As filed with the Securities and Exchange Commission on July 7, 2003

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number 811-7310

ARK FUNDS

Two Portland Square

Portland, Maine 04101

(207) 879-1900

Rick A. Gold, President

Two Portland Square

Portland, Maine 04101

(207) 879-1900

Date of fiscal year end: APRIL 30, 2003

Date of reporting period: APRIL 30, 2003

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1.    REPORTS TO STOCKHOLDERS.

^{Clear-cut strategies for confident investing.}

April 30, 2003 Corporate Classes Annual Report

U.S. Treasury Cash Management Portfolio

U.S. Government Cash Management Portfolio

Prime Cash Management Portfolio

Tax-Free Cash Management Portfolio                           

Managed by Allied Investment Advisors, Inc.

[GRAPHIC]

CONTENTS

Letter to Shareholders	1
Management Discussion and Analysis	4
Schedules of Investments	6
Statements of Assets and Liabilities	12
Statements of Operations	13
Statements of Changes in Net Assets	14
Financial Highlights	15
Notes to Financial Statements	16
Independent Auditors’ Report	19
Trustees & Officers of the Fund	20

This report and the financial statements contained herein are submitted for the general  information of shareholders of the ARK Funds and do not constitute investment advice. The  report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus for each of the portfolios included. Shares of the portfolios are not deposits of any bank, and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investing in the shares involves investment risks including the possible loss of principal amount invested. The views in this report are those of the portfolio manager as of April 30, 2003, and may not reflect his views as of the date this report was first published or anytime thereafter. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. For information about ARK Funds Portfolios, please call 1-800-ARK-FUND (1-800-275-3863).

LETTER TO SHAREHOLDERS

JUNE 2003

Dear Shareholder,

With this Annual Report, we will update you on the progress of the ARK Cash Management Portfolios as of April 30, 2003. We are proud to have been able to grow assets to over $991 million as of April 30, 2003 and pleased to have been able to provide competitive returns during the continuing difficult economic conditions that have impacted us all during the past fiscal year.

In addition to providing you with information about the Portfolios’ performance, diversification, and holdings, the portfolio manager’s Management Discussion and Analysis provides information about economic factors affecting the Portfolios.

The past six months have been full of activity for ARK Funds. In our Semi Annual Report dated October 31, 2002, we told you about the pending acquisition of Allfirst Financial, Inc. by M&T Bank Corporation of Buffalo, New York. That acquisition was completed on April 1, 2003.

Earlier this year, the respective boards of trustees of ARK Funds and the VISION Group of Funds (the proprietary mutual fund company of M&T Bank Corporation) each met and authorized a tax-free reorganization of certain ARK and VISION portfolios, subject to shareholder approval. A Special Meeting of Shareholders of each of the affected portfolios will be scheduled, and a proxy/prospectus containing additional information will be sent to shareholders soon.

We thank you for investing in the ARK Funds, and we look forward to continuing to help you meet your financial goals.

Sincerely,

William H. Cowie, Jr.

Chairman

ANNUAL REPORT    /    APRIL 30, 2003

1

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CASH MANAGEMENT PORTFOLIOS

Cash Management

Portfolios

Our investment management philosophy is defined by three objectives: to preserve principal, to maintain daily liquidity, and to maximize current income. To achieve these objectives, we actively manage the Cash Management Portfolios, utilizing our conservative and highly disciplined relative value approach, which is constantly monitored and reviewed seeking to ensure that the Portfolios’ goals are realized.

To preserve principal, we consider only those issuers that pass our stringent credit evaluation process. The goal of the credit evaluation process is to select high-quality issuers that present minimal credit risk. The evaluation process is based on both quantitative and qualitative factors that highlight the issuer’s ability to maintain its credit rating and leading industry position. Issuers are monitored and reviewed by the Allied Investment Advisors Investment Policy Committee, which is comprised of senior personnel from Allied Investment Advisors, Inc. (AIA).

To provide daily liquidity, we manage our maturities and engage in overnight repurchase agreements seeking to obtain the highest short-term credit ratings. Each repurchase agreement is collateralized by U.S. Treasury or U.S. government agency securities.

To maximize current income, we actively manage the Portfolios. We seek to take advantage of short-lived trading opportunities and market inefficiencies by employing a relative-value approach that emphasizes security selection.

Each Portfolio’s strategy starts with an average maturity decision. This decision is determined by a number of factors, such as analysis of our shareholders’ liquidity needs, expected Federal Reserve monetary policy and yield curve, and implied forward interest-rate analysis.

Upon determining a Portfolio’s average maturity, we analyze each market sector to determine which sectors we believe are cheap, thus providing value, and which sectors are expensive. Individual securities are then selected. This in-depth analysis allows us to identify perceived market inefficiencies and trading opportunities.

3

CASH MANAGEMENT PORTFOLIOS

CASH MANAGEMENT PORTFOLIOS

James M. Hannan

PORTFOLIO MANAGER

James M. Hannan is manager of the Cash Management Portfolios, and is manager or co-manager of other ARK Funds Portfolios. He is also responsible for several separately managed institutional portfolios. Mr. Hannan has been a Portfolio Manager of Allied Investment Advisers, Inc. (“AIA”) since 1996, a Vice President of Allfirst Bank from 1987 to 2003 and a Vice President of Manufacturers and Traders Trust Company (“M&T Trust”) since 2003. He has more than 15 years of experience in the investment industry.

U.S. Treasury Cash Management

U.S. Government Cash Management

Prime Cash Management

Tax-Free Cash Management

Management Discussion and Analysis

Interest rates fell over the past fiscal year, as economic growth remained elusive. The 2-year Treasury note’s yield declined from a fiscal-year high of 3.37% on May 17, 2002 to 1.49% on April 30, 2003. The Federal Reserve lowered short-term interest rates once during the period in November 2002 to 1.25% from 1.75%.

During the past fiscal year we continued to invest in high-quality, short-term securities that present minimal credit risk. We maintained the average maturity of the Portfolios by selectively purchasing securities maturing in either the latter part of 2003 or early 2004.

Given the tepid economic growth and low inflation environment, we believe the Federal Reserve may either lower interest rates during the summer or maintain the current rate of 1.25% for the foreseeable future. Because of our expectations for economic growth and Federal Reserve policy, we may choose to maintain a barbelled portfolio structure, attempting to maintain principal preservation and daily liquidity, while also seeking to provide a competitive rate of return. As always, we will continue to consistently utilize our conservative and disciplined relative value investment process.

APRIL 30, 2003    /    ANNUAL REPORT

4

CASH MANAGEMENT PORTFOLIOS

Performance as of April 30, 2003*

U.S. Treasury Cash Management Portfolio

	Corporate II Class Shares	Corporate III Class Shares	iMoneyNet, Inc. Treasury Institutional Average†
Seven Day Simple Yield	0.69%	0.54%	0.79%

THIRTY-DAY YIELD COMPARISON

Prime Cash Management Portfolio

	Corporate Class Shares	Corporate II Class Shares	Corporate III Class Shares	iMoneyNet, Inc. First Tier Institutional Average†
Seven Day Simple Yield	1.07%	0.82%	0.67%	0.92%

THIRTY-DAY YIELD COMPARISON

* Past performance is not predictive of future performance.

† The performance of the iMoneyNet, Inc. averages do not include operating expenses that are incurred by each Portfolio.

U.S. Government Cash Management Portfolio

	Corporate II Class Shares	Corporate III Class Shares	iMoneyNet, Inc. Gov’t & Agencies Institutional Average†
Seven Day Simple Yield	0.84%	0.69%	0.88%

THIRTY-DAY YIELD COMPARISON

Tax-Free Cash Management Portfolio

	Corporate III Class Shares	iMoneyNet, Inc Tax-Free National Average†
Seven Day Simple Yield	0.72%	0.79%

THIRTY-DAY YIELD COMPARISON

ANNUAL REPORT    /    APRIL 30, 2003

5

U.S. TREASURY CASH MANAGEMENT PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Treasury Obligations — 100.1%
U.S. Treasury Bills ^
1.250%, 05/22/03	$	294	$	294
1.234%, 06/05/03		2,389		2,386
1.217%, 07/10/03		48		48
1.210%, 05/01/03		4,448		4,448
1.209%, 05/15/03		562		562
1.182%, 08/21/03		113		113
1.176%, 09/18/03		2,528		2,516
1.171%, 08/07/03		1,148		1,144
1.166%, 10/02/03		108		107
1.155%, 07/03/03		1,788		1,784
1.154%, 07/17/03		16,954		16,912
1.145%, 08/28/03		2		2
1.142%, 05/29/03		5,650		5,645
1.142%, 07/24/03		1,219		1,216
1.131%, 10/16/03		138		137
1.129%, 09/25/03		4,864		4,842
1.110%, 06/12/03		358		358
TOTAL U.S. TREASURY OBLIGATIONS (COST $42,514)			$	42,514
TOTAL INVESTMENTS  — 100.1% (COST $42,514)			$	42,514
OTHER ASSETS & LIABILITIES, NET — (0.1)%			$	(33	)
TOTAL NET ASSETS — 100.0%			$	42,481

^ The effective yield at time of purchase is shown as the rate on the Schedule of Investments.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

6

U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Government Agency Obligations — 50.6%
FFCB ^
1.616%, 05/15/03	$	6,000	$	5,996
1.576%, 05/28/03		15,000		14,983
FHLB
6.875%, 08/15/03		35,100		35,652
5.250%, 02/13/04		10,000		10,304
5.125%, 09/15/03		7,500		7,603
2.500%, 11/14/03		5,000		5,029
2.060%, 07/02/03		5,000		5,000
1.500%, 03/08/04		4,000		4,000
1.450%, 05/14/04		5,000		5,000
1.400%, 03/29/04		12,000		12,000
1.300%, 04/07/04		10,000		10,000
FHLB ^
1.250%, 05/01/03		50,000		50,000
FHLB ‡
1.210%, 09/27/04		5,000		4,998
1.190%, 05/27/04		15,000		14,993
1.089%, 06/17/03		9,200		9,200
FHLMC
7.375%, 05/15/03		30,000		30,059
FHLMC ^
1.760%, 07/17/03		20,000		19,926
FNMA
5.500%, 09/29/03		9,000		9,153
5.125%, 02/13/04		25,000		25,747
4.000%, 08/15/03		68,903		69,440
FNMA ^
1.250%, 05/01/03		100,000		100,000
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $449,083)			$	449,083

Description	Principal Amount (000)		Market Value (000)
Repurchase Agreements — 49.2%
Deutsche Bank, 1.280%, dated 04/30/03, matures 05/01/03, repurchase price $125,004,444 (102% collateralized by various U.S. Treasury Obligations)	$	125,000	$	125,000
First Boston, 1.270%, dated 04/30/03, matures 05/01/03, repurchase price $50,001,764 (102% collateralized by various U.S. Treasury Obligations)		50,000		50,000
Goldman Sachs, 1.250%, dated 04/30/03, matures 05/01/03, repurchase price $125,004,340 (102% collateralized by various U.S. Treasury Obligations)		125,000		125,000
Goldman Sachs, 1.100%, dated 04/30/03, matures 05/01/03, repurchase price $11,431,395 (102% collateralized by various U.S. Treasury Obligations)		11,431		11,431
Salomon Brothers, 1.250%, dated 04/30/03, matures 05/01/03, repurchase price $125,004,340 (102% collateralized by various U.S. Treasury Obligations)		125,000		125,000
TOTAL REPURCHASE AGREEMENTS (COST $436,431)			$	436,431
TOTAL INVESTMENTS — 99.8% (COST $885,514)			$	885,514
OTHER ASSETS & LIABILITIES, NET — 0.2%			$	1,796
TOTAL NET ASSETS — 100.0%			$	887,310

^ The effective yield at time of purchase is shown as the rate on the Schedule of Investments.

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

FFCB — Federal Farm Credit Bureau

FHLB — Federal Home Loan Bank

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

7

PRIME CASH MANAGEMENT PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
Corporate Obligations — 22.9%
Banks — 9.5%
Bank of New York
6.625%, 06/15/03	$	1,000	$	1,006
Canadian Imperial Bank NY ‡
1.420%, 04/12/04		1,000		1,000
Deutsche Bank NY
1.685%, 03/10/04		1,000		1,000
U.S. Bancorp
6.000%, 05/15/04		1,500		1,571
TOTAL BANKS			$	4,577
Financials — 4.4%
Associates N.A.
5.750%, 11/01/03		1,000		1,021
Heller Financial
6.000%, 03/19/04		1,050		1,093
TOTAL FINANCIALS			$	2,114
Security Dealers & Brokers — 9.0%
Bear Stearns
6.150%, 03/02/04		1,000		1,037
Goldman Sachs Group +
6.650%, 08/01/03		250		253
Goldman Sachs Group ‡
1.590%, 04/26/04		1,000		1,002
Morgan Stanley ‡
1.810%, 03/09/04		1,000		1,004
1.579%, 08/18/03		1,000		1,001
TOTAL SECURITY DEALERS & BROKERS			$	4,297
TOTAL CORPORATE OBLIGATIONS (COST $10,988)			$	10,988

Description	Principal Amount (000)		Market Value (000)
Asset-Backed Securities — 1.9%
Ford Credit Auto Owner Trust, Ser 2003-A, Cl A1
1.363%, 10/15/03	$	485	$	485
Honda Auto Receivables Owner Trust, Ser 2002-3, Cl A1
1.823%, 08/18/03		—†		—†
Whole Auto Loan Trust, Ser 2002-1, Cl A1
1.420%, 12/15/03		416		416
TOTAL ASSET-BACKED SECURITIES (COST $901)			$	901
Asset-Backed Commercial Paper — 30.2%
Bavaria ^
1.281%, 05/23/03		1,500		1,499
Ciesco ^
1.242%, 06/17/03		2,000		1,997
Citibank ^
1.253%, 05/09/03		1,000		1,000
Corporate Asset Receivables ^
1.253%, 06/26/03		2,000		1,996
Delaware Funding ^
1.252%, 05/28/03		2,000		1,998
Edison Asset Securitization ^
1.253%, 06/10/03		1,000		998
Falcon Asset Securitization ^
1.271%, 06/02/03		2,000		1,998
General Electric Capital
1.268%, 11/07/03		1,000		1,000
Sigma Finance
1.280%, 05/27/03		2,000		2,000
TOTAL ASSET-BACKED COMMERCIAL PAPER (COST $14,486)			$	14,486
Commercial Paper — 8.3%
Financials — 8.3%
Societe Generale NY ^
1.248%, 07/07/03		2,000		1,995
UBS Finance Delaware LLC ^
1.260%, 05/07/03		2,000		2,000
TOTAL FINANCIALS			$	3,995
TOTAL COMMERCIAL PAPER (COST $3,995)			$	3,995

APRIL 30, 2003    /    ANNUAL REPORT

8

PRIME CASH MANAGEMENT PORTFOLIO (concluded)

Description	Principal Amount (000)		Market Value (000)
Taxable Municipal Bonds — 2.1%
New York — 2.1%
New York City, FGIC
1.290%, 06/04/03	$	1,000	$	1,000
TOTAL NEW YORK			$	1,000
TOTAL TAXABLE MUNICIPAL BONDS (COST $1,000)			$	1,000
Repurchase Agreements — 37.8%
Credit Suisse First Boston, 1.270%, dated 04/30/03, matures 05/01/03, repurchase price $5,000,176 (102% collateralized by various U.S. Treasury Obligations)		5,000		5,000
Deutsche Bank, 1.280%, dated 04/30/03, matures 05/01/03, repurchase price $5,000,178 (102% collateralized by various U.S. Treasury Obligations)		5,000		5,000
Goldman Sachs, 1.250%, dated 04/30/03, matures 05/01/03, repurchase price $5,000,174 (102% collateralized by various U.S. Treasury Obligations)		5,000		5,000
Goldman Sachs, 1.100%, dated 04/30/03, matures 05/01/03, repurchase price $3,119,704 (102% collateralized by various U.S. Treasury Obligations)		3,120		3,120
TOTAL REPURCHASE AGREEMENTS (COST $18,120)			$	18,120
TOTAL INVESTMENTS — 103.2% (COST $49,490)			$	49,490
OTHER ASSETS & LIABILITIES, NET — (3.2)%			$	(1,555	)
TOTAL NET ASSETS — 100.0%			$	47,935

+  Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

^ The effective yield at time of purchase is shown as the rate on the Schedule of Investments.

†  Amount held rounds to less than 1,000.

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

Cl — Class

Ser — Series

These organizations have provided underlying credit support for securities as listed above, as indicated.

FGIC — Financial Guaranty Insurance Corporation

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

9

TAX-FREE CASH MANAGEMENT PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
Municipal Bonds & Notes — 94.7%
California — 9.1%
California State, RAN
2.500%, 06/20/03	$	700	$	701
Oakland, JT Powers Financing Authority, Ser A-1, FSA §       1.600%, 08/01/21		600		600
TOTAL CALIFORNIA			$	1,301
Colorado — 5.6%
Jefferson County, School District R-001, GO, TRAN
2.500%, 06/30/03		800		802
TOTAL COLORADO			$	802
Florida — 4.2%
Florida State, Housing Finance Agency RB, Ser AA, Remarketed 07/31/95, FNMA §
1.330%, 06/15/25		100		100
Lee County, Housing Finance Authority RB, Forestwood Apartments Project, Ser A, FNMA §
1.330%, 06/15/25		500		500
TOTAL FLORIDA			$	600
Illinois — 0.7%
Illinois State, Development Finance Authority RB, Pollution Control, Amoco Oil Project §
1.350%, 11/01/12		100		100
TOTAL ILLINOIS			$	100

Description	Principal Amount (000)		Market Value (000)
Indiana — 4.9%
Columbus, Industrial RB, Quinco Consulting Center Project, Fifth Third Bank LOC §
1.390%, 12/01/21	$	600	$	600
Elkhart County, Industrial RB, Hubbard Hill Estates Project, Fifth Third Bank LOC §
1.390%, 11/01/21		100		100
TOTAL INDIANA			$	700
Kentucky — 4.4%
Kenton County, Industrial Building RB, Baptist Convalescent Center Project, Fifth Third Bank LOC §
1.400%, 07/01/18		625		625
TOTAL KENTUCKY			$	625
Maryland — 14.2%
Baltimore County, Consolidated Public Improvements Project, GO
3.000%, 09/01/03		220		221
Gaithersburg, Economic Development RB, Asbury Methodist Project, Ser A, MBIA §
1.350%, 07/01/27		400		400
Maryland State, Health & Higher Education Facilities Authority RB, Pooled Loan Program, Ser A, Bank One LOC §
1.320%, 04/01/35		800		800
Maryland State, Health & Higher Education Facilities Authority RB, Pooled Loan Program, Ser B, Bank One LOC §
1.300%, 04/01/35		600		600
TOTAL MARYLAND			$	2,021
Massachusetts — 2.1%
Massachusetts State, Health & Education §
1.300%, 07/01/10		300		300
TOTAL MASSACHUSETTS			$	300
Michigan — 5.6%
Detroit, Water Supply Systems RB, Ser C, FGIC §
1.350%, 07/01/29		800		800
TOTAL MICHIGAN			$	800

APRIL 30, 2003    /    ANNUAL REPORT

10

TAX-FREE CASH MANAGEMENT PORTFOLIO (concluded)

Description	Principal Amount (000)		Market Value (000)
Missouri — 0.7%
Missouri State, Health & Educational Facilities Authority RB, Washington University Project, Ser A §
1.300%, 09/01/30	$	100	$	100
TOTAL MISSOURI			$	100
New Hampshire — 3.5%
New Hampshire State, Housing Finance Authority RB, Equity Residential Property—Bond Partnership—Manchester Project, FNMA §
1.350%, 09/15/26		500		500
TOTAL NEW HAMPSHIRE			$	500
New Jersey — 4.2%
New Jersey State, Municipal Securities Trust Receipts RB, Ser CB1 §
1.400%, 02/15/11		600		600
TOTAL NEW JERSEY			$	600
Pennsylvania — 15.8%
Chester County, Industrial Development Authority RB, The Woods Project, PNC Bank N.A. LOC §
1.400%, 03/31/15		40		40
Delaware County, Industrial Development Authority RB, Resource Recovery Facility Project, Ser G §
1.280%, 12/01/31		550		550
1.280%, 12/01/31		10		10
Delaware Valley, Regulatory Finance Authority RB, Ser D, Toronto-Dominion Bank LOC §
1.350%, 12/01/20		600		600
Emmaus, General Authority RB, Ser G, Remarketed 12/01/97 §
1.400%, 03/01/24		800		800
Moon, Industrial Development Authority RB, Executive Office Association Project, PNC Bank N.A. LOC §
1.400%, 11/01/10		250		250
TOTAL PENNSYLVANIA			$	2,250
South Carolina — 4.2%
South Carolina State, Jobs Economic Development Authority RB, Catholic Diocese of South Carolina Project, Bank of America N.A. LOC §
1.400%, 09/01/18		600		600
TOTAL SOUTH CAROLINA			$	600

Description	Principal Amount (000)		Market Value (000)
Texas — 5.3%
Gulf Coast, Waste Disposal Authority Texas Pollution Control RB, Exxon Project §
1.300%, 06/01/20	$	60	$	60
Texas State, GO, TRAN
2.750%, 08/29/03		700		703
TOTAL TEXAS			$	763
Washington — 4.9%
Washington State, Municipal Security Trust Receipts RB, Public Power Supply Systems Nuclear Project Number One, Ser CMC2 §
1.420%, 01/01/05		700		700
TOTAL WASHINGTON			$	700
Wyoming — 5.3%
Lincoln County, Pollution Control Authority RB, Exxon Project §
1.300%, 08/01/15		500		500
Sublette County, Pollution Control RB, Exxon Project §
1.300%, 11/01/14		250		250
TOTAL WYOMING			$	750
TOTAL MUNICIPAL BONDS & NOTES (COST $13,512)			$	13,512
Commercial Paper — 4.9%
Howard County Maryland
1.100%, 06/02/03		700		700
TOTAL COMMERCIAL PAPER (COST $700)			$	700
TOTAL INVESTMENTS — 99.6% (COST $14,212)			$	14,212
OTHER ASSETS & LIABILITIES, NET — 0.4%			$	59
TOTAL NET ASSETS — 100.0%			$	14,271

§ These variable rate securities are subject to a put and demand feature. The date reported is the stated maturity.

GO — General Obligation

LOC — Securities are held in connection with a letter of credit support for securities listed above, as indicated.

RAN — Revenue Anticipation Note

RB — Revenue Bond

Ser — Series

TRAN — Tax and Revenue Anticipation Note

These organizations have provided underlying credit support for securities as listed above, as indicated.

FGIC — Financial Guaranty Insurance Corporation

FNMA — Federal National Mortgage Corporation

FSA — Financial Security Assistance

MBIA — Municipal Bond Insurance Association

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

11

STATEMENTS OF ASSETS AND LIABILITIES

As of April 30, 2003 (000, except per share amounts)	U.S. Treasury Cash Management Portfolio			U.S. Government Cash Management Portfolio			Prime Cash Management Portfolio		Tax-Free Cash Management Portfolio
Assets:
Investments at Amortized Cost	$	42,514		$	885,514		$	49,490	$	14,212
Cash		1			—			—		20
Interest Receivable		—			2,779			128		52
Expense Reimbursement from Advisor		2			1			5		1
Prepaid Expenses		1			23			2		—	†
Other Assets		—			1			—		—
TOTAL ASSETS		42,518			888,318			49,625		14,285
Liabilities:
Distribution Payable		23			633			47		7
Payable for Investment Securities Purchased		—			—			1,613		—
Accrued Expenses:
Investment Advisory Fees		—			102			—		—
Administrator Fees		—	†		7			2		—	†
Distributor Fees		9			186			13		5
Custody Fees		1			21			5		—	†
Transfer Agency Fees		1			—			3		1
Other Expense Payables		3			59			7		1
TOTAL LIABILITIES		37			1,008			1,690		14
Net Assets:
Paid in Capital		42,473			887,306			47,929		14,260
Undistributed Net Investment Income		9			4			6		11
Accumulated Net Realized Gain (Loss) on Investments		(1	)		—	†		—		—
TOTAL NET ASSETS	$	42,481		$	887,310		$	47,935	$	14,271
Outstanding Shares of Beneficial Interest (unlimited authorization — no par value)
Corporate Class Shares		—			—			10,632		—
Corporate II Class Shares		41,443			879,686			28,836		—
Corporate III Class Shares		1,029			7,620			8,461		14,260
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CORPORATE CLASS SHARES		—			—			$1.00		—
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CORPORATE II CLASS SHARES		$1.00			$1.00			$1.00		—
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CORPORATE III CLASS SHARES		$1.00			$1.00			$1.00		$1.00

† Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

12

STATEMENTS OF OPERATIONS

For the Fiscal Year Ended April 30, 2003 (000)	U.S. Treasury Cash Management Portfolio			U.S. Government Cash Management Portfolio			Prime Cash Management Portfolio			Tax-Free Cash Management Portfolio
Investment Income:
Interest	$	692		$	14,608		$	834		$	286
TOTAL INVESTMENT INCOME		692			14,608			834			286
Expenses:
Investment Advisory Fees		65			1,326			75			30
Administrator Fees		62			784			68			42
Distribution Fees — Corporate II Class Shares		107			2,192			96			—
Distribution Fees — Corporate III Class Shares		3			29			27			80
Transfer Agency Fees		11			—			16			5
Custodian Fees		12			172			40			5
Accounting Fees		49			133			55			38
Professional Fees		5			107			5			2
Registration Fees		2			35			3			1
Printing		3			65			4			1
Trustee Fees and Expenses		2			31			2			1
Miscellaneous Fees		3			83			21			2
TOTAL EXPENSES		324			4,957			412			207
Less Waivers:
Investment Advisory Fees		(64	)		(20	)		(75	)		(30	)
Administrator Fees		(33	)		(587	)		(37	)		(15	)
TOTAL WAIVERS		(97	)		(607	)		(112	)		(45	)
Less Expense Reimbursement by Advisor		(14	)		(7	)		(58	)		(35	)
TOTAL NET EXPENSES		213			4,343			242			127
NET INVESTMENT INCOME		479			10,265			592			159
Net Realized Gain on Investments		1			—	†		1			1
NET REALIZED GAIN ON INVESTMENTS		1			—	†		1			1
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	480		$	10,265		$	593		$	160

† Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

13

STATEMENTS OF CHANGES IN NET ASSETS

For the Fiscal Years Ended April 30, 2003 and 2002 (000)	U.S. Treasury Cash Management Portfolio						U.S. Government Cash Management Portfolio						Prime Cash Management Portfolio						Tax-Free Cash Management Portfolio
	05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02
Operations:
Net Investment Income	$	479		$	678		$	10,265		$	16,172		$	592		$	1,102		$	159		$	391
Net Realized Gain on Investments		1			6			—	†		1			1			8			1			1
NET INCREASE IN NET ASSETS FROM OPERATIONS		480			684			10,265			16,173			593			1,110			160			392
Distributions to Shareholders:
Net Investment Income
Corporate Class Shares		—			—	†		—			—	†		(70	)		(45	)		—			—
Corporate II Class Shares		(473	)		(674	)		(10,192	)		(16,046	)		(455	)		(890	)		—			—
Corporate III Class Shares		(6	)		(4	)		(73	)		(126	)		(73	)		(167	)		(159	)		(391	)
TOTAL DISTRIBUTIONS		(479	)		(678	)		(10,265	)		(16,172	)		(598	)		(1,102	)		(159	)		(391	)
Capital Share Transactions(1):
Corporate Class Shares
Shares Issued		—			279			—			—			69,896			9,558			—			—
Shares Issued in Lieu of Cash Distributions		—			—	†		—	†		—	†		—	†		—	†		—			—
Shares Redeemed		—	†		(279	)		—	†		—			(59,461	)		(14,773	)		—			—
TOTAL CORPORATE CLASS SHARE TRANSACTIONS		—	†**		—	†		—	†**		—	†		10,435			(5,215	)		—			—
Corporate II Class Shares
Shares Issued		45,078			177,397			1,706,797			3,357,870			1,956,938			288,250			—			—
Shares Issued in Lieu of Cash Distributions		28			5			15			47			1			6			—			—
Shares Redeemed		(45,342	)		(161,213	)		(1,532,072	)		(3,189,630	)		(1,966,560	)		(261,562	)		—			—
TOTAL CORPORATE II CLASS SHARE TRANSACTIONS		(236	)		16,189			174,740			168,287			(9,621	)		26,694			—			—
Corporate III Class Shares
Shares Issued		586			443			20,870			29,818			13,936			12,643			35,614			25,875
Shares Issued in Lieu of Cash Distributions		—			—	†		1			3			—			21			5			53
Shares Redeemed		—	†		—			(18,451	)		(27,716	)		(14,207	)		(11,422	)		(35,769	)		(44,171	)
TOTAL CORPORATE III CLASS SHARE TRANSACTIONS		586			443			2,420			2,105			(271	)		1,242			(150	)		(18,243	)
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS		350			16,632			177,160			170,392			543			22,721			(150	)		(18,243	)
NET INCREASE (DECREASE) IN NET ASSETS		351			16,638			177,160			170,393			538			22,729			(149	)		(18,242	)
Net Assets:
Beginning of period		42,130			25,492			710,150			539,757			47,397			24,668			14,420			32,662
END OF PERIOD	$	42,481		$	42,130		$	887,310		$	710,150		$	47,935		$	47,397		$	14,271		$	14,420
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME	$	9		$	—	†	$	4		$	—		$	6		$	—	†	$	11		$	—	†

† Amount rounds to less than one thousand.

** Ended operations August 30, 2002.

(1) At $1.00 per share.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

14

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income	Realized and Unrealized Gains (Losses) on Investments	Distributions from Net Investment Income		Distributions from Capital Gains	Net Asset Value End of Period	Total Return		Net Assets End of Period (000)			Ratio of Expenses to Average Net Assets*		Ratio of Net Investment Income to Average Net Assets*		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)*
U.S. Treasury Cash Management Portfolio
CORPORATE II CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	1.11	%	$	41,451		0.49	%	1.11	%	0.73	%
2002	1.00	0.02	—	(0.02	)	—	1.00	2.46			41,686		0.49		2.37		0.69
2001(1)	1.00	0.04	—	(0.04	)	—	1.00	4.22	+		25,492		0.49		4.90		0.61
CORPORATE III CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	0.96	%	$	1,030		0.64	%	0.89	%	1.60	%
2002	1.00	0.02	—	(0.02	)	—	1.00	2.38			444		0.64		1.67		0.84
2001(2)	1.00	0.04	—	(0.04	)	—	1.00	3.63	+		—	†	0.64		5.90		0.79
U.S. Government Cash Management Portfolio
CORPORATE II CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	1.18	%	$	879,690		0.49	%	1.16	%	0.56	%
2002	1.00	0.02	—	(0.02	)	—	1.00	2.50			704,950		0.49		2.39		0.60
2001(3)	1.00	0.05	—	(0.05	)	—	1.00	5.39	+		536,662		0.49		5.63		0.63
CORPORATE III CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	1.03	%	$	7,620		0.64	%	1.01	%	0.79	%
2002	1.00	0.02	—	(0.02	)	—	1.00	2.35			5,200		0.64		2.33		0.75
2001(4)	1.00	0.05	—	(0.05	)	—	1.00	5.16	+		3,095		0.64		5.60		0.78
U.S. Prime Cash Management Portfolio
CORPORATE CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	1.50	%	$	10,632		0.24	%	1.50	%	0.64	%
2002	1.00	0.03	—	(0.03	)	—	1.00	2.74			197		0.24		3.34		0.49
2001(5)	1.00	0.05	—	(0.05	)	—	1.00	4.61	+		5,412		0.24		6.05		0.42
CORPORATE II CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	1.24	%	$	28,840		0.49	%	1.18	%	0.82	%
2002	1.00	0.02	—	(0.02	)	—	1.00	2.48			38,465		0.49		2.19		0.74
2001(6)	1.00	0.05	—	(0.05	)	—	1.00	5.14	+		11,764		0.49		4.89		0.71
CORPORATE III CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	1.09	%	$	8,463		0.64	%	1.07	%	1.03	%
2002	1.00	0.02	—	(0.02	)	—	1.00	2.33			8,735		0.64		2.27		0.89
2001(7)	1.00	0.04	—	(0.04	)	—	1.00	3.97	+		7,492		0.64		5.79		0.82
Tax-Free Cash Management Portfolio
CORPORATE III CLASS SHARES
2003	$1.00	0.01	—	(0.01	)	—	$1.00	0.78	%	$	14,271		0.64	%	0.79	%	1.04	%
2002	1.00	0.01	—	(0.01	)	—	1.00	1.47			14,420		0.64		1.57		0.80
2001(8)	1.00	0.03	—	(0.03	)	—	1.00	2.82	+		32,662		0.64		3.26		0.81

 + Total return is for the period indicated and has not been annualized.

 † Amount rounds to less than one thousand.

 * Periods of less than one year have been annualized.

(1) Commenced operations on July 21, 2000.

(2) Commenced operations on October 6, 2000.

(3) Commenced operations on June 1, 2000.

(4) Commenced operations on June 6, 2000.

(5) Commenced operations on July 28, 2000.

(6) Commenced operations on June 5, 2000.

(7) Commenced operations on August 16, 2000.

(8) Commenced operations on June 23, 2000.

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

15

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

ARK Funds (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company organized as a Massachusetts business trust pursuant to a Declaration of Trust dated October 22, 1992, amended and restated on March 19, 1993, and further amended on December 10, 1999.

The Fund offers thirty separate investment portfolios as of April 30, 2003:

U.S. Treasury Cash Management Portfolio (“TCMP”)

U.S. Government Cash Management Portfolio (“GCMP”)

Prime Cash Management Portfolio (“PCMP”)

Tax-Free Cash Management Portfolio (“TFCMP”) 

(individually a “Portfolio” and collectively, the “Portfolios”)

Social Issues Intermediate Fixed Income Portfolio

Social Issues Blue Chip Equity Portfolio

Social Issues Capital Growth Portfolio

Social Issues Small-Cap Equity Portfolio

U.S. Treasury Money Market Portfolio

U.S. Government Money Market Portfolio

Money Market Portfolio

Tax-Free Money Market Portfolio

Pennsylvania Tax-Free Money Market Portfolio

Short-Term Treasury Portfolio

Short-Term Bond Portfolio

Maryland Tax-Free Portfolio

Pennsylvania Tax-Free Portfolio

Intermediate Fixed Income Portfolio

U.S. Government Bond Portfolio

Income Portfolio

Balanced Portfolio

Equity Income Portfolio

Value Equity Portfolio

Equity Index Portfolio

Blue Chip Equity Portfolio

Capital Growth Portfolio

Mid-Cap Equity Portfolio

Small-Cap Equity Portfolio

International Equity Portfolio

Emerging Markets Equity Portfolio

The financial statements and notes presented herein are those of TCMP, GCMP, PCMP, and TFCMP. The financial statements of the other portfolios listed above are not presented herein, but are presented separately. The Fund may issue an unlimited number of shares of each of the Portfolios and may issue shares of one or more classes of each Portfolio.

2. SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported therein. Although actual results could differ from these estimates, any such differences are expected to be immaterial to the net assets of the Portfolios.

The following is a summary of significant accounting policies followed by the Portfolios.

Security Valuation — Investment securities held by the Portfolios are stated at their amortized cost, which approximates market value. Under the amortized cost method, any discount or premium is amortized ratably to the maturity of the security and is included in interest income. The Portfolios’ use of amortized cost is subject to compliance with certain conditions specified in Rule 2a-7 under the 1940 Act.

Income Taxes — It is the intention of each Portfolio to comply with the requirements of the Internal Revenue Code, to qualify as a regulated investment company and to distribute all of its taxable income. Accordingly, no provision for federal income taxes is considered necessary.

Net Asset Value Per Share — The net asset value per share (“NAV”) of each class of each Portfolio is calculated every business day (i.e., any day that both the New York Stock Exchange and the Federal Reserve Bank are open for business). A business day will be any weekday, other than a federal holiday, unless the fund determines that being open for business is not in the best interest of shareholders. The NAV is computed by dividing the total assets of each class of the Portfolio, less the liabilities of the class, by the number of outstanding shares of the Portfolio.

Classes — Each class of shares has equal rights to earnings, assets and voting privileges, except that each class bears different distribution and shareholder services expenses. Each class of shares has exclusive voting rights with respect to matters that affect just that class. Class-specific expenses are borne by the applicable class. Other expenses, income and realized and unrealized gains/losses are allocated to the respective classes on the basis of relative daily net assets.

Repurchase Agreements — Securities pledged as collateral for repurchase agreements are held by the custodian bank until maturity of the repurchase agreements. Provisions of the repurchase agreements and procedures adopted by the Board of Trustees require that market value of collateral, including accrued interest thereon, be sufficient in the event of default by the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an

APRIL 30, 2003    /    ANNUAL REPORT

16

NOTES TO FINANCIAL STATEMENTS

insolvency proceeding, realization of the collateral by the Portfolio may be delayed or limited.

Distributions — Dividends from net investment income are declared daily and paid monthly for the Portfolios. Distributions from net realized capital gains, if any, are declared and paid at least annually by each Portfolio.

Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, and may differ from those amounts determined under generally accepted accounting principles. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in capital in the period that the difference arises.

The Portfolios have a tax year end of October 31.

On the Statements of Assets and Liabilities, the following adjustments were made:

Portfolio	Undistributed Net Investment Income (000)	Accumulated Net Realized Loss (000)
TCMP	$10	$	(10	)
GCMP	4		(4	)
PCMP	12		(12	)
TFCMP	11		(11	)

The tax character of distributions paid during the year ended October 31, 2002 and year ended October 31, 2001 was as follows:

	Tax-Exempt Income (000)				Ordinary Income (000)				Total (000)
Portfolio	2002		2001		2002		2001		2002		2001
TCMP	$	—	$	—	$	525	$	780	$	525	$	780
GCMP		—		—		11,940		22,815		11,940		22,815
PCMP		—		—		833		1,255		833		1,255
TFCMP		186		724		10		—		196		724

At October 31, 2002 the components of net assets (excluding paid-in capital) on a tax basis were as follows:

Portfolio	Undistributed Tax-Exempt Income (000)	Undistributed Ordinary Income (000)	Capital and Other Losses (000)		Total (000)
TCMP	$—	$  60	$	(2)	$	58
GCMP	—	993	—			993
PCMP	—	72	—			72
TFCMP	26	1	—			27

The following Portfolio has estimated capital loss carryforwards at October 31, 2002, which are available to offset future net realized capital gains:

Portfolio	Accumulated Capital Loss Carryforward (000)	Year Expires
TCMP	$2	2010

Other — Security transactions are accounted for on the date the security is purchased or sold (trade date). Net realized capital gains and losses on the sale of investment securities are determined using the identified cost method. Interest income is recognized using the accrual method. Discounts and premiums on securities purchased are amortized over the lives of the respective securities.

3. INVESTMENT ADVISORY AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Allied Investment Advisors, Inc. (“AIA”) is the investment advisor to each Portfolio. Pursuant to an investment advisory contract on behalf of each Portfolio, AIA is entitled to receive fees for its advisory services at the annual rates shown in the following table based on the daily average net assets of the Portfolio.

Portfolio	Annual Rate
TCMP	0.15	%
GCMP	0.15	%
PCMP	0.15	%
TFCMP	0.15	%

AIA has contractually agreed to waive a portion of its fees or reimburse expenses for all of the Portfolios in order to limit total operating expenses of such Portfolios.

Effective April 1, 2003, AIA became a wholly-owned subsidiary of Manufacturers and Traders Trust Company (“M&T Trust”), the principal financial services operating subsidiary of M&T Bank Corporation (“M&T”), a publicly-traded holding company based in Buffalo, New York. M&T’s ownership of AIA is a result of an agreement entered into on September 26, 2002, among M&T, Allfirst Financial, Inc. and Allied Irish Banks, p.l.c., under which M&T was to acquire Allfirst Financial Inc. the indirect parent corporation of AIA, and parent corporation of Allfirst Bank, the direct parent of AIA (the “Acquisition”). At a special meeting of shareholders held on January 31, 2003, shareholders of each Portfolio approved a new investment advisory agreement between AIA and the Fund with respect to each Portfolio. The 1940 Act, which regulates investment companies such as the Fund,

ANNUAL REPORT    /    APRIL 30, 2003

17

NOTES TO FINANCIAL STATEMENTS

requires a shareholder vote to approve a new advisory agreement in connection with business transactions such as the Acquisition. The new advisory agreement is substantially identical to the former advisory agreement, except for the dates of execution and termination. The new advisory agreement became effective upon consummation of the Acquisition on April 1, 2003.

Also as a result of the Acquisition, M&T Trust acquired Allfirst Trust Company, N.A., (“Allfirst Trust”), which as of April 30, 2003, served as the Portfolios’ administrator, transfer agent and custodian pursuant to administration, transfer agency and custodian agreements with the Fund. (See Note 5 for additional information concerning the administrator and transfer agent subsequent to the Portfolios’ fiscal year end.)

Allfirst Trust serves as administrator and transfer agent for the Fund pursuant to an administration agreement. For its services, Allfirst Trust is entitled to receive an administration fee from the Fund at the annual rate of $24,000 per Portfolio, plus 0.085% of the annual average daily net assets of the Portfolios. Allfirst Trust receives annually a $60,000 base fee that is allocated to each portfolio of the Fund based on respective average daily net assets. Under a separate agreement, Allfirst Trust has subcontracted the services to be provided by it under the administration agreement to Forum Administrative Services, LLC (the “Sub-administrator”). Allfirst Trust is responsible for paying a portion of the administration fee it receives from the Fund to the Sub-administrator for the services it provides.

Pursuant to an agreement between the Fund and Allfirst Trust, Allfirst Trust performs transfer agency services. Pursuant to an agreement between Boston Financial Data Services, Inc. (“Boston Financial”) and Allfirst Trust, Boston Financial performs sub-transfer agency services. For the services provided under the agreement with Allfirst Trust, the Fund pays an annual fee of up to $16 per Portfolio account and activity based fees ranging from $0.50 to $12.50 per item and reimbursements for out-of-pocket expenses. Allfirst Trust pays the transfer agency fees and expense reimbursements that it receives from the Fund to Boston Financial.

Pursuant to a custody agreement between the Fund and Allfirst Trust, Allfirst Trust was appointed and serves as the custodian of the assets of the Portfolios. Pursuant to an agreement between Bankers Trust Company (“BTC”) and Allfirst Trust, BTC performs sub-custodial services. For the services provided under the agreement with Allfirst Trust, the Fund pays 0.015% of the market value of the assets of the Portfolios, plus transaction fees ranging from $5 to $75 per item and reimbursement for out-of-pocket expenses. Allfirst Trust is responsible for paying a portion of the custody fees it receives from the Fund to BTC for the custody services it provides.

4. DISTRIBUTION AND SERVICE PLANS

The Fund’s Board of Trustees has adopted Distribution and Service Plans on behalf of the Corporate II Class Shares and Corporate III Class Shares of each Portfolio pursuant to Rule 12b-1 under the 1940 Act. Distribution and/or service fees under the plans are paid to ARK Funds Distributors, LLC (the “Distributor”), which acts as distributor for the Fund pursuant to a distribution agreement on behalf of each Portfolio. The plans allow the Portfolios to pay the Distributor a fee at the annual rate of up to 0.25% and 0.40%, respectively, of the average daily net assets of the Corporate II Class Shares and Corporate III Class Shares. The Distributor may voluntarily waive all or a portion of their fees for certain Portfolios. These waivers are voluntary and may be discontinued at any time.

5. SIGNIFICANT EVENTS AFTER APRIL 30, 2003

As a result of the Acquisition described in Note 3, effective June 13, 2003, Allfirst Trust, the administrator, transfer agent and custodian to the Fund was merged into M&T Trust and no longer maintains a separate corporate existence. In connection with that merger, effective June 16, 2003, M&T Trust serves as the administrator, transfer agent and custodian to the Fund as a result of the assignment of the Fund’s administration and transfer agency agreements with Allfirst Trust to M&T Trust. The compensation provisions under the agreements are unchanged.

Effective June 1, 2003, State Street Bank and Trust Company (“State Street Bank”) serves as custodian of the assets of the Portfolios pursuant to a custodian agreement between State Street and the Fund.

M&T Trust also serves as the administrator to the VISION Group of Funds (“VISION Funds”), a mutual fund family that offers different classes of shares in separate investment portfolios for which M&T Asset Management, a department of M&T Trust, serves as investment adviser. In connection with the Acquisition described above, the Board of Trustees of the Fund has authorized the reorganization of each Portfolio into a newly created or existing portfolio of the VISION Funds. On May 16, 2003, the VISION Funds filed a preliminary proxy statement/prospectus on Form N-14, which sets forth the reorganization proposals to be submitted to shareholders of each Portfolio, who will vote separately on the proposal to reorganize their respective Portfolio. The VISION Funds filed an amendment to the Form N-14 filing on May 23, 2003 with a proposed effective date for the preliminary proxy statement/prospectus of June 23, 2003. According to the preliminary proxy statement/prospectus, only shareholders of record of the Fund at the close of business on June 16, 2003 will be entitled to notice of and to vote at the shareholder meeting scheduled for August 14, 2003, and any postponement or adjournment thereof. Under the proposed agreement and plan of reorganization, if approved by shareholders of a Portfolio, the shareholders of that Portfolio will receive shares of a comparable VISION Fund. According to the preliminary proxy statement/prospectus, the reorganization is currently anticipated to occur in August, assuming shareholder approval is obtained.

APRIL 30, 2003    /    ANNUAL REPORT

18

INDEPENDENT AUDITORS’ REPORT

The Board of Trustees and Shareholders

ARK Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of U.S. Treasury Cash Management Portfolio, U.S. Government Cash Management Portfolio, Prime Cash Management Portfolio, and Tax-Free Cash Management Portfolio, portfolios of ARK Funds (the “Portfolios”), as of April 30, 2003, and the related statements of operations for the year then ended, statements of changes in net assets for each of the years in the two-year period then ended, and financial highlights for each of the years or periods in the three-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2003 by correspondence with the custodian and brokers. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of U.S. Treasury Cash Management Portfolio, U.S. Government Cash Management Portfolio, Prime Cash Management Portfolio, and Tax-Free Cash Management Portfolio as of April 30, 2003, the results of their operations, the changes in their net assets and their financial highlights for each of the years or periods specified above in conformity with accounting principles generally accepted in the United States of America.

Boston, Massachusetts

June 16, 2003

ANNUAL REPORT    /    APRIL 30, 2003

19

TRUSTEES OF THE FUND (Unaudited)

Name, Age and Contact Address	Position with the Trust	Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Trusteeships or Directorships Held by Trustees outside ARK Funds Complex
Interested Trustee
Rick A Gold1 Born: August 4, 1949 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410, Baltimore, MD 21202	President and Trustee	since 2000	Senior Vice President of M&T Trust the parent company of AIA (since 2003); Executive Vice President of Asset Management Group of Allfirst Financial, Inc. the former parent company to Allfirst Trust and AIA (1999-2003); Chief Executive Officer and Director of AIA and Allfirst Trust (1997-2003).	30	None
Disinterested Trustees
William H. Cowie, Jr. Born: January 24, 1931 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410, Baltimore, MD 21202	Trustee and Chairman	since 1993	Retired.	30	None
David D. Downes Born: July 16, 1935 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410, Baltimore, MD 21202	Trustee	since 1995	Attorney in private practice (since October 1996).	30	None
Sir Victor Garland Born: May 5, 1934 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410, Baltimore, MD 21202	Trustee	since 2000	Private Investor (since 1994).	30	Director and Chairman: Henderson Far East Income Trust plc (Chairman since 1990). Director: The Throgmorton Trust plc. Director: Framington Income and Capital Trust plc. Director and Chairman: Fidelity Asian Values plc (Chairman since 2001). Director and Chairman: Govett Enhanced Income Investment Trust plc. Director: GEIIT plc. Director: Govett Asian Income and Growth Trust Ltd.
Charlotte R. Kerr Born: September 26, 1946 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410, Baltimore, MD 21202	Trustee	since 1993	Practitioner and faculty member of Traditional Acupuncture Institute.	30	None
Richard B. Seidel Born: April 20, 1941 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410, Baltimore, MD 21202	Trustee	since 1998	Director and President (since 1994) of Girard Partners (a registered broker-dealer).	30	None

1 Mr. Gold is deemed to be an “interested person” due to his affiliation with AIA and M&T Trust. See Note 5 of Notes to the Financial Statements.

Additional information concerning the Trustees is contained in the Statement of Additional Information (“SAI”) and is available by contacting the Fund at 1-800-275-3863.

APRIL 30, 2003    /    ANNUAL REPORT

20

OFFICERS OF THE FUND (Unaudited)

Name, Age and Contact Address	Position with the Trust	Length of Time Served	Principal Occupation(s) During Past 5 Years
Officers
Stacey E. Hong Born: May 10, 1966 Two Portland Square, Portland, ME 04101	Treasurer	since 2002	Director of Forum Accounting Services, LLC (since 1998).
Michele L. Dalton Born: February 16, 1959 100 East Pratt Street, 15th Floor, Baltimore, MD 21202	Vice President and Assistant Secretary	since 2000	Vice President of M&T Trust (since 2003); Senior Vice President of Allfirst Financial, Inc. (1994-2003).
Thomas R. Rus Born: October 11, 1959 100 East Pratt Street, 17th Floor, Baltimore, MD 21202	Secretary	since 2000	Vice President of M&T Trust (since 2003); Vice President and Counsel of Allfirst Trust and Allfirst Bank, and Compliance Officer of Allfirst Trust (1995-2003).
D. Blaine Riggle Born: November 12, 1966 Two Portland Square, Portland, ME 04101	Vice President and Assistant Secretary	since 2002	Relationship Manager and Counsel for Forum Financial Group, LLC (associated since 1998).
Cheryl O. Tumlin Born: June 30, 1966 Two Portland Square, Portland, ME 04101	Vice President and Assistant Secretary	since 2002	Counsel for Forum Financial Group, LLC (associated from 1996-1999 and again since 2001); former Counsel at I-many, Inc. (1999-2001); Staff Attorney at the United States Securities and Exchange Commission (1995-1996).
Dawn L. Taylor Born: May 14, 1964 Two Portland Square, Portland, ME 04101	Assistant Treasurer	since 2002	Tax Manager at Forum Financial Group, LLC (since 1997).
Nathan V. Gemmiti Born: August 6, 1970 Two Portland Square, Portland, ME 04101	Assistant Secretary	since 2002	Staff Attorney, Forum Financial Group, LLC (since 2001); Associate, Pierce Atwood (a law firm) (1998-2001).

ANNUAL REPORT    /    APRIL 30, 2003

21

INVESTMENT ADVISOR

Allied Investment Advisors, Inc.

Baltimore, Maryland

TRUSTEES

William H. Cowie, Jr.

David D. Downes

Sir Victor Garland

Rick A. Gold

Charlotte R. Kerr

Richard B. Seidel

ADMINISTRATOR

Allfirst Trust Company, N.A.

Baltimore, Maryland

DISTRIBUTOR

ARK Funds Distributors, LLC

Portland, Maine

LEGAL COUNSEL

Kirkpatrick & Lockhart LLP

Washington, D.C.

INDEPENDENT AUDITORS

KPMG LLP

Boston, Massachusetts

CUSTODIAN

Allfirst Trust Company, N.A.

Baltimore, Maryland

100 EAST PRATT STREET, 15^TH FLOOR  |  MAIL CODE 104-410  |  BALTIMORE, MD 21202

We are pleased to send you our Annual Report for the fiscal year ended April 30, 2003. This report contains important information about your investments in ARK Funds. Because we are sending a report to each person listed as shareholder, you  (or your household) may receive more than one report.

This material must be preceded or accompanied by a current prospectus. ARK-AR-002-0603 recycled content

^{Clear-cut strategies for confident investing.}

April 30, 2003 Annual Report

U.S. Treasury Money Market Portfolio

U.S. Government Money Market Portfolio

Money Market Portfolio

Tax-Free Money Market Portfolio

Pennsylvania Tax-Free Money Market Portfolio

Short-Term Treasury Portfolio

Short-Term Bond Portfolio

Maryland Tax-Free Portfolio

Pennsylvania Tax-Free Portfolio

Intermediate Fixed Income Portfolio

U.S. Government Bond Portfolio

Income Portfolio

Balanced Portfolio

Equity Income Portfolio

Value Equity Portfolio

Equity Index Portfolio

Blue Chip Equity Portfolio

Capital Growth Portfolio

Mid-Cap Equity Portfolio

Small-Cap Equity Portfolio

International Equity Portfolio

Emerging Markets Equity Portfolio

Managed by Allied Investment Advisors, Inc.

[GRAPHIC]

CONTENTS

Letter to Shareholders	1
MONEY MARKET PORTFOLIOS
Management Discussion and Analysis / Schedules of Investments	4
FIXED INCOME PORTFOLIOS
Management Discussion and Analysis / Schedules of Investments	20
EQUITY PORTFOLIOS
Management Discussion and Analysis / Schedules of Investments	52
Statements of Assets and Liabilities	100
Statements of Operations	104
Statements of Changes in Net Assets	108
Financial Highlights	114
Notes to Financial Statements	122
Independent Auditors’ Report	138
Supplementary Information	139
Trustees and Officers of the Fund	140
Glossary	143

This report and the financial statements contained herein are submitted for the general information of the shareholders of the ARK Funds and do not constitute investment advice. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus for each of the portfolios included. Shares of the portfolios are not deposits of any bank, and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investing in the shares involves investment risks including the possible loss of principal amount invested. The views in this report are those of the respective portfolio manager as of April 30, 2003, and may not reflect the managers’ views as of the date this report was first published or anytime thereafter. For information about ARK Funds Portfolios, please call 1-800-ARK-FUND (1-800-275-3863).

LETTER TO SHAREHOLDERS

JUNE 2003

Dear Shareholder,

With this Annual Report, we are pleased to give you updated performance, holdings, and diversification information for the ARK Funds Money Market, Fixed Income, Balanced, and Equity Portfolios as of April 30, 2003, as well as the Portfolios’ Management Discussion and Analysis.

The past six months have been full of activity for ARK Funds. In our Semi Annual report dated October 31, 2002, we told you about the pending acquisition of Allfirst Financial, Inc. by M&T Bank Corporation of Buffalo, New York. That acquisition was completed on April 1, 2003.

Earlier this year, the respective boards of trustees of ARK Funds and the VISION Group of Funds (the proprietary mutual fund company of M&T Bank Corporation) each met and authorized a tax-free reorganization of certain ARK and VISION portfolios, subject to shareholder approval. A Special Meeting of Shareholders of each of the affected portfolios will be scheduled, and a proxy/prospectus containing additional information will be sent to shareholders soon.

Thank you for investing with ARK Funds. We look forward to continuing to help you meet your financial goals.

Sincerely,

William H. Cowie, Jr.

Chairman

ANNUAL REPORT    /    APRIL 30, 2003

1

The ARK Funds Family

The ARK Funds Family offers a comprehensive range of money market, fixed income, and equity portfolios designed to meet both short- and long-term needs. Whether you’re looking to enhance short-term income, gain tax advantages, or achieve long-term growth, ARK Funds offers a variety of mutual fund solutions.

As a rule, investments, such as stocks, with greater perceived risks also have the potential for greater returns than fixed income investments. Keep in mind stocks also have greater price fluctuations (“volatility”) and risks than fixed income investments, which may not make them appropriate for the short-term investor or those whose primary concern is preservation of principal amount invested. If you are investing for the long-term and will not need your investment for several years in the future, then investing in an equity-based mutual fund may be appropriate. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

MONEY MARKET PORTFOLIOS

Money Market  Portfolios

Our money market investment management philosophy is defined by three objectives: to preserve principal, to maintain daily liquidity, and to maximize current income. To achieve these objectives, we actively manage the Money Market Portfolios utilizing our conservative and highly disciplined relative-value approach, which is constantly monitored and reviewed to ensure that our shareholders’ goals are realized.

To preserve principal, we consider only those issuers that pass our stringent credit evaluation process. The goal of the credit evaluation process is to select high-quality issuers that present minimal credit risk. The evaluation process is based on both quantitative and qualitative factors that highlight the issuer’s ability to maintain its credit rating and leading industry position. Issuers are monitored and reviewed by the Allied Investment Advisors Investment Policy Committee, which is comprised of senior personnel from Allied Investment Advisors Inc. (AIA).

To provide daily liquidity, we manage our maturities and engage in overnight repurchase agreements seeking to obtain the highest short-term credit ratings. Each repurchase agreement is collateralized by U.S. Treasury or U.S. government agency collateral.

To maximize current income, we actively manage the Portfolios. We seek to take advantage of short-lived trading opportunities and market inefficiencies by employing a relative-value approach that emphasizes security selection.

Each Portfolio’s strategy starts with an average maturity decision. The decision is determined by a number of factors, such as analysis of our shareholders’ liquidity needs, expected Federal Reserve monetary policy and yield curve, and implied forward interest-rate analysis.

Upon determining a Portfolio’s average maturity, we analyze each market sector to determine which sectors are cheap, thus providing value, and which sectors are expensive. Individual securities are then selected. This in-depth analysis allows us to identify market inefficiencies and trading opportunities.

3

MONEY MARKET PORTFOLIOS

MONEY MARKET PORTFOLIOS

James M. Hannan

PORTFOLIO MANAGER

James M. Hannan is manager of the Money Market Portfolios, and is manager or co-manager of other ARK Funds Portfolios. He is also responsible for several separately managed institutional portfolios. Mr. Hannan has been a Portfolio Manager of Allied Investment Advisors, Inc. (“AIA”) since 1996, a Vice President of Allfirst Bank from 1987 to 2003 and a Vice President of Manufacturers and Traders Trust Company (“M&T Trust”) since 2003. He has more than 15 years of experience in the investment industry.

U.S. Treasury Money Market Portfolio

U.S. Government Money Market Portfolio

Money Market Portfolio

Tax-Free Money Market Portfolio

Pennsylvania Tax-Free Money Market Portfolio

Management Discussion and Analysis

Interest rates fell over the past fiscal year, as economic growth remained elusive. The 2-year Treasury note’s yield declined from a fiscal-year high of 3.37% on May 17, 2002 to 1.49% on April 30, 2003. The Federal Reserve lowered short-term interest rates once during the period in November 2002 to 1.25% from 1.75%.

During the past fiscal year we continued to invest in high-quality, short-term securities that present minimal credit risk. We maintained the average maturity of the Portfolios by selectively purchasing securities maturing in either the latter part of 2003 or early 2004.

Given the tepid economic growth and low inflation environment, we believe the Federal Reserve may either lower interest rates during the summer or maintain the current rate of 1.25% for the foreseeable future. Because of our expectations for economic growth and Federal Reserve policy, we may choose to maintain a barbelled portfolio structure, attempting to maintain principal preservation and daily liquidity, while also seeking to provide a competitive rate of return. As always, we will continue to consistently utilize our conservative and disciplined relative value investment process.

APRIL 30, 2003    /    ANNUAL REPORT

4

MONEY MARKET PORTFOLIOS

Performance as of April 30, 2003

U.S. Treasury Money Market Portfolio

	Inst’l Class Shares	Class A Shares	Inst’l II Class Shares	iMoneyNet, Inc. Treasury Institutional Average†
Seven Day Simple Yield	0.70%	0.45%	0.63%	0.79%

THIRTY DAY YIELD COMPARISON

Money Market Portfolio

	Inst’l Class Shares	Class A Shares	Class B Shares	Inst’l II Class Shares	iMoneyNet, Inc. First Tier Institutional Average†	iMoneyNet, Inc. First Tier Retail Average†
Seven Day Simple Yield	1.01%	0.78%	0.09%	0.94%	0.92%	0.55%

THIRTY DAY YIELD COMPARISON

Past performance is not predictive of future performance.

†The performance of the iMoneyNet, Inc. averages does not include operating expenses that are incurred by each Portfolio.

U.S. Government Money Market Portfolio

	Inst’l Class Shares	Class A Shares	Inst’l II Class Shares	iMoneyNet, Inc. Gov’t. Institutional Average†	iMoneyNet, Inc. Gov’t & Agencies Retail Average†
Seven Day Simple Yield	0.89%	0.66%	0.82%	0.83%	0.56%

THIRTY DAY YIELD COMPARISON

ANNUAL REPORT    /    APRIL 30, 2003

5

MONEY MARKET PORTFOLIOS

Performance as of April 30, 2003

Tax-Free Money Market Portfolio

	Inst’l Class Shares	Class A Shares	Inst’l II Class Shares	iMoneyNet, Inc. Tax-Free National Institutional Average†	iMoneyNet, Inc. Tax-Free National Retail Average†
Seven Day Simple Yield	0.98%	0.75%	0.91%	0.94%	0.67%

THIRTY DAY YIELD COMPARISON

Past performance is not predictive of future performance.

†The performance of the iMoneyNet, Inc. averages does not include operating expenses that are incurred by each Portfolio.

Pennsylvania Tax-Free Money Market Portfolio

	Inst’l Class Shares	Inst’I II Class Shares	iMoneyNet, Inc. Tax-Free State-Specific Institutional Average†	iMoneyNet, Inc. Tax-Free State-Specific Average†
Seven Day Simple Yield	0.80%	0.80%	0.90%	0.75%

THIRTY DAY YIELD COMPARISON

APRIL 30, 2003    /    ANNUAL REPORT

6

U.S. TREASURY MONEY MARKET PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Treasury Obligations — 100.1%
U.S. Treasury Bills ^
1.400%, 05/01/03	$	9,383	$	9,383
1.290%, 05/29/03		5,794		5,788
1.229%, 06/26/03		29,281		29,225
1.201%, 05/15/03		15,202		15,195
1.200%, 07/03/03		34,506		34,434
1.182%, 06/19/03		48,210		48,133
1.180%, 07/31/03		10,438		10,407
1.180%, 08/21/03		7,854		7,825
1.178%, 07/17/03		24,561		24,499
1.173%, 07/10/03		26,105		26,046
1.170%, 05/22/03		11,945		11,937
1.166%, 09/18/03		47,967		47,751
1.162%, 08/07/03		35,220		35,109
1.123%, 07/24/03		79,142		78,936
1.121%, 06/12/03		49,974		49,909
1.112%, 06/05/03		34,421		34,384
U.S. Treasury Note
3.000%, 01/31/04		10,000		10,137
TOTAL U.S. TREASURY OBLIGATIONS (COST $479,098)			$	479,098
TOTAL INVESTMENTS — 100.1% (COST $479,098)			$	479,098
OTHER ASSETS & LIABILITIES, NET — (0.01)%			$	(392	)
TOTAL NET ASSETS — 100.0%			$	478,706

^ The effective yield at time of purchase is shown as the rate on the Schedule of Investments.

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

7

U.S. GOVERNMENT MONEY MARKET PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Government Agency Obligations — 51.9%
FFCB ^
1.616%, 05/15/03	$	11,400	$	11,393
1.576%, 05/28/03		25,000		24,971
FHLB
6.875%, 08/15/03		49,000		49,754
6.375%, 11/14/03		12,950		13,295
5.250%, 02/13/04		15,000		15,456
5.125%, 09/15/03		42,000		42,588
4.500%, 07/07/03		6,000		6,035
3.750%, 02/13/04		5,000		5,093
2.060%, 07/02/03		15,000		15,000
1.500%, 03/08/04		6,000		6,000
1.450%, 02/27/04		15,000		15,000
1.450%, 05/14/04		10,000		10,000
1.400%, 03/29/04		18,000		18,000
1.300%, 04/07/04		15,000		15,000
FHLB ^
1.250%, 05/01/03		100,000		100,000
FHLB ‡
1.210%, 09/27/04		10,000		9,996
1.190%, 05/27/04		25,000		24,989
1.089%, 06/17/03		15,000		15,000
FHLMC
7.375%, 05/15/03		30,000		30,062
6.375%, 11/15/03		5,100		5,240
5.000%, 01/15/04		28,350		29,083
FHLMC ^
1.760%, 07/17/03		39,899		39,751
FNMA
5.125%, 02/13/04		15,000		15,458
4.750%, 11/14/03		7,000		7,119
4.000%, 08/15/03		85,000		85,666

Description	Principal Amount (000)		Market Value (000)
FNMA ^
1.250%, 05/01/03	$	200,000	$	200,000
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $809,949)			$	809,949
Repurchase Agreements — 48.0%
Credit Suisse First Boston 1.270%, dated 04/30/03, matures 05/01/03, repurchase price $55,001,940 (102% collateralized by various U.S. Treasury Obligations)		55,000		55,000
Deutsche Bank 1.280%, dated 04/30/03, matures 05/01/03, repurchase price $275,009,778 (102% collateralized by various U.S. Treasury Obligations)		275,000		275,000
Goldman Sachs 1.250%, dated 04/30/03, matures 05/01/03, repurchase price $235,008,160 (102% collateralized by various U.S. Treasury Obligations)		235,000		235,000
Goldman Sachs 1.100%, dated 04/30/03, matures 05/01/03, repurchase price $9,309,329 (102% collateralized by various U.S. Treasury Obligations)		9,309		9,309
Salomon Brothers 1.250%, dated 04/30/03, matures 05/01/03, repurchase price $175,006,076 (102% collateralized by various U.S. Treasury Obligations)		175,000		175,000
TOTAL REPURCHASE AGREEMENTS (COST $749,309)			$	749,309
TOTAL INVESTMENTS — 99.9% (COST $1,559,258)			$	1,559,258
OTHER ASSETS & LIABILITIES, NET — 0.1%			$	2,833
TOTAL NET ASSETS — 100.0%			$	1,562,091

^ The effective yield at time of purchase is shown as the rate on the Schedule of Investments.

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

FFCB — Federal Farm Credit Bureau

FHLB — Federal Home Loan Bank

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

8

MONEY MARKET PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
Corporate Obligations — 41.9%
Banks — 11.6%
Bank One
8.740%, 09/15/03	$	5,500	$	5,635
6.875%, 06/15/03		3,000		3,018
Bank of America
6.500%, 08/15/03		20,000		20,262
Bank of America ‡
1.584%, 03/12/04		25,000		25,074
Bank of New York
6.625%, 06/15/03		11,588		11,653
Bank of Nova Scotia
6.875%, 05/01/03		2,000		2,000
Canadian Imperial Bank NY ‡
1.420%, 04/12/04		24,000		24,016
Deutsche Bank NY
1.685%, 03/10/04		23,000		23,000
First Fidelity
6.800%, 06/15/03		6,000		6,033
Fleet Boston Financial
6.625%, 02/01/04		5,110		5,308
U.S. Bank N.A. ‡
1.243%, 05/29/03		6,500		6,500
Wells Fargo
9.125%, 02/01/04		5,000		5,290
7.200%, 05/01/03		5,000		5,000
TOTAL BANKS			$	142,789
Financials — 11.0%
Associates N.A
5.750%, 11/01/03		37,800		38,586
Beta Finance, MTN +
2.700%, 05/22/03		22,000		22,000
1.850%, 09/15/03		25,000		25,000

Description	Principal Amount (000)		Market Value (000)
Capital One Funding, Ser 1995-C ‡
1.350%, 10/01/15	$	1,000	$	1,000
Capital One Funding, Ser 1996-H ‡
1.350%, 10/01/21		1,000		1,000
CIT Group ‡
2.027%, 04/08/04		5,000		5,009
General Electric Capital
6.750%, 09/11/03		2,194		2,235
General Electric Capital ‡
1.390%, 07/28/03		10,000		10,001
1.320%, 05/28/03		16,000		16,000
Household Finance, MTN
3.000%, 05/30/03		4,650		4,650
Mellon Financial
5.750%, 11/15/03		9,990		10,231
TOTAL FINANCIALS			$	135,712
Financials
(Miscellaneous Business Services) — 1.3%
Bob Sumerel Tire, Ser 1999 ‡
1.360%, 04/01/19		4,725		4,725
Elsinore Properties, Ser 1999 ‡
1.360%, 01/01/29		9,600		9,600
Trap Rock Industry, Ser 1997 ‡
1.370%, 10/01/12		1,000		1,000
TOTAL FINANCIALS (MISCELLANEOUS BUSINESS SERVICES)			$	15,325
Security Brokers & Dealers — 16.0%
Bear Stearns
6.625%, 01/15/04		2,000		2,071
6.150%, 03/02/04		21,502		22,326
Bear Stearns ‡
1.665%, 05/16/03		500		500
Goldman Sachs Group ‡
1.590%, 04/26/04		39,000		39,089
Goldman Sachs Group ‡ +
1.539%, 05/12/04		10,000		10,000
Lehman Brothers Holdings
7.360%, 12/15/03		7,000		7,239
7.250%, 10/15/03		9,023		9,261
6.625%, 04/01/04		1,065		1,115
Lehman Brothers Holdings, Ser F, MTN
7.000%, 05/15/03		14,130		14,154
Merrill Lynch ‡
1.480%, 12/02/03		9,000		9,008
1.440%, 10/01/03		18,000		18,004
1.358%, 05/11/04		9,000		9,000

ANNUAL REPORT    /    APRIL 30, 2003

9

MONEY MARKET PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Merrill Lynch, Ser B, MTN
7.850%, 05/30/03	$	7,700	$	7,737
Morgan Stanley
5.625%, 01/20/04		2,000		2,061
Morgan Stanley ‡
1.810%, 03/09/04		22,000		22,086
1.579%, 08/18/03		24,000		24,016
TOTAL SECURITY BROKERS & DEALERS			$	197,667
Telecommunications — 2.0%
Verizon Global
1.319%, 10/15/03		25,000		24,999
TOTAL TELECOMMUNICATIONS			$	24,999
TOTAL CORPORATE OBLIGATIONS (COST $516,492)			$	516,492
Asset-Backed Commercial Paper — 28.7%
Atlantis One Funding ^
1.274%, 05/08/03		50,000		49,988
Bavaria ^
1.291%, 05/23/03		25,000		24,980
1.291%, 05/27/03		25,000		24,977
CXC ^
1.253%, 06/23/03		40,000		39,926
Citibank Credit Card Issuance ^
1.253%, 05/09/03		50,000		49,986
Corporate Asset Funding ^
1.253%, 06/24/03		14,374		14,347
Corporate Asset Receivables ^
1.254%, 07/11/03		50,000		49,877
Edison Asset Securitization ^
1.254%, 07/16/03		25,000		24,934
1.253%, 06/10/03		25,000		24,965
Falcon Asset Securitization ^
1.271%, 06/02/03		50,000		49,944
TOTAL ASSET-BACKED COMMERCIAL PAPER (COST $353,924)			$	353,924
Commercial Paper — 7.8%
Financials — 7.4%
CIT Group ^
1.345%, 05/12/03		20,000		19,992
General Electric Capital
1.268%, 11/07/03		21,000		21,000
UBS Finance Delaware ^
1.360%, 05/01/03		50,000		50,000
TOTAL FINANCIALS			$	90,992

Description	Principal Amount (000)		Market Value (000)
Financials
(Miscellaneous Business Services) — 0.4%
Reynolds Road Fitness, Ser 1998 ‡
1.360%, 01/01/19	$	5,455	$	5,455
TOTAL FINANCIALS (MISCELLANEOUS BUSINESS SERVICES)			$	5,455
TOTAL COMMERCIAL PAPER (COST $96,447)			$	96,447
Municipal Bonds & Notes — 6.5%
California — 0.6%
Riverside County COP, Bankruptcy Courthouse Project, Commerzbank AG LOC §
1.600%, 11/01/27		7,500		7,500
TOTAL CALIFORNIA			$	7,500
Illinois — 0.7%
Illinois State, Health Facilities Authority RB, Loyola University Health Facilities Project, Ser C, MBIA §
1.300%, 07/01/24		8,500		8,500
TOTAL ILLINOIS			$	8,500
Maryland — 0.4%
Maryland State, Health & Higher Education Facilities RB, Charlestown, Ser B, First Union National Bank LOC §
1.350%, 01/01/28		4,700		4,700
TOTAL MARYLAND			$	4,700
New Jersey — 0.3%
New Jersey Economic Development Authority RB, The Morey Organization Project, First Union National Bank LOC §
1.400%, 10/01/15		3,600		3,600
TOTAL NEW JERSEY			$	3,600
New York — 2.5%
New York City, FGIC
1.290%, 06/04/03		31,000		31,000
TOTAL NEW YORK			$	31,000
North Carolina — 0.5%
Durham COP, Ser B §
1.340%, 07/01/03		1,500		1,500
Winston-Salem
1.380%, 05/09/03		5,000		5,000
TOTAL NORTH CAROLINA			$	6,500

APRIL 30, 2003    /    ANNUAL REPORT

10

MONEY MARKET PORTFOLIO (concluded)

Description	Principal Amount (000)		Market Value (000)
Texas — 1.5%
Texas State GO, Veterans Housing Assistance Program, Ser A-2 §
1.320%, 12/01/29	$	10,000	$	10,000
Texas State GO, Veterans Land Refunding Program, Ser B §
1.320%, 12/01/09		8,920		8,920
TOTAL TEXAS			$	18,920
TOTAL MUNICIPAL BONDS & NOTES (COST $80,720)			$	80,720
Asset-Backed Securities — 2.0%
Ford Credit Auto Owner Trust, Ser 2003-A, Cl A1
1.363%, 10/15/03		14,543		14,543
Honda Auto Receivables Owner Trust, Ser 2002-3, Cl A1
1.823%, 08/18/03		2		2
Whole Auto Loan Trust, Ser 2002-1, Cl A1
1.420%, 12/15/03		10,132		10,132
TOTAL ASSET-BACKED SECURITIES (COST $24,677)			$	24,677
Certificates of Deposit — 0.5%
Financials — 0.5%
Abbey National N.A.
2.105%, 07/01/03		2,000		2,003
Societe Generale NY
9.875%, 07/15/03		4,100		4,172
TOTAL FINANCIALS			$	6,175
TOTAL CERTIFICATES OF DEPOSIT (COST $6,175)			$	6,175
Repurchase Agreements — 12.7%
Deutsche Bank, 1.280%, dated 04/30/03, matures 05/01/03, repurchase price $100,003,556 (102% collateralized by various U.S. Treasury Obligations)		100,000		100,000
Goldman Sachs, 1.250%, dated 04/30/03, matures 05/01/03, repurchase price $35,001,215 (102% collateralized by various U.S. Treasury Obligations)		35,000		35,000
Goldman Sachs, 1.100%, dated 04/30/03, matures 05/01/03, repurchase price $20,941,494 (102% collateralized by various U.S. Treasury Obligations)		20,941		20,941
TOTAL REPURCHASE AGREEMENTS (COST $155,941)			$	155,941

Description	Principal Amount (000)	Market Value (000)
TOTAL INVESTMENTS — 100.1% (COST $1,234,376)		$	1,234,376
OTHER ASSETS & LIABILITIES, NET — (0.1)%		$	(853	)
TOTAL NET ASSETS — 100.0%		$	1,233,523

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

§ These variable rate securities are subject to a put and demand feature. The date shown is the stated maturity.

^ The effective yield at time of purchase is shown as the rate on the Schedule of Investments.

+ Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

Cl — Class

COP — Certificate of Participation

GO — General Obligation

LOC — Securities are held in connection with a letter of credit support for securities, as indicated.

MTN — Medium Term Note

RB — Revenue Bond

Ser — Series

These organizations have provided underlying credit support for securities listed above, as indicated.

FGIC — Financial Guaranty Insurance Corporation

MBIA — Municipal Bond Insurance Association

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

11

TAX-FREE MONEY MARKET PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
Municipal Bonds & Notes — 96.4%
Alabama — 0.5%
Mobile, Industrial Development Board RB, Dock & Wharf, Holnam Project, Ser B, Wachovia Bank N.A. LOC §
1.350%, 06/01/32	$	900	$	900
TOTAL ALABAMA			$	900
Alaska — 1.0%
Valdez, Marine Terminal RB, BP Amoco Pipelines Project §
1.350%, 07/01/37		1,850		1,850
TOTAL ALASKA			$	1,850
California — 5.1%
Berkeley County, Pollution Control RB, BP Amoco Chemical Project §
1.350%, 07/01/12		320		320
California State, RAN
2.500%, 06/20/03		5,300		5,307
Oakland, JT Powers Financing Authority, Ser A-1, FSA §
1.600%, 08/01/21		3,900		3,900
TOTAL CALIFORNIA			$	9,527
Colorado — 3.1%
Colorado State, Postsecondary Educational Facilities Authority RB, Pro Rodeo Hall of Fame Project, Bank One Colorado N.A. LOC §
1.500%, 10/01/10		645		645
Jefferson County, School District R-001, GO, TRAN
2.500%, 06/30/03		5,200		5,209
TOTAL COLORADO			$	5,854
District of Columbia — 0.8%
District of Columbia, General Fund Recovery Project GO, Ser B-3, Morgan Guaranty Trust LOC §
1.350%, 06/01/03		1,500		1,500
TOTAL DISTRICT OF COLUMBIA			$	1,500

Description	Principal Amount (000)		Market Value (000)
Florida—3.6%
Florida State, Housing Finance Agency RB, Ser AA, Remarketed 07/31/95, FNMA §
1.330%, 06/15/25	$	2,800	$	2,800
Lee County, Housing Finance Authority RB, Forestwood Apartments Project, Ser A, FNMA §
1.330%, 06/15/25		1,900		1,900
Pinellas County, Housing Finance Authority RB, Foxbridge Apartments Project, Ser A, FNMA §
1.330%, 06/15/25		2,000		2,000
TOTAL FLORIDA			$	6,700
Georgia — 0.9%
De Kalb County, Housing Authority RB, Winters Creek Apartments Project, FNMA §
1.350%, 06/15/25		1,600		1,600
TOTAL GEORGIA			$	1,600
Illinois — 2.2%
Illinois State, Development Finance Authority RB, Pollution Control, Amoco Oil Project §
1.350%, 11/01/12		600		600
Illinois State, Health Facilities Authority RB, St. Luke’s Medical Center Project, Ser B, MBIA §
1.350%, 11/15/23		3,500		3,500
TOTAL ILLINOIS			$	4,100
Indiana — 3.1%
Columbus, Industrial RB, Quinco Consulting Center Project, Fifth Third Bank LOC §
1.390%, 12/01/21		2,500		2,500
Elkhart County, Industrial RB, Hubbard Hill Estates Project, Fifth Third Bank LOC §
1.390%, 11/01/21		1,200		1,200
Indiana State, Educational Facilities Authority RB, University of Notre Dame Du Lac Project §
1.280%, 03/01/25		2,000		2,000
TOTAL INDIANA			$	5,700
Iowa — 1.2%
Iowa State, Higher Educational Facilities Authority RB, Ambrose Project, Wells Fargo Bank N.A. LOC §
1.350%, 10/01/09		400		400
Iowa State, School Cash Anticipation Program, Ser B, FSA
2.250%, 01/30/04		1,800		1,816
TOTAL IOWA			$	2,216

APRIL 30, 2003    /    ANNUAL REPORT

12

TAX-FREE MONEY MARKET PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Kentucky — 1.0%
Kenton County, Industrial Building RB, Baptist Convalescent Center Project, Fifth Third Bank LOC §
1.400%, 07/01/18	$	1,875	$	1,875
TOTAL KENTUCKY			$	1,875
Louisiana — 1.6%
Lake Charles, Harbor & Revenue District RB, Conoco Project, Ser A, Bank One N.A. LOC §
1.350%, 09/01/29		3,000		3,000
TOTAL LOUISIANA			$	3,000
Maryland — 18.8%
Baltimore County, Consolidated Public Improvements Project, GO
3.000%, 09/01/03		2,700		2,715
Gaithersburg, Economic Development RB, Asbury Methodist Project, Ser A, MBIA §
1.350%, 07/01/27		5,250		5,250
Howard County, Housing RB, Avalon Meadows Project, FNMA §
1.300%, 06/15/26		2,000		2,000
Maryland State, Health & Higher Education Facilities Authority RB, Charlestown Community Project, Ser A, First Union National Bank LOC §
1.350%, 01/01/28		6,445		6,445
Maryland State, Health & Higher Education Facilities Authority RB, Pooled Loan Program, Ser A, Bank One LOC §
1.320%, 04/01/35		5,600		5,600
Maryland State, Health & Higher Education Facilities Authority RB, Pooled Loan Program, Ser B, Bank One LOC §
1.300%, 04/01/35		700		700
Maryland State, Health & Higher Education Facilities Authority RB, Pooled Loan Program, Ser D, Bank of America N.A. LOC §
1.350%, 01/01/29		5,233		5,233
Maryland State, University of Maryland Authority RB, Equipment Loan Program, Ser A §
1.300%, 07/01/15		500		500
Maryland State, University of Maryland Authority RB, Revolving Equipment Loan Program, Ser B §
1.300%, 07/01/15		400		400

Description	Principal Amount (000)		Market Value (000)
Montgomery County, Housing Opportunities RB, Barclay Apartments Project, Issue I, MBIA §
1.250%, 07/01/29	$	2,800	$	2,800
Washington County, Economic Development Authority RB, St. James School Project, PNC Bank N.A. LOC §
2.000%, 11/01/29		1,500		1,500
Westminster, Educational Facilities RB, Western Maryland College Project, Wachovia Bank N.A. LOC §
1.350%, 04/01/30		1,700		1,700
TOTAL MARYLAND			$	34,843
Massachusetts — 1.4%
Massachusetts State, Health & Higher Educational Facilities RB, Capital Asset Program, Ser B, MBIA §
1.300%, 07/01/10		700		700
Massachusetts State, Water Resources Authority RB, Ser A, AMBAC §
1.280%, 08/01/28		1,965		1,965
TOTAL MASSACHUSETTS			$	2,665
Michigan — 1.1%
Detroit, Water Supply Systems RB, FGIC §
1.350%, 07/01/13		2,100		2,100
TOTAL MICHIGAN			$	2,100
Mississippi — 1.7%
Jackson County, Port Facility Authority RB, Chevron USA Project §
1.350%, 06/01/23		3,100		3,100
TOTAL MISSISSIPPI			$	3,100
Missouri — 0.4%
Missouri State, Health & Educational Facilities Authority RB, Washington University Project, Ser A §
1.300%, 09/01/30		700		700
TOTAL MISSOURI			$	700
Montana — 0.5%
Montana State, Health Facilities Authority RB, Healthcare Pooled Loan Program, Ser A, FGIC §
1.350%, 12/01/15		1,000		1,000
TOTAL MONTANA			$	1,000

ANNUAL REPORT    /    APRIL 30, 2003

13

TAX-FREE MONEY MARKET PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Nevada — 0.4%
Clark County, Airport Improvement Authority RB, Ser A, MBIA, Bayerische Vereinsbank LOC §
1.300%, 07/01/12	$	800	$	800
TOTAL NEVADA			$	800
New Hampshire — 0.8%
New Hampshire State, Housing Finance Authority RB, Equity Residential Property—Bond Partnership—Manchester Project, FNMA §
1.350%, 09/15/26		1,500		1,500
TOTAL NEW HAMPSHIRE			$	1,500
New Jersey — 1.0%
New Jersey State, Municipal Securities Trust Receipts RB, Ser CB1 §
1.400%, 02/15/11		1,800		1,800
TOTAL NEW JERSEY			$	1,800
New York — 0.7%
New York, GO, Sub-Ser A-8, Morgan Guaranty Trust LOC §
1.400%, 08/01/18		1,300		1,300
TOTAL NEW YORK			$	1,300
North Carolina — 3.5%
Charlotte, Airport Development Authority RB, Ser A, MBIA §
1.600%, 07/01/16		1,540		1,540
Durham, Water & Sewer Utilities System RB §
1.400%, 12/01/15		2,000		2,000
Greensboro, Public Improvements Project, GO, Ser B §
1.300%, 04/01/14		1,000		1,000
North Carolina State, Educational Facilities Financing Authority RB, Elon College Project, Bank of America N.A. LOC §
1.350%, 01/01/21		1,900		1,900
TOTAL NORTH CAROLINA			$	6,440
Ohio — 1.4%
Allen County, GO, AMBAC
1.500%, 12/01/03		525		525
Butler County, Healthcare Facilities Authority RB, UC Physicians Project, Fifth Third Bank N.A. LOC §
1.390%, 09/01/22		2,000		2,000
TOTAL OHIO			$	2,525

Description	Principal Amount (000)		Market Value (000)
Pennsylvania — 24.7%
Allegheny County, Hospital Development Authority RB, Health Center—South Hills Project, Ser A, PNC Bank N.A. LOC §
1.950%, 06/01/30	$	1,150	$	1,150
Allentown, Commercial & Industrial Development Authority RB, Diocese of Allentown Project, First Union National Bank LOC §
1.350%, 12/01/29		2,430		2,430
Bucks County, Industrial Development Authority RB, Christian Life Center Project, First Union National Bank LOC §
1.450%, 09/01/19		600		600
Chester County, Health & Educational Facilities Authority RB, Barclay Friends Project, Ser A, First Union National Bank LOC §
1.350%, 08/01/25		945		945
Chester County, Industrial Development Authority RB, Archdiocese of Philadelphia Project, Wachovia Bank N.A. LOC §
1.350%, 07/01/31		600		600
Chester County, Industrial Development Authority RB, The Woods Project, PNC Bank N.A. LOC §
1.400%, 03/31/15		140		140
Dallastown, Area School District Authority, GO, FGIC §
1.420%, 02/01/18		350		350
Delaware County, Industrial Development Authority RB, Resource Recovery Facility Project, Ser G §
1.280%, 12/01/31		2,055		2,055
1.280%, 12/01/31		2,860		2,860
Delaware Valley, Regional Finance Authority RB, Mode 1, Toronto-Dominion Bank LOC §
1.350%, 08/01/16		5,700		5,700
Emmaus, General Authority RB, Loan Program, Ser A, FSA §
1.400%, 03/01/30		2,600		2,600
Emmaus, General Authority RB, Remarketed 03/03/97 §
1.400%, 03/01/24		2,800		2,800
Emmaus, General Authority RB, Ser E, Remarketed 07/01/97 §
1.400%, 03/01/24		3,000		3,000
Erie County, Higher Education Building Authority RB, Gannon University Project, Ser F, PNC Bank N.A. LOC §
1.400%, 07/01/13		1,000		1,000

APRIL 30, 2003    /    ANNUAL REPORT

14

TAX-FREE MONEY MARKET PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Erie County, Hospital Authority RB, Hamot Health Foundation Project, AMBAC §
1.350%, 05/15/20	$	650	$	650
Huntingdon County, General Authority RB, Juniata College Project, Ser A, PNC Bank N.A. LOC §
2.050%, 05/01/26		850		850
Lancaster County, Hospital Authority RB, Health Center — Masonic Homes Project, AMBAC §
1.350%, 07/01/34		1,585		1,585
Lehigh County, Industrial Development Authority RB, Allegheny Electric Cooperative Project, Ser A, Rabobank Nederland LOC §
1.300%, 12/01/15		1,500		1,500
Lehigh County, Industrial Development Authority RB, Allentown Airport Project, First Union National Bank LOC §
1.450%, 12/01/05		900		900
Luzerne County, Convention Center Authority RB, Ser A, Wachovia Bank N.A. LOC §
1.350%, 09/01/28		1,550		1,550
Montgomery County, Redevelopment Authority RB, Forge Gate Apartments Project, Ser A §
1.300%, 08/15/31		600		600
Pennsylvania State, Economic Development Financing Authority RB, Glade Run Lutheran Services Project, Ser E1, PNC Bank N.A. LOC §
1.400%, 09/01/15		475		475
Pennsylvania State, GO, 1st Ser, MBIA
5.000%, 06/01/03		740		742
Pennsylvania State University, Higher Educational Facilities Authority RB, Ser A §
1.330%, 04/01/31		450		450
1.330%, 03/01/32		1,400		1,400
Pennsylvania State, Intergovernmental Special Tax Authority, GO, City of Philadelphia Funding Program, MBIA, Prerefunded 06/15/03 @ 100
5.600%, 06/15/15		1,000		1,005
Pennsylvania Turnpike RB, Ser Q §
1.350%, 06/01/28		1,750		1,750
Philadelphia, Water & Wastewater Authority RB, Ser B, AMBAC §
1.300%, 08/01/27		3,000		3,000

Description	Principal Amount (000)		Market Value (000)
Schuylkill County, GO, AMBAC §
1.440%, 09/01/15	$	400	$	400
University of Pittsburgh, University Capital Project RB, Ser A §
1.350%, 09/15/04		400		400
1.350%, 09/15/29		500		500
University of Pittsburgh, University Capital Project RB, Ser B §
1.350%, 09/15/29		1,500		1,500
York, General Authority Pooled Finance RB, Sub-Ser A, Remarketed 05/07/98, AMBAC §
1.350%, 09/01/26		375		375
TOTAL PENNSYLVANIA			$	45,862
Texas — 10.5%
City of Midlothian, Industrial Development Authority RB, Box-Crow Cement Project, UBS AG Bank LOC §
1.370%, 12/01/09		1,900		1,900
Georgetown, Higher Education Financing RB, Southwestern University Project, Chase Manhattan Bank LOC §
1.350%, 10/01/14		3,000		3,000
Gulf Coast, Waste Disposal Authority Texas Pollution Control RB, Exxon Project §
1.300%, 06/01/20		600		600
Splendora, Higher Education Financing Authority RB, Fort Bend Baptist Project, Ser A, Wells Fargo Bank N.A. LOC §
1.350%, 12/01/26		3,600		3,600
Texas State, GO, TRAN
2.750%, 08/29/03		5,300		5,323
Texas State, Gas Utility RB, FSA §
1.350%, 01/15/23		3,500		3,500
Texas State, Higher Education Authority RB, Ser B, FGIC §
1.350%, 12/01/25		1,580		1,580
TOTAL TEXAS			$	19,503
Utah — 1.0%
Emery County, Pollution Control RB, Pacificorp Project, AMBAC §
1.350%, 11/01/24		40		40
Emery County, Pollution Control RB, Pacificorp Project, Bank One N.A. LOC §
1.400%, 07/01/15		1,800		1,800
TOTAL UTAH			$	1,840

ANNUAL REPORT    /    APRIL 30, 2003

15

TAX-FREE MONEY MARKET PORTFOLIO (concluded)

Description	Principal Amount (000)		Market Value (000)
Vermont — 3.0%
Vermont State, Educational & Health Buildings Financing Authority RB, Capital Asset Financing Program, Ser 1, Chittenden Trust / First Union National Bank LOC §
1.450%, 06/01/22	$	1,500	$	1,500
Vermont State, Educational & Health Buildings Financing Authority RB, VHA New England Project, Ser C, AMBAC §
1.400%, 12/01/25		1,000		1,000
Vermont State, Educational & Health Buildings Financing Authority RB, VHA New England Project, Ser E, AMBAC §
1.400%, 12/01/25		3,100		3,100
TOTAL VERMONT			$	5,600
Wyoming — 1.4%
Lincoln County, Pollution Control Authority RB, Exxon Project §
1.300%, 08/01/15		730		730
Sublette County, Pollution Control RB, Exxon Project §
1.300%, 11/01/14		1,850		1,850
TOTAL WYOMING			$	2,580
TOTAL MUNICIPAL BONDS & NOTES (COST $178,980)			$	178,980
Commercial Paper — 3.4%
District of Columbia, National Academy of Science Project
1.050%, 05/27/03		1,000		1,000
Howard County Maryland
1.100%, 06/02/03		5,300		5,300
TOTAL COMMERCIAL PAPER (COST $6,300)			$	6,300
TOTAL INVESTMENTS — 99.8% (COST $185,280)			$	185,280
OTHER ASSETS & LIABILITIES, NET — 0.2%			$	373
TOTAL NET ASSETS — 100.0%			$	185,653

§ These variable rate securities are subject to a put and demand feature. The date shown is the stated maturity.

GO — General Obligation

LOC — Securities are held in connection with a letter of credit support for securities as listed above, as indicated.

RAN — Revenue Anticipation Note

RB — Revenue Bond

Ser — Series

TRAN — Tax & Revenue Anticipation Note

These organizations have provided underlying credit support for securities, as indicated.

AMBAC — American Municipal Bond Assurance Corporation

FGIC — Financial Guaranty Insurance Corporation

FNMA — Federal National Mortgage Association

FSA — Financial Security Assistance

MBIA — Municipal Bond Insurance Association

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

16

PENNSYLVANIA TAX-FREE MONEY MARKET PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
Municipal Bonds & Notes — 99.7%
Pennsylvania — 99.7%
Beaver County, Industrial Development Authority RB, Atlantic Richfield Project §
1.350%, 12/01/20	$	700	$	700
Berks County, GO, MBIA §
1.320%, 11/01/23		500		500
Bucks County, Industrial Development Authority RB, SHV Real Estate Project, ABN Amro Bank N.V. LOC §
1.300%, 07/01/15		800		800
Chester County, Health & Educational Facilities Authority RB, Barclay Friends Project, Ser A, First Union National Bank LOC §
1.350%, 08/01/25		315		315
Chester County, Industrial Development Authority RB, Archdiocese of Philadelphia Project, Wachovia Bank N.A. LOC §
1.350%, 07/01/31		600		600
Chester County, Industrial Development Authority RB, The Woods Project, PNC Bank N.A. LOC §
1.400%, 03/31/15		180		180
Dallastown, Area School District Authority, GO, FGIC §
1.420%, 02/01/18		150		150
Delaware County, Industrial Development Authority RB, Resource Recovery Facility Project, Ser G §
1.280%, 12/01/31		700		700
1.280%, 12/01/31		130		130
Delaware County, Industrial Development Authority RB, Scott Paper Project, Ser D §
1.350%, 12/01/18		800		800
Delaware Valley, Regional Finance Authority RB, Ser A, Toronto-Dominion Bank N.A. LOC §
1.350%, 12/01/20		500		500
East Hempfield Township, Industrial Development Authority RB, Menonite Home Project, Northern Trust Company LOC §
1.420%, 06/01/25		785		785

Description	Principal Amount (000)		Market Value (000)
Emmaus, General Authority RB, Ser E, Remarketed 07/01/97 §
1.400%, 03/01/24	$	400	$	400
Emmaus, General Authority RB, Ser G, Remarketed 12/01/97 §
1.400%, 03/01/24		200		200
Erie County, Higher Education Building Authority RB, Gannon University Project, Ser F, PNC Bank N.A. LOC §
1.400%, 07/01/13		700		700
Huntingdon County, General Authority RB, Juniata College Project, Ser A, PNC Bank N.A. LOC §
2.050%, 05/01/26		500		500
Lancaster County, Hospital Authority RB, Health Center — Masonic Homes Project, AMBAC §
1.350%, 07/01/34		200		200
Lancaster, Higher Education Authority RB, Franklin & Marshall College Project §
1.450%, 04/15/27		395		395
Lehigh County, Industrial Development Authority RB, Allegheny Electric Cooperative Project, Ser A, Rabobank Nederland LOC §
1.300%, 12/01/15		500		500
Lehigh County, Industrial Development Authority RB, Allentown Airport Project, First Union National Bank LOC §
1.450%, 12/01/05		600		600
Montgomery County, Redevelopment Authority RB, Forge Gate Apartments Project, Ser A §
1.300%, 08/15/31		800		800
Moon, Industrial Development Authority RB, Executive Office Association Project, PNC Bank N.A. LOC §
1.400%, 11/01/10		300		300
Pennsylvania State, GO, 1st Ser, MBIA
5.000%, 06/01/03		500		502
Pennsylvania State, GO, AMBAC
5.125%, 09/15/03		500		507
Pennsylvania State, Intergovernmental Special Tax Authority, GO, City of Philadelphia Funding Program, MBIA, Prerefunded 06/15/03 @ 100
5.600%, 06/15/15		400		402
Pennsylvania Turnpike RB, Ser Q §
1.350%, 06/01/28		150		150
Philadelphia, Gas Works RB, Ser 104, FSA §
1.390%, 07/01/28		760		760

ANNUAL REPORT    /    APRIL 30, 2003

17

PENNSYLVANIA TAX-FREE MONEY MARKET PORTFOLIO (concluded)

Description	Principal Amount (000)		Market Value (000)
Philadelphia, Industrial Development Authority RB, Newcourtland Elder Services Project, PNC Bank N.A. LOC §
1.350%, 03/01/27	$	300	$	300
Philadelphia, Water & Wastewater Authority RB, Ser B, AMBAC §
1.300%, 08/01/27		1,000		1,000
Pittsburgh, GO, AMBAC
4.750%, 09/01/03		500		505
Schuylkill County, GO, AMBAC §
1.440%, 09/01/15		100		100
University of Pittsburgh, University Capital Project RB, Ser A §
1.350%, 09/15/29		100		100
University of Pittsburgh, University Capital Project RB, Ser B §
1.350%, 09/15/29		400		400
York, General Authority Pooled Finance RB, Harrisburg Parking Project, Sub-Ser 96-C, FSA §
1.350%, 09/01/26		545		545
York, General Authority Pooled Finance RB, Sub-Ser 96B, Remarketed 04/29/99, AMBAC §
1.350%, 09/01/26		520		520
York, General Authority Pooled Finance RB, Sub-Ser A, Remarketed 05/07/98, AMBAC §
1.350%, 09/01/26		300		300
TOTAL PENNSYLVANIA			$	16,846
TOTAL MUNICIPAL BONDS & NOTES (COST $16,846)			$	16,846
TOTAL INVESTMENTS — 99.7% (COST $16,846)			$	16,846
OTHER ASSETS & LIABILITIES, NET — 0.3%			$	46
TOTAL NET ASSETS — 100.0%			$	16,892

§ These variable rate securities are subject to a put and demand feature. The date shown is the stated maturity.

GO — General Obligation

LOC — Securities are held in connection with a letter of credit support for securities listed above, as indicated.

RB — Revenue Bond

Ser — Series

These organizations have provided underlying credit support for securities as indicated

AMBAC — American Municipal Bond Assurance Corporation

FGIC — Financial Guaranty Insurance Corporation

FSA — Financial Security Assistance

MBIA — Municipal Bond Insurance Association

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

18

FIXED INCOME PORTFOLIOS

Fixed Income

Portfolios

Our fixed income investment management philosophy centers on four core beliefs. We believe that over a full interest-rate cycle, a portfolio of fixed income investments should provide real returns that exceed any loss of purchasing power due to inflation, be competitive with the specified portfolio benchmark return, be competitive versus portfolios of similar risk, and maintain low-to-moderate principal volatility.

With the understanding of each Portfolio’s constraints and tolerance for risk, we employ a value approach to fixed income investing involving over- or under-weighting market sectors, industries, or yield curve segments deemed to be relatively undervalued or expensive. We undertake rigorous analysis utilizing the following components to construct a portfolio: sector selection, duration management, credit analysis, industry and issue selection, and yield curve management.

The fixed income process is an actively managed, bottom-up sector selection approach, wherein risk containment is paramount. Our objective is to position the Portfolios in such a way that our sector, interest rate, yield curve, and credit analysis can add value without assuming an inordinate risk of underperformance. As part of the construction and management process, we continually test the Portfolios to assess and control risk. This disciplined fixed income philosophy has been in place within our organization for more than 15 years, has been consistently applied, and has generated historically strong results.

19

FIXED INCOME PORTFOLIOS

SHORT-TERM TREASURY PORTFOLIO

James M. Hannan

PORTFOLIO MANAGER

James M. Hannan is manager of the Short-Term Treasury Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He is also responsible for several separately managed institutional portfolios. Mr. Hannan has been a Portfolio Manager of AIA since 1996, a Vice President of Allfirst Bank from 1987 to 2003 and a Vice President of M&T Trust since 2003. He has more than 15 years of experience in the investment industry.

Management Discussion and Analysis

As economic growth remained elusive over the past fiscal year, interest rates fell. The 2-year Treasury note declined from a high yield for the fiscal year of 3.37% on May 17, 2002 to a yield of 1.49% on April 30, 2003. The Federal Reserve lowered short-term interest rates once during the period in November 2002 to 1.25% from 1.75%. We were challenged to seek out investments that would provide competitive short-term returns, even as falling rates negatively impacted Portfolio performance.

Working within this declining interest rate environment, we continued to invest in U.S. Treasury securities maturing in less than 3 years. Portfolio strategy was to maintain an average maturity of between 1 ¹/2 and 1 ³/4 years, which positively impacted Portfolio performance. Had duration been shorter, our performance would have suffered.

As always we will continue to consistently utilize our conservative and disciplined relative value investment process.

APRIL 30, 2003    /    ANNUAL REPORT

20

SHORT-TERM TREASURY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A SHARES: VALUE OF A $10,000 INVESTMENT

	Inst’l Class Shares*	Class A Shares*	Merrill Lynch 1-3 Year Treasury Index	Lehman Brothers 1-3 Year U.S. Gov’t Bond Index
One year total return	4.18%	3.93%	5.39%	5.63%
Annualized three year total return	6.10%	5.88%	7.08%	7.34%
Annualized five year total return	5.32%	5.09%	6.16%	6.29%
Annualized total return inception to date	5.39%	5.29%	—	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

* Institutional Class Shares were offered beginning March 20, 1996. Class A Shares were offered beginning September 9, 1996. Class A Shares are not subject to a sales charge.

The performance of the Lehman Brothers 1-3 Year U.S. Government Bond Index and the Merrill Lynch 1-3 Year Treasury Index do not include operating expenses that are incurred by the Portfolio. Index performance for the Institutional Class Shares is for the period March 31, 1996 to April 30, 2003. Index performance for the Class A Shares is for the period September 30, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Treasury Obligations — 98.5%
U.S. Treasury Bills ^
1.241%, 05/22/2003	$	48	$	48
1.233%, 06/05/2003		33		33
1.187%, 07/03/2003		611		610
1.186%, 06/19/2003		787		786
1.176%, 09/18/2003		288		287
1.172%, 08/07/2003		418		417
1.163%, 07/10/2003		2,255		2,250
1.158%, 05/15/2003		570		570
1.157%, 07/17/2003		186		186
1.145%, 08/28/2003		35		35
1.132%, 07/24/2003		519		518
1.131%, 10/16/2003		36		36
1.120%, 09/25/2003		216		215
1.118%, 06/26/2003		1,487		1,484
1.110%, 06/12/2003		101		101
U.S. Treasury Bonds
10.750%, 05/15/2003		2,000		2,007
U.S. Treasury Notes
7.500%, 02/15/2005		9,000		9,969
6.750%, 05/15/2005		5,000		5,523
6.500%, 08/15/2005		4,000		4,438
6.000%, 08/15/2004		500		531
5.875%, 02/15/2004		2,000		2,075
5.875%, 11/15/2004		9,000		9,621
5.875%, 11/15/2005		3,000		3,305
4.250%, 11/15/2003		3,000		3,049
3.250%, 05/31/2004		4,500		4,600
1.625%, 01/31/2005		5,000		5,019
TOTAL U.S. TREASURY OBLIGATIONS (COST $56,698)			$	57,713
TOTAL INVESTMENTS — 98.5% (COST $56,698)			$	57,713
OTHER ASSETS & LIABILITIES, NET — 1.5%			$	881
TOTAL NET ASSETS — 100.0%			$	58,594

^ The effective yield at time of purchase is shown as the rate on the Schedule of Investments.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

21

FIXED INCOME PORTFOLIOS

SHORT-TERM BOND PORTFOLIO

Wilmer C. Stith III, CFA

PORTFOLIO MANAGER

Wilmer C. Stith III, CFA is manager of the Short-Term Bond Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He has been a Vice President of AIA and Portfolio Manager since 1996. He manages separate accounts, assists in the management of the money market portfolios, and is responsible for analyzing and trading various fixed income securities. Mr. Stith has more than 10 years of experience in the investment industry, and is a Chartered Financial Analyst.

Management Discussion and Analysis

The Portfolio reduced its exposure to U.S. Treasury securities to 4%, its lowest allocation in over 5 years. We took this action, anticipating that as the Federal government finances its budget deficit for 2003, Treasuries will be issued at a much greater volume as compared to last year. The potential result of this action may cause Treasuries to underperform other sectors. Conversely, as corporate profit margins continued to compress amidst global competition and little to no pricing power, we increased our exposure to select corporate securities. For example, Portfolio performance was positively impacted as we added yield with the purchase of approximately one-year CIT Group corporate bonds.

We will continue our investment approach of seeking to invest in higher-yielding corporate and asset-backed securities.

APRIL 30, 2003    /    ANNUAL REPORT

22

SHORT-TERM BOND PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

	Inst’l Class Shares*	Lehman Brothers 1-3 Year U.S. Gov’t Bond Index
One year total return	5.44%	5.63%
Annualized three year total return	5.89%	7.34%
Annualized five year total return	4.95%	6.29%
Annualized total return inception to date*	5.09%	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

* Institutional Class Shares were offered beginning March 22, 1998. Performance prior to that date reflects performance of the Marketvest Short-Term Bond Fund from its inception date of April 1, 1996.

The performance of the Lehman Brothers 1-3 Year U.S. Government Bond Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period March 31, 1996 to April 30, 2003.

The performance information presented in the graph and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Treasury Obligations — 4.0%
Treasury Inflation Index Bonds
3.500%, 01/15/11	$	1,400	$	1,630
U.S. Treasury Notes
6.000%, 08/15/04		200		212
3.250%, 08/15/07		215		221
3.000%, 11/15/07		350		355
TOTAL U.S. TREASURY OBLIGATIONS (COST $2,259)			$	2,418
U.S. Government Agency Obligations — 6.0%
FHLMC
7.000%, 07/15/05		500		556
4.500%, 01/15/13		1,000		1,021
FNMA
3.780%, 08/09/04		1,000		1,001
3.600%, 05/14/04		1,000		1,001
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $3,562)			$	3,579
U.S. Government Agency Mortgage-Backed Obligations — 3.5%
FHLMC
6.250%, 11/15/22		1,220		1,277
6.000%, 07/15/21		816		824
FNMA ‡
4.285%, 09/01/27		1		1
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (COST $2,085)			$	2,102
Corporate Obligations — 53.9%
Banks — 15.5%
Bank of America
5.250%, 02/01/07		1,000		1,086
First USA Bank
7.650%, 08/01/03		480		487

ANNUAL REPORT    /    APRIL 30, 2003

23

SHORT-TERM BOND PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Fleet Boston Financial
6.625%, 12/01/05	$	1,000	$	1,098
Mercantile Bank-St Louis
6.375%, 01/15/04		500		517
National Westminster Bank
9.375%, 11/15/03		1,000		1,042
PNC Funding
7.000%, 09/01/04		1,500		1,600
Wachovia
6.700%, 06/21/04		1,500		1,586
Wells Fargo
6.700%, 09/22/04		1,500		1,605
Wells Fargo, MTN, Ser C
4.250%, 08/15/03		216		218
TOTAL BANKS			$	9,239
Consumer Staples — 1.0%
ConAgra Foods
7.400%, 09/15/04		585		625
TOTAL CONSUMER STAPLES			$	625
Energy — 9.3%
Conoco
5.900%, 04/15/04		540		561
Consolidated Natural Gas
5.750%, 08/01/03		300		303
DTE Energy
6.000%, 06/01/04		1,500		1,565
Husky Oil
6.875%, 11/15/03		1,000		1,026
Smith International ‡ +
2.414%, 10/15/03		1,000		1,001
Union Pacific
6.500%, 05/15/05		1,000		1,078
TOTAL ENERGY			$	5,534
Financials — 19.8%
American Express
6.875%, 11/01/05		1,700		1,891
CIT Group ‡
2.839%, 03/01/04		1,000		1,006
General Electric Capital
3.500%, 05/01/08		1,000		1,005
General Motors Acceptance
7.500%, 07/15/05		2,000		2,140
Household Finance
7.250%, 07/15/03		500		506

Description	Principal Amount (000)		Market Value (000)
John Deere Capital
4.500%, 08/22/07	$	1,000	$	1,045
Lehman Brothers Holdings
7.750%, 01/15/05		1,000		1,093
MBNA, MTN
6.150%, 10/01/03		1,000		1,017
Morgan Stanley
6.100%, 04/15/06		1,000		1,097
Simon Property Group
6.750%, 02/09/04		1,000		1,038
TOTAL FINANCIALS			$	11,838
Industrials — 4.2%
Canadian National Railway
7.000%, 03/15/04		300		313
First Data
6.750%, 07/15/05		1,000		1,101
Rockwell International
6.625%, 06/01/05		1,000		1,085
TOTAL INDUSTRIALS			$	2,499
Materials — 3.2%
Westvaco
6.850%, 11/15/04		1,800		1,910
TOTAL MATERIALS			$	1,910
Telecommunication Services — 0.9%
Alltel
7.500%, 03/01/06		475		542
TOTAL TELECOMMUNICATION SERVICES			$	542
TOTAL CORPORATE OBLIGATIONS (COST $31,296)			$	32,187
Asset-Backed Securities — 31.5%
ANRC Auto Owner Trust, Ser 2001-A, Cl A-4
4.320%, 06/16/08		900		934
Capital Auto Receivables Asset, Ser 2002-2, Cl A-3
3.820%, 07/15/05		1,500		1,531
Capital Auto Receivables Asset, Ser 2002-3, Cl A-4
3.580%, 10/16/06		1,000		1,037
Daimler Chrysler Auto Trust, Ser 2001-C, Cl A3
4.210%, 07/06/05		700		711
EQCC Home Equity Loan Trust, Ser 1991-1, Cl A3F
5.915%, 11/20/24		330		334

APRIL 30, 2003    /    ANNUAL REPORT

24

SHORT-TERM BOND PORTFOLIO (concluded)

Description	Principal Amount (000)		Market Value (000)
EQCC Home Equity Loan Trust, Ser 1998-1, Cl A4F
6.459%, 03/15/21	$	224	$	225
Ford Credit Auto Owner Trust, Ser 2000-C, Cl A4
7.240%, 02/15/04		70		71
Ford Credit Auto Owner Trust, Ser 2001-D, Cl A3
4.310%, 06/15/05		739		750
Ford Credit Auto Owner Trust, Ser 2002-C, Cl A4
3.790%, 09/15/06		1,000		1,041
Green Tree Home Improvement Loan Trust, Ser 1995-F, Cl B1
6.750%, 01/15/21		301		302
Green Tree Home Improvement Loan Trust, Ser 1996-F, Cl HIB1
7.250%, 11/15/27		2,000		2,031
Greenpoint Manufactured Housing, Ser 1999-1, Cl A2
6.010%, 08/15/15		126		127
Honda Auto Receivables Owner Trust, Ser 2002-2, Cl A3
3.830%, 02/15/06		1,000		1,025
Honda Auto Receivables Owner Trust, Ser 2002-3, Cl A3
3.000%, 05/18/06		2,000		2,040
Prudential Home Mortgage Securities Trust, Ser 1994-25, Cl A7
7.500%, 08/15/24		314		313
Residential Asset Securities, Ser 2001-KS3, Cl AI3
5.180%, 07/25/27		1,800		1,827
Residential Asset Securities, Ser 2002-KS4, Cl AI2
4.040%, 01/25/22		1,000		1,021
Residential Asset Securities, Ser 2002-KS6, Cl AI3
3.580%, 12/25/26		750		768

Description	Principal Amount/ Shares (000)		Market Value (000)
SLMA ‡
1.891%, 10/25/10	$	1,742	$	1,760
Whole Auto Loan Trust, Ser 2002-1, Cl A3
2.600%, 08/15/06		950		966
TOTAL ASSET-BACKED SECURITIES (COST $18,463)			$	18,814
Repurchase Agreements — 1.7%
Credit Suisse First Boston 1.270%, dated 04/30/03, matures 05/01/03 repurchase price $1,000,035 (102% collateralized by various U.S. Treasury Obligations)		1,000		1,000
TOTAL REPURCHASE AGREEMENTS (COST $1,000)			$	1,000
Related Party Money Market Portfolio — 1.3%
ARK Money Market Portfolio Institutional Class Ú		785		785
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $785)			$	785
TOTAL INVESTMENTS — 101.9% (COST $59,450)			$	60,885
OTHER ASSETS & LIABILITIES, NET — (1.9)%			$	(1,120	)
TOTAL NET ASSETS — 100.0%			$	59,765

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

+ Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

Cl — Class

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

MTN — Medium Term Note

Ser — Series

SLMA — Student Loan Marketing Association

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

25

FIXED INCOME PORTFOLIOS

MARYLAND AND PENNSYLVANIA  TAX-FREE PORTFOLIOS

Susan L. Schnaars, CFA

PORTFOLIO MANAGER

Susan L. Schnaars, CFA is manager of the Maryland Tax-Free Portfolio and Pennsylvania Tax-Free Portfolio. Ms. Schnaars is also responsible for managing several large institutional accounts. She has been a Principal of AIA and Portfolio Manager since 1996, a Vice President of Allfirst Bank from 1992 to 2003 and a Vice President M&T Trust since 2003. Ms. Schnaars is a Chartered Financial Analyst and a Certified Public Accountant, and has more than 12 years of experience in the investment industry.

Management Discussion and Analysis

During the fiscal year ended April 30, 2003, ongoing reports of lethargic economic growth and volatility in the equity markets continued to fuel demand for bonds. Yields on municipal bonds fell over 100 basis points (1.00%) in 2-5 year notes, while yields on longer-dated securities fell almost 50 basis points. Over the same period, yields on U.S. Treasury securities fell even more dramatically as the yield on shorter-maturity assets fell 175 basis points and longer-dated assets fell 75 basis points. The result was an underperformance of municipals, as well as the Portfolios, when compared to their taxable counterparts.

Early in the year, we shortened the effective duration of the Portfolios only slightly as we believed interest rates would rise in tandem with an economic recovery. We have continued to maintain duration around the 6.25 to 6.5 year range as interest rates have fallen further. We have the option to sustain this range should interest rates rise during the second half of 2003. The overall credit quality of the Portfolios has been upheld; however, we have taken opportunities to add yield to the Portfolios where appropriate.

During March we took minor positions in Tobacco Asset Securitization bonds, which are issued by states and local municipalities that capitalize the payments due to them from the major cigarette manufacturers under the Master Settlement Agreement (the agreement by 46 states to settle all claims against major cigarette manufacturers). At the end of March, the bonds were downgraded by several rating agencies citing increased litigation risk, causing volatility in these holdings. We are following the situation very closely.

APRIL 30, 2003    /    ANNUAL REPORT

26

MARYLAND TAX-FREE PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A AND B SHARES: VALUE OF A $10,000 INVESTMENT

	Inst’l Class Shares	Class A Shares*	Class B Shares*	Lehman Brothers 7 yr. Muni Bond Index	Lehman Brothers 10 yr. Muni Bond Index
One year total return	7.66%	7.47%	6.72%	8.62%	8.50%
One year total return with load	—	2.68%	1.72%	—	—
Annualized three year total return	7.75%	7.56%	6.84%	8.40%	8.54%
Annualized three year total return with load	—	5.91%	5.96%	—	—
Annualized five year total return	5.27%	5.10%	6.91%	6.34%	6.44%
Annualized five year total return with load	—	4.13%	6.60%	—	—
Annualized total return inception to date	5.47%	5.31%	6.47%	—	—
Annualized total return inception to date with load	—	4.56%	6.47%	—	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. The Portfolio is non-diversified, which means that it may invest in the securities of relatively few issuers. As a result, the Portfolio may experience increased volatility due to its investments in fewer securities. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Institutional Class Shares were offered beginning November 18, 1996. Class A Shares were offered beginning January 2, 1997. Performance for Class A Shares with load reflects the deduction of the maximum 4.50% sales charge. Class B Shares were offered beginning September 19, 1999. Performance for Class B Shares with load reflects the deduction of the applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year.

* Performance shown prior to the actual inception date of the Class A and Class B Shares represents that of the Institutional Class Shares adjusted for the sales charge and total annual operating expenses applicable to Class A and Class B Shares, respectively.

The performance of the Lehman Brothers 7 Year Municipal Bond Index and Lehman Brothers 10 Year Municipal Bond Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period November 30, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

27

MARYLAND TAX-FREE PORTFOLIO (continued)

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
Municipal Bonds & Notes — 97.9%
Maryland — 91.3%
Allegany County, GO, AMBAC, Prerefunded 03/01/07 @ 101
5.300%, 03/01/12	$	1,190	$	1,341
Allegany County, Pollution Control Authority RB, Westvaco Project
6.200%, 01/01/08		550		569
Anne Arundel County, GO
6.000%, 09/01/06		2,000		2,277
5.000%, 03/01/19		2,000		2,132
Baltimore County, Consolidated Public Improvements Project, GO, Prerefunded 06/01/06 @ 101
5.250%, 06/01/11		1,000		1,117
5.500%, 06/01/16		1,500		1,687
Baltimore, City Parking System Facilities Project RB, Ser A, FGIC
5.250%, 07/01/17		1,000		1,150
Baltimore, Convention Center RB, MBIA
5.375%, 09/01/11		2,910		3,270
Baltimore, GO, Ser B, MBIA
7.000%, 10/15/03		1,000		1,026
Baltimore, Port Facilities RB, Consolidated Coal Sales Project, Ser A
6.500%, 10/01/11		1,000		1,024
Baltimore, Water Project RB, Ser A, FSA, Prerefunded 07/01/10 @ 100
5.750%, 07/01/30		3,000		3,515

Description	Principal Amount (000)		Market Value (000)
Calvert County, GO, Prerefunded 01/01/06 @ 101
5.750%, 01/01/11	$	1,900	$	2,121
Calvert County, Pollution Control Authority RB, Baltimore Gas Project, MBIA-IBC
5.550%, 07/15/14		2,500		2,662
Carroll County, Fairhaven & Copper Ridge Project RB, Ser A, Radian Guaranty
5.375%, 01/01/16		2,000		2,172
Charles County, GO
3.125%, 03/01/11		1,000		991
Frederick County, Educational Facilities RB, Mount St. Mary’s College, Ser A
5.750%, 09/01/25		1,000		1,029
Frederick County, Retirement Community RB, Buckinghams Choice Facilities Project, Ser A
5.900%, 01/01/17		1,000		954
Harford County, GO
5.500%, 12/01/08		1,895		2,188
Howard County, Consolidated Public Improvements Project, GO, Ser A
5.250%, 08/15/16		1,480		1,652
Howard County, Metropolitan District Project, GO, Ser A
5.250%, 08/15/15		1,925		2,161
Maryland State, Community Development Administration RB, Multi Family Housing Development, Westfield Project, Ser C
5.200%, 12/01/29		2,000		2,118
Maryland State, Community Development Administration RB, Residential Housing & Community Development, Ser A, FHA
5.600%, 03/01/17		940		985
Maryland State, Community Development Administration RB, Single Family Housing & Community Development, First Ser, FHA
5.050%, 04/01/08		1,000		1,073
Maryland State, Economic Development Authority RB, Chesapeake Hills Golf Course Project
8.250%, 11/01/26		1,000		1,019
Maryland State, Economic Development Authority RB, Collegiate Student Housing, Salisbury Project, Ser A
6.000%, 06/01/19		1,000		1,024
5.600%, 06/01/10		1,775		1,871

APRIL 30, 2003    /    ANNUAL REPORT

28

MARYLAND TAX-FREE PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Maryland State, Economic Development Authority RB, Healthcare Facilities, GNMA-Crescent Cities Project, Ser A, Collateralized by GNMA
4.650%, 12/20/08	$	635	$	680
Maryland State, Economic Development Authority RB, Lutheran World Relief Project, Guaranty Agreement
7.125%, 04/01/19		895		954
Maryland State, Health & Higher Education Facilities Authority RB, Bullis School Project, FSA
5.250%, 07/01/20		1,585		1,708
Maryland State, Health & Higher Education Facilities Authority RB, Carroll County General Hospital Project
6.000%, 07/01/37		2,250		2,346
Maryland State, Health & Higher Education Facilities Authority RB, Catholic Health Initiatives Project, Ser A
6.000%, 12/01/13		1,370		1,551
Maryland State, Health & Higher Education Facilities Authority RB, Frederick Memorial Hospital Project
5.000%, 07/01/22		2,500		2,510
Maryland State, Health & Higher Education Facilities Authority RB, Hebrew Home of Washington Project
5.800%, 01/01/32		1,135		1,166
Maryland State, Health & Higher Education Facilities Authority RB, Helix Health Project, AMBAC, ETM
5.000%, 07/01/27		2,500		2,656
Maryland State, Health & Higher Education Facilities Authority RB, Hospital-Charity Obligation Group, Daughters of Charity Project, Ser A
4.750%, 11/01/14		1,000		1,041
Maryland State, Health & Higher Education Facilities Authority RB, Howard County General Hospital Project, ETM
5.500%, 07/01/13		1,000		1,025
Maryland State, Health & Higher Education Facilities Authority RB, Johns Hopkins Medicine Project, MBIA
5.000%, 07/01/19		1,500		1,585
Maryland State, Health & Higher Education Facilities Authority RB, Johns Hopkins University Project
5.250%, 07/01/17		2,000		2,192
5.125%, 07/01/20		2,000		2,120
5.000%, 05/15/13		1,465		1,597

Description	Principal Amount (000)		Market Value (000)
Maryland State, Health & Higher Education Facilities Authority RB, Loyola College Project, Ser A, MBIA
5.375%, 10/01/11	$	950	$	1,052
Maryland State, Health & Higher Education Facilities Authority RB, McLean School Project
6.000%, 07/01/20		250		261
6.000%, 07/01/31		1,500		1,525
Maryland State, Health & Higher Education Facilities Authority RB, Medlantic/Helix Project, Ser A, FSA
5.250%, 08/15/11		2,000		2,198
5.250%, 08/15/12		1,175		1,283
Maryland State, Health & Higher Education Facilities Authority RB, Mercy Medical Center Project
5.625%, 07/01/31		2,000		2,029
Maryland State, Health & Higher Education Facilities Authority RB, Mercy Medical Center Project, AMBAC
5.750%, 07/01/15		2,000		2,053
Maryland State, Health & Higher Education Facilities Authority RB, North Arundel Hospital Project, MBIA
6.000%, 07/01/12		500		513
Maryland State, Health & Higher Education Facilities Authority RB, Peninsula Regional Medical Center Project
5.000%, 07/01/08		1,000		1,022
Maryland State, Health & Higher Education Facilities Authority RB, Peninsula United Methodists of Maryland, Ser B ‡
5.250%, 10/01/28		1,000		998
Maryland State, Health & Higher Education Facilities Authority RB, Pickersgill Project, Ser A
6.000%, 01/01/15		1,500		1,589
Maryland State, Health & Higher Education Facilities Authority RB, University of Maryland Medical System Project
5.000%, 07/01/12		1,000		1,057
Maryland State, Industrial Development Financing Authority RB, National Aquarium Baltimore Facilities Project, Ser B
5.100%, 11/01/22		1,000		1,042
Maryland State, Local Facilities Authority, Capital Improvement Project, GO, Ser A
5.500%, 03/01/13		2,000		2,324

ANNUAL REPORT    /    APRIL 30, 2003

29

MARYLAND TAX-FREE PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Maryland State, National Capital Park & Planning Commission RB, Park Acquisition & Development Project, Ser T-2
5.375%, 01/15/14	$	1,000	$	1,089
Maryland State, Stadium Authority RB, AMBAC
5.500%, 03/01/12		1,000		1,087
Maryland State, Transportation Authority RB
5.750%, 07/01/15		1,500		1,507
Maryland State, Transportation Authority RB, Baltimore/Washington International Airport Project, Ser B, FGIC
6.000%, 07/01/07		1,000		1,067
Maryland Water Quality Financing Administration RB, Revolving Loan Fund, Ser A
6.550%, 09/01/14		945		959
5.500%, 09/01/12		1,250		1,349
Montgomery County, Consolidated Public Improvements Project, GO
4.750%, 02/01/15		2,025		2,195
Montgomery County, Consolidated Public Improvements Project, GO, Ser A
5.800%, 07/01/07		1,000		1,147
Montgomery County, Consolidated Public Improvements Project, GO, Ser A, Prerefunded 01/01/10 @ 101
5.600%, 01/01/16		2,000		2,327
Montgomery County, Special Obligation, West Germantown Development District Project, GO, Ser A, Radian Guaranty
5.375%, 07/01/20		250		267
New Baltimore, School Board System RB
5.000%, 11/01/13		1,135		1,238
Northeast Maryland Waste Disposal Authority RB, Southwest Resource Recovery Facility Project, MBIA
7.200%, 01/01/06		2,500		2,637
Prince George’s County, Consolidated Public Improvements Project, GO, FSA
5.500%, 10/01/10		2,000		2,295
Queen Anne’s County, Public Facilities, GO, FGIC
6.000%, 11/15/08		1,000		1,159
5.400%, 11/15/11		1,000		1,117
St. Mary’s College, Academic & Auxiliary Facilities RB, Ser A, MBIA
5.250%, 09/01/27		2,000		2,078

Description	Principal Amount (000)		Market Value (000)
St. Mary’s County, Consolidated Public Improvements Project, GO
4.450%, 07/01/14	$	1,100	$	1,176
St. Mary’s County, County Commissioners St. Mary’s Hospital Project, GO
5.000%, 10/01/21		1,000		1,063
University of Maryland, Auxiliary Facility & Tuition RB, Ser A
5.500%, 04/01/10		1,000		1,085
Washington County, Public Improvements Project, GO, MBIA, Prerefunded 01/01/05 @ 102
5.800%, 01/01/15		1,250		1,365
Washington Suburban Sanitation District, General Construction Project, GO
6.000%, 06/01/18		1,000		1,242
Washington Suburban Sanitation District, Water Supply Project, GO
4.700%, 06/01/18		2,000		2,103
TOTAL MARYLAND			$	116,757
New Jersey — 1.4%
Tobacco Settlement Financing
6.750%, 06/01/39		2,000		1,767
TOTAL NEW JERSEY			$	1,767
Puerto Rico — 5.2%
Commonwealth of Puerto Rico, Highway & Transportation RB, Ser F
5.250%, 07/01/11		1,000		1,097
Commonwealth of Puerto Rico, Highway & Transportation RB, Ser W, FSA, Prerefunded 07/01/03 @ 101.5
5.400%, 07/01/06		2,000		2,043
Commonwealth of Puerto Rico, Public Buildings Authority RB, MBIA-IBC Commonwealth Guaranty
5.700%, 07/01/16		500		511
Commonwealth of Puerto Rico, Public Finance Authority RB, Ser A, AMBAC
5.375%, 06/01/19		1,500		1,722
Commonwealth of Puerto Rico, Public Improvements Project, GO, MBIA
6.250%, 07/01/12		1,000		1,221
TOTAL PUERTO RICO			$	6,594
TOTAL MUNICIPAL BONDS & NOTES (COST $117,276)			$	125,118

APRIL 30, 2003    /    ANNUAL REPORT

30

MARYLAND TAX-FREE PORTFOLIO (concluded)

Description	Shares (000)	Market Value (000)
Related Party Money Market Portfolio — 1.0%
ARK Tax-Free Money Market Portfolio Institutional Class Ú	1,226	$	1,226
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $1,226)		$	1,226
TOTAL INVESTMENTS — 98.9% (COST $118,502)		$	126,344
OTHER ASSETS & LIABILITIES, NET — 1.1%		$	1,461
TOTAL NET ASSETS — 100.0%		$	127,805

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ETM — Escrowed to Maturity

GO — General Obligation

RB — Revenue Bond

Ser — Series

These organizations have provided underlying credit support for securities, as indicated

AMBAC — American Municipal Bond Assurance Corporation

FGIC — Financial Guaranty Insurance Corporation

FHA — Federal Housing Authority

FSA — Financial Security Assistance

GNMA — Government National Mortgage Association

IBC — Insured Bond Certification

MBIA — Municipal Bond Insurance Association

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

31

PENNSYLVANIA TAX-FREE PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A AND B SHARES: VALUE OF A $10,000 INVESTMENT

	Inst’l Class Shares	Class A Shares*	Class B Shares*	Lehman Brothers 5 yr. Muni Bond Index	Lehman Brothers 7 yr. Muni Bond Index	Lehman Brothers 10 yr. Muni Bond Index
One year total return	7.96%	7.77%	7.03%	7.88%	8.62%	8.50%
One year total return with load	—	2.96%	2.03%	—	—	—
Annualized three year total return	8.13%	7.92%	7.19%	7.95%	8.40%	8.54%
Annualized three year total return with load	—	6.29%	6.32%	—	—	—
Annualized five year total return	5.10%	4.94%	6.25%	6.09%	6.34%	6.44%
Annualized five year total return with load	—	3.97%	5.93%	—	—	—
Annualized total return inception to date	5.15%	4.94%	5.61%	—	—	—
Annualized total return inception to date with load	—	4.27%	5.61%	—	—	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. The Portfolio is non-diversified, which means that it may invest in the securities of relatively few issuers. As a result, the Portfolio may experience increased volatility due to its investments in fewer securities. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

For each class, performance presented prior to March 23, 1998 reflects the performance of the Marketvest Pennsylvania Intermediate Municipal Bond Fund from its inception date of April 1, 1996. Class A Shares were offered beginning March 23, 1998. Performance for Class A Shares with load reflects the deduction of the maximum 4.50% sales charge. Class B Shares were offered beginning September 1, 1999. Performance for Class B Shares with load reflects the deduction of the applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year.

* Performance shown prior to the actual inception date of the Class A and Class B Shares represents that of the Institutional Class Shares adjusted for the sales charge and total annual operating expenses applicable to Class A and Class B Shares, respectively.

The performance of the Lehman Brothers 5 Year Municipal Bond Index, Lehman Brothers 7 Year Municipal Bond Index, and Lehman Brothers 10 Year Municipal Bond Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period March 31, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

APRIL 30, 2003    /    ANNUAL REPORT

32

PENNSYLVANIA TAX-FREE PORTFOLIO

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
Municipal Bonds & Notes — 98.1%
New Jersey — 1.1%
Tobacco Settlement Financing
6.750%, 06/01/39	$	2,000	$	1,767
TOTAL NEW JERSEY			$	1,767
Pennsylvania — 97.0%
Adams County, GO, FGIC, Prerefunded 05/15/11 @ 100
5.500%, 11/15/26		2,500		2,883
Allegheny County, GO, Ser C-52, FGIC
5.250%, 05/10/11		4,000		4,236
Allegheny County, Industrial Development Authority RB, Environmental Improvement Project, Ser A
6.700%, 12/01/20		4,150		4,293
Bucks County, Industrial Development Authority RB, Pennswood Village Project, Ser A
6.000%, 10/01/27		1,000		1,033
Bucks County, Industrial Development Authority RB, Personal Care, Ser A, ETM, Remarketed 11/15/93
10.000%, 05/15/19		4,775		8,041
Burrell School District, GO, FGIC, STAID
5.250%, 11/15/10		2,200		2,434
Chester County, Health & Education Facilities Authority RB, Chester County Hospital Project, MBIA
5.625%, 07/01/09		1,985		2,190
5.625%, 07/01/10		1,675		1,847
5.500%, 07/01/07		965		1,074

Description	Principal Amount (000)		Market Value (000)
Chester County, Health & Education Facilities Authority RB, Immaculata College Project, Radian — IBC Guaranty
5.625%, 10/15/27	$	2,250	$	2,380
Chester County, Health & Education Facilities Authority RB, Jefferson Health Systems Project, Ser B
5.375%, 05/15/27		2,000		2,012
Chester County, Health & Education Facilities Authority RB, Main Line Health Systems Project, Ser A, MBIA-IBC
5.300%, 05/15/07		2,045		2,157
Dauphin County, General Health Authority RB, Pinnacle Health System Project, MBIA
5.200%, 05/15/09		910		1,001
Delaware County, Dunwoody Village Project RB
6.250%, 04/01/30		1,200		1,250
5.550%, 04/01/06		300		301
Delaware County, Hospital RB, Chester Community Hospital Project
6.000%, 12/15/20		4,000		4,021
Downington, Area School District, GO, FSA — STAID
4.900%, 04/01/16		2,130		2,259
Indiana County, Industrial Development Authority RB, New York State Electric & Gas Project, Ser A, MBIA
6.000%, 06/01/06		1,500		1,692
Lancaster County, Solid Waste Management Authority RB, Ser B, AMBAC
5.375%, 12/15/15		4,000		4,416
Lehigh County, GO, Ser A, CNTY GTD, Prerefunded 05/15/06 @ 100
5.500%, 07/19/06		2,000		2,228
Lehigh County, General Purpose Authority GOH, Muhlenberg Hospital Center Project, ETM
5.750%, 07/15/10		1,270		1,424
5.750%, 07/15/10		1,730		1,939
Lehigh County, General Purpose Authority RB, Kidspeace Obligation Group Project
5.800%, 11/01/12		1,435		1,378
Luzerne County, Pennsylvania Flood Protection Authority RB, Ser A, CNTY GTD — MBIA
5.250%, 01/15/12		2,310		2,597

ANNUAL REPORT    /    APRIL 30, 2003

33

PENNSYLVANIA TAX-FREE PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Mercer County, GO, FGIC
5.500%, 10/01/18	$	1,155	$	1,274
5.500%, 10/01/19		1,215		1,332
Montgomery County, GO
5.375%, 07/15/13		1,885		2,084
Montgomery County, Health & Higher Education Facilities Authority RB, Beaver College Project, CONLEE
5.700%, 04/01/10		500		558
Montgomery County, Health & Higher Education Facilities Authority RB, Holy Redeemer Health Project, Ser A, AMBAC
5.500%, 10/01/08		1,275		1,439
5.250%, 10/01/04		2,070		2,183
Montgomery County, Health & Higher Education Facilities Authority RB, Philadelphia Geriatric Center Project, Ser A
7.250%, 12/01/19		3,000		3,079
Montgomery County, Industrial Development Authority RB, Acts Retirement-Life Communities Project
5.250%, 11/15/28		3,000		2,855
Montgomery County, Industrial Development Authority RB, Adult Communities Total Services Project, Ser B
5.750%, 11/15/17		1,000		1,030
North Allegheny, School District Authority, GO, FGIC, STAID
5.500%, 11/01/10		1,765		2,032
Northhampton County, GO
5.125%, 08/15/19		2,575		2,731
Pennsylvania State, Convention Center Authority RB, Ser A, FGIC, ETM
6.000%, 09/01/19		5,410		6,620
Pennsylvania State, Convention Center Authority RB, Ser A, FSA
6.750%, 09/01/19		2,000		2,173
Pennsylvania State, Convention Center Authority RB, Ser A, MBIA-IBC
6.750%, 09/01/19		2,500		2,716
Pennsylvania State, GO, First Ser, FGIC
5.375%, 05/15/15		5,000		5,443
Pennsylvania State, Higher Educational Facilities Authority RB, Drexel University Project
6.000%, 05/01/24		4,075		4,426
Pennsylvania State, Higher Educational Facilities Authority RB, Gwynedd-Mercy College Project, Radian Guaranty
5.600%, 11/01/22		2,600		2,834

Description	Principal Amount (000)		Market Value (000)
Pennsylvania State, Higher Educational Facilities Authority RB, University of Pennsylvania Health Services Project, Ser A
5.500%, 01/01/09	$	4,000	$	4,225
Pennsylvania State, Housing Finance Agency RB, Ser 50A
6.000%, 10/01/13		1,500		1,589
Pennsylvania State, Industrial Development Authority RB, AMBAC
6.000%, 07/01/06		3,000		3,389
Philadelphia, Authority For Industrial Lease RB, Ser B, FSA
5.250%, 10/01/30		2,000		2,091
Philadelphia, GO, FGIC
5.125%, 05/15/14		5,000		5,379
Philadelphia, Health & Higher Educational Facilities Authority RB, Community College of Philadelphia Project, AMBAC
5.500%, 05/01/14		1,280		1,432
5.500%, 05/01/15		1,350		1,507
Philadelphia, Hospital & Higher Education Facilities Authority RB, Temple University Hospital Project, Ser A
6.625%, 11/15/23		3,250		3,286
Philadelphia, Industrial Development Authority RB, City of Philadelphia Project, Ser A, MBIA
6.000%, 02/15/07		1,365		1,556
Philadelphia, Industrial Development Authority RB, Franklin Institute Project
5.200%, 06/15/18		2,100		2,113
Philadelphia, Industrial Development Authority RB, Girard Estate Coal Mining Project, ETM
5.500%, 11/15/16		3,590		3,978
Philadelphia, Industrial Development Authority RB, Simpson House Project
4.750%, 08/15/08		1,000		1,023
Philadelphia, Municipal Authority RB, Justice Lease Project, Ser A, MBIA
7.100%, 11/15/06		4,095		4,159
Philadelphia, Water & Wastewater RB, MBIA
6.250%, 08/01/07		3,000		3,491
6.250%, 08/01/08		2,150		2,533
Pittsburgh & Allegheny Counties, Regional Asset District Sales Tax, AMBAC
5.250%, 02/01/17		3,000		3,216

APRIL 30, 2003    /    ANNUAL REPORT

34

PENNSYLVANIA TAX-FREE PORTFOLIO (concluded)

Description	Principal Amount/ Shares (000)		Market Value (000)
Ridley Park, Taylor Hospital RB, Ser A, ETM
6.000%, 12/01/05	$	400	$	425
Scranton-Lackawanna, Mercy Health Hospital Facilities RB, Ser B, MBIA
5.625%, 01/01/16		2,000		2,170
Swarthmore, Higher Educational Facility RB
5.250%, 09/15/20		1,000		1,072
Tredyffrin Township, GO
5.250%, 11/15/17		1,750		1,898
West Chester Area School District, GO
5.000%, 04/15/16		1,515		1,631
5.000%, 04/15/18		1,000		1,062
TOTAL PENNSYLVANIA			$	157,120
TOTAL MUNICIPAL BONDS & NOTES (COST $148,676)			$	158,887
Related Party Money Market Portfolio — 0.5%
ARK Pennsylvania Tax-Free Money Market Portfolio Institutional Class Ú		762		762
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $762)			$	762
TOTAL INVESTMENTS — 98.6% (COST $149,438)			$	159,649
OTHER ASSETS & LIABILITIES, NET — 1.4%			$	2,300
TOTAL NET ASSETS — 100.0%			$	161,949

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ETM — Escrowed to Maturity

GO — General Obligation

GOH — General Obligation of Hospital

RB — Revenue Bond

Ser — Series

STAID — State Aid Withholding

These organizations have provided underlying credit support for securities as listed above, as indicated

AMBAC — American Municipal Bond Assurance Corporation

CNTY GTD — County Guaranteed

CONLEE — College Construction Loan Insurance Association

FGIC — Financial Guaranty Insurance Corporation

FSA — Financial Security Assistance

IBC — Insured Bond Certification

MBIA — Municipal Bond Insurance Association

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

35

FIXED INCOME PORTFOLIOS

INTERMEDIATE FIXED INCOME PORTFOLIO

Wilmer C. Stith III, CFA

PORTFOLIO MANAGER

Wilmer C. Stith III, CFA is manager of the Intermediate Fixed Income Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He has been a Vice President of AIA and Portfolio Manager since 1996. He manages separate accounts, assists in the management of the money market portfolios, and is responsible for analyzing and trading various fixed income securities. Mr. Stith has more than 10 years of experience in the investment industry, and is a Chartered Financial Analyst.

Management Discussion and Analysis

The Portfolio has reduced its exposure to U.S. Treasury securities to 8%, its lowest allocation in over 5 years. This strategic decision has contributed positively towards performance. Although Treasuries have served us well over the last couple of years we anticipate that powerful dynamics are in play to cause them to under perform other sectors. One such dynamic will be a much greater amount of Treasuries issued this year vs. last year, as the Federal government finances its budget deficit. While we are decreasing our allocation to Treasuries we are increasing our exposure to corporate and mortgage-backed securities. Our choices in corporate issuers have been very selective. As corporate profit margins continue to compress amidst global competition and little to no pricing power, we remain very cautious in our choice of corporate issuers. We have purchased AT&T Wireless Services in the telecom sector. AT&T Wireless Services has shown above average subscriber growth and continues to be the dominant wireless provider. We also expanded our exposure in the energy sector with Devon Financing and Valero Logistics. We anticipate, as the summer driving season picks up and the economy grows, a strong demand for refined oil products. In addition, we expect crude oil to continue to fall in price. This environment is highly favorable for an oil refiner such as Valero Logistics. We also added yield to the overall portfolio with the purchase of approximately one-year Ford Motor Credit and CIT Group corporate bonds. Finally, we have increased our exposure to mortgage backed securities. We have forecasted that the worst of prepayment risks are behind us, and that unlike last year mortgage backed securities will outperform U.S. Treasuries.

Looking forward we expect to reduce our overall level of interest rate risk in the Portfolio as economic growth resumes in earnest. Eventually, once the market anticipates the Federal Reserve to begin to tighten monetary policy, we will migrate to floating rate notes. These securities have a coupon that is set to a money market index such as three month LIBOR and is reset on a frequent basis. As interest rates move higher, the floating rate note will outperform its fixed rate counterpart. We will also continue to underweight Treasuries and continue to invest in higher yielding corporate and mortgage-backed securities.

APRIL 30, 2003    /    ANNUAL REPORT

36

INTERMEDIATE FIXED INCOME PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

	Inst’l Class Shares*	Lehman Brothers Intermediate Gov't/Credit Index	Lehman Brothers Intermediate U.S. Government Bond Index
One year total return	11.20%	10.76%	9.22%
Annualized three year total return	9.00%	10.00%	9.37%
Annualized five year total return	6.49%	7.53%	7.27%
Annualized total return inception to date*	6.47%	—	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

* Institutional Class Shares were offered beginning November 18, 1996.

The performance of the Lehman Brothers Intermediate Government/Credit Index and the Lehman Brothers Intermediate U.S. Government Bond Index do not include operating expenses incurred by the Portfolio. Index performance is for the period November 30, 1996 to April 30, 2003.

The performance information presented in the graph and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Treasury Obligations — 8.3%
Treasury Inflation Index Bonds
3.500%, 01/15/11	$	2,000	$	2,329
3.375%, 01/15/12		1,000		1,139
3.000%, 07/15/12		580		634
U.S. Treasury Notes
6.625%, 05/15/07		175		203
6.500%, 08/15/05		1,000		1,110
6.125%, 08/15/07		1,120		1,281
5.625%, 05/15/08		165		186
4.750%, 11/15/08		80		87
4.625%, 05/15/06		690		743
3.500%, 11/15/06		1,055		1,100
3.000%, 02/15/08		870		879
1.625%, 03/31/05		1,000		1,003
TOTAL U.S. TREASURY OBLIGATIONS (COST $10,246)			$	10,694
U.S. Government Agency Obligations — 16.6%
FHLB
6.500%, 11/13/09		5,000		5,867
FHLMC
5.875%, 03/21/11		2,500		2,772
5.125%, 07/15/12		500		537
4.000%, 10/29/07		2,000		2,053

ANNUAL REPORT    /    APRIL 30, 2003

37

INTERMEDIATE FIXED INCOME PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
FNMA
6.000%, 05/15/08	$	1,190	$	1,350
5.500%, 05/02/06		1,500		1,633
5.250%, 08/01/12		3,000		3,173
2.345%, 11/26/04		2,250		2,252
Private Export Funding, Ser UU n
7.950%, 11/01/06		1,495		1,632
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $19,743)			$	21,269
U.S. Government Agency Mortgage-Backed Obligations — 17.3%
FHLMC
6.500%, 07/01/09		1,055		1,112
6.250%, 11/15/22		1,220		1,277
6.000%, 07/15/21		817		824
FHLMC, Ser T
4.105%, 10/27/31		1,000		1,030
FNMA
7.500%, 12/01/29		515		549
7.000%, 06/01/03		25		25
6.500%, 05/01/08		242		258
6.500%, 10/01/08		666		710
6.500%, 06/01/13		427		453
6.500%, 03/01/32		846		884
6.000%, 04/01/11		788		829
5.500%, 11/01/17		4,300		4,476
5.500%, 03/01/18		5,000		5,205
FNMA, REMIC
6.500%, 04/25/23		2,705		2,947
6.250%, 07/25/08		1,193		1,264
GNMA
7.000%, 02/15/29		326		346
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (COST $21,375)			$	22,189
Corporate Obligations — 51.2%
Banks — 10.7%
Bank One
7.600%, 05/01/07		1,000		1,156
Bank of America
7.800%, 02/15/10		965		1,174
6.625%, 10/15/07		500		569
Bank of New York
5.200%, 07/01/07		1,000		1,080
Citigroup
4.875%, 05/07/15		1,000		1,001

Description	Principal Amount (000)		Market Value (000)
CitiFinancial
7.750%, 03/01/05	$	1,285	$	1,420
Fleet National Bank
5.750%, 01/15/09		1,320		1,448
PNC Funding
6.125%, 02/15/09		1,330		1,467
Wachovia
7.875%, 02/15/10		1,000		1,203
6.625%, 06/15/04		970		1,026
Wells Fargo
7.125%, 08/15/06		1,920		2,200
TOTAL BANKS			$	13,744
Consumer Discretionary — 3.7%
Comcast Cablevision Communications
8.875%, 05/01/17		1,500		1,900
Newell Rubbermaid
6.350%, 07/15/08		1,125		1,266
Wal-Mart Stores
5.450%, 08/01/06		1,460		1,600
TOTAL CONSUMER DISCRETIONARY			$	4,766
Consumer Staples — 0.9%
ConAgra Foods
9.875%, 11/15/05		1,000		1,175
TOTAL CONSUMER STAPLES			$	1,175
Energy — 10.5%
Anderson Exploration
6.750%, 03/15/11		1,000		1,130
BP Amoco
10.875%, 07/15/05		962		1,142
ChevronTexaco Capital
3.500%, 09/17/07		990		1,013
Devon Financing
6.875%, 09/30/11		1,000		1,150
DTE Energy
7.050%, 06/01/11		2,305		2,656
Kerr-McGee
5.375%, 04/15/05		500		526
Kinder Morgan
6.650%, 03/01/05		2,000		2,161
National Oilwell +
5.650%, 11/15/12		1,000		1,046
Oryx Energy
8.125%, 10/15/05		580		650

APRIL 30, 2003    /    ANNUAL REPORT

38

INTERMEDIATE FIXED INCOME PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Smith International ‡ +
2.414%, 10/15/03	$	1,000	$	1,001
Valero Logistics +
6.050%, 03/15/13		1,000		1,048
TOTAL ENERGY			$	13,523
Financials — 12.5%
Bear Stearns
7.250%, 10/15/06		835		951
4.000%, 01/31/08		1,000		1,028
CIT Group
5.625%, 10/15/03		1,000		1,017
Ford Motor Credit
6.700%, 07/16/04		1,000		1,038
General Electric Capital
3.500%, 05/01/08		1,000		1,005
General Motors Acceptance
7.000%, 02/01/12		1,000		1,024
Goldman Sachs Group
5.700%, 09/01/12		1,000		1,065
JP Morgan
7.625%, 09/15/04		1,000		1,073
John Deere Capital
4.500%, 08/22/07		1,000		1,045
Kimco Realty
6.500%, 10/01/03		1,084		1,105
Lehman Brothers Holdings
6.250%, 05/15/06		670		743
Morgan Stanley
5.800%, 04/01/07		500		545
4.250%, 05/15/10		1,000		1,000
National Rural Utilities
6.500%, 03/01/07		1,000		1,111
Nordia Bank Finland NY
6.500%, 01/15/06		2,060		2,273
TOTAL FINANCIALS			$	16,023
Industrials — 2.9%
Canadian National Railway ‡
6.450%, 07/15/06		2,445		2,683
General Electric Capital
5.000%, 02/01/13		1,000		1,033
TOTAL INDUSTRIALS			$	3,716

Description	Principal Amount (000)		Market Value (000)
Insurance — 0.9%
American General Finance
5.375%, 10/01/12	$	1,160	$	1,205
TOTAL INSURANCE			$	1,205
Materials — 1.1%
MeadWestvaco
6.850%, 04/01/12		1,275		1,442
TOTAL MATERIALS			$	1,442
Telecommunication Services — 3.7%
Alltel
7.500%, 03/01/06		1,150		1,312
AT&T Wireless Services
7.875%, 03/01/11		800		922
Cox Communications
6.850%, 01/15/18		1,310		1,449
Verizon Wireless ‡
1.659%, 12/17/03		1,000		999
TOTAL TELECOMMUNICATION SERVICES			$	4,682
Utilities — 3.3%
Cinergy
6.250%, 09/01/04		1,000		1,055
Columbus Southern Power
6.510%, 02/01/08		1,250		1,410
Consolidated Natural Gas
6.850%, 04/15/11		1,500		1,724
TOTAL UTILITIES			$	4,189
Real Estate Investment Trust — 1.0%
Boston Properties +
6.250%, 01/15/13	$	1,225	$	1,313
TOTAL REAL ESTATE INVESTMENT TRUST			$	1,313
TOTAL CORPORATE OBLIGATIONS (COST $62,706)			$	65,778
Asset-Backed Securities — 6.8%
EQCC Home Equity Loan Trust, Ser 1999-1, Cl A3F
5.915%, 11/20/24		507		513
Ford Credit Auto Owner Trust, Ser 2002-B, Cl A4
4.750%, 08/15/06		1,000		1,058
Household Automotive Trust, Ser 2002-2, Cl A3
2.850%, 09/16/04		1,000		1,015

ANNUAL REPORT    /    APRIL 30, 2003

39

INTERMEDIATE FIXED INCOME PORTFOLIO (concluded)

Description	Shares/Principal Amount (000)		Market Value (000)
Residential Asset Securities, Ser
3.690%, 12/04/05	$	1,500	$	1,534
Residential Asset Securities, Ser 2002-KS6, Cl AI3
3.580%, 09/29/05		1,250		1,280
The Money Store Home Equity Trust, Ser 1997-D, Cl AF5
6.555%, 09/20/03		1,295		1,326
Whole Auto Loan Trust, Ser 2002-1, Cl A3
2.600%, 12/11/04		1,000		1,017
William Street Funding, Ser 2003-1, Cl A ‡ +
1.620%, 04/23/06		1,000		1,004
TOTAL ASSET-BACKED SECURITIES (COST $8,550)			$	8,747
Repurchase Agreements — 9.4%
Credit Suisse First Boston 1.270%, dated 4/30/03, matures 5/1/03 repurchase price $12,000,423 (102% collateralized by various U.S. Treasury Obligations)
1.270%, 05/01/03		12,000		12,000
TOTAL REPURCHASE AGREEMENTS (COST $12,000)			$	12,000
Related Party Money Market Portfolio — 1.6%
ARK Money Market Portfolio Institutional Class Ú		2,007		2,007
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $2,007)			$	2,007
TOTAL INVESTMENTS — 111.2% (COST $136,627)			$	142,684
OTHER ASSETS & LIABILITIES, NET — (11.2)%			$	(14,421	)
TOTAL NET ASSETS — 100.0%			$	128,263

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

+ Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

n Principal is guaranteed by U.S. Government and interest is guaranteed by EXIM Bank.

Cl — Class

FHLB — Federal Home Loan Bank

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

GNMA — Government National Mortgage Association

MTN — Medium Term Note

REMIC — Real Estate Mortgage Investment Conduit

Ser — Series

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

40

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FIXED INCOME PORTFOLIOS

U.S. GOVERNMENT BOND PORTFOLIO

James M. Hannan

CO-PORTFOLIO MANAGER

James M. Hannan is co-manager of the U.S. Government Bond Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He is also responsible for several separately managed institutional portfolios. Mr. Hannan has been a Portfolio Manager of AIA since 1996, a Vice President of Allfirst Bank from 1987 to 2003 and a Vice President of M&T Trust since 2003. He has more than 15 years of experience in the investment industry.

Wilmer C. Stith III, CFA

CO-PORTFOLIO MANAGER

Wilmer C. Stith III, CFA is co-manager of the U.S. Government Bond Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He has been a Vice President of AIA and Portfolio Manager since 1996. He manages separate accounts, assists in the management of the money market portfolios, and is responsible for analyzing and trading various fixed income securities. Mr. Stith has more than 10 years of experience in the investment industry, and is a Chartered Financial Analyst.

Management Discussion and Analysis

Interest rates fell over the past fiscal year, as economic growth remained elusive. The 10-year Treasury yield declined from a fiscal year high of 5.27% on May 14, 2002 to a yield of 3.84% on April 30, 2003. The Federal Reserve lowered short-term interest rates once during the period in November 2002 to 1.25% from 1.75%.

Working within this declining interest rate environment during the past fiscal year, we maintained our allocation to high-quality U.S. Treasury securities and increased our allocation to higher-yielding government agency securities. In the mortgage-backed sector we reduced our allocation versus fiscal year end 2002 to minimize our prepayment risk. This reduction contributed positively to Portfolio performance as mortgage prepayments soared. During the final quarter of the fiscal year, our increased allocation to corporate securities also aided Portfolio performance as corporates generally outperformed other areas of the bond market.

At fiscal year end our duration was in line with the Lehman Government Intermediate Index at approximately 3.2 years. We believe that securities with durations between 7 and 8 years have the potential to outperform the shorter end of the yield curve, and thus have overweighting in this portion of the yield curve.

Looking forward we will continue to consistently utilize our conservative and disciplined relative value investment process.

APRIL 30, 2003    /    ANNUAL REPORT

42

U.S. GOVERNMENT BOND PORTFOLIO

9Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A SHARES: VALUE OF A $10,000 INVESTMENT

	Inst'l Class Shares	Class A Shares*	Lehman Brothers Intermediate Gov't/Credit Index
One year total return	8.11%	8.01%	10.76%
One year total return with load	—	3.14%	—
Annualized three year total return	8.19%	8.06%	10.00%
Annualized three year total return with load	—	6.41%	—
Annualized five year total return	5.84%	5.76%	7.53%
Annualized five year total return with load	—	4.80%	—
Annualized total return inception to date	5.90%	6.77%	—
Annualized total return inception to date with load	—	6.07%	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

For each class, performance presented prior to March 23, 1998 reflects the performance of the Marketvest Intermediate U.S. Government Bond Fund from its inception date of April 1, 1996. Class A Shares were offered beginning April 1, 1998. Performance for Class A Shares with load reflects the deduction of the maximum 4.50% sales charge.

* Performance shown prior to the actual inception date of the Class A Shares represents that of the Institutional Class Shares adjusted for the sales charge and total operating expenses applicable to Class A Shares.

The performance of the Lehman Brothers Intermediate Government/Credit Index does not include operating expenses incurred by the Portfolio. Index performance is for the period March 31, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

43

U.S GOVERNMENT BOND PORTFOLIO (continued)

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Treasury Obligations — 14.8%
Treasury Inflation Index Bonds
U.S. Treasury Bonds
3.500%, 01/15/11	$	2,325	$	2,707
U.S. Treasury Notes
5.375%, 02/15/31		750		818
6.750%, 05/15/05		1,500		1,657
6.500%, 08/15/05		1,000		1,110
5.000%, 08/15/11		1,385		1,517
4.750%, 11/15/08		825		897
4.625%, 05/15/06		2,000		2,154
4.000%, 11/15/12		500		506
3.500%, 11/15/06		1,500		1,564
3.250%, 08/15/07		720		740
2.125%, 10/31/04		1,000		1,012
TOTAL U.S. TREASURY OBLIGATIONS (COST $13,941)			$	14,682
U.S. Government Agency Obligations — $38.6%
FHLB
6.625%, 11/15/10		1,435		1,697
4.500%, 11/15/12		3,000		3,068
2.000%, 03/10/05		1,500		1,501
FHLMC
8.250%, 06/01/26		1,000		1,335
5.875%, 03/21/11		2,000		2,217
5.125%, 07/15/12		2,615		2,808
2.500%, 07/28/05		5,000		5,038
FNMA
5.500%, 05/02/06		3,025		3,293
5.250%, 08/01/12		3,000		3,173
3.875%, 03/15/05		5,000		5,218
FNMA, MTN
6.470%, 09/25/12		7,500		8,820
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $35,776)			$	38,168

Description	Principal Amount (000)		Market Value (000)
U.S. Government Agency Mortgage-Backed Obligations — 27.0%
FHLMC
6.500%, 10/15/25	$	1,500	$	1,522
6.250%, 11/15/22		351		367
6.000%, 03/01/13		4,498		4,711
5.500%, 09/15/06		2,595		2,631
FHLMC, REMIC
6.250%, 09/15/23		5,000		5,306
FNMA
6.500%, 03/01/32		1,450		1,515
6.500%, 08/01/28		723		756
6.500%, 08/01/28		583		610
6.500%, 08/01/28		2,104		2,201
6.500%, 03/01/29		1,779		1,860
6.500%, 03/01/29		1,344		1,406
6.500%, 05/01/29		1,176		1,229
FNMA, REMIC
6.000%, 09/18/26		2,493		2,537
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (COST $25,727)			$	26,651
Corporate Obligations — 9.2%
Banks — 2.6%
Bank of America
5.250%, 02/01/07		1,425		1,548
PNC Funding
6.125%, 09/01/03		1,000		1,016
TOTAL BANKS			$	2,564
Energy — 1.2%
Husky Oil
7.550%, 11/15/16		1,000		1,209
TOTAL ENERGY			$	1,209
Financials — 3.6%
CIT Group ‡
2.839%, 03/01/04		1,500		1,509
Ford Motor Credit
6.700%, 07/16/04		1,000		1,038
General Motors Acceptance
7.000%, 02/01/12		1,000		1,024
TOTAL FINANCIALS			$	3,571
Industrials — 1.2%
FedEx
7.250%, 02/15/11		1,000		1,153
TOTAL INDUSTRIALS			$	1,153

APRIL 30, 2003    /    ANNUAL REPORT

44

U.S GOVERNMENT BOND PORTFOLIO (concluded)

Description	Principal Amount/ Shares (000)		Market Value (000)
Real Estate Investment Trust — 0.6%
Boston Properties +
5.625%, 04/15/15	$	600	$	607
TOTAL REAL ESTATE INVESTMENT TRUST			$	607
TOTAL CORPORATE OBLIGATIONS (COST $8,598)			$	9,104
Asset-Backed Securities — 1.6%
ANRC Auto Owner Trust, Ser 2001-A, Cl A-4
4.320%, 06/16/08		850		883
EQCC Home Equity Loan Trust, Ser 1998-1, Cl A4F
6.459%, 03/15/21		168		169
EQCC Home Equity Loan Trust, Ser 1998-2, Cl A4F
6.326%, 01/15/22		558		565
TOTAL ASSET-BACKED SECURITIES (COST $1,582)			$	1,617
Repurchase Agreements — 7.1%
Credit Suisse First Boston, 1.270%, dated 04/30/03, matures 05/01/03, repurchase price $7,000,247 (102% collateralized by various U.S. Treasury Obligations)		7,000		7,000
TOTAL REPURCHASE AGREEMENTS (COST $7,000)			$	7,000
Related Party Money Market Portfolio — 3.9%
ARK Money Market Portfolio Institutional Class Ú		3,877		3,877
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $3,877)			$	3,877
TOTAL INVESTMENTS — 102.2% (COST $96,501)			$	101,099
OTHER ASSETS & LIABILITIES, NET — (2.2)%			$	(2,191	)
TOTAL NET ASSETS — 100.0%			$	98,908

+  Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

Cl — Class

FHLB — Federal Home Loan Bank

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

MTN — Medium Term Note

REMIC — Real Estate Mortgage Investment Conduit

Ser — Series

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

45

FIXED INCOME PORTFOLIOS

INCOME PORTFOLIO

James M. Hannan

CO-PORTFOLIO MANAGER

James M. Hannan is co-manager of the Income Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He is also responsible for several separately managed institutional portfolios. Mr. Hannan has been a Portfolio Manager of AIA since 1996, a Vice President of Allfirst Bank from 1987 to 2003 and a Vice President of M&T Trust since 2003. He has more than 15 years of experience in the investment industry.

Wilmer C. Stith III, CFA

CO-PORTFOLIO MANAGER

Wilmer C. Stith III, CFA is co-manager of the Income Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He has been a Vice President of AIA and Portfolio Manager since 1996. He manages separate accounts, assists in the management of the money market portfolios, and is responsible for analyzing and trading various fixed income securities. Mr. Stith has more than 10 years of experience in the investment industry, and is a Chartered Financial Analyst.

Management Discussion and Analysis

Interest rates fell over the past fiscal year, as economic growth remained elusive. The 10-year Treasury declined from a high yield for the fiscal year of 5.27% on May 14, 2002 to a yield of 3.84% on April 30, 2003. The Federal Reserve lowered short-term interest rates once during the period in November 2002 to 1.25% from 1.75%.

Working within this declining interest rate environment, during the past fiscal year we reduced our allocation to high-quality U.S. Treasury securities in favor of higher-yielding corporate, government agency, and mortgage-backed securities. This sector shift aided the Portfolio as the credit sector outperformed the general market from November 2002 through April 2003. In particular, we added names such as AT&T Wireless Services, Boston Properties (a real estate investment trust), Goldman Sachs, and a number of energy companies. In the mortgage-backed sector we added 15-year pass-through securities versus 30-year securities to minimize our prepayment risk.

For most of the past year the duration of the Portfolio was either neutral to or longer than the Lehman Brothers U.S. Aggregate Bond Index. At fiscal year end, Portfolio duration was in line with the aforementioned index at slightly less than 4 years. Believing that securities with a duration between 6 and 9 years have the potential to outperform the shorter end of the yield curve, we have an overweighting in this portion of the yield curve.

Looking forward we will continue to consistently utilize our conservative and disciplined relative value investment process.

APRIL 30, 2003    /    ANNUAL REPORT

46

INCOME PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A AND B SHARES: VALUE OF A $10,000 INVESTMENT

	Inst’l Class Shares	Class A Shares*	Class B Shares*	Lehman Brothers U.S. Aggregate Bond Index
One year total return	9.86%	9.59%	8.90%	10.47%
One year total return with load	—	4.65%	3.90%	—
Annualized three year total return	9.14%	9.01%	8.21%	10.21%
Annualized three year total return with load	—	7.36%	7.35%	—
Annualized five year total return	6.26%	6.12%	5.46%	7.58%
Annualized five year total return with load	—	5.14%	5.14%	—
Annualized total return inception to date	6.46%	6.19%	5.49%	—
Annualized total return inception to date with load	—	5.69%	5.49%	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed, otherwise total return would have been lower.

Institutional Class Shares were offered beginning July 16, 1993. Class A Shares were offered beginning April 12, 1994. Performance for Class A Shares with load reflects the deduction of the maximum 4.50% sales charge. Class B Shares were offered beginning September 14, 1998. Performance for Class B Shares with load reflects the deduction of the applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year.

* Performance shown prior to the actual inception date of the Class A and Class B Shares represents that of the Institutional Class Shares adjusted for the sales charge and total operating expenses applicable to Class A and Class B Shares, respectively.

The performance of the Lehman Brothers U.S. Aggregate Bond Index does not include operating expenses incurred by the Portfolio. Index performance is for the period July 31, 1993 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

47

INCOME PORTFOLIO (continued)

Schedule of Investments

Description	Principal Amount (000)		Market Value (000)
U.S. Treasury Obligations — 9.1%
Treasury Inflation Index Bonds
3.375%, 01/15/12	$	7,000	$	7,972
3.000%, 07/15/12		2,000		2,188
U.S. Treasury Bonds
6.250%, 05/15/30		2,350		2,832
5.375%, 02/15/31		1,000		1,091
U.S. Treasury Notes
6.750%, 05/15/05		5,000		5,523
3.875%, 02/15/13		2,555		2,558
3.500%, 11/15/06		1,570		1,636
TOTAL U.S. TREASURY OBLIGATIONS (COST $22,210)			$	23,800
U.S. Government Agency Obligations — 12.1%
FHLB
4.500%, 11/15/12		3,000		3,068
FHLMC
5.875%, 03/21/11		10,500		11,641
5.250%, 01/15/06		3,000		3,253
5.125%, 07/15/12		4,850		5,208
FHLMC, GTD
9.000%, 09/15/08		4		4
FNMA
5.250%, 08/01/12		8,000		8,461
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $29,437)			$	31,635
U.S. Government Agency Mortgage-Backed Obligations — 42.6%
FHLMC
14.750%, 03/01/10		8		10
8.500%, 09/01/26		234		254
8.000%, 01/01/08		6		6
6.250%, 11/15/22		1,220		1,277

Description	Principal Amount (000)		Market Value (000)
FHLMC, REMIC
6.500%, 05/15/30	$	12,000	$	12,708
6.500%, 06/15/30		10,000		10,387
FNMA
7.000%, 02/01/26		850		903
7.000%, 03/01/29		422		446
5.500%, 11/01/17		7,075		7,365
5.500%, 03/01/18		10,000		10,409
FNMA ±
6.000%, 05/01/33		43,500		45,330
FNMA, REMIC
9.750%, 09/25/18		95		108
6.000%, 07/18/26		10,732		10,981
6.000%, 09/18/26		4,156		4,229
GNMA
7.500%, 05/15/22		135		145
7.500%, 10/15/23		779		838
7.500%, 12/15/23		371		399
7.500%, 05/15/24		699		750
7.500%, 10/15/24		749		805
7.000%, 02/15/24		1,111		1,186
7.000%, 05/15/24		1,044		1,115
7.000%, 05/15/24		1,034		1,103
7.000%, 09/20/25		363		386
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (COST $108,673)			$	111,140
Corporate Obligations — 51.0%
Banks — 7.7%
Bank of America +
8.070%, 12/31/26		2,500		2,927
Bank of New York +
7.780%, 12/01/26		1,500		1,697
Bank One
5.250%, 01/30/13		900		946
Citigroup
4.875%, 05/07/15		2,000		2,002
Crestar Capital Trust I
8.160%, 12/15/26		3,500		4,065
Mellon Capital I, Ser A
7.720%, 12/01/26		2,500		2,856
PNC Funding
6.125%, 09/01/03		1,300		1,320
5.750%, 08/01/06		2,500		2,722
Wells Fargo
5.000%, 11/15/14		1,445		1,493
TOTAL BANKS			$	20,028

APRIL 30, 2003    /    ANNUAL REPORT

48

INCOME PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value (000)
Consumer Discretionary — 1.4%
Comcast Cablevision Communications
8.875%, 05/01/17	$	2,000	$	2,533
Target
3.375%, 03/01/08		1,000		1,006
TOTAL CONSUMER DISCRETIONARY			$	3,539
Consumer Staples — 1.4%
Archer-Daniels-Midland
5.935%, 10/01/32		1,000		1,048
ConAgra Foods
9.875%, 11/15/05		1,000		1,174
Safeway
3.625%, 11/05/03		1,330		1,337
TOTAL CONSUMER STAPLES			$	3,559
Energy — 10.0%
Anadarko Petroleum
7.200%, 03/15/29		3,800		4,462
Anderson Exploration
6.750%, 03/15/11		1,000		1,130
Conoco Funding
7.250%, 10/15/31		1,290		1,564
Devon Financing
6.875%, 09/30/11		950		1,093
DTE Energy
6.000%, 06/01/04		2,600		2,713
6.375%, 04/15/33		1,000		1,048
Husky Oil
7.550%, 11/15/16		2,100		2,539
Kinder Morgan
6.650%, 03/01/05		2,750		2,971
National Oilwell +
5.650%, 11/15/12		2,000		2,091
Smith International ‡ +
2.414%, 10/15/03		4,000		4,003
Valero Logistics +
6.050%, 03/15/13		1,500		1,572
XTO Energy +
6.250%, 04/15/13		1,000		1,042
TOTAL ENERGY			$	26,228
Financials — 23.1%
Bear Stearns ‡
1.565%, 06/26/04		1,830		1,822

Description	Principal Amount (000)		Market Value (000)
CIT Group
7.500%, 11/14/03	$	5,000	$	5,143
Countrywide Home ‡
1.568%, 12/10/03		3,000		3,000
Deutsche Ausgleichsbank
7.000%, 06/23/05		250		277
Ford Motor Credit
6.700%, 07/16/04		3,000		3,113
General Electric Capital
3.500%, 05/01/08		1,150		1,155
General Motors Acceptance
7.000%, 02/01/12		4,000		4,098
General Motors Acceptance, MTN ‡
1.604%, 07/21/03		5,000		4,997
Goldman Sachs Group
5.700%, 09/01/12		1,000		1,065
5.500%, 11/15/14		1,000		1,046
John Deere Capital
4.500%, 08/22/07		1,300		1,358
JP Morgan
7.625%, 09/15/04		2,497		2,678
Lehman Brothers Holdings
8.250%, 06/15/07		2,500		2,970
7.000%, 02/01/08		1,107		1,272
MBNA, MTN
6.150%, 10/01/03		2,000		2,035
Merrill Lynch
4.000%, 11/15/07		1,455		1,492
Merrill Lynch, MTN, Ser B ‡
1.710%, 06/23/03		5,000		5,001
Morgan Stanley, MTN ‡
1.650%, 02/02/04		2,100		2,104
Morgan Stanley, MTN, Ser C ‡
1.599%, 08/07/03		5,000		5,004
National Rural Utilities
6.500%, 03/01/07		1,180		1,312
Newcourt Credit
6.875%, 02/16/05		3,500		3,717
SLM
3.625%, 03/17/08		2,000		2,015
SUSA Partnership
7.125%, 11/01/03		3,600		3,695
TOTAL FINANCIALS			$	60,369

ANNUAL REPORT    /    APRIL 30, 2003

49

INCOME PORTFOLIO (concluded)

Description	Principal Amount (000)		Market Value (000)
Industrials — 3.6%
Canadian National Railway
6.450%, 07/15/06	$	2,000	$	2,194
General Electric
5.000%, 02/01/13		1,000		1,034
Norfolk Southern ‡
1.849%, 07/07/03		6,045		6,048
TOTAL INDUSTRIALS			$	9,276
Insurance — 0.4%
ASIF Global Financing +
4.900%, 01/17/13		1,175		1,199
TOTAL INSURANCE			$	1,199
Materials — 0.4%
Westvaco
6.850%, 11/15/04		1,000		1,061
TOTAL MATERIALS			$	1,061
Real Estate Investment Trust — 0.4%
Boston Properties +
6.250%, 01/15/13		1,000		1,072
TOTAL REAL ESTATE INVESTMENT TRUST			$	1,072
Telecommunication Services — 1.8%
AT&T Wireless Services
7.875%, 03/01/11		1,500		1,728
Verizon Wireless ‡
1.659%, 12/17/03		2,865		2,863
TOTAL TELECOMMUNICATION SERVICES			$	4,591
Utilities — 0.8%
Consolidated Natural Gas, Ser C
6.250%, 11/01/11		2,000		2,229
TOTAL UTILITIES			$	2,229
TOTAL CORPORATE OBLIGATIONS (COST $128,107)			$	133,151
Asset-Backed Securities — 5.5%
Chase Funding Mortgage Loan, Ser 2000-1, Cl IA3
7.674%, 10/25/19		895		904
Citibank Credit Card Master Trust I, Ser 1998-9, Cl A
5.300%, 01/09/06		2,000		2,054
Countrywide Funding, Ser 1994-4, Cl A12
6.950%, 04/25/04		1,171		1,183

Description	Principal Amount/ Shares (000)		Market Value (000)
L.A. Arena Funding, Ser 1, Cl A +
7.656%, 12/15/26	$	1,933	$	2,087
The Money Store Home Equity Trust, Ser 1997-D, Cl AF5
6.555%, 12/15/38		3,165		3,240
William Street Funding, Ser 2003-1, Cl A ‡ +
1.620%, 04/23/06		5,000		5,019
TOTAL ASSET-BACKED SECURITIES (COST $14,164)			$	14,487
Repurchase Agreements — 0.8%
Credit Suisse First Boston 1.270%, dated 4/30/03, matures 5/1/03 repurchase price $2,000,071 (102% collateralized by various U.S. Treasury Obligations)		2,000		2,000
TOTAL REPURCHASE AGREEMENTS (COST $2,000)			$	2,000
Related Party Money Market Portfolio — 1.8%
ARK Money Market Portfolio Institutional Class Ú		4,634		4,634
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $4,634)			$	4,634
TOTAL INVESTMENTS — 122.9% (COST $309,225)			$	320,847
OTHER ASSETS & LIABILITIES, NET — (22.9)%			$	(59,692	)
TOTAL NET ASSETS — 100.0%			$	261,155

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 4/30/03. The date shown is the stated maturity.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

± When Issued Security, total cost $50,666 (in thousands)

+ Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

Cl — Class

FHLB — Federal Home Loan Bank

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

GNMA — Government National Mortgage Association

GTD — Guaranteed Mortgage Certificate

MTN — Medium Term Note

REMIC — Real Estate Mortgage Investment Conduit

Ser — Series

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

50

EQUITY PORTFOLIOS

Equity

Portfolios

Simply stated, our investment management philosophy for the Equity Portfolios is quality for the long term. We look for outstanding businesses that are reasonably priced, because over the long haul, experience has shown the benefits of buying a quality company at a fair price, versus a fair business at a bargain price.

In their research, our Portfolio Managers look for businesses that demonstrate faster-than-average growth, strong cash flows, and returns on capital in excess of the cost of capital.

We look for high-quality companies and use a bottom-up stock selection process with strict criteria. We select the stocks of companies that demonstrate superior sales, cash flow, and earnings growth rates, and that operate in a dynamic market and industry. We also look for strong balance sheets and capable, shareholder-oriented management. We like companies that can earn returns on capital in excess of their cost of capital.

We believe history has become a less-than-accurate predictor of the future; thus, we place greater emphasis on meeting with management to assess each company’s future. Increasingly important is the teaming of strong financials with enlightened corporate leadership, a combination necessary to thrive in today’s highly competitive, rapidly evolving business environment. Our team of professionals, which includes all of our Portfolio Managers, searches for the best companies based on our specific screening criteria.

Next, we assess future earnings prospects seeking to identify the companies that can continue to generate superior sales and profit growth. We examine industry dynamics, the companies’ relative positions, cost structures, margin trends, and management plans. Finally, we assess each company’s current stock valuation relative to future earnings stream against history, competitors, and the S&P 500.

Typically, we review a portfolio holding for sale under the following circumstances: when the price objective is achieved, when fundamentals deteriorate and make the achievement of objectives unlikely, when the stock underperforms the S&P 500 by 20 percent or more on a relative basis, and when a more attractive opportunity presents itself.

51

EQUITY PORTFOLIOS

BALANCED PORTFOLIO

PORTFOLIO MANAGERS

The Balanced Portfolio is managed by a Portfolio Management Team under the direction of J. Eric Leo. Through the team approach, AIA seeks consistent implementation of process and continuity in investment management staff for the Portfolio. Mr. Leo has been a Portfolio Manager of AIA since 1996, a Vice President of Allfirst Bank from 1987 to 2003 and a Vice President of M&T Trust since 2003. Mr. Leo has more than 30 years of experience in the investment industry.

Management Discussion and Analysis

This year was one of the more challenging years from an investment standpoint in decades. The equity markets experienced their third consecutive year of negative returns. Equity investors shied away from equities on concerns over the health of a struggling economy, and the worries of an armed conflict with Iraq. As equities in general underperformed, this Portfolio was aided by its weighting in fixed income assets. The bond market had a superb year as interest rates fell and bond prices appreciated handsomely. Because of its positioning, the Portfolio didn’t suffer the poor returns witnessed by most equity funds over the last fiscal year.

The largest positive contributing factor to Portfolio performance this year was our exposure to the fixed income market. However, several equities that positively impacted returns were Amgen, Eli Lilly, and Best Buy. The Portfolio’s worst-performing equities were Lucent, Taiwan Semiconductor, and Honeywell.

The Portfolio’s style is to invest approximately two thirds of its capital in equities with a growth bias, while investing approximately one third in fixed income assets. This approach creates a solid combination of aggressiveness and conservatism. Aggressiveness in looking at stocks of companies that over time we feel have the potential to grow at double digit rates, and conservatism in owning quality fixed assets that seek to deliver a competitive income stream. We continue to search for investments that we believe can add value to the Portfolio with the potential to deliver strong long-term returns.

APRIL 30, 2003    /    ANNUAL REPORT

52

BALANCED PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A AND B SHARES: VALUE OF A $10,000 INVESTMENT

	Inst'l Class Shares	Class A Shares*	Class B Shares*	S&P 500 Index	Lehman Brothers U.S. Aggregate Bond Index	60/40 Hybrid **
One year total return	-8.52%	-8.71%	-9.31%	-13.31%	10.47%	-3.82%
One year total return with load	—	-13.04%	-13.81%	—	—	—
Annualized three year total return	-8.15%	-8.25%	-8.92%	-12.96%	10.21%	-3.83%
Annualized three year total return with load	—	-9.73%	-9.76%	—	—	—
Annualized five year total return	2.31%	2.17%	1.23%	-2.42%	7.58%	1.96%
Annualized five year total return with load	—	1.18%	0.90%	—	—	—
Annualized total return inception to date	7.64%	7.32%	6.48%	—	—	—
Annualized total return inception to date with load	—	6.79%	6.48%	—	—	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Institutional Class Shares were offered beginning July 16, 1993. Class A Shares were offered beginning March 9, 1994. Performance for Class A Shares with load reflects the deduction of the maximum 4.75% sales charge. Class B Shares were offered beginning September 14, 1998. Performance for Class B Shares with load reflects the deduction of the applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year.

* Performance shown prior to the actual inception date of the Class A and Class B Shares represents that of the Institutional Class Shares adjusted for the sales charge and total operating expenses applicable to Class A and Class B Shares, respectively.

The performance of the S&P 500 Index and Lehman Brothers U.S. Aggregate Bond Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period July 31, 1993 to April 30, 2003.

** Benchmark is comprised of two unmanaged indexes, weighted 60% S&P 500 Index and 40% Lehman Brothers U.S. Aggregate Bond Index. The Portfolio uses a blended index as a comparison index because it is better suited to the Portfolio’s objective.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

53

BALANCED PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)	Market Value
Common Stock — 69.5%
Consumer Discretionary — 12.6%
AOL Time Warner *	180	$	2,462
Best Buy *	45		1,556
Brinker International *	60		1,905
Centex	51		3,367
Clear Channel Communications *	35		1,369
Darden Restaurants	90		1,576
DR Horton	85		2,015
Lear *	45		1,788
Lowe’s	55		2,414
Target	62		2,073
TOTAL CONSUMER DISCRETIONARY		$	20,525
Consumer Staples — 7.1%
General Mills	40		1,804
Kraft Foods, Cl A	75		2,318
PepsiCo	80		3,462
Procter & Gamble	36		3,235
Sysco	30		862
TOTAL CONSUMER STAPLES		$	11,681
Energy — 5.3%
Nabors Industries *	85		3,332
Smith International *	60		2,134
Weatherford International *	80		3,218
TOTAL ENERGY		$	8,684

Description	Shares (000)	Market Value
Financials — 9.2%
American International Group	75	$	4,346
Freddie Mac	35		2,027
JP Morgan Chase	100		2,935
Morgan Stanley	53		2,372
Wells Fargo	70		3,378
TOTAL FINANCIALS		$	15,058
Health Care — 14.1%
Abbott Laboratories	65		2,641
Amgen *	45		2,759
Eli Lilly	59		3,765
Genentech *	60		2,279
Health Management Association	80		1,365
Johnson & Johnson	38		2,142
Pfizer	153		4,705
Wyeth	78		3,395
TOTAL HEALTH CARE		$	23,051
Industrials — 5.9%
First Data	40		1,569
General Electric	105		3,093
Northrop Grumman	37		3,254
SPX *	50		1,690
TOTAL INDUSTRIALS		$	9,606
Information Technology — 13.3%
Celestica *	75		867
Cisco Systems *	131		1,970
Corning *	350		1,897
EMC-Mass *	100		909
International Business Machines	35		2,972
Jabil Circuit *	121		2,265
Microsoft	110		2,813
STMicroelectronics NV, ADR	125		2,574
Taiwan Semiconductor Manufacturing, ADR *	160		1,339
Texas Instruments	80		1,479
Veritas Software *	125		2,751
TOTAL INFORMATION TECHNOLOGY		$	21,836
Telecommunication Services — 2.0%
Alltel	45		2,109
AT&T Wireless Services *	175		1,130
TOTAL TELECOMMUNICATION SERVICES		$	3,239
TOTAL COMMON STOCK (COST $121,018)		$	113,680

APRIL 30, 2003    /    ANNUAL REPORT

54

BALANCED PORTFOLIO (continued)

Description	Principal Amount (000)		Market Value
U.S. Treasury Obligations — 3.2%
Treasury Inflation Index Bonds
3.500%, 01/15/11	$	1,965	$	2,288
U.S. Treasury Bonds
8.000%, 11/15/21		1,000		1,403
U.S. Treasury Notes
6.500%, 08/15/05		1,000		1,110
5.000%, 08/15/11		320		350
TOTAL U.S. TREASURY OBLIGATIONS (COST $4,889)			$	5,151
U.S. Government Agency Obligations — 5.7%
FHLMC
5.875%, 03/21/11		4,000		4,435
5.250%, 01/15/06		2,000		2,168
FNMA
5.250%, 08/01/12		2,500		2,644
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $8,437)			$	9,247
U.S. Government Agency Mortgage-Backed Obligations — 10.1%
FHLMC
8.500%, 09/01/26		26		28
6.500%, 04/01/08		252		268
6.500%, 05/15/30		1,325		1,398
FNMA
8.000%, 12/01/08		89		96
7.500%, 01/01/30		190		202
7.500%, 03/01/30		602		642
7.500%, 04/01/30		167		178
7.000%, 02/01/07		55		59
7.000%, 12/01/25		125		133
7.000%, 02/01/26		719		763
5.500%, 03/01/18		5,000		5,204
FNMA, REMIC
9.750%, 09/25/18		32		36
6.000%, 09/18/26		4,156		4,229
GNMA
7.500%, 12/15/23		247		266
7.500%, 10/15/23		701		754
7.000%, 09/25/25		273		289
7.000%, 02/15/24		634		677
7.000%, 05/15/24		627		669
7.000%, 05/15/24		620		662
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (COST $16,051)			$	16,553

Description	Principal Amount (000)		Market Value
Corporate Obligations — 8.8%
Banks — 1.3%
Bank of America
5.250%, 02/01/07	$	1,500	$	1,629
Bank of New York +
7.780%, 12/01/26		500		565
TOTAL BANKS			$	2,194
Consumer Discretionary — 0.4%
Comcast Cablevision Communications
8.875%, 05/01/17		500		633
TOTAL CONSUMER DISCRETIONARY			$	633
Energy — 1.6%
Anadarko Petroleum
7.200%, 03/15/29		500		587
Husky Oil
7.550%, 11/15/16		725		877
Kinder Morgan
6.650%, 03/01/05		500		540
Valero Logistics +
6.050%, 03/15/13		500		524
TOTAL ENERGY			$	2,528
Financials — 3.9%
Citicorp Capital I
7.933%, 02/15/27		250		293
Citigroup
6.500%, 01/18/11		1,300		1,486
Crestar Capital Trust I
8.160%, 12/15/26		800		929
General Motors Acceptance
7.000%, 02/01/12		750		768
Household Finance
6.375%, 10/15/11		1,000		1,095
Mellon Capital I, Ser A
7.720%, 12/01/26		600		686
Mellon Capital II, Ser B
7.995%, 01/15/27		500		587
Newcourt Credit
6.875%, 02/16/05		500		531
TOTAL FINANCIALS			$	6,375
Industrials — 0.7%
Union Pacific
7.375%, 09/15/09		1,000		1,183
TOTAL INDUSTRIALS			$	1,183

ANNUAL REPORT    /    APRIL 30, 2003

55

BALANCED PORTFOLIO (concluded)

Description	Principal Amount/ Shares (000)		Market Value
Utilities — 0.9%
Consolidated Natural Gas
6.250%, 11/01/11	$	635	$	708
Hydro-Quebec, Ser IO
8.050%, 07/07/24		575		764
TOTAL UTILITIES			$	1,472
TOTAL CORPORATE OBLIGATIONS (COST $12,567)			$	14,385
Asset-Backed Securities — 1.6%
Chase Funding Mortgage Loan, Ser 2000-1, Cl IA3
7.674%, 10/25/19		298		301
Contimortgage Home Equity Loan Trust, Ser 1998-2, Cl A6
6.360%, 11/15/19		407		414
Countrywide Funding, Ser 1994-4, Cl A12
6.950%, 04/25/24		409		413
Honda Auto Receivables Owner Trust, Ser 2002-1, Cl A3
3.500%, 10/17/05		1,150		1,167
The Money Store Home Equity Trust, Ser 97-D, Cl AF5
6.555%, 12/15/38		291		298
TOTAL ASSET-BACKED SECURITIES (COST $2,549)			$	2,593
Related Party Money Market Portfolio — 4.1%
ARK Money Market Portfolio Institutional Class Ú		6,710		6,710
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $6,710)			$	6,710
TOTAL INVESTMENTS — 103.0% (COST $172,221)			$	168,319
OTHER ASSETS & LIABILITIES, NET — (3.0)%			$	(4,827	)
TOTAL NET ASSETS — 100.0%			$	163,492

* Non-income producing security.

+ Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ADR —American Depositary Receipt

Cl — Class

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

GNMA — Government National Mortgage Association

REMIC — Real Estate Mortgage Investment Conduit

Ser — Series

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

56

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EQUITY PORTFOLIOS

EQUITY INCOME PORTFOLIO

Allen J. Ashcroft, Jr.

CO-PORTFOLIO MANAGER

Allen J. Ashcroft, Jr. is co-manager of the Equity Income Portfolio and is co-manager of other ARK Funds Portfolios. He has been a Principal of AIA and Portfolio Manager since 1996, a Vice President of Allfirst Bank from 1995 to 2003 and a Vice President of M&T Trust since 2003. Mr. Ashcroft has more than 20 years of experience in investment research and equity analysis.

Clyde L. Randall II, CFA

CO-PORTFOLIO MANAGER

Clyde L. Randall II, CFA is co-manager of the Equity Income Portfolio, and is co-manager of other ARK Funds Portfolios. Mr. Randall has been a Principal of AIA and Portfolio Manager since 1996, a Vice President of Allfirst Bank from 1995 to 2003 and a Vice President of M&T Trust since 2003. He has more than 14 years of experience in investment research and equity analysis and is a Chartered Financial Analyst.

Management Discussion and Analysis

Market returns were broadly down during the Portfolio’s 2003 fiscal year, turning up in early March but not recovering fully. Behind the averages, individual stocks declined significantly, many over 50%. Many were from sectors which had historically been quite stable – electric utilities, natural gas, and consumer companies.

In the context of this market, the Portfolio experienced good performance from holdings in many sectors, including real estate, technology, finance, and health care. However, these positive performances were offset by large declines in several utility, natural gas, and consumer-related stocks. Our assumptions about the level of diversification needed to moderate risk were based on historical norms of volatility, but these declines were well in excess of historical norms and so had a meaningful negative impact on Portfolio performance.

New positions in the last fiscal year included Bristol-Myers Squibb, Electronic Data Systems, Masco, Verizon Communications, Merck, General Mills, and Maytag. Sales included Telefonica, Safeco, United Parcel Service, Dover, Interpublic Group, SBC Communications, CVS, Hartford Financial Services Group, and Duke Energy. Looking forward, we will continue to seek dividend-paying stocks that we feel have the potential for competitive long-term total returns.

APRIL 30, 2003    /    ANNUAL REPORT

58

EQUITY INCOME PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS: VALUE OF A $100,000 INVESTMENT

CLASS A SHARES: VALUE OF A $10,000 INVESTMENT

	Inst’l Class Shares	Class A Shares*	S&P 500 Index
One year total return	-19.21%	-19.38%	-13.31%
One year total return with load	—	-23.19%	—
Annualized three year total return	-7.59%	-7.71%	-12.96%
Annualized three year total return with load	—	-9.20%	—
Annualized five year total return	-2.82%	-2.97%	-2.42%
Annualized five year total return with load	—	-3.90%	—
Annualized total return inception to date	3.44%	3.29%	—
Annualized total return inception to date with load	—	2.51%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Institutional Class Shares were offered beginning November 18, 1996. Class A Shares were offered beginning May 9, 1997. Performance for Class A Shares with load reflects the deduction of the maximum 4.75% sales charge.

* Performance shown prior to the actual inception date of the Class A Shares represents that of the Institutional Class Shares adjusted for the sales charge and total annual operating expenses applicable to Class A Shares.

The performance of the S&P 500 Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period November 30, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

59

EQUITY INCOME PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)	Market Value (000)
Common Stock — 89.9%
Consumer Discretionary — 7.8%
Maytag	40	$	834
New York Times, Cl A	17		788
Newell Rubbermaid	50		1,524
Target	40		1,338
Walt Disney	35		653
TOTAL CONSUMER DISCRETIONARY		$	5,137
Consumer Staples — 11.0%
Adolph Coors, Cl B	10		535
Altria Group	30		923
General Mills	15		677
Kellogg	40		1,309
Kraft Foods, Cl A	35		1,082
PepsiCo	35		1,515
Procter & Gamble	13		1,168
TOTAL CONSUMER STAPLES		$	7,209
Energy — 8.1%
BP, ADR	42		1,619
Exxon Mobil	66		2,323
GlobalSantaFe	65		1,375
TOTAL ENERGY		$	5,317
Financials — 26.1%
ACE	28		926
Boston Properties	20		784

Description	Shares (000)	Market Value (000)
Chubb	24	$	1,269
Citigroup	45		1,766
FleetBoston Financial	50		1,326
JP Morgan Chase	25		734
Keycorp	50		1,206
New Plan Excel Realty Trust	40		799
Simon Property Group	22		808
U.S. Bancorp	80		1,772
Waddell & Reed Financial, Cl A	80		1,600
Washington Mutual	45		1,778
Wells Fargo	50		2,413
TOTAL FINANCIALS		$	17,181
Health Care — 10.7%
Abbott Laboratories	35		1,422
Bristol-Myers Squibb	40		1,022
Merck	20		1,164
Pfizer	55		1,691
Wyeth	40		1,741
TOTAL HEALTH CARE		$	7,040
Industrials — 9.3%
General Dynamics	13		795
General Electric	50		1,473
Knightsbridge Tankers	85		1,040
Masco	60		1,264
United Technologies	25		1,545
TOTAL INDUSTRIALS		$	6,117
Information Technology — 6.6%
Electronic Data Systems	50		907
International Business Machines	20		1,698
Koninklijke Philips Electronics	60		1,121
Texas Instruments	35		647
TOTAL INFORMATION TECHNOLOGY		$	4,373
Materials — 2.8%
Alcoa	40		917
Eastman Chemical	30		916
TOTAL MATERIALS		$	1,833
Telecommunication Services — 3.3%
BellSouth	45		1,147
Verizon Communications	27		1,009
TOTAL TELECOMMUNICATION SERVICES		$	2,156
Utilities — 4.2%
Constellation Energy Group	42		1,230
El Paso	60		450
Exelon	20		1,061
TOTAL UTILITIES		$	2,741
TOTAL COMMON STOCK (COST $56,910)		$	59,104

APRIL 30, 2003    /    ANNUAL REPORT

60

EQUITY INCOME PORTFOLIO (concluded)

Description	Shares/Principal Amount (000)		Market Value (000)
Convertible Preferred Stock — 2.3%
Industrials — 2.3%
Northrop Grumman		15	$	1,533
TOTAL INDUSTRIALS			$	1,533
TOTAL CONVERTIBLE PREFERRED STOCK (COST $1,579)			$	1,533
Repurchase Agreements — 3.0%
Credit Suisse First Boston 1.270%, dated 4/30/03, matures 5/1/03 repurchase price $2,000,071 (102% collateralized by various U.S. Treasury Obligations)	$	2,000		2,000
TOTAL REPURCHASE AGREEMENTS (COST $2,000)			$	2,000
Related Party Money Market Portfolio — 4.7%
ARK Money Market Portfolio Institutional Class Ú		3,114		3,114
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $3,114)			$	3,114
TOTAL INVESTMENTS — 99.9% (COST $63,603)			$	65,751
OTHER ASSETS & LIABILITIES, NET — 0.1%			$	64
TOTAL NET ASSETS — 100.0%			$	65,815

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ADR—American Depositary Receipt

Cl—Class

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

61

EQUITY PORTFOLIOS

VALUE EQUITY PORTFOLIO

J. Eric Leo

CO-PORTFOLIO MANAGER

J. Eric Leo is co-manager of the Value Equity Portfolio and heads a Portfolio Management Team that manages the Balanced Portfolio. Mr. Leo has been a Portfolio Manager of AIA since 1996, a Vice President of Allfirst Bank from 1987 to 2003 and a Vice President of M&T Trust since 2003. Mr. Leo has more than 30 years of experience in the investment industry.

Barbara L. Rishel

CO-PORTFOLIO MANAGER

Barbara L. Rishel is co-manager of the Value Equity Portfolio. Ms. Rishel has been a Principal of AIA since 2001. She is also an equity analyst. She has more than 15 years of experience in the investment industry.

Management Discussion and Analysis

For the fiscal year ended April 30, 2003, the Portfolio lagged the S&P 500/BARRA Value Index as both economically sensitive sectors and traditionally defensive sectors failed to live up to investors’ expectations. The Portfolio’s exposure to basic materials and industrials proved too early, and an overweight position in health care, particularly in Baxter International and Abbott Laboratories, hurt Portfolio performance due to greater than expected earnings disappointments. Our relative underweighted position in financials also negatively impacted Portfolio returns. Overall, the Portfolio was aided by strength in the telecommunications and technology sectors, particularly Corning and First Data, a transaction processing company. Short-term volatility inherent to turnaround situations was demonstrated by Crown Holdings, which was a significant positive contributor to Portfolio performance in the fourth quarter of 2002, but detracted from our overall returns for the year. Crown Holdings remains in the Portfolio due to its strong brands, dominant market position, and growth potential.

Positions were initiated in several financial holdings: American International Group, Lincoln National, and Capital One Financial; and increased in AT&T Wireless and Comcast, which was distributed through AT&T. Nextel Communications, which was a strong contributor to Portfolio performance over the past two quarters, was sold as it had reached our price target. Positions were also eliminated in Allstate and Tyco International, and overweighted positions were decreased in Lowe’s, Wells Fargo, and selected energy companies.

We will continue to seek undervalued or out-of-favor stocks with higher-than-average sales growth and return on equity whose management we feel has the ability to adjust to the dynamics of changing economic and business conditions.

APRIL 30, 2003    /    ANNUAL REPORT

62

VALUE EQUITY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A AND B SHARES: VALUE OF A $10,000 INVESTMENT

	Inst’l Class Shares	Class A Shares*	Class B Shares*	S&P 500/ Barra Value Index	S&P 500 Index
One year total return	-19.03%	-19.12%	-19.64%	-14.61%	-13.31%
One year total return with load	—	-22.96%	-23.58%	—	—
Annualized three year total return	-11.68%	-11.76%	-12.40%	-8.21%	-12.96%
Annualized three year total return with load	—	-13.17%	-13.08%	—	—
Annualized five year total return	-3.34%	-3.45%	-4.53%	-2.49%	-2.42%
Annualized five year total return with load	—	-4.39%	-4.76%	—	—
Annualized total return inception to date	5.12%	5.05%	3.89%	—	—
Annualized total return inception to date with load	—	4.33%	3.89%	—	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

For each class, performance presented prior to March 29, 1998 reflects the performance of the Marketvest Equity Fund from its inception date of April 1, 1996. Class A Shares were offered beginning April 1, 1998. Performance for Class A Shares with load reflects the deduction of the maximum 4.75% sales charge. Class B Shares were offered beginning September 14, 1998. Performance for Class B Shares with load reflects the deduction of the applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year.

* Performance shown prior to the actual inception date of the Class A and Class B Shares represents that of the Institutional Class Shares adjusted for the sales charge and total operating expenses applicable to Class A and Class B Shares, respectively.

The performance of the S&P 500 Index and the S&P 500/Barra Value Index does not include operating expenses incurred by the Portfolios. Index performance is for the period March 31, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

63

VALUE EQUITY PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)	Market Value (000)
Common Stock — 97.1%
Consumer Discretionary — 5.9%
AOL Time Warner *	130	$	1,778
Comcast, Cl A *	60		1,915
Lear *	50		1,987
Lowe’s	85		3,731
Walt Disney	50		933
TOTAL CONSUMER DISCRETIONARY		$	10,344
Consumer Staples — 5.5%
HJ Heinz	43		1,273
Kraft Foods, Cl A	100		3,090
PepsiCo	121		5,215
TOTAL CONSUMER STAPLES		$	9,578
Energy — 14.5%
BP, ADR	195		7,515
ChevronTexaco	84		5,301
Exxon Mobil	245		8,624
Nabors Industries *	50		1,960
Weatherford International *	47		1,891
TOTAL ENERGY		$	25,291
Financials — 17.5%
American International Group	60		3,477
Capital One Financial	50		2,093
CIT Group	100		2,037
Citigroup	105		4,121
Fannie Mae	25		1,810
Lincoln National	57		1,822

Description	Shares (000)	Market Value (000)
Travelers Property Casualty, Cl A	85	$	1,372
U.S. Bancorp	85		1,883
Waddell & Reed Financial, Cl A	300		6,000
Washington Mutual	70		2,765
Wells Fargo	65		3,137
TOTAL FINANCIALS		$	30,517
Health Care — 16.4%
Abbott Laboratories	140		5,688
Becton Dickinson	175		6,195
Bristol-Myers Squibb	95		2,426
Medtronic	140		6,684
Wyeth	175		7,635
TOTAL HEALTH CARE		$	28,628
Industrials — 10.9%
First Data	68		2,648
General Electric	55		1,620
Ingersoll-Rand, Cl A	85		3,747
Northrop Grumman	31		2,761
Parker Hannifin	75		3,051
Raytheon	125		3,741
United Technologies	25		1,545
TOTAL INDUSTRIALS		$	19,113
Information Technology — 8.3%
Agere Systems, Cl B *	1,100		1,881
Corning *	700		3,794
International Business Machines	45		3,821
Lucent Technologies *	1,050		1,890
Motorola	200		1,582
Solectron *	500		1,595
TOTAL INFORMATION TECHNOLOGY		$	14,563
Materials — 6.7%
Ball	70		3,931
Constar International *	140		1,015
Crown Holdings *	150		795
Engelhard	200		4,910
Pactiv *	50		1,026
TOTAL MATERIALS		$	11,677
Telecommunication Services — 7.5%
AT&T	80		1,364
AT&T Wireless Services *	350		2,261
BellSouth	145		3,696
SBC Communications	84		1,972
Verizon Communications	100		3,751
TOTAL TELECOMMUNICATION SERVICES		$	13,044

APRIL 30, 2003    /    ANNUAL REPORT

64

VALUE EQUITY PORTFOLIO (concluded)

Description	Shares (000)	Market Value (000)
Utilities — 3.9%
Questar	226	$	6,813
TOTAL UTILITIES		$	6,813
TOTAL COMMON STOCK (COST) $127,837)		$	169,568
Related Party Money Market Portfolio — 3.3%
ARK Money Market Portfolio Institutional Class Ú	5,762		5,762
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $5,762)		$	5,762
TOTAL INVESTMENTS — 100.4% (COST $133,599)		$	175,330
OTHER ASSETS & LIABILITIES, NET — (0.4)%		$	(615	)
TOTAL NET ASSETS — 100.0%		$	174,715

* Non-income producing security

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ADR — American Depositary Receipt

Cl — Class

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

65

EQUITY PORTFOLIOS

EQUITY INDEX PORTFOLIO

Clarence W. Woods, Jr.

CO-PORTFOLIO MANAGER

Clarence W. Woods, Jr. is co-manager of the Equity Index Portfolio. Mr. Woods has been a Vice President and Principal of, and Chief Equity Trader for, AIA since 1996. He heads the equity-trading unit. Mr. Woods has more than 17 years of experience in the investment industry.

Peter C. Hastings, CFA

CO-PORTFOLIO MANAGER

Peter C. Hastings, CFA is co-manager of the Equity Index Portfolio. Mr. Hastings has been a Vice President of AIA since 1997. Mr. Hastings has more than 6 years of experience in the investment industry and is a Chartered Financial Analyst.

Management Discussion and Analysis

The fiscal year ended April 30, 2003 was relatively quiet in terms of changes in composition of the S&P 500 Index via the traditional manner of through-mergers and acquisitions. During the period, Standard and Poor’s elected to remove foreign-based companies from the Index. Also, most of the airlines were removed either due to bankruptcies or the likelihood of declaring bankruptcy. In all, a total of 24 changes occurred in the S&P 500 Index, which turned out to be a smaller number than usual. In terms of contribution to performance, Amgen, Comcast, and Ebay added the most on a market capitalization basis, while Intel, Altria, and Home Depot were the three with the most negative impact to performance. We continue to manage the Portfolio with the goal of seeking to closely replicate the performance of the S&P 500 Index.

APRIL 30, 2003    /    ANNUAL REPORT

66

EQUITY INDEX PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A SHARES: VALUE OF A $10,000 INVESTMENT

	Inst'l Class Shares	Class A Shares*	S&P 500 Index
One year total return	-13.50%	-13.70%	-13.31%
One year total return with load	—	-17.81%	—
Annualized three year total return	-12.81%	-13.03%	-12.96%
Annualized three year total return with load	—	-14.43%	—
Annualized five year total return	-2.21%	-2.46%	-2.42%
Annualized five year total return with load	—	-3.41%	—
Annualized total return inception to date	0.77%	0.92%	—
Annualized total return inception to date with load	—	0.02%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

* Institutional Class Shares were offered beginning October 1, 1997. Class A Shares were offered beginning November 3, 1997. Performance for Class A Shares with load reflects the deduction of the maximum 4.75% sales charge.

The performance of the S&P 500 Index does not include operating expenses that are incurred by the Portfolio. Index performance for the Institutional Class Shares is for the period October 31, 1997 to April 30, 2003. Index performance for the Class A Shares is for the period November 30, 1997 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

67

EQUITY INDEX PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)		Market Value (000)
Common Stock — 97.9%
Consumer Discretionary — 13.9%
American Greetings, Cl A *	—	†	$	5
AOL Time Warner *	52			719
Autonation *	3			48
Autozone *	1			96
Bed Bath & Beyond *	3			136
Best Buy *	4			124
Big Lots *	1			16
Black & Decker	1			30
Brunswick	1			20
Carnival	7			204
Centex	1			45
Circuit City Stores	2			13
Clear Channel Communications *	7			281
Comcast, Cl A *	27			865
Cooper Tire & Rubber	—	†		3
Costco Wholesale *	5			185
Dana	2			16
Darden Restaurants	2			29
Delphi	7			55
Dillard’s, Cl A	1			15
Dollar General	4			57
Dow Jones	1			33
Eastman Kodak	3			98
Ebay *	4			339
Family Dollar Stores	2			70
Federated Department Stores	2			61
Ford Motor	21			221

Description	Shares (000)	Market Value (000)
Fortune Brands	2	$	80
Gannett	3		238
Gap	10		173
General Motors	7		238
Genuine Parts	2		56
Goodyear Tire & Rubber	1		9
Harley-Davidson	3		151
Harrah's Entertainment *	1		51
Hasbro	2		32
Hilton Hotels	4		55
Home Depot	27		770
International Game Technology *	1		82
Interpublic Group	4		46
JC Penney	3		51
Johnson Controls	1		82
Jones Apparel Group *	1		41
KB Home	1		26
Knight Ridder	1		58
Kohl’s *	4		224
Leggett & Platt	2		43
Limited	5		80
Liz Claiborne	1		44
Lowe’s	9		404
Marriott International, Cl A	2		89
Mattel	5		112
May Department Stores	3		72
Maytag	1		15
McDonald’s	15		255
McGraw-Hill	2		126
Meredith	1		24
New York Times, Cl A	2		82
Newell Rubbermaid	3		85
Nike, Cl B	3		159
Nordstrom	1		20
Office Depot *	3		42
Omnicom Group	2		128
Pulte Homes	1		36
RadioShack	2		43
Reebok International *	1		21
Sears Roebuck	3		101
Sherwin-Williams	2		53
Snap-On	1		20
Stanley Works	1		24
Staples *	5		99
Starbucks *	4		107
Starwood Hotels & Resorts Worldwide	2		62
Target	11		358
Tiffany	2		44
TJX	6		109
TMP Worldwide *	1		13

APRIL 30, 2003    /    ANNUAL REPORT

68

EQUITY INDEX PORTFOLIO (continued)

Description	Shares (000)		Market Value (000)
Toys ‘R’ US *	2		$	21
Tribune	4			175
Tupperware	—	†		2
Univision Communications, Cl A *	3			79
VF	1			42
Viacom, Cl B *	21			899
Visteon	1			9
Wal-Mart Stores	52			2,913
Walt Disney	24			448
Wendy’s International	1			36
Whirlpool	1			35
Yum! Brands *	3			76
TOTAL CONSUMER DISCRETIONARY			$	13,852
Consumer Staples — 8.6%
Adolph Coors, Cl B	—	†		15
Alberto-Culver Cl B	1			31
Albertson’s	5			90
Altria Group	24			747
Anheuser-Busch	10			501
Archer-Daniels-Midland	7			75
Avon Products	3			151
Brown-Forman, Cl B	1			60
Campbell Soup	5			106
Clorox	2			115
Coca-Cola	29			1,177
Coca-Cola Enterprises	5			97
Colgate-Palmolive	6			362
Conagra Foods	6			126
CVS	5			112
General Mills	4			195
Gillette	12			374
Hershey Foods	2			100
HJ Heinz	4			115
Kellogg	4			147
Kimberly-Clark	6			300
Kroger *	9			125
McCormick	2			40
Pepsi Bottling Group	3			66
PepsiCo	20			879
Procter & Gamble	15			1,366
RJ Reynolds Tobacco Holdings	1			28
Safeway *	5			89
Sara Lee	9			145
Supervalu	1			19
Sysco	7			212
UST	2			59
Walgreen	12			373
Winn-Dixie Stores	1			18

Description	Shares (000)	Market Value (000)
WM Wrigley Jr	2	$	142
TOTAL CONSUMER STAPLES		$	8,557
Energy — 5.7%
Amerada Hess	1		44
Anadarko Petroleum	3		121
Apache	2		99
Ashland	1		18
Baker Hughes	4		104
BJ Services *	2		60
Burlington Resources	2		110
ChevronTexaco	13		790
ConocoPhillips	8		401
Devon Energy	3		130
EOG Resources	1		41
Exxon Mobil	79		2,774
Halliburton	5		105
Kerr-McGee	1		50
Marathon Oil	3		75
Nabors Industries *	2		67
Noble *	1		40
Occidental Petroleum	4		123
Rowan	1		22
Schlumberger	7		286
Sunoco	1		27
Transocean	3		64
Unocal	3		80
TOTAL ENERGY		$	5,631
Financials — 20.3%
ACE	3		96
Aflac	6		188
Allstate	8		313
AMBAC Financial Group	1		64
American Express	15		583
American International Group	31		1,779
AmSouth Bancorporation	4		88
AON	3		76
Apartment Investment & Management	1		38
Bank of America	18		1,309
Bank of New York	9		236
Bank One	14		494
BB&T	5		176
Bear Stearns	1		80
Capital One Financial	3		108
Charles Schwab	15		130
Charter One Financial	3		78
Chubb	2		102
Cincinnati Financial	2		61
Citigroup	60		2,373

ANNUAL REPORT    /    APRIL 30, 2003

69

EQUITY INDEX PORTFOLIO (continued)

Description	Shares (000)	Market Value (000)
Comerica	2	$	84
Countrywide Financial	1		102
Equity Office Properties Trust	5		125
Equity Residential	3		79
Fannie Mae	12		847
Federated Investors, Cl B	1		35
Fifth Third Bancorp	7		335
First Tennessee National	1		57
FleetBoston Financial	12		328
Franklin Resources	3		101
Freddie Mac	8		473
Golden West Financial	2		136
Goldman Sachs Group	5		421
Hartford Financial Services Group	3		112
Huntington Bancshares	2		49
Janus Capital Group	2		33
Jefferson-Pilot	2		64
John Hancock Financial Services	3		97
JP Morgan Chase	23		689
Keycorp	5		114
Lehman Brothers Holdings	3		171
Lincoln National	2		63
Loew’s	2		80
Marsh & McLennan	6		292
Marshall & Ilsley	3		76
MBIA	2		74
MBNA	15		283
Mellon Financial	5		126
Merrill Lynch	10		418
Metlife	8		236
MGIC Investment	1		45
Moody’s	2		79
Morgan Stanley	13		571
National City	7		210
North Fork Bancorporation	2		55
Northern Trust	2		87
Plum Creek Timber	2		41
PNC Financial Services Group	3		138
Principal Financial Group	4		112
Progressive	2		167
Providian Financial *	3		21
Prudential Financial	7		208
Regions Financial	3		88
Safeco	2		59
Simon Property Group	2		70
SLM	2		193
SouthTrust	4		105
St Paul	3		86
State Street	4		126
SunTrust Banks	3		180

Description	Shares (000)	Market Value (000)
Synovus Financial	3	$	63
T Rowe Price Group	1		40
Torchmark	1		47
Travelers Property Casualty, Cl B	11		181
U.S. Bancorp	23		498
Union Planters	2		62
UnumProvident	2		29
Wachovia	16		611
Washington Mutual	11		441
Wells Fargo	20		961
XL Capital, Cl A	2		134
Zions Bancorporation	1		44
TOTAL FINANCIALS		$	20,224
Health Care — 14.7%
Abbott Laboratories	18		747
Aetna	2		88
Allergan	1		104
AmerisourceBergen	1		69
Amgen *	15		929
Anthem *	2		117
Applied Biosystems Group — Applera	2		36
Bausch & Lomb	1		23
Baxter International	7		154
Becton Dickinson	3		101
Biogen *	2		66
Biomet	3		90
Boston Scientific *	5		207
Bristol-Myers Squibb	23		579
Cardinal Health	5		296
Chiron *	2		86
Cigna	1		80
CR Bard	1		41
Eli Lilly	13		842
Forest Laboratories *	4		222
Genzyme *	2		93
Guidant	3		131
HCA	6		188
Health Management Associates, Cl A	2		39
Humana *	2		20
Johnson & Johnson	35		1,969
King Pharmaceuticals *	3		34
Manor Care *	1		15
McKesson	3		90
Medimmune *	3		93
Medtronic	14		687
Merck	26		1,537
Pfizer	93		2,871
Quest Diagnostics *	1		66
Quintiles Transnational *	1		18

APRIL 30, 2003    /    ANNUAL REPORT

70

EQUITY INDEX PORTFOLIO (continued)

Description	Shares (000)		Market Value (000)
Schering-Plough	17		$	313
St Jude Medical *	2			101
Stryker	2			147
Tenet Healthcare *	5			76
UnitedHealth Group	4			332
Watson Pharmaceuticals *	1			35
Wellpoint Health Networks *	2			129
Wyeth	16			678
Zimmer Holdings *	2			102
TOTAL HEALTH CARE			$	14,641
Industrials — 11.3%
3M	5			581
Allied Waste Industries *	2			16
American Power Conversion *	3			39
American Standard *	1			57
Apollo Group, Cl A *	2			111
Automatic Data Processing	7			233
Avery Dennison	1			66
Boeing	10			270
Burlington Northern Santa Fe	4			124
Caterpillar	4			214
Cendant *	11			164
Cintas	2			68
Concord EFS *	6			77
Convergys *	2			28
Cooper Industries	1			34
Crane	1			15
CSX	3			82
Cummins	—	†		11
Danaher	2			117
Deere	3			116
Delta Air Lines	1			15
Deluxe	1			28
Dover	2			61
Eaton	1			63
Emerson Electric	5			251
Equifax	2			38
FedEx	4			211
First Data	9			348
Fiserv *	2			63
Fluor	1			26
General Dynamics	2			138
General Electric	117			3,431
Goodrich	1			14
H&R Block	2			81
Honeywell International	10			237
Illinois Tool Works	4			232
IMS Health	3			48
Ingersoll-Rand, Cl A	2			84

Description	Shares (000)		Market Value (000)
ITT Industries	1		$	61
Lockheed Martin	5			268
Masco	5			117
McDermott International *	—	†		1
Navistar International *	1			15
Norfolk Southern	5			97
Northrop Grumman	2			179
Paccar	1			78
Pall	1			21
Parker Hannifin	1			47
Paychex	4			128
Pitney Bowes	3			94
Power-One *	1			4
Raytheon	5			137
Robert Half International *	2			28
Rockwell Automation	2			43
Rockwell Collins	2			40
RR Donnelley & Sons	1			22
Ryder System	—	†		9
Sabre Holdings	1			25
Southwest Airlines	9			144
Textron	1			37
Thomas & Betts *	1			9
Tyco International	23			366
Union Pacific	3			166
United Parcel Service, Cl B	13			823
United Technologies	6			344
Waste Management	7			145
WW Grainger	1			51
TOTAL INDUSTRIALS			$	11,291
Information Technology — 14.5%
ADC Telecommunications *	8			18
Adobe Systems	3			90
Advanced Micro Devices *	3			25
Agilent Technologies *	5			83
Altera *	4			62
Analog Devices *	4			136
Andrew *	—	†		2
Apple Computer *	4			51
Applied Materials *	19			282
Applied Micro Circuits *	3			13
Autodesk	1			21
Avaya *	3			11
BMC Software *	3			40
Broadcom, Cl A *	3			50
CIENA *	5			23
Cisco Systems *	84			1,259
Citrix Systems *	2			38
Computer Associates International	6			104

ANNUAL REPORT    /    APRIL 30, 2003

71

EQUITY INDEX PORTFOLIO (continued)

Description	Shares (000)	Market Value (000)
Computer Sciences *	2	$	63
Compuware *	4		15
Comverse Technology *	2		20
Corning *	13		69
Dell Computer *	30		876
Electronic Arts *	2		101
Electronic Data Systems	5		91
EMC-Mass *	26		235
Gateway *	4		10
Hewlett-Packard	36		584
Intel	78		1,432
International Business Machines	20		1,687
Intuit *	2		90
Jabil Circuit *	2		36
JDS Uniphase *	17		55
Kla-Tencor *	2		86
Lexmark International *	1		104
Linear Technology	3		122
LSI Logic *	3		18
Lucent Technologies *	41		74
Maxim Integrated Products	4		141
Mercury Interactive *	1		31
Micron Technology *	6		54
Microsoft	125		3,204
Millipore *	1		18
Molex	2		43
Motorola	27		214
National Semiconductor *	2		35
NCR *	1		24
Network Appliance *	4		53
Novell *	3		9
Novellus Systems *	1		39
Nvidia *	1		19
Oracle *	61		724
Parametric Technology *	3		9
PeopleSoft *	3		53
PerkinElmer	1		10
PMC-Sierra *	1		11
Qlogic *	1		44
Qualcomm	9		287
Sanmina-SCI *	4		22
Scientific-Atlanta	2		26
Siebel Systems *	5		43
Solectron *	8		24
Sun Microsystems *	38		124
SunGard Data Systems *	3		62
Symantec *	2		77
Symbol Technologies	3		30
Tektronix *	1		21
Tellabs *	4		25

Description	Shares (000)		Market Value (000)
Teradyne *	2		$	20
Texas Instruments	20			376
Thermo Electron *	2			29
Unisys *	3			34
Veritas Software *	4			99
Waters *	1			30
Xerox *	8			80
Xilinx *	4			100
Yahoo *	7			161
TOTAL INFORMATION TECHNOLOGY			$	14,481
Materials — 2.6%
Air Products & Chemicals	3			109
Alcoa	10			230
Allegheny Technologies	1			3
Ball	1			33
Bemis	1			26
Boise Cascade	1			13
Dow Chemical	11			349
Eastman Chemical	1			27
Ecolab	1			74
EI du Pont de Nemours	12			495
Engelhard	1			28
Freeport-McMoran Copper & Gold, Cl B	2			32
Georgia-Pacific	2			37
Great Lakes Chemical	1			15
Hercules *	1			8
International Flavors & Fragrances	1			27
International Paper	5			193
Louisiana-Pacific *	1			7
MeadWestvaco	2			56
Monsanto	3			53
Newmont Mining	4			120
Nucor	1			32
Pactiv *	2			36
Phelps Dodge *	1			28
PPG Industries	2			92
Praxair	2			105
Rohm & Haas	2			81
Sealed Air *	1			38
Sigma-Aldrich	1			37
Temple-Inland	—	†		20
United States Steel	1			13
Vulcan Materials	1			31
Weyerhaeuser	2			121
Worthington Industries	1			13
TOTAL MATERIALS			$	2,582

APRIL 30, 2003    /    ANNUAL REPORT

72

EQUITY INDEX PORTFOLIO (concluded)

Description	Shares (000)		Market Value (000)
Telecommunication Services — 3.6%
Alltel	3		$	161
AT&T	1			25
AT&T Wireless Services *	32			206
BellSouth	22			558
CenturyTel	1			44
Citizens Communications *	3			29
Nextel Communications, Cl A *	12			178
Qwest Communications International *	19			70
SBC Communications	39			912
Sprint (FON Group)	10			113
Sprint (PCS Group) *	11			39
Verizon Communications	32			1,202
TOTAL TELECOMMUNICATION SERVICES			$	3,537
Utilities — 2.7%
AES *	6			38
Allegheny Energy	1			8
Ameren	2			66
American Electric Power	4			113
Calpine *	3			14
Centerpoint Energy	3			23
Cinergy	2			64
CMS Energy	1			6
Consolidated Edison	2			88
Constellation Energy Group	2			48
Dominion Resources	4			213
DTE Energy	2			74
Duke Energy	10			173
Dynegy, Cl A	3			13
Edison International *	3			51
El Paso	6			49
Entergy	2			116
Exelon	4			192
FirstEnergy	3			109
FPL Group	2			125
KeySpan	2			58
Kinder Morgan	1			61
Mirant *	4			14
Nicor	1			16
NiSource	3			51
Peoples Energy	—	†		16
PG&E *	4			66
Pinnacle West Capital	1			30
PPL	2			66
Progress Energy	3			110
Progress Energy, CVO *	1			—	†
Public Service Enterprise Group	3			100
Sempra Energy	2			64

Description	Shares (000)	Market Value (000)
Southern	8	$	245
TECO Energy	2		20
TXU	3		68
Williams	5		33
XCEL Energy	4		60
TOTAL UTILITIES		$	2,661
TOTAL COMMON STOCK (COST $123,850)		$	97,457
Rights — 0.0%
Seagate Escrow Security + *	2		—	†
TOTAL RIGHTS (COST $0)		$	—	†
Registered Investment Companies — 0.9%
SPDR Trust, Ser 128	10		920
TOTAL REGISTERED INVESTMENT COMPANIES (COST $921)		$	920
Related Party Money Market Portfolio — 0.0%
ARK Money Market Portfolio Institutional Class Ú	30		30
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $30)		$	30
TOTAL INVESTMENTS — 98.8% (COST $124,801)		$	98,407
OTHER ASSETS & LIABILITIES, NET — 1.2%		$	1,186
TOTAL NET ASSETS — 100.0%		$	99,593

*  Non-income producing security

+  Security is fair valued as determined under procedures established by the Board of Trustees.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

†  Amount rounds to less than one thousand

Cl — Class

CVO — Contingent Value Obligation

SPDR — Standard & Poors Depositary Receipt

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

73

EQUITY PORTFOLIOS

BLUE CHIP EQUITY PORTFOLIO

Allen J. Ashcroft, Jr.

CO-PORTFOLIO MANAGER

Allen J. Ashcroft, Jr. is co-manager of the Blue Chip Equity Portfolio and is co-manager of other ARK Funds Portfolios. He has been a Principal of AIA and Portfolio Manager since 1996, a Vice President of Allfirst Bank from 1995 to 2003 and a Vice President of M&T Trust since 2003. Mr. Ashcroft has more than 20 years of experience in investment research and equity analysis.

Clyde L. Randall II, CFA

CO-PORTFOLIO MANAGER

Clyde L. Randall II, CFA is co-manager of the Blue Chip Equity Portfolio, and is co-manager of other ARK Funds Portfolios. Mr. Randall has been a Principal of AIA and Portfolio Manager since 1996, a Vice President of Allfirst Bank from 1995 to 2003 and a Vice President of M&T Trust since 2003. He has more than 14 years of experience in investment research and equity analysis and is a Chartered Financial Analyst.

Management Discussion and Analysis

This fiscal year was the most challenging to the Portfolio from an investment standpoint since its inception. The equity markets recently completed their third straight year of negative returns. This three-year span is somewhat unprecedented in that you would have to go back to the late 1930’s to witness a similar period of market contraction. Many equity investors remained on the sidelines concerned about the health of the economy, and the conflict that seemed imminent in the Middle East. Historically, in uncertain times investors have tended to seek cover by transferring assets into blue chip equities that had the perceived strength and balance sheets to weather the pending storm; however, this wasn’t the case this year. Investors questioned management and their accounting principles, among other things, and as a result capital exited even the most respected of institutions. For the most part, fixed income assets or short-term money market instruments were the only investments that delivered positive returns.

The best contributors to Portfolio performance this year were Amgen, Genentech, and Lowe’s—two health care companies and a home improvement company. Demographics certainly were a factor in this group, delivering positive returns in a tough environment. The Portfolio’s worst performers in our fiscal year were Dynegy, Interpublic Group, and Sun Microsystems. Dynegy, a merchant gas company, was impacted from the fallout over Enron. Interpublic, an advertising company, had accounting concerns, and Sun Microsystems got caught up in the technology swoon.

The Portfolio’s primary focus is to invest in established large-cap franchise companies while seeking to stay competitive with the returns of the S&P 500. We remain committed to our strategy of diversifying the Portfolio so that it has representation in each major market sector. Our investment style guides us to concentrate on those companies that we believe are well managed and have long-term investment horizons. This approach has not changed even in the tough and unpleasant market environment of the past several years.

APRIL 30, 2003    /    ANNUAL REPORT

74

BLUE CHIP EQUITY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A AND B SHARES: VALUE OF A $10,000 INVESTMENT

	Inst’l Class Shares	Class A Shares*	Class B Shares*	S&P 500 Index
One year total return	-18.18%	-18.30%	-18.89%	-13.31%
One year total return with load	—	-22.19%	-22.95%	—
Annualized three year total return	-16.96%	-17.06%	-17.66%	-12.96%
Annualized three year total return with load	—	-18.40%	-18.47%	—
Annualized five year total return	-3.54%	-3.65%	-3.99%	-2.42%
Annualized five year total return with load	—	-4.59%	-4.35%	—
Annualized total return inception to date	5.54%	5.41%	4.81%	—
Annualized total return inception to date with load	—	4.69%	4.81%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Institutional Class Shares were offered beginning April 1, 1996. Class A Shares were offered beginning May 16, 1996. Performance for Class A Shares with load reflects the deduction of maximum 4.75% sales charge. Class B Shares were offered beginning July 31, 1998. Performance for Class B Shares with load reflects the deduction of applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year.

* Performance shown prior to the actual inception date of the Class A and Class B Shares represents that of the Institutional Class Shares adjusted for the sales charge and total annual operating expenses applicable to Class A and Class B Shares, respectively.

The performance of the S&P 500 Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period March 31, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

ANNUAL REPORT    /    APRIL 30, 2003

75

BLUE CHIP EQUITY PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)	Market Value (000)
Common Stock — 99.0%
Consumer Discretionary — 13.1%
AOL Time Warner *	350	$	4,788
Best Buy *	150		5,187
Clear Channel Communications *	70		2,738
Lowe’s	100		4,389
Newell Rubbermaid	100		3,048
Wal-Mart Stores	100		5,632
TOTAL CONSUMER DISCRETIONARY		$	25,782
Consumer Staples — 7.9%
Kraft Foods, Cl A	150		4,635
PepsiCo	125		5,410
Procter & Gamble	60		5,391
TOTAL CONSUMER STAPLES		$	15,436
Energy — 8.2%
Exxon Mobil	160		5,632
Nabors Industries *	140		5,488
Weatherford International *	125		5,029
TOTAL ENERGY		$	16,149
Financials — 21.1%
American Express	135		5,111
American International Group	107		6,201
Bank of America	40		2,962
Citigroup	140		5,495
JP Morgan Chase	175		5,136
Morgan Stanley	135		6,041
Northern Trust	140		4,914
Wells Fargo	115		5,550
TOTAL FINANCIALS		$	41,410

Description	Shares (000)	Market Value (000)
Health Care — 16.2%
Abbott Laboratories	120	$	4,876
Amgen *	75		4,598
Eli Lilly	90		5,744
Johnson & Johnson	80		4,509
Pfizer	190		5,842
Wyeth	145		6,312
TOTAL HEALTH CARE		$	31,881
Industrials — 10.7%
General Electric	250		7,362
Northrop Grumman	65		5,716
Tyco International	175		2,730
United Technologies	85		5,254
TOTAL INDUSTRIALS		$	21,062
Information Technology — 15.2%
Celestica *	150		1,734
Cisco Systems *	250		3,760
International Business Machines	50		4,245
Jabil Circuit *	165		3,085
Koninklijke Philips Electronics	115		2,148
Microsoft	210		5,370
Nokia, ADR	175		2,900
STMicroelectronics NV, ADR	150		3,089
Veritas Software *	165		3,631
TOTAL INFORMATION TECHNOLOGY		$	29,962
Materials — 2.9%
Alcoa	250		5,733
TOTAL MATERIALS		$	5,733
Telecommunication Services — 3.7%
BellSouth	220		5,608
SBC Communications	75		1,752
TOTAL TELECOMMUNICATION SERVICES		$	7,360
TOTAL COMMON STOCK (COST $211,143)		$	194,775

APRIL 30, 2003    /    ANNUAL REPORT

76

BLUE CHIP EQUITY PORTFOLIO (concluded)

Description	Shares (000)	Market Value (000)
Related Party Money Market Portfolio — 0.3%
ARK Money Market Portfolio Institutional Class Ú	517	$	517
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $517)		$	517
TOTAL INVESTMENTS — 99.3% (COST $211,660)		$	195,292
OTHER ASSETS & LIABILITIES, NET — 0.7%		$	1,280
TOTAL NET ASSETS — 100.0%		$	196,572

* Non-income producing security

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ADR — American Depositary Receipt

Cl — Class

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

77

EQUITY PORTFOLIOS

CAPITAL GROWTH PORTFOLIO

Thomas D. DeHudy, CFA

PORTFOLIO MANAGER

Thomas D. DeHudy, CFA is manager of the Capital Growth Portfolio and another ARK Funds Portfolio. Mr. DeHudy has been a Principal of AIA since 2001. Mr. DeHudy is also an equity analyst and provides research coverage for the technology sector and selected consumer cyclical areas. Mr. DeHudy has more than 20 years of experience in investment research, and is a Chartered Financial Analyst.

Management Discussion and Analysis

During the first half of fiscal year 2003, the Portfolio underperformed its benchmark (the Russell 1000 Growth Index) primarily because of a premature assumption for a reaccelerating economy. Portfolio performance for the second half of the year more closely followed that of the benchmark. Generally, sector weighting helped performance as overweights in energy, financials, and consumer cyclicals/services benefited Portfolio performance (as did the underweight in consumer staples).

Among the stocks that detracted most from Portfolio performance were: Sprint PCS, Best Buy, Baxter International, Freemarkets, and Taiwan Semiconductor Manufacturing. Most of the performance detractors were either technology-related or economically-sensitive. Conversely, stocks that contributed positively to Portfolio performance were either health care-related (e.g., Forest Laboratories, Amgen, and Wyeth) or had unique industry circumstances such as radio broadcasting (Clear Channel Communications) or homebuilders (Centex).

The Portfolio remains positioned for a reacceleration of the economy, but we continue to favor: 1) consumer-related groups such as homebuilders, restaurants and radio broadcasting; 2) financials such as real estate investment trusts and Fannie Mae/Freddie Mac; and 3) energy service companies that have exposure to natural gas. Currently, the Portfolio is approximately neutrally weighted to technology and moderately underweighted to health care.

APRIL 30, 2003    /    ANNUAL REPORT

78

CAPITAL GROWTH PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A AND B SHARES: VALUE OF A $10,000 INVESTMENT

	Inst'l Class Shares	Class A Shares*	Class B Shares*	S&P 500 Index	Russell 1000 Growth Index
One year total return	-17.50%	-17.69%	-18.23%	-13.31%	-14.35%
One year total return with load	—	-21.60%	-22.32%	—	—
Annualized three year total return	-21.56%	-21.66%	-22.23%	-12.96%	-22.60%
Annualized three year total return with load	—	-22.92%	-22.94%	—	—
Annualized five year total return	-1.10%	-1.23%	-2.26%	-2.42%	-5.63%
Annualized five year total return with load	—	-2.19%	-2.58%	—	—
Annualized total return inception to date	7.57%	7.29%	6.27%	—	—
Annualized total return inception to date with load	—	6.76%	6.27%	—	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Institutional Class Shares were offered beginning July 16, 1993. Class A Shares were offered beginning March 9, 1994. Performance for Class A Shares with load reflects the deduction of the maximum 4.75% sales charge. Class B Shares were offered beginning September 14, 1998. Performance for Class B Shares with load reflects the deduction of applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year.

* Performance shown prior to the actual inception date of the Class A and Class B Shares represents that of the Institutional Class Shares adjusted for the sales charge and total annual operating expenses applicable to Class A and Class B Shares, respectively.

The performance of the S&P 500 Index and the Russell 1000 Growth Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period July 31, 1993 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Investments in smaller and medium capitalization companies may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, these companies may have limited product lines, markets and financial resources, and may depend upon a relatively small management group.

ANNUAL REPORT    /    APRIL 30, 2003

79

CAPITAL GROWTH PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)	Market Value (000)
Common Stock — 99.1%
Consumer Discretionary — 25.6%
American Axle & Manufacturing *	50	$	1,246
Applebees International	25		685
BorgWarner	40		2,347
Brinker International *	50		1,587
CBRL Group	60		1,913
Centex	45		2,971
Clear Channel Communications *	90		3,520
Darden Restaurants	90		1,576
DR Horton	110		2,607
Hispanic Broadcasting *	70		1,795
Lear *	50		1,987
Lennar, Cl A	40		2,170
Lennar, Cl B	5		241
Outback Steakhouse	40		1,430
Radio One, Cl D *	125		1,912
Ruby Tuesday	90		1,773
Staples *	80		1,523
Toll Brothers *	75		1,744
Viacom, Cl B *	35		1,519
TOTAL CONSUMER DISCRETIONARY		$	34,546
Consumer Staples — 2.7%
Estee Lauder	55		1,788
General Mills	40		1,804
TOTAL CONSUMER STAPLES		$	3,592
Energy — 3.2%
Nabors Industries *	35		1,372
Patterson-UTI Energy *	40		1,324
Weatherford International *	40		1,609
TOTAL ENERGY		$	4,305

Description	Shares (000)	Market Value (000)
Financials — 16.2%
American International Group	35	$	2,028
Boston Properties	40		1,568
Equity Office Properties Trust	60		1,558
Fannie Mae	70		5,067
Freddie Mac	90		5,211
General Growth Properties	25		1,391
Morgan Stanley	50		2,238
Rouse	40		1,390
Simon Property Group	40		1,469
TOTAL FINANCIALS		$	21,920
Health Care — 20.9%
Affymetrix *	80		1,484
Amgen *	45		2,759
Caremark Rx *	125		2,489
Eli Lilly	20		1,276
Express Scripts *	50		2,948
Health Management Associates, Cl A	110		1,877
ICOS *	75		2,006
Johnson & Johnson	80		4,509
Pfizer	200		6,150
Pharmaceutical Product Development *	50		1,308
Quest Diagnostics *	25		1,494
TOTAL HEALTH CARE		$	28,300
Industrials — 6.9%
General Electric	250		7,362
Ryanair Holdings, ADR *	50		1,984
TOTAL INDUSTRIALS		$	9,346
Information Technology — 22.6%
Affiliated Computer Services, Cl A *	60		2,862
Analog Devices *	30		994
Applied Materials *	40		584
BearingPoint *	210		1,716
CACI International, Cl A *	50		1,747
Cadence Design Systems *	125		1,429
Celestica *	125		1,445
Ceridian *	100		1,395
Cisco Systems *	100		1,504
Cognos *	35		950
Computer Associates International	200		3,248
Concord EFS *	110		1,521
Cree *	60		1,197
Dell Computer *	75		2,168
Jabil Circuit *	85		1,589
Microsoft	30		767
Nokia — ADR	30		497
STMicroelectronics NV, ADR	65		1,338

APRIL 30, 2003    /    ANNUAL REPORT

80

CAPITAL GROWTH PORTFOLIO (concluded)

Description	Shares (000)	Market Value (000)
Symantec *	35	$	1,538
Taiwan Semiconductor Manufacturing, ADR *	100		837
Yahoo *	50		1,239
TOTAL INFORMATION TECHNOLOGY		$	30,565
Materials — 1.0%
Peabody Energy	50		1,405
TOTAL MATERIALS		$	1,405
TOTAL COMMON STOCK (COST $129,385)		$	133,979
Related Party Money Market Portfolio — 1.8%
ARK Money Market Portfolio Institutional Class Ú	2,388		2,388
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $2,388)		$	2,388
TOTAL INVESTMENTS 100.9% (COST $131,773)		$	136,367
OTHER ASSETS & LIABILITIES, NET — (0.9)%		$	(1,236	)
TOTAL NET ASSETS — 100.0%		$	135,131

* Non-income producing security.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ADR — American Depositary Receipt

Cl — Class

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

81

EQUITY PORTFOLIOS

MID-CAP EQUITY PORTFOLIO

David G. Robertson, CFA

PORTFOLIO MANAGER

David G. Robertson, CFA is manager of the Mid-Cap Equity Portfolio. Mr. Robertson has been a Vice President of AIA since 2000. He is also an equity analyst. Mr. Robertson has more than 13 years of experience in the investment industry and is a Chartered Financial Analyst.

Management Discussion and Analysis

During the fiscal year ended April 30, 2003, the number of holdings in the Portfolio was reduced from about 135 to about 60, aligning the style and size composition of the Portfolio even more closely with its benchmark. As a result, although size and style continued to be important determinants of performance across the broad equity indices over the course of the year, these factors were not important factors in the relative performance of the Portfolio.

The factors that were most important to the Portfolio’s relative performance were stock selection and the positioning of the Portfolio for an economic recovery. Because the Portfolio was positioned for economic recovery for the better part of the year, the volatility and lack of direction of the equity markets hurt its performance. Encouragingly however, our ongoing search for stocks with sustainable growth, cash flow generation, solid balance sheets, and conservative accounting proved fruitful as stock selection aided Portfolio performance and partially offset other negative and (hopefully) temporary impacts such as investor sentiment ranging from ebullience to despair.

Over the course of the year, positive contributors to Portfolio performance came from a large number of stocks, many of which are related to the energy industry. XTO Energy, Maverick Tube, and Nabors Industries were all strong contributors to performance. In addition, stocks such as Protein Design Labs, Express Scripts, and Comverse Technology also helped boost Portfolio performance. Although overall contribution to performance was positively effected by stock selection, a couple of stocks materially detracted from performance. Both Enzon Pharmaceuticals and Concord EFS were penalized severely by the market when doubts arose regarding growth and profitability prospects.

APRIL 30, 2003    /    ANNUAL REPORT

82

MID-CAP EQUITY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A SHARES: VALUE OF A $10,000 INVESTMENT

	Inst'l Class Shares	Class A Shares*	S&P Mid- Cap 400 Index
One year total return	-19.25%	-19.32%	-17.51%
One year total return with load	—	-23.16%	—
Annualized three year total return	-10.27%	-10.36%	-2.00%
Annualized three year total return with load	—	-11.80%	—
Annualized five year total return	1.77%	1.44%	4.34%
Annualized five year total return with load	—	0.46%	—
Annualized total return inception to date	7.92%	7.57%	—
Annualized total return inception to date with load	—	6.76%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Institutional Class Shares were offered beginning November 18, 1996. Class A Shares were offered beginning September 1, 1999. Performance for Class A Shares with load reflects the deduction of the maximum 4.75% sales charge.

* Performance shown prior to the actual inception date of the Class A Shares represents that of the Institutional Class Shares adjusted for the sales charge and total annual operating expenses applicable to Class A Shares.

The performance of the S&P Mid-Cap 400 Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period November 30, 1996 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Investments in medium capitalization companies may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, these companies may have limited product lines, markets and financial resources, and may depend upon a relatively small management group.

ANNUAL REPORT    /    APRIL 30, 2003

83

MID-CAP EQUITY PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)		Market Value (000)
Common Stock — 92.2%
Consumer Discretionary — 17.8%
Blockbuster, Cl A	50		$	894
Dollar General	63			916
FTI Consulting *	12			543
Interpublic Group	177			2,018
Lennar, Cl A	10			542
Lennar, Cl B	1			54
Lin TV, Cl A *	28			669
Michaels Stores *	47			1,468
New York Times, Cl A	24			1,113
Sinclair Broadcast Group *	142			1,505
United Rentals *	179			1,844
Washington Post, Cl B	1			948
TOTAL CONSUMER DISCRETIONARY			$	12,514
Consumer Staples — 2.2%
Career Education *	12			721
Pepsi Bottling Group	40			822
TOTAL CONSUMER STAPLES			$	1,543
Energy — 12.1%
BJ Services *	17			621
Devon Energy	25			1,181
Ensco International	61			1,537
GlobalSantaFe	—	†		—	†
Grant Prideco *	15			171
Maverick Tube *	27			480
Nabors Industries *	40			1,568
Smith International *	8			285

Description	Shares (000)	Market Value (000)
Valero Energy	33	$	1,213
Weatherford International *	15		603
XTO Energy	44		851
TOTAL ENERGY		$	8,510
Financials — 13.1%
Archstone-Smith Trust	40		912
Boston Properties	25		980
CarrAmerica Realty	48		1,252
CIT Group	59		1,202
Greater Bay Bancorp	103		1,648
Northern Trust	45		1,579
UCBH Holdings	64		1,628
TOTAL FINANCIALS		$	9,201
Health Care — 16.8%
Adolor *	25		350
Affymetrix *	30		557
Amerigroup *	70		2,038
Enzon *	33		453
Express Scripts *	25		1,474
Health Management Associates, Cl A	60		1,024
Idec Pharmaceuticals *	22		720
Protein Design Labs *	254		2,522
Quest Diagnostics *	29		1,733
Universal Health Services *	24		928
TOTAL HEALTH CARE		$	11,799
Industrials — 3.9%
Harsco	42		1,448
SPX *	39		1,318
TOTAL INDUSTRIALS		$	2,766
Information Technology — 16.8%
BEA Systems *	116		1,242
Cadence Design Systems *	90		1,029
Cerner *	40		799
Cree *	45		898
Electronic Data Systems	29		526
Internet Security Systems *	82		1,076
Lucent Technologies *	470		846
Mantech International, Cl A *	90		1,404
Microchip Technology	12		249
Nvidia *	62		885
Skyworks Solutions *	177		947
THQ *	84		1,187
Vishay Intertechnology *	55		688
TOTAL INFORMATION TECHNOLOGY		$	11,776

APRIL 30, 2003    /    ANNUAL REPORT

84

MID-CAP EQUITY PORTFOLIO (concluded)

Description	Shares/Principal Amount (000)		Market Value (000)
Materials — 3.3%
IMC Global		125	$	1,133
Pactiv *		39		800
Peabody Energy		13		365
TOTAL MATERIALS			$	2,298
Utilities — 6.2%
Constellation Energy Group		54		1,581
PEPCO Holdings		70		1,203
Wisconsin Energy		60		1,580
TOTAL UTILITIES			$	4,364
TOTAL COMMON STOCK (COST $61,268)			$	64,771
Warrants — 0.0%
Dime Bancorp *		9		1
TOTAL WARRANTS (COST $0)			$	1
Registered Investment Companies — 2.5%
Midcap SPDR Trust Ser 1		22		1,764
TOTAL REGISTERED INVESTMENT COMPANIES (COST $1,701)			$	1,764
Repurchase Agreement — 1.4%
Credit Suisse First Boston, 1.270%, dated 04/30/03, matures 05/01/03, repurchase price $1,000,035 (102% collateralized by various U.S. Treasury Obligations)	$	1,000		1,000
TOTAL REPURCHASE AGREEMENT (COST $1,000)			$	1,000
Related Party Money Market Portfolio — 3.9%
ARK Money Market Portfolio Institutional Class Ú		2,753		2,753
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $2,753)			$	2,753
TOTAL INVESTMENTS — 100.0% (COST $66,722)			$	70,289
OTHER ASSETS & LIABILITIES, NET — (0.0)%			$	(31	)
TOTAL NET ASSETS — 100.0%			$	70,258

* Non-income producing security.

† Amount rounds to less than one thousand.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

Cl — Class

Ser — Series

SPDR — Standard & Poors Depositary Receipt

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

85

EQUITY PORTFOLIOS

SMALL-CAP EQUITY PORTFOLIO

H. Giles Knight

PORTFOLIO MANAGER

H. Giles Knight is manager of the Small-Cap Equity Portfolio and is manager of another ARK Funds Portfolio. He has been a Principal of AIA and Portfolio Manager since 1996, a Senior Vice President of Allfirst Bank from 1995 to 2003 and a Senior Vice President of M&T Trust since 2003. Mr. Knight has more than 30 years of experience in the investment industry.

Management Discussion and Analysis

Small-cap stocks had a tough year as investors faced the uncertainty of war in Iraq, a very weak and unresponsive economy, and continued destructive revelations concerning the accounting practices of the likes of Enron, WorldCom, and Tyco. Small-cap stocks suffered disproportionally because of their added financial and market risks. Their lack of liquidity made for many jarring declines as a few cents earnings miss could severely diminish a stock’s value.

The Portfolio had a disappointing fiscal year due mainly to weak third and fourth quarters. The third quarter suffered from our lower technology weighting as this group rallied in late October, and the fourth quarter was hurt by earning disappointments from five stocks: Accredo Health, Hilb Rogal & Hamilton, Multimedia Games, Overture Services, and Charles River Laboratories. These companies provided earnings shortfalls or weaker forward guidance, which then triggered selling among shareholders.

It appears that the Federal Reserve’s monetary stimulus has had a positive impact on the United States economy. The Portfolio has been positioned more aggressively with overweightings in information technology, health care, and telecommunications. Standard Pacific, WCI Communities, and Brookfield Homes are home builders that we feel have the potential to continue to do well in an atmosphere of low interest rates. Semiconductor producers such as Intersil, Integrated Circuits, and Micrel have the potential to participate in anticipated “chip” capital spending increases.

APRIL 30, 2003    /    ANNUAL REPORT

86

SMALL-CAP EQUITY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A, B AND C SHARES: VALUE OF A $10,000 INVESTMENT

	Inst'l Class Shares	Class A Shares*	Class B Shares*	Class C Shares*	Russell 2000 Growth Index	Russell 2000 Index
One year total return	-32.35%	-32.49%	-33.01%	-33.01%	-23.50%	-20.76%
One year total return with load	—	-35.71%	-36.36%	-33.68%	—	—
Annualized three year total return	-13.98%	-14.07%	-15.16%	-14.97%	-19.28%	-6.36%
Annualized three year total return with load	—	-15.45%	-15.86%	-14.97%	—	—
Annualized five year total return	9.63%	9.49%	8.74%	8.35%	-7.84%	-2.47%
Annualized five year total return with load	—	8.43%	8.46%	8.35%	—	—
Annualized total return inception to date	13.37%	13.15%	12.23%	11.94%	—	—
Annualized total return inception to date with load	—	12.45%	12.23%	11.94%	—	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Institutional Class Shares were offered beginning July 13, 1995. Class A Shares were offered beginning May 16, 1996. Performance for Class A Shares with load reflects the deduction of the maximum 4.75% sales charge. Class B Shares were offered beginning February 20, 2001. Performance for Class B Shares with load reflects the deduction of the applicable contingent deferred sales charge (CDSC). Class B Shares are subject to a maximum 5% CDSC in the first year which declines to 0% in the seventh year. Class C Shares were offered beginning October 1, 2002. Performance for Class C Shares with load reflects the deduction of the applicable CDSC. Class C Shares are subject to a 1% CDSC in the first year which declines to 0% in the second year.

* Performance shown prior to the actual inception date of the Class A, Class B and Class C Shares represents that of the Institutional Class Shares adjusted for the sales charge and total annual operating expenses applicable to these classes.

The performance of the Russell 2000 Growth Index and the Russell 2000 Index does not include operating expenses that are incurred by the Portfolio. Index performance is for the period July 30, 1995 to April 30, 2003.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Investments in smaller capitalization companies may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, these companies may have limited product lines, markets and financial resources, and may depend upon a relatively small management group.

ANNUAL REPORT    /    APRIL 30, 2003

87

SMALL-CAP EQUITY PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)	Market Value (000)
Common Stock — 99.8%
Consumer Discretionary — 25.9%
AC Moore Arts & Crafts *	100	$	1,723
Alliance Gaming *	100		1,597
Brookfield Homes	157		2,379
Central Garden & Pet *	100		2,423
Emmis Communications, Cl A *	100		1,897
Gevity HR	100		941
HOT Topic *	70		1,712
Meredith	65		2,809
Multimedia Games *	87		2,179
SCP Pool *	44		1,443
Shuffle Master *	100		2,290
Standard-Pacific	60		1,815
Steven Madden *	100		1,772
Strayer Education	35		2,276
WCI Communities *	110		1,521
TOTAL CONSUMER DISCRETIONARY		$	28,777
Energy — 5.6%
Grant Prideco *	100		1,141
Patina Oil & Gas	50		1,727
Range Resources *	141		833
Tom Brown *	100		2,452
TOTAL ENERGY		$	6,153
Financials — 8.2%
Columbia Bancorp	56		1,436
East-West Bancorp	65		2,200
Greater Bay Bancorp	96		1,542
Sterling Bancshares	137		1,634
UCBH Holdings	90		2,290
TOTAL FINANCIALS		$	9,102

Description	Shares (000)	Market Value (000)
Health Care — 17.8%
ICOS *	83	$	2,207
Idexx Laboratories *	75		2,925
Mentor	75		1,388
Orthofix International *	77		2,153
Pediatrix Medic Group *	75		2,390
Perrigo	100		1,536
Possis Medical *	115		2,216
PSS World Medical *	165		989
Taro Pharmaceuticals *	41		1,876
Zoll Medical *	65		2,100
TOTAL HEALTH CARE		$	19,780
Industrials — 9.5%
Chicago Bridge & Iron	100		2,000
Dionex *	60		2,064
Heartland Express *	39		897
OMI *	450		2,183
Oshkosh Truck	30		1,680
Regis	60		1,700
TOTAL INDUSTRIALS		$	10,524
Information Technology — 29.7%
ADC Telecommunications *	401		957
Anixter International *	77		1,762
Autodesk	199		3,096
Avid Technology *	85		2,335
Cognizant Technology Systems *	125		2,245
Concur Technologies *	145		871
Cray *	134		1,012
Cypress Semiconductor *	125		1,090
Exar *	64		947
Integrated Circuit Systems *	115		2,498
Intersil *	142		2,623
Legato Systems *	125		740
Marvel Technology Group *	100		2,308
Micrel *	175		2,049
Perot Systems, Cl A *	100		1,062
Pixelworks *	215		1,602
Rambus *	100		1,430
RSA Security *	100		959
Sandisk *	85		2,057
Seachange International *	160		1,288
TOTAL INFORMATION TECHNOLOGY		$	32,931
Telecommunication Services — 1.9%
Nextel Partner, Cl A *	200		1,162
Western Wireless *	150		918
TOTAL TELECOMMUNICATION SERVICES		$	2,080

APRIL 30, 2003    /    ANNUAL REPORT

88

SMALL-CAP EQUITY PORTFOLIO (concluded)

Description	Shares (000)	Market Value (000)
Utilities — 1.2%
AES *	230	$	1,382
TOTAL UTILITIES		$	1,382
TOTAL COMMON STOCK (COST $105,311)		$	110,729
Related Party Money Market Portfolio — 3.1%
ARK Money Market Portfolio Institutional Class Ú	3,465		3,465
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $3,465)		$	3,465
TOTAL INVESTMENTS — 102.9% (COST $108,776)		$	114,194
OTHER ASSETS & LIABILITIES, NET — (2.9)%		$	(3,273	)
TOTAL NET ASSETS — 100.0%		$	110,921

* Non-income producing security.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

Cl — Class

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

89

EQUITY PORTFOLIOS

INTERNATIONAL EQUITY PORTFOLIO

Louise McGuigan

PORTFOLIO MANAGER

Louise McGuigan is the manager of the International Equity Portfolio. Ms. McGuigan has been head of AIB Investment Managers Limited’s (“AIBIM”) EAFE product line since 1998. She managed AIBIM’s Far East equity book before becoming European equity manager in 1995. Ms. McGuigan has more than 9 years of experience in the investment industry.

Management Discussion and Analysis

Near the end of the period under review, global equity markets rallied in April following the swift collapse of Saddam Hussein’s regime in Iraq. The U.S. reporting season also brought some relief to equity markets as first quarter earnings figures were viewed as generally positive. On the back of these events, equity markets continued their recovery from the lows reached in mid-March.

Within this volatile economic and geopolitical environment, we increased the Portfolio’s defensive exposure in Europe ex UK, funded through a reduction in our cyclical holdings. Cap Gemini (IT consulting) was sold and we reduced our exposure in Accor (hotels) due to the slow demand in the hotel and leisure industry. We also sold out of Allianz, Infineon, and Koninklijke Ahold mainly due to balance sheet concerns and vulnerability to a slower economic environment. New stocks added included Arcelor (produces steel for manufacturers of automobiles, home appliances, and construction materials) and Schneider Electric (manufactures power distribution and automation systems, and has a strong balance sheet and pricing power over suppliers). Other new purchases included Enel (Italian utility), TPG (Dutch TNT post group) and Sanofi Synthelbo (second largest pharmaceutical company in France).

The Europe ex UK portion of the Portfolio experienced positive performance, but yet underperformed its benchmark. Most of the underperformance came from stock specific weakness. Accor, the hotel group, was a poor performer with fears over further terrorist attacks and the spread of SARS leading to a slowdown in the hotel industry. Koninklijke Ahold, the Dutch food retailer, had extremely poor performance which in turn had a negative impact on Portfolio performance. An announcement from the food retailer that income was overstated by at least $500m led to an investigation into its U.S. operation, resulting in a sharp decline in its share price. In the food, beverages, and tobacco sector, Pernod Ricard and Danone contributed to Portfolio performance.

In the UK, we saw some repositioning as we increased our exposure from an underweight to overweight position. We sold some of our cyclical/growth-oriented stocks (e.g., Granada, Hays, Invensys, Signet, and reduced holdings in IMI and Pearson) as their valuations largely reflected recovery. We increased our weighting in banks where more attractive valuations existed by increasing our holdings in HBOS and Royal Bank of Scotland and purchasing HSBC. Other purchases included Debenhams (retailing), Kingfisher (European leader in do-it-yourself), and Imperial Tobacco. Tesco’s, the supermarket chain which controls 23% of the food retail market in the UK and is rapidly growing its non-food retail business, was also added to the Portfolio. BHP Billiton (materials), Astra Zeneca and GlaxoSmithKline (pharmaceuticals), and HBOS and RBS (banks) all had good performance, and helped the UK portion of the Portfolio outperform its benchmark.

In Japan, Sony, Nintendo (consumer durables and apparel) and THK Co Ltd. (capital goods) were all weak performers, contributing to underperformance in the Japanese portion of the Portfolio. However, we did see some good performance from NTT DoCoMo (telecom services). We reduced our holdings in Ajinomoto, Nissan Motors, and Promise. New stocks added included Canon and East Japan Railways, which is focused on expanding its non-railway operations.

In the Far East, we saw some relatively strong performance in Hong Kong (non-domestic stocks mainly) with PetroChina performing well. In Emerging Markets, we saw positive performance but underperformed the benchmark. China Steel was a strong performer from Taiwan. In China, the reform process has been strongly aided by the smooth transition of power at the recent congresses.

Geographically, the Portfolio has moved to an underweight position in Europe ex UK due to a less favourable outlook in Europe. In the UK, we have taken a more positive stance moving from an underweight to overweight position. We remain overweight Emerging Markets and underweight in the Far East and Japan.

APRIL 30, 2003    /    ANNUAL REPORT

90

INTERNATIONAL EQUITY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $100,000 INVESTMENT

CLASS A SHARES: VALUE OF A $10,000 INVESTMENT

	Inst'l Class Shares	Class A Shares*	MSCI EAFE Index
One year total return	-25.16%	-25.20%	-16.27%
One year total return with load	—	-28.75%	—
Annualized three year total return	-20.14%	-20.23%	-15.49%
Annualized three year total return with load	—	-21.51%	—
Annualized five year total return	-8.85%	-9.01%	-5.52%
Annualized five year total return with load	—	-9.89%	—
Annualized ten year total return	0.42%	0.33%	1.98%
Annualized ten year total return with load	—	-0.15%	—
Annualized total return inception to date **	1.73%	1.65%	—
Annualized total return inception to date with load **	—	1.21%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Performance for the Class A Shares with load reflects the deduction of the maximum 4.75% sales charge.

* Performance prior to August 12, 2000 reflects the performance of the Retail Class A Shares of the Govett International Equity Fund, which were offered beginning January 7, 1992. The assets of the Govett Fund were reorganized into the Portfolio on August 12, 2000. There was no sales charge applicable to Retail Class A Shares of the Govett Fund. Performance results for Institutional Class Shares have not been adjusted for the sales charge applicable to Class A Shares of the Portfolio.

** Since January 7, 1992.

The performance of the MSCI EAFE^® Index does not include operating expenses that are incurred by the Portfolio.

The performance information presented in the graphs and table above do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Investments in foreign countries pose additional risks since the political and economic events unique to a country or region will affect those markets and their issues.

ANNUAL REPORT    /    APRIL 30, 2003

91

INTERNATIONAL EQUITY PORTFOLIO (continued)

Schedule of Investments

Description	Shares (000)	Market Value (000)
Foreign Common Stock — 97.3%
Australia — 2.6%
AMP	6	$	31
Australia & New Zealand Banking Group	5		65
BHP Billiton	9		51
Coles Myer	15		64
Foster's Group	20		57
National Australia Bank	4		87
Rio Tinto	1		18
Westpac Banking	6		58
Woodside Petroleum	8		56
TOTAL AUSTRALIA		$	487
Czech Republic — 1.2%
Komercni Banka, GDR *	10		239
TOTAL CZECH REPUBLIC		$	239
Finland — 1.5%
Nokia OYJ	17		281
TOTAL FINLAND		$	281
France — 10.8%
Accor *	3		118
Air Liquide	1		97
Arcelor	9		107
Aventis	4		205
AXA	11		165
BNP Paribas	5		258
Groupe Danone	1		176
Lafarge	2		153
Pernod-Ricard	1		105
Sanofi-Synthelabo	1		80
Schneider Electric	2		110
STMicroelectronics	2		35

Description	Shares (000)		Market Value (000)
TotalFina Elf	3		$	378
Valeo	3			74
TOTAL FRANCE			$	2,061
Germany — 4.0%
BASF	3			139
Deutsche Bank	2			89
E.ON	5			235
Siemens	5			232
Volkswagen	2			68
TOTAL GERMANY			$	763
Hong Kong — 3.1%
China Mobile	48			96
Fountain SET Holdings	310			211
PetroChina, Cl H	1,284			293
TOTAL HONG KONG			$	600
Israel — 1.1%
Teva Pharmaceutical Industries, ADR	5			210
TOTAL ISRAEL			$	210
Italy — 1.7%
Enel	30			177
Sanpaolo IMI	17			139
TOTAL ITALY			$	316
Japan — 16.4%
Aeon	4			89
Ajinomoto	14			142
Canon	6			243
East Japan Railway	—	†		140
Fuji Photo Film	3			77
Hitachi	16			53
Ito-Yokado	2			47
Kao	4			73
Leopalace21	13			75
Meitec	5			132
Mitsubishi	23			137
Mitsubishi Estate	8			47
Mitsui Sumitomo Insurance	13			61
Nissan Motor	12			88
Nomura Holdings	17			168
NTT DoCoMo	—	†		173
OJI Paper	26			98
Rohm	2			155
Shin-Etsu Chemical	5			153
SMC	2			128
Sony	7			175
Takeda Chemical Industries	5			187
THK	9			79

APRIL 30, 2003    /    ANNUAL REPORT

92

INTERNATIONAL EQUITY PORTFOLIO (continued)

Description	Shares (000)		Market Value (000)
Tokyo Gas	29		$	94
Toyota Motor	7			165
Yamaha	12			140
TOTAL JAPAN			$	3,119
Mexico — 1.5%
Telefonos de Mexico, ADR	4			127
Walmart de México, Ser C	60			152
TOTAL MEXICO			$	279
Netherlands — 6.7%
ASML Holding *	8			68
Fortis Group	10			166
ING Groep	13			216
Royal Dutch Petroleum	9			362
Royal KPN *	20			134
TPG	5			77
VNU	8			242
TOTAL NETHERLANDS			$	1,265
South Africa — 0.9%
Edgars Consolidated Stores	—	†		2
Sappi	14			168
TOTAL SOUTH AFRICA			$	170
South Korea — 2.0%
POSCO ADR	9			177
Samsung Electronics, GDR	2			212
TOTAL SOUTH KOREA			$	389
Spain — 2.9%
Endesa	6			90
Santander	14			112
Telefonica	32			351
TOTAL SPAIN			$	553
Sweden — 3.2%
Atlas Copco, Cl A	6			142
ForeningsSparbanken	15			204
Nordea	13			67
Sandvik	8			193
TOTAL SWEDEN			$	606
Switzerland — 7.6%
Nestle, Cl B	2			404
Novartis	9			343
Roche Holding	1			90
Swisscom	1			186
UBS	8			373
Zurich Financial Services	1			58
TOTAL SWITZERLAND			$	1,454

Description	Shares (000)	Market Value (000)
Taiwan — 1.0%
China Steel	17	$	186
TOTAL TAIWAN		$	186
Thailand — 0.8%
Bangkok Bank *	104		146
Finance One *	3		—	†
TOTAL THAILAND		$	146
United Kingdom — 28.3%
3i Group	8		63
Aggregate Industries	104		128
AstraZeneca	7		288
Aviva	22		151
Barclays	27		184
Barratt Developments	7		43
BHP Billiton	21		109
BP	99		629
BT Group	47		136
Bunzl	8		56
Compass Group	15		69
Debenhams	13		69
Diageo	12		136
GlaxoSmithKline	29		583
HBOS	23		269
HSBC Holdings	37		410
IMI	10		44
Imperial Tobacco Group	5		92
Kier Group	9		64
Kingfisher	26		101
Lloyds TSB Group	9		59
Mitie Group	13		23
Pearson	7		58
Royal Bank of Scotland Group	16		418
Serco Group	11		27
Severn Trent	8		91
Shell Transport & Trading	36		217
South Staffordshire Group	5		28
Tesco	28		90
Unilever	24		232
Vodafone Group	264		522
TOTAL UNITED KINGDOM		$	5,389
TOTAL FOREIGN COMMON STOCK (COST $19,727)		$	18,513

ANNUAL REPORT    /    APRIL 30, 2003

93

INTERNATIONAL EQUITY PORTFOLIO (concluded)

Description	Shares (000)	Market Value (000)
Foreign Preferred Stock — 2.1%
Brazil — 1.4%
Brasil Telecom Participacoes, ADR	3	$	117
Companhia Vale do Rio Doce, ADR	5		142
TOTAL BRAZIL		$	259
Germany — 0.7%
Henkel	2		126
TOTAL GERMANY		$	126
TOTAL FOREIGN PREFERRED STOCK (COST $377)		$	385
TOTAL INVESTMENTS — 99.4% (COST $20,104)		$	18,898
OTHER ASSETS & LIABILITIES, NET — 0.6%		$	118
TOTAL NET ASSETS — 100.0%		$	19,016

* Non-income producing security

† Amount rounds to less than one thousand.

ADR — American Depositary Receipt

Cl — Class

GDR — Global Depositary Receipt

Ser — Series

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

94

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EQUITY PORTFOLIOS

EMERGING MARKETS EQUITY PORTFOLIO

Calum Graham

PORTFOLIO MANAGER

Calum Graham is manager of the Emerging Markets Equity Portfolio. Mr. Graham is also the Director of Govett Investment Management Limited (“Govett”) where he has overall responsibility for the management of all Global Emerging Markets portfolios and the implementation of the investment process. He has more than 10 years of experience in the investment industry.

Management Discussion and Analysis

During this third torrid year for equity markets, the Portfolio maintained a defensive posture, concentrating in markets and stocks that we felt had the potential to better weather the storm of uncertainty derived from geopolitical pressures, accountancy scandals, and declining economic growth.

Two key Asian markets we focused on were Hong Kong and Thailand: Hong Kong’s economy enjoyed strong growth in 2002, and we added several smaller Hong Kong stocks to the Portfolio, such as Harbin Brewery, Fountain Set (a textile manufacturer), and Lerado (a maker of infant strollers), all of which benefited performance. The effect of this was to increase our exposure to the consumer sector. The Thai economy performed robustly, and we moved the Thai portfolio to a strong overweight by buying key benchmark stocks such as Siam Cement and several Thai banks.

Korea, the largest market component of the benchmark index, was weak over the period, and although the Portfolio was a net seller, performance was negatively impacted by exposure to the banking sector, particularly in early 2003. We also reduced exposure to Taiwan, but performance was also negatively impacted by that market’s large technology component. Overall technology exposure was underweighted throughout the period. We avoided smaller Asian markets by exiting Indonesia and having no exposure to the Philippines.

Exposure in Latin America was confined to Brazil and Mexico. We avoided Argentina—which suffered a financial crisis in 2002 but is now on the path to recovery—and other small markets. Brazil was habitually volatile, falling heavily in the run-up to October’s Presidential election, but recovering well since then. We reduced our Brazilian exposure from an overweighted to neutral position during 2002, but have returned to an overweighted position recently by adding to the telecom sector, while reducing defensive stocks such as iron ore producer Cia Vale do Rio Doce and Aracruz Celulose, a paper and pulp company. We maintained an overweighted exposure to Mexico through the period.

A positive stance was maintained to Eastern Europe, as European integration underpins the outlook for these economies. Substantial exposure was held to the Czech Republic, Hungary, and Russia (representing the bulk of the Portfolio’s oil exposure). The South African portfolio concentrated on the index-heavy commodities sector, through stocks such as Anglo American and Anglogold, which benefited performance. More recently, we broadened Portfolio holdings through purchases of Standard Bank, Nedcor, and Barloworld.

APRIL 30, 2003    /    ANNUAL REPORT

96

EMERGING MARKETS EQUITY PORTFOLIO

Performance as of April 30, 2003

CLASS A SHARES: VALUE OF A $10,000 INVESTMENT

	Class A Shares*	MSCI Emerging Markets Free Index
One year total return	-17.64%	-14.06%
One year total return with load	-21.58%	—
Annualized three year total return	-15.86%	-11.04%
Annualized three year total return with load	-17.21%	—
Annualized five year total return	-10.57%	-5.04%
Annualized five year total return with load	-11.44%	—
Annualized ten year total return	-3.19%	0.79%
Annualized ten year total return with load	-3.66%	—
Annualized total return inception to date **	-0.82%	—
Annualized total return inception to date with load **	-1.25%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. During the period, certain fees may have been waived or expenses reimbursed; otherwise total return would have been lower.

Performance for the Class A Shares with load reflects the deduction of the maximum 4.75% sales charge.

* Performance presented prior to August 12, 2000 reflects the performance of the Retail Class A Shares of the Govett Emerging Markets Equity Fund, which were offered beginning January 7, 1992. The assets of the Govett fund were reorganized into the Portfolio on August 12, 2000.

** Since January 7, 1992.

The performance of the MSCI Emerging Markets Free Index does not include operating expenses that are incurred by the Portfolio.

The performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Investments in foreign countries pose additional risks since the political and economic events unique to a country or region will affect those markets and their issues.

Schedule of Investments

Description	Shares (000)	Market Value (000)
Foreign Common Stock — 93.6%
Austria — 1.2%
Erste Bank der Oesterreichisch *	1	$	55
TOTAL AUSTRIA			55
Brazil — 3.5%
Aracruz Celulose, ADR	1		32
Cia de Saneamento Basico, ADR	7		62
Petróleo Brasileiro, ADR	2		37
Uniao de Bancos Brasileiros, ADR	1		27
TOTAL BRAZIL		$	158
China — 1.2%
Sinotrans *	22		5
Zhejiang Expressway	130		50
TOTAL CHINA		$	55
Croatia — 1.0%
Pliva D.D. — Reg S, GDR	3		46
TOTAL CROATIA		$	46
Czech Republic — 1.6%
Komercni Banka, GDR *	3		70
TOTAL CZECH REPUBLIC		$	70
Hong Kong — 12.3%
Cosco Pacific	27		23
Fong's Industries	82		33
Fountain Set	258		175
Harbin Brewery *	350		106
Leefung-Asco Printers	46		10
Lerado Group	508		76
Shanghai Real Estate	540		42
Victory City International	402		91
TOTAL HONG KONG		$	556
Hungary — 3.4%
Magyar Olajes Gazip-Mol, GDR *	2		48
OTP Bank, GDR	5		107
TOTAL HUNGARY		$	155

ANNUAL REPORT    /    APRIL 30, 2003

97

EMERGING MARKETS EQUITY PORTFOLIO (continued)

Description	Shares (000)	Market Value (000)
India — 2.1%
ICICI Bank, ADR *	19	$	97
TOTAL INDIA		$	97
Israel — 3.4%
Check Point Software Technology *	3		45
Teva Pharmaceutical Industries, ADR	2		108
TOTAL ISRAEL		$	153
Malaysia — 1.7%
Gamuda	56		77
TOTAL MALAYSIA		$	77
Mexico — 11.3%
America Móvil, Ser L	86		72
Cemex, ADR	2		53
Fomento Económico Mexicano	13		49
Grupo Financiero BBVA Bancomer, Ser B *	105		91
Grupo Modelo, Ser C	12		28
Grupo Televisa, ADR *	2		75
Teléfonos de México, Ser L *	55		83
Walmart de México, Ser C	23		58
TOTAL MEXICO		$	509
Russia — 6.0%
Lukoil, ADR	1		90
MMC Norilsk Nickel *	3		67
Vimpelcom—Communications, ADR *	1		59
YUKOS Oil	5		54
TOTAL RUSSIA		$	270
South Africa — 9.6%
Anglo American	10		150
Anglo American Platinum	1		21
Anglogold	1		28
Barloworld	5		34
Nedcor	4		54
SABMiller	3		22
Sappi	2		29
Sasol	3		33
Standard Bank	16		64
TOTAL SOUTH AFRICA		$	435
South Korea — 17.7%
Daewoo Shipbuilding & Marine *	8		65
Hyundai Motor	5		106
Hyundai Motor, Ser 2	1		10
Kookmin Bank	4		98
KT	2		64
LG Chemical	3		92

Description	Shares (000)	Market Value (000)
Posco	1	$	63
Samsung Electronics	1		239
Shinsegae	1		61
TOTAL SOUTH KOREA		$	798
Taiwan — 8.6%
Askey Computer *	52		31
Benq	30		31
Cathay Financial	64		71
Fubon Financial	35		24
K Laser Technology	20		16
Largan Precision	—  †		2
Nan Ya Plastic	58		50
Optimax Technology *	25		29
Sinopac Holdings *	68		21
Taiwan Hon Chuan Enterprise	14		19
Taiwan Semiconductor Manufacturing *	71		97
TOTAL TAIWAN		$	391
Thailand — 7.5%
Asian Property Development	48		42
Banpu	29		26
Dynasty Ceramic	43		12
Kasikornbank *	122		103
Land & Houses	493		85
Siam Cement	26		73
TOTAL THAILAND		$	341
Turkey — 1.5%
Akbank	6,700		24
Arcelik	2,500		24
Turkcell Iletisim Hizmet *	3,125		19
TOTAL TURKEY		$	67
TOTAL FOREIGN COMMON STOCK (COST $4,075)		$	4,233
Foreign Preferred Stock — 6.3%
Brazil — 6.3%
Cia de Bebidas das Americas, ADR	3		60
Cia Vale do Rio Doce	2		51
Petróleo Brasileiro	4		68
Tele Norte Leste Participacoes	9,733		106
TOTAL BRAZIL		$	285
TOTAL FOREIGN PREFERRED STOCK (COST $273)		$	285

APRIL 30, 2003    /    ANNUAL REPORT

98

EMERGING MARKETS EQUITY PORTFOLIO (concluded)

Description	Shares (000)	Market Value (000)
Rights — 0.0%
Tele Norte Leste Rights *	173	$	—	†
Tele Norte Leste Rights *	1		—	†
TOTAL RIGHTS (COST $0)			—	†
TOTAL INVESTMENTS 99.9% (COST $4,348)		$	4,518
OTHER ASSETS & LIABILITIES, NET — 0.1%		$	5
TOTAL NET ASSETS — 100.0%		$	4,523

* Non-income producing security

† Amount rounds to less than one thousand.

ADR — American Depositary Receipt

GDR — Global Depositary Receipt

Ser — Series

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

99

STATEMENTS OF ASSETS AND LIABILITIES

As of April 30, 2003 (000, except for per share amounts)	U.S. Treasury Money Market Portfolio		U.S. Government Money Market Portfolio		Money Market Portfolio		Tax-Free Money Market Portfolio		Pennsylvania Tax-Free Money Market Portfolio
Assets:
Investments at Market Value (Cost $479,098, $1,559,258, $1,234,376, $185,280, $16,846, $56,698, $59,450, $118,502, $149,438, $136,627, $96,501 and $309,225, respectively)	$479,098	*	$1,559,258	*	$1,234,376	*	$185,280	*	$16,846	*
Collateral for Investment Securities Loaned	—		—		—		—		—
Cash	—		—		—		8		7
Interest and Dividends Receivable	74		4,601		5,517		529		49
Receivable for Investment Securities Sold	—		—		—		—		—
Receivable for Capital Shares Sold	—		—		—		—		—
Expense Reimbursement from Advisor	2		4		20		3		5
Prepaid Expenses	11		39		34		4		—	†
Other Assets	4		—		16		—	†	—
TOTAL ASSETS	479,189		1,563,902		1,239,963		185,824		16,907
Liabilities:
Distribution Payable	260		1,139		829		95		10
Payable for Investment Securities Loaned	—		—		—		—		—
Payable for Investment Securities Purchased	—		—		5,016		—		—
Payable for Capital Shares Redeemed	—		—		—		—		—
Accrued Expenses:
Investment Advisory Fees	96		289		217		19		—
Administrator Fees	33		112		92		12		—	†
Shareholder Servicing Fees	18		87		63		8		2
Distribution Fees	28		48		81		15		—	†
Custody Fees	10		35		32		5		1
Transfer Agency Fees	—		—		—		3		1
Other Expense Payables	38		101		110		14		1
TOTAL LIABILITIES	483		1,811		6,440		171		15
Net Assets:
Paid in Capital	478,607		1,562,089		1,233,523		185,655		16,892
Undistributed (Distributions in Excess of) Net Investment Income	84		2		—		—	†	—
Accumulated Net Realized Gain (Loss) on Investments	15		—	†	—	†	(2	)	—	†
Net Unrealized Appreciation (Depreciation) on Investments	—		—		—		—		—
TOTAL NET ASSETS	$478,706		$1,562,091		$1,233,523		$185,653		$16,892
Outstanding Shares of Beneficial Interest (unlimited authorization — no par value)
Institutional Class Shares	250,972		1,232,649		749,229		96,730		13,453
Class A Shares	22,612		70,519		205,867		40,713		—
Class B Shares	—		—		237		—		—
Institutional II Class Shares	205,056		259,027		278,218		48,223		3,439
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — INSTITUTIONAL CLASS SHARES	$1.00		$1.00		$1.00		$1.00		$1.00
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CLASS A SHARES	$1.00		$1.00		$1.00		$1.00		—
MAXIMUM OFFERING PRICE PER SHARE — CLASS A SHARES ($10.42 ÷ 95.50%, $10.45 ÷ 95.50%, $10.13 ÷ 95.50% AND $10.70 ÷ 95.50%, RESPECTIVELY)	N/A		N/A		N/A		N/A		N/A
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CLASS B SHARES	—		—		$1.00		—		—
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — INSTITUTIONAL II CLASS SHARES	$1.00		$1.00		$1.00		$1.00		$1.00

* Investments are stated at their amortized cost. See Note 2 in Notes to Financial Statements.

† Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

100

STATEMENTS OF ASSETS AND LIABILITIES

Short- Term Treasury Portfolio		Short- Term Bond Portfolio		Maryland Tax-Free Portfolio		Pennsylvania Tax-Free Portfolio		Intermediate Fixed Income Portfolio	U.S. Government Bond Portfolio		Income Portfolio
$57,713		$60,885		$126,344		$159,649		$142,684	$101,099		$320,847
—		—		—		—		2,416	10,851		25,766
1		—		—		—		—	—		—
945		704		1,877		2,895		1,466	884		3,087
—		—		—		—		1,330	—		2,727
128		269		49		44		81	39		870
1		—		2		3		—	2		4
1		2		3		4		3	2		6
—	†	—	†	—	†	—	†	2	—	†	—	†
58,789		61,860		128,275		162,595		147,982	112,877		353,307
74		88		314		488		344	214		393
—		—		—		—		2,416	10,851		25,766
—		1,947		—		—		16,826	2,638		65,724
85		12		58		20		42	182		70
18		34		56		88		56	54		120
4		4		9		11		9	7		18
2		3		10		20		12	9		25
2		—		6		—	†	—	1		4
2		2		3		3		4	3		7
3		—		4		3		—	2		4
5		5		10		13		10	8		21
195		2,095		470		646		19,719	13,969		92,152
57,310		60,073		120,631		155,361		119,321	102,934		247,424
2		2		—		21		—	25		—
267		(1,745	)	(668	)	(3,644	)	2,885	(8,649	)	2,109
1,015		1,435		7,842		10,211		6,057	4,598		11,622
$58,594		$59,765		$127,805		$161,949		$128,263	$98,908		$261,155
4,620		5,986		9,666		15,161		12,217	9,291		23,329
1,048		—		2,421		275		—	489		1,162
—		—		170		40		—	—		197
—		—		—		—		—	—		—
$10.34		$9.98		$10.43		$10.46		$10.50	$10.11		$10.57
$10.33		—		$10.42		$10.45		—	$10.13		$10.70
N/A		N/A		$10.91		$10.94		N/A	$10.61		$11.20
—		—		$10.43		$10.47		—	—		$10.57
—		—		—		—		—	—		—

ANNUAL REPORT    /    APRIL 30, 2003

101

STATEMENTS OF ASSETS AND LIABILITIES

As of April 30, 2003 (000, except for per share amounts)	Balanced Portfolio			Equity Income Portfolio			Value Equity Portfolio			Equity Index Portfolio
Assets:
Investments at Market Value (Cost $172,221, $63,603, $133,599, $124,801, $211,660, $131,773, $66,722, $108,776, $20,104 and $4,348, respectively)	$	168,319		$	65,751		$	175,330		$	98,407
Foreign Currency (Cost $—, $—, $—, $—, $—, $—, $—, $—, $42 and $111, respectively)		—			—			—			—
Cash		—			—			—			—
Interest and Dividend Receivable		564			197			297			104
Receivable for Investment Securities Sold		—			—			3,706			2,136
Receivable for Capital Shares Sold		20			69			3			352
Expense Reimbursement from Advisor		14			3			4			3
Prepaid Expenses		4			2			4			2
Other Assets		—	†		—			—	†		—
TOTAL ASSETS		168,921			66,022			179,344			101,004
Liabilities:
Payable to Custodian		—			—			—			—
Distribution Payable		—			144			—			—
Payable for Investment Securities Purchased		5,186			—			4,303			1,355
Payable for Capital Shares Redeemed		89			11			145			34
Accrued Expenses:
Investment Advisory Fees		79			29			127			—	†
Administrator Fees		11			4			12			5
Shareholder Servicing Fees		17			7			21			1
Distribution Fees		13			1			1			1
Custody Fees		5			2			4			3
Transfer Agency Fees		16			3			2			4
Other Expense Payables		13			6			14			8
TOTAL LIABILITIES		5,429			207			4,629			1,411
Net Assets:
Paid in Capital		231,753			64,292			133,298			138,664
Undistributed (Distributions in Excess of) Net Investment Income		153			—			129			93
Accumulated Net Realized Loss on Investments and Options		(64,512	)		(625	)		(443	)		(12,770	)
Net Unrealized Appreciation (Depreciation) on Investments and Foreign Exchange Translations		(3,902	)		2,148			41,731			(26,394	)
TOTAL NET ASSETS	$	163,492		$	65,815		$	174,715		$	99,593
Outstanding Shares of Beneficial Interest (unlimited authorization — no par value)
Institutional Class Shares		10,538			7,545			22,755			12,342
Class A Shares		2,618			537			567			604
Class B Shares		970			—			120			—
Class C Shares		—			—			—			—
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — INSTITUTIONAL CLASS SHARES		$11.58			$8.14			$7.45			$7.69
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CLASS A SHARES		$11.55			$8.16			$7.47			$7.70
MAXIMUM OFFERING PRICE PER SHARE — CLASS A SHARES ($11.55 ÷ 95.25%, $8.16 ÷ 95.25%, $7.47 ÷ 95.25%, $7.70 ÷ 95.25%, $13.05 ÷ 95.25%, $11.40 ÷ 95.25%, $10.15 ÷ 95.25%, $11.99 ÷ 95.25%, $6.03 ÷ 95.25% AND $7.05 ÷ 95.25%, RESPECTIVELY)		$12.13			$8.57			$7.84			$8.08
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CLASS B SHARES		$11.55			—			$7.23			—
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE — CLASS C SHARES		—			—			—			—

† Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

102

STATEMENTS OF ASSETS AND LIABILITIES

Blue Chip Equity Portfolio		Capital Growth Portfolio		Mid-Cap Equity Portfolio		Small-Cap Equity Portfolio		International Equity Portfolio		Emerging Markets Equity Portfolio
$195,292		$136,367		$70,289		$114,194		$18,898		$4,518
—		—		—		—		42		113
—		—		—		—		—		—
193		56		19		7		164		7
1,442		—		—		1,517		192		—
128		35		31		358		257		—
25		23		3		70		11		11
5		3		2		3		—	†	—	†
—		—	†	1		—	†	—		—
197,085		136,484		70,345		116,149		19,564		4,649
—		—		—		—		289		95
—		—		—		—		—		—
—		1,110		—		4,435		—		—
312		92		20		607		238		11
104		71		39		64		—		—
13		9		5		7		—	†	—	†
20		14		8		7		2		—
13		10		2		11		1		1
4		5		3		5		11		6
31		31		4		83		7		12
16		11		6		9		—	†	1
513		1,353		87		5,228		548		126
268,448		212,107		81,301		149,496		41,285		17,685
122		97		7		—		(74	)	—
(55,630	)	(81,667	)	(14,617	)	(43,993	)	(21,001	)	(13,335	)
(16,368	)	4,594		3,567		5,418		(1,194	)	173
$196,572		$135,131		$70,258		$110,921		$19,016		$4,523
11,544		8,957		6,419		4,681		2,247		—
2,845		2,001		477		4,371		916		642
724		801		—		137		—		—
—		—		—		12		—		—
$13.01		$11.55		$10.19		$12.13		$6.00		—
$13.05		$11.40		$10.15		$11.99		$6.03		$7.05
$13.70		$11.97		$10.66		$12.59		$6.33		$7.40
$12.71		$11.08		—		$11.79		—		—
—		—		—		$11.81		—		—

ANNUAL REPORT    /    APRIL 30, 2003

103

STATEMENTS OF OPERATIONS

For the Fiscal Year Ended April 30, 2003 (000)	U.S. Treasury Money Market Portfolio			U.S. Government Money Market Portfolio			Money Market Portfolio			Tax-Free Money Market Portfolio			Pennsylvania Tax-Free Money Market Portfolio
Investment Income:
Dividends	$	—		$	—		$	—		$	—		$	—
Interest		7,536			27,193			26,347			2,343			297
TOTAL INVESTMENT INCOME		7,536			27,193			26,347			2,343			297
Expenses:
Investment Advisory Fees		1,161			4,040			3,723			424			51
Administrator Fees		424			1,414			1,304			170			42
Shareholder Servicing Fees —Institutional Class Shares		393			1,880			1,294			120			44
Shareholder Servicing Fees —Class A Shares		32			116			345			62			—
Shareholder Servicing Fees —Class B Shares		—			—			1			—			—
Shareholder Servicing Fees —Institutional II Class Shares		—			—			594			—			6
Distribution Fees — Class A Shares		54			193			575			103			—
Distribution Fees — Class B Shares		—			—			1			—			—
Distribution Fees —Institutional II Class Shares		271			428			—			72			4
Transfer Agency Fees		23			—			105			43			10
Custodian Fees		53			283			268			33			10
Accounting Fees		95			210			203			65			44
Professional Fees		54			191			171			20			2
Registration Fees		23			100			89			9			1
Printing		33			111			96			13			1
Trustee Fees and Expenses		18			63			59			6			1
Miscellaneous Fees		44			171			147			16			—	†
TOTAL EXPENSES		2,678			9,200			8,975			1,156			216
Less Waivers:
Investment Advisory Fees		—			(902	)		(1,125	)		(244	)		(51	)
Administrator Fees		—			—			—			—			(12	)
Shareholder Servicing Fees —Institutional Class Shares		(183	)		(877	)		(604	)		(56	)		(9	)
Shareholder Servicing Fees —Class A Shares		(20	)		(70	)		(207	)		(37	)		—
Shareholder Servicing Fees —Institutional II Class Shares		—			—			—			—			(4	)
Distribution Fees — Class A Shares		—			—			—			—			—
TOTAL WAIVERS		(203	)		(1,849	)		(1,936	)		(337	)		(76	)
Less Expense Reimbursement by Advisor		(22	)		(24	)		(125	)		(30	)		(21	)
TOTAL NET EXPENSES		2,453			7,327			6,914			789			119
NET INVESTMENT INCOME (LOSS)		5,083			19,866			19,433			1,554			178
Net Realized Gain (Loss) on Investments		10			—	†		4			(1	)		—	†
Net Change in Unrealized Appreciation (Depreciation) on Investments		—			—			—			—			—
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS		10			—	†		4			(1	)		—	†
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	5,093		$	19,866		$	19,437		$	1,553		$	178

• Includes income from securities lending program. See Note 6 in Notes to Financial Statements.

† Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

104

STATEMENTS OF OPERATIONS

Short-Term Treasury Portfolio			Short-Term Bond Portfolio			Maryland Tax-Free Portfolio			Pennsylvania Tax-Free Portfolio			Intermediate Fixed Income Portfolio			U.S. Government Bond Portfolio			Income Portfolio
$	—		$	17		$	21		$	24		$	93		$	228		$	389
	1,958			2,909	•		6,218			8,051			6,330	•		5,086	•		13,263	•
	1,958			2,926			6,239			8,075			6,423			5,314			13,652
	194			494			826			1,058			774			776			1,632
	72			81			133			164			135			113			258
	68			99			150			240			193			148			386
	15			—			38			3			—			7			19
	—			—			4			1			—			—			5
	—			—			—			—			—			—			—
	40			—			77			7			—			13			38
	—			—			12			2			—			—			14
	—			—			—			—			—			—			—
	23			6			36			32			3			22			46
	13			16			21			25			30			21			52
	48			43			61			65			49			53			75
	7			7			16			19			16			12			32
	3			4			7			9			7			6			15
	4			4			9			12			9			7			19
	2			3			5			6			5			4			10
	5			6			11			14			11			9			24
	494			763			1,406			1,657			1,232			1,191			2,625
	(15	)		(45	)		(175	)		(4	)		(97	)		(95	)		(133	)
	—			—			—			—			—			—			—
	(41	)		(59	)		(30	)		—			(52	)		(39	)		(77	)
	(15	)		—			(38	)		(3	)		—			(7	)		(19	)
	—			—			—			—			—			—			—
	(15	)		—			(13	)		(1	)		—			(2	)		(6	)
	(86	)		(104	)		(256	)		(8	)		(149	)		(143	)		(235	)
	(14	)		—			(22	)		(30	)		—			(16	)		(39	)
	394			659			1,128			1,619			1,083			1,032			2,351
	1,564			2,267			5,111			6,456			5,340			4,282			11,301
	326			745			495			583			4,821			871			6,724
	293			557			3,739			5,524			3,626			2,971			7,581
	619			1,302			4,234			6,107			8,447			3,842			14,305
$	2,183		$	3,569		$	9,345		$	12,563		$	13,787		$	8,124		$	25,606

ANNUAL REPORT    /    APRIL 30, 2003

105

STATEMENTS OF OPERATIONS

For the Fiscal Year Ended April 30, 2003 (000)	Balanced Portfolio			Equity Income Portfolio			Value Equity Portfolio			Equity Index Portfolio
Investment Income:
Dividends	$	1,998		$	2,077		$	3,835		$	1,638
Less: Foreign Taxes Withheld		(6	)		(10	)		(32	)		(4	)
Interest		4,263			8			5			—	†
TOTAL INVESTMENT INCOME		6,255			2,075			3,808			1,634
Expenses:
Investment Advisory Fees		1,488			457			1,947			182
Administrator Fees		221			80			192			103
Shareholder Servicing Fees — Institutional Class Shares		278			91			284			128
Shareholder Servicing Fees — Class A Shares		48			7			7			9
Shareholder Servicing Fees — Class B Shares		29			—			2			—
Shareholder Servicing Fees — Class C Shares		—			—			—			—
Distribution Fees — Class A Shares		129			18			18			23
Distribution Fees — Class B Shares		88			—			7			—
Distribution Fees — Class C Shares		—			—			—			—
Transfer Agency Fees		124			26			37			30
Custodian Fees		46			14			34			28
Accounting Fees		71			49			68			51
Professional Fees		23			7			21			11
Registration Fees		15			4			13			6
Printing		13			4			11			6
Trustee Fees and Expenses		10			3			8			4
Amortization of Deferred Organization Costs		—			—			—			1
Miscellaneous Fees		23			6			18			8
TOTAL EXPENSES		2,606			766			2,667			590
Less Waivers:
Investment Advisory Fees		(98	)		(61	)		(208	)		(141	)
Administrator Fees		—			—			—			(37	)
Shareholder Servicing Fees — Institutional Class Shares		—			—			—			(120	)
Shareholder Servicing Fees — Class A Shares		(48	)		(7	)		(7	)		(9	)
Distribution Fees — Class A Shares		(48	)		(7	)		(7	)		(9	)
TOTAL WAIVERS		(194	)		(75	)		(222	)		(316	)
Less Expense Reimbursement by Advisor		(108	)		(19	)		(35	)		(28	)
TOTAL NET EXPENSES		2,304			672			2,410			246
NET INVESTMENT INCOME (LOSS)		3,951			1,403			1,398			1,388
Net Realized Loss on Investments		(35,836	)		(3,250	)		(385	)		(5,731	)
Net Realized Gain (Loss) on Options		—			—			104			—
Net Realized Loss on Foreign Currency Translations		—			—			—			—
Net Change in Unrealized Appreciation (Depreciation) on Investments		1,971			(12,929	)		(49,517	)		(9,047	)
Net Change in Unrealized Appreciation (Depreciation) on Foreign Currency Translations		—			—			—			—
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS		(33,865	)		(16,179	)		(49,798	)		(14,778	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(29,914	)	$	(14,776	)	$	(48,400	)	$	(13,390	)

(1) Class C commenced operations on October 1, 2002.

 † Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

106

STATEMENTS OF OPERATIONS

Blue Chip Equity Portfolio			Capital Growth Portfolio			Mid-Cap Equity Portfolio			Small-Cap Equity Portfolio			International Equity Portfolio			Emerging Markets Equity Portfolio
$	3,296		$	1,411		$	856		$	735		$	681		$	113
	(16	)		(14	)		—			(1	)		(108	)		(10	)
	3			11			56			69			9			2
	3,283			1,408			912			803			582			105
	1,495			991			621			972			239			52
	208			146			91			129			45			29
	246			161			109			96			27			—
	60			37			8			84			9			8
	24			23			—			3			—			—
	—			—			—			—	†(1)		—			—
	219			98			20			225			23			21
	72			70			—			10			—			—
	—			—			—			—	†(1)		—			—
	218			208			30			482			44			72
	36			40			26			38			69			65
	70			63			50			64			69			61
	23			16			9			14			2			—	†
	15			10			5			8			2			—	†
	12			8			5			8			1			—	†
	9			6			3			5			1			—	†
	—			—			—			—			—			—
	20			13			7			11			2			—	†
	2,727			1,890			984			2,149			533			308
	(90	)		(50	)		(60	)		(25	)		(95	)		(52	)
	—			—			—			—			(1	)		(4	)
	—			—			—			—			—			—
	(60	)		(37	)		(8	)		(84	)		(9	)		(8	)
	(119	)		(37	)		(8	)		(84	)		(9	)		(8	)
	(269	)		(124	)		(76	)		(193	)		(114	)		(72	)
	(202	)		(189	)		(22	)		(431	)		(38	)		(129	)
	2,256			1,577			886			1,525			381			107
	1,027			(169	)		26			(722	)		201			(2	)
	(46,516	)		(36,357	)		(9,011	)		(36,188	)		(10,444	)		(665	)
	—			(279	)		—			327			—			—
	—			—			—			—			(253	)		(9	)
	(5,851	)		3,889			(9,898	)		(16,378	)		3,061			(423	)
	—			—			—			—			101			3
	(52,367	)		(32,747	)		(18,909	)		(52,239	)		(7,535	)		(1,094	)
$	(51,340	)	$	(32,916	)	$	(18,883	)	$	(52,961	)	$	(7,334	)	$	(1,096	)

ANNUAL REPORT    /    APRIL 30, 2003

107

STATEMENTS OF CHANGES IN NET ASSETS

For the Fiscal Years Ended April 30, 2003 and 2002 (000)	U.S. Treasury Money Market Portfolio						U.S. Government Money Market Portfolio						Money Market Portfolio
	05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02
Operations:
Net Investment Income	$	5,083		$	10,518		$	19,866		$	41,440		$	19,433		$	42,845
Net Realized Gain (Loss) on Investments		10			26			—	†		—	†		4			34
Net Change in Unrealized Appreciation (Depreciation) on Investments		—			—			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		5,093			10,544			19,866			41,440			19,437			42,879
Distributions to Shareholders:
Net Investment Income
Institutional Class Shares		(2,983	)		(6,670	)		(15,731	)		(33,488	)		(11,633	)		(21,712	)
Class A Shares		(192	)		(559	)		(798	)		(2,424	)		(2,630	)		(7,742	)
Class B Shares		—			—			—			—			(1	)		(2	)
Institutional II Class Shares		(1,917	)		(3,289	)		(3,337	)		(5,528	)		(5,197	)		(13,389	)
Net Capital Gains
Institutional Class Shares		—			—			—			—			—			—
Class A Shares		—			—			—			—			—			—
TOTAL DISTRIBUTIONS		(5,092	)		(10,518	)		(19,866	)		(41,440	)		(19,461	)		(42,845	)
Capital Share Transactions(1):
Institutional Class Shares:
Shares Issued		595,456			466,051			2,455,363			1,809,961			2,016,168			2,527,319
Shares Issued in Lieu of Cash Distributions		35			23			45			—			1,122			1,712
Shares Redeemed		(594,272	)		(475,352	)		(2,550,591	)		(1,725,723	)		(2,196,098	)		(2,184,923	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS		1,219			(9,278	)		(95,183	)		84,238			(178,808	)		344,108
Class A Shares:
Shares Issued		23,764			30,179			169,780			154,038			107,969			123,836
Shares Issued in Lieu of Cash Distributions		140			447			—			—	†		2,585			7,648
Shares Redeemed		(23,682	)		(29,821	)		(178,670	)		(194,408	)		(163,837	)		(169,143	)
TOTAL CLASS A SHARE TRANSACTIONS		222			805			(8,890	)		(40,370	)		(53,283	)		(37,659	)
Class B Shares:
Shares Issued		—			—			—			—			125			97
Shares Issued in Lieu of Cash Distributions		—			—			—			—			1			3
Shares Redeemed		—			—			—			—			(46	)		(49	)
TOTAL CLASS B SHARE TRANSACTIONS		—			—			—			—			80			51
Institutional II Class Shares:
Shares Issued		488,538			507,157			1,251,005			1,045,057			1,348,148			2,294,308
Shares Issued in Lieu of Cash Distributions		—			—			—			—			—			—
Shares Redeemed		(437,433	)		(463,193	)		(1,254,483	)		(948,855	)		(1,528,331	)		(2,201,705	)
TOTAL INSTITUTIONAL II CLASS SHARE TRANSACTIONS		51,105			43,964			(3,478	)		96,202			(180,183	)		92,603
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS		52,546			35,491			(107,551	)		140,070			(412,194	)		399,103
NET INCREASE (DECREASE) IN NET ASSETS		52,547			35,517			(107,551	)		140,070			(412,218	)		399,137
Net Assets:
Beginning of period		426,159			390,642			1,669,642			1,529,572			1,645,741			1,246,604
END OF PERIOD	$	478,706		$	426,159		$	1,562,091		$	1,669,642		$	1,233,523		$	1,645,741
UNDISTRIBUTED NET INVESTMENT INCOME	$	84		$	18		$	2		$	—		$	—		$	—	†

(1) For share transactions, see Note 8 in Notes to Financial Statements.

† Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

108

STATEMENTS OF CHANGES IN NET ASSETS

Tax-Free Money Market Portfolio						Pennsylvania Tax-Free Money Market Portfolio						Short-Term Treasury Portfolio						Short-Term Bond Portfolio						Maryland Tax-Free Portfolio
05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02
$	1,554		$	2,610		$	178		$	531		$	1,564		$	1,911		$	2,267		$	3,375		$	5,111		$	5,157
	(1	)		—			—	†		—			326			672			745			(1,603	)		495			3
	—			—			—			—			293			(113	)		557			171			3,739			2,137
	1,553			2,610			178			531			2,183			2,470			3,569			1,943			9,345			7,297
	(796	)		(1,200	)		(155	)		(501	)		(1,304	)		(1,542	)		(2,299	)		(3,376	)		(4,075	)		(4,044	)
	(318	)		(651	)		—			—			(260	)		(369	)		—			—			(997	)		(1,077	)
	—			—			—			—			—			—			—			—			(49	)		(36	)
	(440	)		(759	)		(23	)		(30	)		—			—			—			—			—			—
	—			—			—			—			(420	)		—			—			—			—			—
	—			—			—			—			(86	)		—			—			—			—			—
	(1,554	)		(2,610	)		(178	)		(531	)		(2,070	)		(1,911	)		(2,299	)		(3,376	)		(5,121	)		(5,157	)
	121,416			82,024			41,730			79,059			26,297			10,879			15,285			18,536			8,352			13,932
	—			—			—			—	†		149			186			1,083			1,502			519			455
	(93,962	)		(74,801	)		(52,328	)		(55,008	)		(15,176	)		(10,332	)		(29,066	)		(23,502	)		(9,100	)		(8,510	)
	27,454			7,223			(10,598	)		24,051			11,270			733			(12,698	)		(3,464	)		(229	)		5,877
	19,710			25,344			—			—			8,229			2,044			—			—			3,415			10,002
	319			651			—			—			240			347			—			—			696			822
	(28,554	)		(15,121	)		—			—			(6,027	)		(2,989	)		—			—			(6,454	)		(9,286	)
	(8,525	)		10,874			—			—			2,442			(598	)		—			—			(2,343	)		1,538
	—			—			—			—			—			—			—			—			523			606
	—			—			—			—			—			—			—			—			32			23
	—			—			—			—			—			—			—			—			(93	)		(119	)
	—			—			—			—			—			—			—			—			462			510
	88,282			98,032			8,751			5,095			—			—			—			—			—			—
	—			—			—			—	†		—			—			—			—			—			—
	(72,422	)		(109,667	)		(7,380	)		(3,027	)		—			—			—			—			—			—
	15,860			(11,635	)		1,371			2,068			—			—			—			—			—			—
	34,789			6,462			(9,227	)		26,119			13,712			135			(12,698	)		(3,464	)		(2,110	)		7,925
	34,788			6,462			(9,227	)		26,119			13,825			694			(11,428	)		(4,897	)		2,114			10,065
	150,865			144,403			26,119			—			44,769			44,075			71,193			76,090			125,691			115,626
$	185,653		$	150,865		$	16,892		$	26,119		$	58,594		$	44,769		$	59,765		$	71,193		$	127,805		$	125,691
$	—	†	$	—		$	—		$	—		$	2		$	2		$	2		$	11		$	—		$	—

ANNUAL REPORT    /    APRIL 30, 2003

109

STATEMENTS OF CHANGES IN NET ASSETS

For the Fiscal Years Ended April 30, 2003 and 2002 (000)	Pennsylvania Tax-Free Portfolio						Intermediate Fixed Income Portfolio						U.S. Government Bond Portfolio
	05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02
Operations:
Net Investment Income	$	6,456		$	6,948		$	5,340		$	6,774		$	4,282		$	6,243
Net Realized Gain (Loss) on Investments		583			1,392			4,821			(1,669	)		871			(1,898	)
Net Realized Gain on Options		—			—			—			—			—			—
Net Change in Unrealized Appreciation (Depreciation) on Investments		5,524			3,004			3,626			1,671			2,971			2,437
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		12,563			11,344			13,787			6,776			8,124			6,782
Distributions to Shareholders:
Net Investment Income
Institutional Class Shares		(6,359	)		(6,850	)		(5,349	)		(6,779	)		(4,159	)		(6,074	)
Class A Shares		(87	)		(93	)		—			—			(173	)		(162	)
Class B Shares		(10	)		(5	)		—			—			—			—
Net Capital Gains
Institutional Class Shares		—			—			—			(64	)		—			—
Class A Shares		—			—			—			—			—			—
Class B Shares		—			—			—			—			—			—
TOTAL DISTRIBUTIONS		(6,456	)		(6,948	)		(5,349	)		(6,843	)		(4,332	)		(6,236	)
Capital Share Transactions(1):
Institutional Class Shares
Shares Issued		7,490			11,394			14,470			21,567			12,551			12,221
Shares Issued in Lieu of Cash Distributions		233			220			1,015			1,397			1,010			1,526
Shares Redeemed		(15,423	)		(16,447	)		(25,895	)		(22,193	)		(24,542	)		(41,045	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS		(7,700	)		(4,833	)		(10,410	)		771			(10,981	)		(27,298	)
Class A Shares
Shares Issued		1,213			336			—			—			5,779			2,263
Shares Issued in Lieu of Cash Distributions		68			69			—			—			142			134
Shares Redeemed		(659	)		(891	)		—			—			(4,796	)		(1,247	)
TOTAL CLASS A SHARE TRANSACTIONS		622			(486	)		—			—			1,125			1,150
Class B Shares
Shares Issued		307			98			—			—			—			—
Shares Issued in Lieu of Cash Distributions		5			5			—			—			—			—
Shares Redeemed		(78	)		(6	)		—			—			—			—
TOTAL CLASS B SHARE TRANSACTIONS		234			97			—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS		(6,844	)		(5,222	)		(10,410	)		771			(9,856	)		(26,148	)
NET INCREASE (DECREASE) IN NET ASSETS		(737	)		(826	)		(1,972	)		704			(6,064	)		(25,602	)
Net Assets:
Beginning of period		162,686			163,512			130,235			129,531			104,972			130,574
END OF PERIOD	$	161,949		$	162,686		$	128,263		$	130,235		$	98,908		$	104,972
UNDISTRIBUTED NET INVESTMENT INCOME	$	21		$	21		$	—		$	9		$	25		$	49

(1) For share transactions, see Note 8 in Notes to Financial Statements.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

110

STATEMENTS OF CHANGES IN NET ASSETS

Income Portfolio						Balanced Portfolio						Equity Income Portfolio						Value Equity Portfolio						Equity Index Portfolio
05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02
$	11,301		$	17,964		$	3,951		$	6,063		$	1,403		$	1,178		$	1,398		$	961		$	1,388		$	1,106
	6,724			595			(35,836	)		(25,352	)		(3,250	)		2,359			(385	)		6,462			(5,731	)		(5,962	)
	—			—			—			—			—			—			104			—			—			—
	7,581			3,291			1,971			(11,934	)		(12,929	)		(9,569	)		(49,517	)		(36,701	)		(9,047	)		(9,100	)
	25,606			21,850			(29,914	)		(31,223	)		(14,776	)		(6,032	)		(48,400	)		(29,278	)		(13,390	)		(13,956	)
	(10,783	)		(17,378	)		(3,584	)		(5,385	)		(1,329	)		(1,115	)		(1,266	)		(1,005	)		(1,309	)		(1,034	)
	(501	)		(534	)		(511	)		(785	)		(73	)		(66	)		(9	)		(17	)		(47	)		(74	)
	(59	)		(47	)		(93	)		(168	)		—			—			—			—			—			—
	—			(576	)		—			—			—			(333	)		(3,324	)		(20,266	)		—			—
	—			(18	)		—			—			—			(21	)		(76	)		(483	)		—			—
	—			(2	)		—			—			—			—			(17	)		(77	)		—			—
	(11,343	)		(18,555	)		(4,188	)		(6,338	)		(1,402	)		(1,535	)		(4,692	)		(21,848	)		(1,356	)		(1,108	)
	35,535			37,445			11,591			16,678			11,678			8,422			17,045			27,523			31,763			27,108
	5,803			11,581			3,560			5,354			66			351			2,909			14,913			905			785
	(72,011	)		(160,519	)		(113,301	)		(42,979	)		(7,279	)		(8,272	)		(44,470	)		(57,733	)		(19,537	)		(19,095	)
	(30,673	)		(111,493	)		(98,150	)		(20,947	)		4,465			501			(24,516	)		(15,297	)		13,131			8,798
	6,501			4,892			1,984			6,799			1,653			2,220			1,369			1,663			1,134			1,042
	422			463			500			764			67			82			79			376			38			52
	(6,611	)		(2,926	)		(7,403	)		(7,181	)		(1,333	)		(954	)		(1,901	)		(1,830	)		(3,160	)		(1,387	)
	312			2,429			(4,919	)		382			387			1,348			(453	)		209			(1,988	)		(293	)
	701			757			892			2,445			—			—			165			456			—			—
	55			45			92			166			—			—			17			77			—			—
	(185	)		(83	)		(2,279	)		(1,816	)		—			—			(209	)		(67	)		—			—
	571			719			(1,295	)		795			—			—			(27	)		466			—			—
	(29,790	)		(108,345	)		(104,364	)		(19,770	)		4,852			1,849			(24,996	)		(14,622	)		11,143			8,505
	(15,527	)		(105,050	)		(138,466	)		(57,331	)		(11,326	)		(5,718	)		(78,088	)		(65,748	)		(3,603	)		(6,559	)
	276,682			381,732			301,958			359,289			77,141			82,859			252,803			318,551			103,196			109,755
$	261,155		$	276,682		$	163,492		$	301,958		$	65,815		$	77,141		$	174,715		$	252,803		$	99,593		$	103,196
$	—		$	42		$	153		$	390		$	—		$	—		$	129		$	17		$	93		$	65

ANNUAL REPORT    /    APRIL 30, 2003

111

STATEMENTS OF CHANGES IN NET ASSETS

For the Fiscal Years Ended April 30, 2003 and 2002 (000)	Blue Chip Equity Portfolio						Capital Growth Portfolio
	05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02
Operations:
Net Investment Income (Loss)	$	1,027		$	489		$	(169	)	$	(459	)
Net Realized Gain (Loss) on Investments		(46,516	)		(7,596	)		(36,357	)		(39,485	)
Net Realized Gain (Loss) on Options		—			—			(279	)		—
Net Realized Gain (Loss) on Foreign Currency Translations		—			—			—			—
Net Change in Unrealized Appreciation (Depreciation) on Investments		(5,851	)		(56,779	)		3,889			(25,288	)
Net Change in Unrealized Appreciation (Depreciation) on Foreign Currency Transactions		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		(51,340	)		(63,886	)		(32,916	)		(65,232	)
Distributions to Shareholders:
Net Investment Income
Institutional Class Shares		(946	)		(463	)		—			—
Class A Shares		(18	)		(71	)		—			—
TOTAL DISTRIBUTIONS		(964	)		(534	)		—			—
Capital Share Transactions(1):
Institutional Class Shares
Shares Issued		21,388			55,009			17,565			42,901
Shares Issued in Lieu of Cash Distributions		375			183			—			—
Shares Redeemed		(39,891	)		(34,266	)		(27,797	)		(31,616	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS		(18,128	)		20,926			(10,232	)		11,285
Class A Shares
Shares Issued		2,561			10,240			1,261			8,628
Shares Issued in Lieu of Cash Distributions		17			68			—			—
Shares Redeemed		(8,862	)		(11,620	)		(6,060	)		(7,809	)
TOTAL CLASS A SHARE TRANSACTIONS		(6,284	)		(1,312	)		(4,799	)		819
Class B Shares
Shares Issued		707			2,491			373			2,055
Shares Issued in Lieu of Cash Distributions		—			—			—			—
Shares Redeemed		(1,677	)		(1,251	)		(1,443	)		(1,557	)
TOTAL CLASS B SHARE TRANSACTIONS		(970	)		1,240			(1,070	)		498
Class C Shares
Shares Issued		—			—			—			—
Shares Issued in Lieu of Cash Distributions		—			—			—			—
Shares Redeemed		—			—			—			—
TOTAL CLASS C SHARE TRANSACTIONS		—			—			—			—
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS		(25,382	)		20,854			(16,101	)		12,602
NET INCREASE (DECREASE) IN NET ASSETS		(77,686	)		(43,566	)		(49,017	)		(52,630	)
Net Assets:
Beginning of period		274,258			317,824			184,148			236,778
END OF PERIOD	$	196,572		$	274,258		$	135,131		$	184,148
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME (LOSS)	$	122		$	59		$	97		$	(502	)

(1) For share transactions, see Note 8 in Notes to Financial Statements.

(2) Class C Shares commenced operations on October 1, 2002.

† Amount rounds to less than one thousand.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

112

STATEMENTS OF CHANGES IN NET ASSETS

Mid-Cap Equity Portfolio						Small-Cap Equity Portfolio						International Equity Portfolio						Emerging Markets Equity Portfolio
05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03(2)			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02			05/01/02 to 04/30/03			05/01/01 to 04/30/02
$	26		$	(132	)	$	(722	)	$	(474	)	$	201		$	104		$	(2	)	$	10
	(9,011	)		(11,910	)		(36,188	)		(3,204	)		(10,444	)		(7,434	)		(665	)		(1,042	)
	—			—			327			—			—			—			—			—
	—			—			—			—			(253	)		485			(9	)		(31	)
	(9,898	)		7,800			(16,378	)		10,616			3,061			1,949			(423	)		1,512
	—						—			—			101			(187	)		3			(7	)
	(18,883	)		(4,242	)		(52,961	)		6,938			(7,334	)		(5,083	)		(1,096	)		442
	(56	)		—			—			(30	)		(419	)		(53	)		—			—
	—			—			—			—			(103	)		(6	)		—			(26	)
	(56	)		—			—			(30	)		(522	)		(59	)		—			(26	)
	5,638			21,532			21,325			39,076			21,152			4,410			—			—
	22			—			—			25			266			32			—			—
	(12,719	)		(22,602	)		(19,978	)		(44,977	)		(26,552	)		(8,715	)		—			—
	(7,059	)		(1,070	)		1,347			(5,876	)		(5,134	)		(4,273	)		—			—
	1,413			3,527			17,146			19,586			23,273			2,076			1,986			2,070
	—			—			—			—			98			6			—			22
	(1,301	)		(1,877	)		(14,319	)		(13,415	)		(23,775	)		(3,334	)		(2,773	)		(3,348	)
	112			1,650			2,827			6,171			(404	)		(1,252	)		(787	)		(1,256	)
	—			—			1,369			665			—			—			—			—
	—			—			—			—			—			—			—			—
	—			—			(127	)		(14	)		—			—			—			—
	—			—			1,242			651			—			—			—			—
	—			—			139			—			—			—			—			—
	—			—			—			—			—			—			—			—
	—			—			—	†		—			—			—			—			—
	—			—			139			—			—			—			—			—
	(6,947	)		580			5,555			946			(5,538	)		(5,525	)		(787	)		(1,256	)
	(25,886	)		(3,662	)		(47,406	)		7,854			(13,394	)		(10,667	)		(1,883	)		(840	)
	96,144			99,806			158,327			150,473			32,410			43,077			6,406			7,246
$	70,258		$	96,144		$	110,921		$	158,327		$	19,016		$	32,410		$	4,523		$	6,406
$	7		$	—		$	—		$	—		$	(74	)	$	432		$	—		$	—

ANNUAL REPORT    /    APRIL 30, 2003

113

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains	Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)
U.S. Treasury Money Market Portfolio
INSTITUTIONAL CLASS SHARES
2003	$1.00	0.01	—		(0.01	)	—	$1.00	1.14	%	$251,101	0.49	%	1.14	%	0.56	%
2002	1.00	0.03	—		(0.03	)	—	1.00	2.59		249,882	0.46		2.53		0.58
2001	1.00	0.05	—		(0.05	)	—	1.00	5.58		259,145	0.47		5.44		0.60
2000	1.00	0.05	—		(0.05	)	—	1.00	4.73		278,568	0.45		4.63		0.58
1999	1.00	0.04	—		(0.04	)	—	1.00	4.58		289,930	0.45		4.47		0.59
CLASS A SHARES
2003	$1.00	0.01	—		(0.01	)	—	$1.00	0.90	%	$22,616	0.73	%	0.89	%	0.92	%
2002	1.00	0.02	—		(0.02	)	—	1.00	2.35		22,394	0.69		2.28		0.84
2001	1.00	0.05	—		(0.05	)	—	1.00	5.34		21,587	0.70		5.19		0.85
2000	1.00	0.04	—		(0.04	)	—	1.00	4.49		18,618	0.68		4.34		0.83
1999	1.00	0.04	—		(0.04	)	—	1.00	4.33		19,632	0.69		4.31		0.84
INSTITUTIONAL II CLASS SHARES
2003	$1.00	0.01	—		(0.01	)	—	$1.00	1.07	%	$204,989	0.56	%	1.06	%	0.56	%
2002	1.00	0.02	—		(0.02	)	—	1.00	2.51		153,883	0.53		2.43		0.59
2001	1.00	0.05	—		(0.05	)	—	1.00	5.50		109,910	0.54		5.34		0.60
2000	1.00	0.05	—		(0.05	)	—	1.00	4.66		129,378	0.52		4.58		0.58
1999	1.00	0.04	—		(0.04	)	—	1.00	4.53		139,253	0.50		4.39		0.56
U.S. Government Money Market Portfolio
INSTITUTIONAL CLASS SHARES
2003	$1.00	0.01	—		(0.01	)	—	$1.00	1.25	%	$1,232,568	0.43	%	1.26	%	0.56	%
2002	1.00	0.03	—		(0.03	)	—	1.00	2.63		1,327,751	0.42		2.56		0.60
2001	1.00	0.06	—		(0.06	)	—	1.00	6.00		1,243,512	0.40		5.82		0.58
2000	1.00	0.05	—		(0.05	)	—	1.00	5.16		1,414,772	0.41		5.05		0.59
1999	1.00	0.05	—		(0.05	)	—	1.00	5.00		1,428,064	0.40		4.86		0.59
CLASS A SHARES
2003	$1.00	0.01	—		(0.01	)	—	$1.00	1.02	%	$70,506	0.66	%	1.03	%	0.83	%
2002	1.00	0.02	—		(0.02	)	—	1.00	2.39		79,396	0.65		2.46		0.85
2001	1.00	0.06	—		(0.06	)	—	1.00	5.75		119,725	0.63		5.62		0.83
2000	1.00	0.05	—		(0.05	)	—	1.00	4.92		120,578	0.64		4.85		0.84
1999	1.00	0.05	—		(0.05	)	—	1.00	4.75		104,037	0.64		4.62		0.84
INSTITUTIONAL II CLASS SHARES
2003	$1.00	0.01	—		(0.01	)	—	$1.00	1.18	%	$259,017	0.50	%	1.17	%	0.56	%
2002	1.00	0.02	—	^	(0.02	)	—	1.00	2.55		262,495	0.49		2.35		0.60
2001	1.00	0.06	—		(0.06	)	—	1.00	5.92		166,335	0.47		5.69		0.58
2000	1.00	0.05	—		(0.05	)	—	1.00	5.08		84,503	0.48		4.91		0.59
1999	1.00	0.05	—		(0.05	)	—	1.00	4.95		142,144	0.45		4.76		0.56
Money Market Portfolio
INSTITUTIONAL CLASS SHARES
2003	$1.00	0.01	—		(0.01	)	—	$1.00	1.37	%	$749,267	0.41	%	1.35	%	0.56	%
2002	1.00	0.03	—		(0.03	)	—	1.00	2.78		928,089	0.40		2.56		0.60
2001	1.00	0.06	—		(0.06	)	—	1.00	6.17		583,964	0.38		5.97		0.58
2000	1.00	0.05	—		(0.05	)	—	1.00	5.37		509,229	0.38		5.25		0.58
1999	1.00	0.05	—		(0.05	)	—	1.00	5.17		527,132	0.38		5.01		0.60

+	Total  return does not include any front-end or deferred sales load.	(1)  Commenced operations on January 22, 1999.
††	Not  Annualized	(2)  Commenced operations on May 1, 2001.
^	Amount  rounds to less than $0.01.	(3)  Commenced operations on May 11, 2001.
*	Annualized.	The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

114

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Realized and Unrealized Gains (Losses) on Investments	Distributions from Net Investment Income	Distributions from Capital Gains	Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income (Loss) to Average Net Assets	Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)
Money Market Portfolio (continued)
CLASS A SHARES
2003	$1.00	0.01	—	(0.01)	—	$1.00	1.13%		$205,808	0.64%	1.14%	0.85%
2002	1.00	0.03	—	(0.03)	—	1.00	2.55		259,095	0.62	2.54	0.85
2001	1.00	0.06	—	(0.06)	—	1.00	5.93		296,748	0.61	5.75	0.83
2000	1.00	0.05	—	(0.05)	—	1.00	5.13		251,140	0.61	5.02	0.83
1999	1.00	0.05	—	(0.05)	—	1.00	4.91		246,496	0.62	4.79	0.85
CLASS B SHARES
2003	$1.00	—^	—	—^	—	$1.00	0.44%		$237	1.33%	0.41%	9.60%
2002	1.00	0.02	—	(0.02)	—	1.00	1.85		156	1.32	1.64	1.45
2001	1.00	0.05	—	(0.05)	—	1.00	5.21		105	1.30	4.80	1.43
2000	1.00	0.04	—	(0.04)	—	1.00	4.41		23	1.31	4.39	1.44
1999(1)	1.00	0.01	—	(0.01)	—	1.00	3.86	††	22	1.30*	3.76*	1.44*
INSTITUTIONAL II CLASS SHARES
2003	$1.00	0.01	—	(0.01)	—	$1.00	1.30%		$278,211	0.48%	1.31%	0.56%
2002	1.00	0.03	—	(0.03)	—	1.00	2.71		458,401	0.46	2.67	0.60
2001	1.00	0.06	—	(0.06)	—	1.00	6.09		365,787	0.45	5.86	0.58
2000	1.00	0.05	—	(0.05)	—	1.00	5.30		300,562	0.45	5.20	0.58
1999	1.00	0.05	—	(0.05)	—	1.00	5.11		229,046	0.43	4.97	0.57
Tax-Free Money Market Portfolio
INSTITUTIONAL CLASS SHARES
2003	$1.00	0.01	—	(0.01)	—	$1.00	1.00%		$96,729	0.39%	0.99%	0.60%
2002	1.00	0.02	—	(0.02)	—	1.00	1.77		69,275	0.37	1.73	0.61
2001	1.00	0.04	—	(0.04)	—	1.00	3.73		62,052	0.36	3.67	0.59
2000	1.00	0.03	—	(0.03)	—	1.00	3.17		63,666	0.37	3.12	0.60
1999	1.00	0.03	—	(0.03)	—	1.00	2.99		77,896	0.36	2.95	0.60
CLASS A SHARES
2003	$1.00	0.01	—	(0.01)	—	$1.00	0.77%		$40,706	0.62%	0.77%	0.92%
2002	1.00	0.02	—	(0.02)	—	1.00	1.54		49,232	0.60	1.49	0.86
2001	1.00	0.03	—	(0.03)	—	1.00	3.50		38,358	0.59	3.46	0.84
2000	1.00	0.03	—	(0.03)	—	1.00	2.94		45,970	0.60	2.90	0.85
1999	1.00	0.03	—	(0.03)	—	1.00	2.74		33,509	0.60	2.66	0.85
INSTITUTIONAL II CLASS SHARES
2003	$1.00	0.01	—	(0.01)	—	$1.00	0.93%		$48,218	0.46%	0.92%	0.61%
2002	1.00	0.02	—	(0.02)	—	1.00	1.70		32,358	0.44	1.74	0.61
2001	1.00	0.04	—	(0.04)	—	1.00	3.66		43,993	0.43	3.53	0.59
2000	1.00	0.03	—	(0.03)	—	1.00	3.10		35,256	0.44	3.04	0.60
1999	1.00	0.03	—	(0.03)	—	1.00	2.94		43,575	0.41	2.87	0.57
Pennsylvania Tax-Free Money Market Portfolio
INSTITUTIONAL CLASS SHARES
2003	$1.00	0.01	—	(0.01)	—	$1.00	0.86%		$13,453	0.58%	0.88%	1.01%
2002(2)	1.00	0.02	—	(0.02)	—	1.00	1.54	††	24,051	0.57*	1.51*	0.76*
INSTITUTIONAL II CLASS SHARES
2003	$1.00	0.01	—	(0.01)	—	$1.00	0.86%		$3,439	0.58%	0.83%	1.31%
2002(3)	1.00	0.01	—	(0.01)	—	1.00	1.46	††	2,068	0.57*	1.45*	0.86*

ANNUAL REPORT    /    APRIL 30, 2003

115

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains		Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)		Portfolio Turnover Rate
Short-Term Treasury Portfolio
INSTITUTIONAL CLASS SHARES
2003	$10.31	0.30	0.12		(0.30	)	(0.09	)	$10.34	4.18	%	$47,768	0.67	%	2.87	%	0.79	%	57.22	%
2002	10.18	0.44	0.13		(0.44	)	—		10.31	5.71		36,404	0.63		4.30		0.75		65.56
2001	9.86	0.49	0.32		(0.49	)	—		10.18	8.45		35,215	0.64		4.93		0.73		80.00
2000	10.03	0.46	(0.15	)	(0.46	)	(0.02	)	9.86	3.11		34,877	0.64		4.60		0.73		80.49
1999	10.05	0.48	0.03		(0.48	)	(0.05	)	10.03	5.24		34,088	0.63		4.79		0.72		70.64
CLASS A SHARES
2003	$10.30	0.28	0.12		(0.28	)	(0.09	)	$10.33	3.93	%	$10,826	0.91	%	2.62	%	1.37	%	57.22	%
2002	10.17	0.42	0.13		(0.42	)	—		10.30	5.51		8,365	0.82		4.11		1.15		65.56
2001	9.85	0.47	0.32		(0.47	)	—		10.17	8.24		8,860	0.83		4.74		1.13		80.00
2000	10.03	0.44	(0.16	)	(0.44	)	(0.02	)	9.85	2.80		9,804	0.82		4.39		1.12		80.49
1999	10.05	0.47	0.03		(0.47	)	(0.05	)	10.03	5.04		14,006	0.82		4.61		1.12		70.64
Short-Term Bond Portfolio
INSTITUTIONAL CLASS SHARES
2003	$9.80	0.34	0.19		(0.35	)	—		$9.98	5.44	%	$59,765	1.00	%	3.49	%	1.16	%	169.92	%
2002	9.99	0.45	(0.19	)	(0.45	)	—		9.80	2.65		71,193	0.97		4.54		1.13		79.12
2001	9.63	0.55	0.36		(0.55	)	—		9.99	9.70		76,090	0.97		5.52		1.11		107.45
2000	9.94	0.50	(0.30	)	(0.50	)	(0.01	)	9.63	2.01		92,185	0.97		5.09		1.11		65.58
1999	9.95	0.51	(0.01	)	(0.51	)	—		9.94	5.15		111,127	0.97		5.14		1.11		91.22
Maryland Tax-Free Portfolio
INSTITUTIONAL CLASS SHARES
2003	$10.09	0.42	0.34		(0.42	)	—		$10.43	7.66	%	$100,797	0.84	%	4.07	%	1.01	%	17.81	%
2002	9.91	0.43	0.18		(0.43	)	—		10.09	6.27		97,759	0.81		4.29		1.01		8.72
2001	9.48	0.44	0.43		(0.44	)	—		9.91	9.34		90,210	0.81		4.50		1.00		28.94
2000	10.21	0.44	(0.69	)	(0.44	)	(0.04	)	9.48	(2.37	)	87,845	0.81		4.57		1.00		24.29
1999	10.14	0.45	0.14		(0.45	)	(0.07	)	10.21	5.86		95,046	0.76		4.35		0.99		30.83
CLASS A SHARES
2003	$10.08	0.40	0.34		(0.40	)	—		$10.42	7.47	%	$25,233	1.02	%	3.89	%	1.38	%	17.81	%
2002	9.90	0.42	0.18		(0.42	)	—		10.08	6.13		26,666	0.94		4.16		1.31		8.72
2001	9.48	0.43	0.42		(0.43	)	—		9.90	9.09		24,671	0.94		4.38		1.30		28.94
2000	10.21	0.43	(0.69	)	(0.43	)	(0.04	)	9.48	(2.50	)	25,924	0.94		4.43		1.30		24.29
1999	10.14	0.43	0.14		(0.43	)	(0.07	)	10.21	5.69		32,395	0.93		4.18		1.29		30.83
CLASS B SHARES
2003	$10.09	0.33	0.34		(0.33	)	—		$10.43	6.72	%	$1,775	1.72	%	3.18	%	2.89	%	17.81	%
2002	9.91	0.35	0.18		(0.35	)	—		10.09	5.37		1,266	1.69		3.40		1.86		8.72
2001	9.48	0.36	0.43		(0.36	)	—		9.91	8.47		745	1.69		3.57		1.85		28.94
2000(1)	9.75	1.51	(0.23	)	(1.51	)	(0.04	)	9.48	13.17	††	50	1.68	*	3.82	*	1.85	*	24.29

+  Total return does not include any front-end or deferred sales load.	*  Annualized.
††  Not Annualized.	(1)  Commenced operations on September 1, 1999.
^  Amount rounds to less than $0.01.	The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

116

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains		Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)		Portfolio Turnover Rate
Pennsylvania Tax-Free Portfolio
INSTITUTIONAL CLASS SHARES
2003	$10.08	0.41	0.38		(0.41	)	—		$10.46	7.96	%	$158,648	0.99	%	3.97	%	0.99	%	11.78	%
2002	9.81	0.42	0.27		(0.42	)	—		10.08	7.18		160,333	0.95		4.22		1.00		16.15
2001	9.38	0.42	0.43		(0.42	)	—		9.81	9.25		160,833	0.96		4.38		1.00		25.67
2000	10.23	0.42	(0.81	)	(0.42	)	(0.04	)	9.38	(3.88	)	160,664	0.96		4.32		1.00		30.92
1999	10.14	0.41	0.15		(0.41	)	(0.06	)	10.23	5.56		224,480	0.92		4.01		1.00		43.46
CLASS A SHARES
2003	$10.07	0.39	0.38		(0.39	)	—		$10.45	7.77	%	$2,880	1.17	%	3.79	%	1.99	%	11.78	%
2002	9.80	0.41	0.27		(0.41	)	—		10.07	7.03		2,177	1.09		4.08		1.30		16.15
2001	9.38	0.41	0.42		(0.41	)	—		9.80	8.99		2,603	1.09		4.24		1.29		25.67
2000	10.22	0.40	(0.80	)	(0.40	)	(0.04	)	9.38	(3.95	)	3,036	1.09		4.23		1.29		30.92
1999	10.13	0.39	0.15		(0.39	)	(0.06	)	10.22	5.39		3,820	1.10		3.84		1.30		43.46
CLASS B SHARES
2003	$10.09	0.32	0.38		(0.32	)	—		$10.47	7.03	%	$421	1.82	%	3.08	%	6.70	%	11.78	%
2002	9.82	0.34	0.27		(0.34	)	—		10.09	6.26		176	1.84		3.33		1.85		16.15
2001	9.39	0.34	0.43		(0.34	)	—		9.82	8.30		76	1.84		3.52		1.84		25.67
2000(1)	9.71	1.20	(0.28	)	(1.20	)	(0.04	)	9.39	9.37	††	188	1.84	*	3.63	*	1.84	*	30.92
Intermediate Fixed Income Portfolio
INSTITUTIONAL CLASS SHARES
2003	$9.84	0.42	0.66		(0.42	)	—		$10.50	11.20	%	$128,263	0.84	%	4.14	%	0.96	%	259.20	%
2002	9.85	0.51	(0.01	)	(0.51	)	—	^	9.84	5.18		130,235	0.82		5.11		0.97		83.47
2001	9.42	0.55	0.43		(0.55	)	—		9.85	10.72		129,531	0.80		5.75		0.95		36.26
2000	9.93	0.53	(0.50	)	(0.53	)	(0.01	)	9.42	0.32		114,554	0.81		5.52		0.96		29.28
1999	10.00	0.55	(0.02	)	(0.55	)	(0.05	)	9.93	5.40		100,419	0.77		5.49		0.95		52.87
U.S. Government Bond
INSTITUTIONAL CLASS SHARES
2003	$9.75	0.42	0.36		(0.42	)	—		$10.11	8.11	%	$93,953	0.99	%	4.16	%	1.12	%	53.04	%
2002	9.72	0.51	0.03		(0.51	)	—		9.75	5.65		101,291	0.96		5.22		1.10		36.05
2001	9.27	0.53	0.45		(0.53	)	—		9.72	10.88		128,041	0.96		5.62		1.09		36.75
2000	9.78	0.51	(0.51	)	(0.51	)	—		9.27	0.04		166,837	0.96		5.38		1.09		6.62
1999	9.85	0.54	(0.07	)	(0.54	)	—		9.78	4.82		255,329	0.93		5.43		1.10		102.27
CLASS A SHARES
2003	$9.76	0.40	0.37		(0.40	)	—		$10.13	8.01	%	$4,955	1.18	%	3.91	%	1.84	%	53.04	%
2002	9.73	0.50	0.03		(0.50	)	—		9.76	5.53		3,681	1.10		5.05		1.40		36.05
2001	9.28	0.52	0.45		(0.52	)	—		9.73	10.72		2,533	1.10		5.47		1.40		36.75
2000	9.79	0.50	(0.51	)	(0.50	)	—		9.28	(0.09	)	2,375	1.10		5.26		1.40		6.62
1999	9.85	0.54	(0.06	)	(0.54	)	—		9.79	4.93		2,240	1.12		5.11		1.41		102.27

ANNUAL REPORT    /    APRIL 30, 2003

117

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)	Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains		Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)		Portfolio Turnover Rate
Income Portfolio
INSTITUTIONAL CLASS SHARES
2003	$10.03	0.43	0.54		(0.43	)	—		$10.57	9.86	%	$246,639	0.85	%	4.17	%	0.93	%	275.91	%
2002	9.96	0.54	0.08		(0.53	)	(0.02	)	10.03	6.33		263,802	0.83		5.32		0.96		142.61
2001	9.51	0.60	0.45		(0.60	)	—		9.96	11.28		372,036	0.82		6.09		0.94		339.82
2000	10.08	0.56	(0.57	)	(0.56	)	—		9.51	(0.01	)	343,260	0.82		5.82		0.94		328.20
1999	10.25	0.59	(0.17	)	(0.59	)	—		10.08	4.22		356,482	0.78		5.77		0.94		50.41
CLASS A SHARES
2003	$10.16	0.42	0.54		(0.42	)	—		$10.70	9.59	%	$12,430	1.03	%	3.97	%	1.45	%	275.91	%
2002	10.08	0.54	0.09		(0.53	)	(0.02	)	10.16	6.30		11,459	0.96		5.13		1.26		142.61
2001	9.62	0.58	0.47		(0.59	)	—		10.08	11.19		8,991	0.95		5.97		1.24		339.82
2000	10.20	0.56	(0.58	)	(0.56	)	—		9.62	(0.18	)	5,830	0.95		5.67		1.24		328.20
1999	10.37	0.58	(0.16	)	(0.59	)	—		10.20	4.08		8,573	0.95		5.59		1.24		50.41
CLASS B SHARES
2003	$10.03	0.34	0.54		(0.34	)	—		$10.57	8.90	%	$2,086	1.73	%	3.25	%	2.72	%	275.91	%
2002	9.96	0.45	0.09		(0.45	)	(0.02	)	10.03	5.44		1,421	1.71		4.35		1.80		142.61
2001	9.51	0.51	0.45		(0.51	)	—		9.96	10.35		705	1.70		5.19		1.79		339.82
2000	10.08	0.48	(0.57	)	(0.48	)	—		9.51	(0.85	)	429	1.71		4.97		1.80		328.20
1999(1)	10.40	0.35	(0.32	)	(0.35	)	—		10.08	0.35	††	280	1.70	*	4.71	*	1.79	*	50.41
Balanced Portfolio
INSTITUTIONAL CLASS SHARES
2003	$12.91	0.21	(1.32	)	(0.22	)	—		$11.58	(8.52	)%	$122,051	0.94	%	1.80	%	0.98	%	84.46	%
2002	14.47	0.26	(1.55	)	(0.27	)	—		12.91	(8.98	)	248,726	0.91		1.88		1.01		50.05
2001	16.90	0.35	(1.48	)	(0.35	)	(0.95	)	14.47	(6.93	)	300,818	0.91		2.18		1.01		36.26
2000	14.64	0.28	2.90		(0.26	)	(0.66	)	16.90	22.39		348,332	0.90		1.95		1.00		54.46
1999	13.24	0.28	2.03		(0.28	)	(0.63	)	14.64	18.17		118,395	0.85		2.12		1.00		56.70
CLASS A SHARES
2003	$12.86	0.19	(1.32	)	(0.18	)	—		$11.55	(8.71	)%	$30,238	1.10	%	1.61	%	1.64	%	84.46	%
2002	14.40	0.24	(1.52	)	(0.26	)	—		12.86	(8.97	)	39,276	1.01		1.78		1.41		50.05
2001	16.84	0.32	(1.48	)	(0.33	)	(0.95	)	14.40	(7.06	)	43,644	1.02		2.08		1.41		36.26
2000	14.59	0.28	2.88		(0.25	)	(0.66	)	16.84	22.26		43,098	1.01		1.84		1.40		54.46
1999	13.20	0.26	2.02		(0.26	)	(0.63	)	14.59	17.97		26,927	1.01		1.94		1.40		56.70
CLASS B SHARES
2003	$12.84	0.10	(1.30	)	(0.09	)	—		$11.55	(9.31	)%	$11,203	1.80	%	0.91	%	2.22	%	84.46	%
2002	14.38	0.14	(1.52	)	(0.16	)	—		12.84	(9.66	)	13,956	1.76		1.03		1.86		50.05
2001	16.82	0.20	(1.47	)	(0.22	)	(0.95	)	14.38	(7.78	)	14,827	1.77		1.35		1.86		36.26
2000	14.60	0.16	2.87		(0.15	)	(0.66	)	16.82	21.32		10,991	1.77		1.10		1.86		54.46
1999(1)	12.58	0.16	2.67		(0.18	)	(0.63	)	14.60	23.13	††	2,479	1.75	*	0.99	*	1.84	*	56.70
Equity Income Portfolio
INSTITUTIONAL CLASS SHARES
2003	$10.30	0.18	(2.16	)	(0.18	)	—		$8.14	(19.21	)%	$61,427	1.02	%	2.16	%	1.11	%	28.13	%
2002	11.34	0.16	(0.99	)	(0.16	)	(0.05	)	10.30	(7.34	)	72,005	1.00		1.52		1.08		42.83
2001	12.00	0.20	0.42		(0.20	)	(1.08	)	11.34	5.42		78,666	0.99		1.70		1.06		21.41
2000	12.05	0.20	0.38		(0.20	)	(0.43	)	12.00	5.40		83,473	0.98		1.83		1.05		41.43
1999	12.52	0.25	0.22		(0.25	)	(0.69	)	12.05	4.17		101,104	0.91		2.10		1.04		56.03

+	Total  return does not include any front-end or deferred sales load.	*  Annualized.
††	Not  Annualized.	(1)  Commenced operations on September 14, 1998.
		The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

118

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)		Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains		Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)		Portfolio Turnover Rate
Equity Income Portfolio (continued)
CLASS A SHARES
2003	$10.29	0.17		(2.16	)	(0.14	)	—		$8.16	(19.38	)%	$4,388	1.18	%	1.99	%	1.99	%	28.13	%
2002	11.33	0.15		(0.99	)	(0.15	)	(0.05	)	10.29	(7.43	)	5,136	1.10		1.41		1.48		42.83
2001	11.99	0.19		0.42		(0.19	)	(1.08	)	11.33	5.33		4,193	1.10		1.62		1.46		21.41
2000	12.04	0.22		0.38		(0.22	)	(0.43	)	11.99	5.29		3,353	1.09		1.72		1.45		41.43
1999	12.52	0.23		0.21		(0.23	)	(0.69	)	12.04	3.92		3,659	1.08		1.93		1.44		56.03
Value Equity Portfolio
INSTITUTIONAL CLASS SHARES
2003	$9.44	0.06		(1.86	)	(0.05	)	(0.14	)	$7.45	(19.03	)%	$169,616	1.23	%	0.73	%	1.34	%	35.74	%
2002	11.30	0.04		(1.09	)	(0.04	)	(0.77	)	9.44	(9.52	)	245,727	1.21		0.34		1.35		21.81
2001	14.11	0.02		(0.86	)	(0.02	)	(1.95	)	11.30	(5.96	)	310,803	1.20		0.17		1.33		9.63
2000	15.22	0.26		1.40		(0.26	)	(2.51	)	14.11	10.87		428,675	1.20		0.16		1.34		25.00
1999	14.59	0.08		1.36		(0.09	)	(0.72	)	15.22	10.48		536,827	1.14		0.58		1.34		32.21
CLASS A SHARES
2003	$9.43	0.04		(1.84	)	(0.02	)	(0.14	)	$7.47	(19.12	)%	$4,232	1.38	%	0.58	%	2.17	%	35.74	%
2002	11.28	0.02		(1.07	)	(0.03	)	(0.77	)	9.43	(9.53	)	5,935	1.31		0.24		1.75		21.81
2001	14.10	0.01		(0.87	)	(0.01	)	(1.95	)	11.28	(6.10	)	6,890	1.30		0.06		1.73		9.63
2000	15.22	0.14		1.40		(0.15	)	(2.51	)	14.10	10.72		7,516	1.32		(0.01	)	1.75		25.00
1999	14.60	0.05		1.36		(0.07	)	(0.72	)	15.22	10.29		3,553	1.31		0.29		1.74		32.21
CLASS B SHARES
2003	$9.17	(0.01	)	(1.79	)	—		(0.14	)	$7.23	(19.64	)%	$867	2.08	%	(0.13	)%	4.10	%	35.74	%
2002	11.05	(0.01	)	(1.10	)	—		(0.77	)	9.17	(10.26	)	1,141	2.06		(0.53	)	2.20		21.81
2001	13.94	(0.02	)	(0.92	)	—		(1.95	)	11.05	(6.79	)	858	2.05		(0.69	)	2.18		9.63
2000	15.16	(0.07	)	1.36		—		(2.51	)	13.94	9.93		583	2.07		(0.77	)	2.20		25.00
1999(1)	12.93	0.01		2.97		(0.03	)	(0.72	)	15.16	23.70	††	164	2.07	*	(0.67	)*	2.20	*	32.21
Equity Index Portfolio
INSTITUTIONAL CLASS SHARES
2003	$9.03	0.12		(1.34	)	(0.12	)	—		$7.69	(13.50	)%	$94,947	0.25	%	1.54	%	0.59	%	87.33	%
2002	10.45	0.11		(1.42	)	(0.11	)	—		9.03	(12.59	)	95,487	0.25		1.12		0.59		31.17
2001	14.83	0.12		(1.77	)	(0.13	)	(2.60	)	10.45	(12.34	)	100,495	0.25		0.94		0.56		44.36
2000	13.87	0.14		1.26		(0.14	)	(0.30	)	14.83	10.25		151,157	0.25		1.03		0.59		58.81
1999	11.59	0.14		2.41		(0.14	)	(0.13	)	13.87	22.37		86,911	0.23		1.20		0.61		34.04
CLASS A SHARES
2003	$9.00	0.10		(1.34	)	(0.06	)	—		$7.70	(13.70	)%	$4,646	0.58	%	1.21	%	1.44	%	87.33	%
2002	10.42	0.08		(1.42	)	(0.08	)	—		9.00	(12.85	)	7,709	0.50		0.87		0.99		31.17
2001	14.79	0.09		(1.77	)	(0.09	)	(2.60	)	10.42	(12.51	)	9,260	0.50		0.70		0.96		44.36
2000	13.84	0.11		1.25		(0.11	)	(0.30	)	14.79	9.95		7,453	0.50		0.78		0.99		58.81
1999	11.57	0.11		2.40		(0.11	)	(0.13	)	13.84	22.05		4,974	0.48		0.92		1.00		34.04

ANNUAL REPORT    /    APRIL 30, 2003

119

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)		Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains		Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)		Portfolio Turnover Rate
Blue Chip Equity Portfolio
INSTITUTIONAL CLASS SHARES
2003	$16.00	0.07		(2.98	)	(0.08	)	—		$13.01	(18.18	)%	$150,242	0.99	%	0.55	%	1.03	%	42.56	%
2002	19.89	0.04		(3.89	)	(0.04	)	—		16.00	(19.38	)	208,327	0.96		0.23		1.05		40.45
2001	23.60	0.07		(3.15	)	(0.07	)	(0.56	)	19.89	(13.20	)	235,562	0.96		0.35		1.06		31.66
2000	20.00	0.08		3.97		(0.07	)	(0.38	)	23.60	20.45		211,534	0.97		0.39		1.08		40.58
1999	17.01	0.10		3.41		(0.12	)	(0.40	)	20.00	21.07		129,720	0.91		0.63		1.07		38.78
CLASS A SHARES
2003	$15.98	0.06		(2.98	)	(0.01	)	—		$13.05	(18.30	)%	$37,126	1.14	%	0.40	%	1.98	%	42.56	%
2002	19.87	0.02		(3.89	)	(0.02	)	—		15.98	(19.48	)	53,338	1.06		0.13		1.60		40.45
2001	23.57	0.05		(3.14	)	(0.05	)	(0.56	)	19.87	(13.26	)	67,840	1.06		0.25		1.61		31.66
2000	19.98	0.06		3.95		(0.04	)	(0.38	)	23.57	20.29		73,347	1.08		0.28		1.63		40.58
1999	16.98	0.09		3.40		(0.09	)	(0.40	)	19.98	20.96		56,771	1.07		0.49		1.62		38.78
CLASS B SHARES
2003	$15.67	(0.07	)	(2.89	)	—		—		$12.71	(18.89	)%	$9,204	1.84	%	(0.30	)%	2.54	%	42.56	%
2002	19.60	(0.09	)	(3.84	)	—		—		15.67	(20.05	)	12,593	1.81		(0.62	)	1.90		40.45
2001	23.38	(0.06	)	(3.16	)	—		(0.56	)	19.60	(13.92	)	14,422	1.81		(0.50	)	1.91		31.66
2000	19.93	(0.07	)	3.90		—		(0.38	)	23.38	19.39		10,710	1.83		(0.49	)	1.93		40.58
1999(1)	17.07	0.01		3.28		(0.03	)	(0.40	)	19.93	19.62	††	3,162	1.84	*	(0.43	)*	1.94	*	38.78
Capital Growth Portfolio
INSTITUTIONAL CLASS SHARES
2003	$14.00	—		(2.45	)	—		—		$11.55	(17.50	)%	$103,441	1.03	%	(0.03	)%	1.07	%	193.91	%
2002	19.07	(0.02	)	(5.05	)	—		—		14.00	(26.59	)	138,331	1.00		(0.14	)	1.05		201.73
2001	26.13	0.04		(5.19	)	(0.02	)	(1.89	)	19.07	(20.32	)	175,559	1.00		0.20		1.06		90.32
2000	18.71	(0.03	)	9.31		—		(1.86	)	26.13	51.36		193,827	1.00		(0.18	)	1.06		113.74
1999	14.90	(0.01	)	4.33		—		(0.51	)	18.71	29.51		90,042	0.94		(0.07	)	1.04		118.46
CLASS A SHARES
2003	$13.85	(0.03	)	(2.42	)	—		—		$11.40	(17.69	)%	$22,820	1.19	%	(0.20	)%	2.01	%	193.91	%
2002	18.88	(0.04	)	(4.99	)	—		—		13.85	(26.64	)	33,621	1.10		(0.24	)	1.45		201.73
2001	25.89	0.03		(5.15	)	—		(1.89	)	18.88	(20.37	)	44,988	1.11		0.11		1.46		90.32
2000	18.58	(0.05	)	9.22		—		(1.86	)	25.89	51.12		52,445	1.11		(0.29	)	1.46		113.74
1999	14.82	(0.03	)	4.30		—		(0.51	)	18.58	29.34		23,035	1.09		(0.23	)	1.44		118.46
CLASS B SHARES
2003	$13.55	(0.14	)	(2.33	)	—		—		$11.08	(18.23	)%	$8,870	1.89	%	(0.90	)%	2.69	%	193.91	%
2002	18.61	(0.15	)	(4.91	)	—		—		13.55	(27.19	)	12,196	1.85		(0.99	)	1.90		201.73
2001	25.74	(0.08	)	(5.16	)	—		(1.89	)	18.61	(20.98	)	16,231	1.86		(0.66	)	1.91		90.32
2000	18.61	(0.13	)	9.12		—		(1.86	)	25.74	50.03		14,129	1.86		(1.04	)	1.91		113.74
1999(2)	13.53	(0.04	)	5.63		—		(0.51	)	18.61	41.88	††	2,162	1.87	*	(1.09	)*	1.92	*	118.46
Mid-Cap Equity Portfolio
INSTITUTIONAL CLASS SHARES
2003	$12.63	—		(2.43	)	(0.01	)	—		$10.19	(19.25	)%	$65,417	1.13	%	0.05	%	1.21	%	237.57	%
2002	13.19	(0.02	)	(0.54	)	—		—		12.63	(4.25	)	90,179	1.11		(0.13	)	1.18		105.88
2001	17.92	(0.02	)	(1.11	)	—		(3.60	)	13.19	(6.55	)	95,317	1.10		(0.20	)	1.17		95.51
2000	14.70	(0.04	)	5.30		—		(2.04	)	17.92	38.90		92,253	1.11		(0.26	)	1.18		55.90
1999	14.11	0.01		1.16		(0.01	)	(0.57	)	14.70	8.76		63,648	1.06		0.04		1.18		61.81
CLASS A SHARES
2003	$12.58	(0.01	)	(2.42	)	—		—		$10.15	(19.32	)%	$4,841	1.29	%	(0.12	)%	2.11	%	237.57	%
2002	13.16	(0.03	)	(0.55	)	—		—		12.58	(4.41	)	5,965	1.21		(0.25	)	1.58		105.88
2001	17.90	(0.01	)	(1.13	)	—		(3.60	)	13.16	(6.62	)	4,489	1.21		(0.27	)	1.57		95.51
2000(3)	15.22	(0.02	)	4.74		—		(2.04	)	17.90	34.04	††	1,161	1.23	*	(0.31	)*	1.59	*	55.90

+  Total return does not include any front-end or deferred sales load.	(4)  Commenced operations on February 20, 2001.
††  Not Annualized.	(5)  Commenced operations on October 1, 2002.
*  Annualized.	(6)  For the six-month period ended April 30, 2001.
(1)  Commenced operations on July 31, 1998.	(7)  Periods ended October 31, 2000.
(2)  Commenced operations on September 14, 1998.	(8)  Years ended December 31, 1999 and December 31, 1998.
(3)  Commenced operations on September 1, 1999.	(9)  Commenced operations on July 24, 1998.
	The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

120

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period	Net Investment Income (Loss)		Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains		Return of Capital		Net Asset Value End of Period	Total Return+		Net Assets End of Period (000)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income (Loss) to Average Net Assets		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)		Portfolio Turnover Rate
Small-Cap Equity Portfolio
INSTITUTIONAL CLASS SHARES
2003	$17.93	(0.07	)	(5.73	)	—		—		—		$12.13	(32.35	)%	$56,766	1.17	%	(0.51	)%	1.19	%	246.11	%
2002	17.15	(0.04	)	0.83		(0.01	)	—		—		17.93	4.58		82,922	1.17		(0.27	)	1.18		266.74
2001	23.24	(0.01	)	(2.03	)	—		(4.03	)	(0.02	)	17.15	(10.05	)	85,286	1.15		(0.14	)	1.17		359.60
2000	12.65	(0.08	)	15.39		—		(4.72	)	—		23.24	126.42		81,375	1.19		(0.49	)	1.21		753.31
1999	11.86	(0.05	)	1.17		—		(0.33	)	—		12.65	9.89		30,562	1.16		(0.48	)	1.23		733.14
CLASS A SHARES
2003	$17.76	(0.08	)	(5.69	)	—		—		—		$11.99	(32.49	)%	$52,397	1.33	%	(0.67	)%	2.38	%	246.11	%
2002	16.99	(0.05	)	0.82		—		—		—		17.76	4.53		74,576	1.27		(0.38	)	1.58		266.74
2001	23.07	(0.02	)	(2.01	)	—		(4.03	)	(0.02	)	16.99	(10.09	)	65,062	1.25		(0.11	)	1.56		359.60
2000	12.59	(0.05	)	15.25		—		(4.72	)	—		23.07	126.13		11,292	1.30		(0.49	)	1.61		753.31
1999	11.83	(0.07	)	1.16		—		(0.33	)	—		12.59	9.66		2,248	1.32		(0.64	)	1.63		733.14
CLASS B SHARES
2003	$17.60	(0.19	)	(5.62	)	—		—		—		$11.79	(33.01	)%	$1,611	2.08	%	(1.44	)%	3.47	%	246.11	%
2002	16.97	(0.14	)	0.77		—		—		—		17.60	3.71		829	2.01		(1.20	)	2.03		266.74
2001(4)	16.80	(0.01	)	0.18		—		—		—		16.97	1.01	††	125	2.07	*	(0.61	)*	2.08	*	359.60
CLASS C SHARES
2003(5)	$12.27	(0.03	)	(0.43	)	—		—		—		$11.81	(3.75	)%††	$147	2.09	%*	(1.42	)%*	11.28	%*	246.11	%††
International Equity Portfolio
INSTITUTIONAL CLASS SHARES
2003	$8.23	0.09		(2.16	)	(0.16	)	—		—		$6.00	(25.16	)%	$13,493	1.57	%	0.84	%	1.99	%	65.29	%
2002	9.38	0.03		(1.16	)	(0.02	)	—		—		8.23	(12.08	)	24,793	1.39		0.32		1.73		52.80
2001(6)	11.02	(0.02	)	(1.06	)	(0.04	)	(0.52	)	—		9.38	(10.21	)††	33,101	1.41	*	(0.07	)*	1.46	*	15.09	††
2000(7)	17.18	(0.01	)	(2.92	)	—		(3.23	)	—		11.02	(18.85	)††	42,058	1.71	*	(0.51	)*	1.96	*	196.30	††
1999(8)	15.05	(0.03	)	4.18		—		(2.02	)	—		17.18	28.25		8,419	2.00		(0.17	)	2.98		41.00
1998(9)	17.28	(0.03	)	(0.17	)	—		(2.03	)	—		15.05	(1.15	)††	6,678	1.75		(0.47	)	2.90		109.00
CLASS A SHARES
2003	$8.23	0.07		(2.14	)	(0.13	)	—		—		$6.03	(25.20	)%	$5,523	1.67	%	0.88	%	2.99	%	65.29	%
2002	9.38	0.01		(1.15	)	(0.01	)	—		—		8.23	(12.18	)	7,617	1.49		0.23		2.13		52.80
2001(6)	11.01	(0.02	)	(1.06	)	(0.03	)	(0.52	)	—		9.38	(10.24	)††	9,976	1.51	*	(0.18	)*	1.86	*	15.09	††
2000(7)	17.25	(0.08	)	(2.93	)	—		(3.23	)	—		11.01	(19.09	)††	10,815	2.46	*	(1.21	)*	3.11	*	196.30	††
1999(8)	15.15	(0.08	)	4.21		—		(2.03	)	—		17.25	27.95		12,718	2.35		(0.52	)	3.34		41.00
1998(8)	14.78	(0.11	)	2.92		—		(2.44	)	—		15.15	19.12		12,223	2.45		(0.62	)	3.30		109.00
Emerging Markets Portfolio
CLASS A SHARES
2003	$8.56	—		(1.51	)	—		—		—		$7.05	(17.64	)%	$4,523	2.10	%	(0.05	)%	5.99	%	134.46	%
2002	7.98	0.01		0.60		(0.03	)	—		—		8.56	7.68		6,406	2.06		0.16		3.90		124.31
2001(6)	9.23	(0.01	)	(1.24	)	—		—		—		7.98	(13.54	)††	7,246	2.16	*	(0.25	)*	2.61	*	29.80	††
2000(7)	13.54	(0.20	)	(4.11	)	—		—		—		9.23	(31.83	)††	9,124	1.91	*	(0.88	)*	3.80	*	63.40	††
1999(8)	7.96	—		5.58		—		—		—		13.54	70.10		18,059	1.85		0.08		4.31		63.00
1998(8)	12.24	0.02		(4.15	)	(0.15	)	—		—		7.96	(34.18	)	14,734	2.50		0.03		4.09		121.00

ANNUAL REPORT    /    APRIL 30, 2003

121

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

ARK Funds (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company organized as a Massachusetts business trust pursuant to a Declaration of Trust dated October 22, 1992, amended and restated on March 19, 1993, and further amended on December 10, 1999.

The Fund offers thirty separate investment portfolios as of April 30, 2003:

U.S. Treasury Money Market Portfolio (“TMMP”)

U.S. Government Money Market Portfolio (“GMMP”)

Money Market Portfolio (“MMP”)

Tax-Free Money Market Portfolio (“TFMMP”)

Pennsylvania Tax-Free Money Market Portfolio (“PTFMMP”)

Short-Term Treasury Portfolio (“STTP”)

Short-Term Bond Portfolio (“STBP”)

Maryland Tax-Free Portfolio (“MTFP”)

Pennsylvania Tax-Free Portfolio (“PTFP”)

Intermediate Fixed Income Portfolio (“IFIP”)

U.S. Government Bond Portfolio (“GBP”)

Income Portfolio (“IP”)

Balanced Portfolio (“BP”)

Equity Income Portfolio (“EIP”)

Value Equity Portfolio (“VEP”)

Equity Index Portfolio (“EIDP”)

Blue Chip Equity Portfolio (“BCEP”)

Capital Growth Portfolio (“CGP”)

Mid-Cap Equity Portfolio (“MCEP”)

Small-Cap Equity Portfolio (“SCEP”)

International Equity Portfolio (“IEP”)

Emerging Markets Equity Portfolio (“EMEP”)

(individually a “Portfolio” and collectively, the “Portfolios”)

U.S. Treasury Cash Management Portfolio

U.S. Government Cash Management Portfolio

Prime Cash Management Portfolio

Tax-Free Cash Management Portfolio

Social Issues Intermediate Fixed Income Portfolio

Social Issues Blue Chip Equity Portfolio

Social Issues Capital Growth Portfolio

Social Issues Small-Cap Equity Portfolio

The financial statements and notes presented herein are those of TMMP, GMMP, MMP, TFMMP, PTFMMP, STTP, STBP, MTFP, PTFP, IFIP, GBP, IP, BP, EIP, VEP, EIDP, BCEP, CGP, MCEP, SCEP, IEP, and EMEP. The financial statements of the other portfolios listed above are not presented herein, but are presented separately. The Fund may issue an unlimited number of shares of each of the Portfolios and may issue shares of one or more classes of each Portfolio.

2. SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported therein. Although actual results could differ from these estimates, any such differences are expected to be immaterial to the net assets of the Portfolios.

The following is a summary of significant accounting policies followed by the Portfolios.

Security Valuation — Securities of the Portfolios are generally valued by independent pricing services. Securities listed on a securities exchange for which market quotations are readily available are valued at the last reported sale price on the principal exchange on which they are traded on the valuation date or, if there is no such reported sale on the valuation date, at the most recently quoted bid price. Unlisted securities for which market quotations are readily available are valued at the most recently quoted bid price. Debt obligations exceeding sixty days to maturity for which market quotations are readily available are valued at the most recently quoted bid price. Debt obligations with sixty days or less to maturity are valued at their amortized cost.

When market quotations are not readily available, securities are valued at fair value as determined under procedures established by the Board of Trustees.

Investment securities held by the money market fund portfolios are stated at their amortized cost, which approximates market value. Under the amortized cost method, any discount or premium is amortized ratably to the maturity of the security and is included in net interest income. The money market fund portfolios’ use of the amortized cost method is subject to compliance with certain conditions specified in Rule 2a-7 under the 1940 Act.

Income Taxes — It is the intention of each Portfolio to qualify as a regulated investment company, to comply with the requirements of the Internal Revenue Code, and to distribute all of its taxable income. Accordingly, no provision for federal income taxes is considered necessary.

Net Asset Value Per Share — The net asset value per share (“NAV”) of each class of each Portfolio is calculated every business day (i.e., any day that both the New York Stock Exchange and the Federal Reserve Bank are open for business). For TMMP, GMMP, MMP, TFMMP, and PTFMMP, a business day will be any weekday, other than a federal holiday, unless the fund determines that being open for business is not in the best interest of shareholders. The NAV is computed by dividing the total assets of each class of the Portfolio, less the liabilities of the class, by the number of outstanding shares of the Portfolio.

APRIL 30, 2003    /    ANNUAL REPORT

122

NOTES TO FINANCIAL STATEMENTS

Classes — Each class of shares has equal rights to earnings, assets and voting privileges, except that each class bears different distribution and shareholder services expenses. Each class of shares has exclusive voting rights with respect to matters that affect just that class. Class-specific expenses are borne by the applicable class. Other expenses, income and realized and unrealized gains/losses are allocated to the respective classes on the basis of relative daily net assets.

Organizational Costs — All eligible organizational costs associated with the start-up of the Portfolios prior to December 15, 1998 are being amortized on a straight-line basis over a period of sixty months. If any or all of the shares representing initial capital of a Portfolio are redeemed by any holder thereof prior to the end of the amortization period, the proceeds will be reduced by the unamortized organizational cost balance in the same proportion as the number of shares redeemed bears to the initial shares outstanding immediately preceding the redemption.

Repurchase Agreements — Securities pledged as collateral for repurchase agreements are held by the custodian bank until maturity of the repurchase agreements. Provisions of the repurchase agreements and procedures adopted by the Board of Trustees require that market value of collateral, including accrued interest thereon, be sufficient in the event of default by the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the Portfolio may be delayed or limited.

Dollar Roll Transactions — IP engages in dollar roll transactions with respect to mortgage-related securities issued by GNMA, FNMA, and FHLMC. In a dollar roll transaction, a Portfolio sells a mortgage-related security to a financial institution, such as a bank or broker/dealer, and simultaneously agrees to repurchase a substantially similar (i.e., same type, coupon, maturity) security from the institution at a later date at an agreed-upon price. The mortgage-related securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. As of April 30, 2003, there were no dollar roll transactions outstanding.

When-Issued Purchases and Forward Commitments — The Portfolios may purchase securities on a “when-issued” basis and may purchase or sell securities on a “forward commitment” basis. These transactions, which involve a commitment by a Portfolio to purchase or sell particular securities with payment and delivery taking place at a future date (perhaps one or two months later), permit the Portfolio to lock in a price or yield on a security it owns or intends to purchase, regardless of future changes in interest rates. When-issued and forward commitment transactions involve the risk, however, that the yield obtained in a transaction (and therefore the value of the security) may be less favorable than the yield available in the market when the securities delivery takes place. The Portfolios maintain cash, U.S. government securities, or liquid, high-grade debt obligations in an amount sufficient to meet the purchase price in a segregated account until the settlement date. No Portfolio intends to engage in when-issued purchases and forward commitments for speculative purposes. As of April 30, 2003, there were no forward contracts outstanding.

Written Option Transactions — VEP, CGP and SCEP engage in written options transactions. An option is a right to buy or sell a particular security at a specified price within a limited period of time. The buyer of the option, in return for a premium paid to the seller, has the right to buy (in the case of a call option) or sell (in the case of a put option) the underlying security of the contract. The premium received in cash from that is adjusted to reflect the option’s value. The premium received from writing options that expire is recorded as realized gains. The premium received from writing options that are exercised or closed is offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the security or currency purchased. Options are valued based on their quoted daily settlement prices.

Risks could arise from entering into written options transactions from the potential inability of counterparties to meet the terms of their contracts, the potential inability to enter into a closing transaction because of an illiquid secondary market, and from unexpected movements in interest or exchange rates or security values.

Foreign Currency Translations and Contracts — Investment securities and other assets and liabilities initially expressed in foreign currencies are converted daily to U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income are converted to U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions. The effect of the changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. Forward foreign currency exchange contracts are valued daily at that day’s forward rate and are marked-to-market. The daily change in market value is recorded as an unrealized gain or loss. When the currency contract is closed, a gain or loss is recorded in the amount of the difference between value of the opening contract and that of the time of closing.

IEP and EMEP may enter into transactions to purchase or sell foreign currencies to protect the U.S. dollar value of its underlying portfolio of securities against the effect of possible adverse movements in foreign exchange rates. Principal risks associated with such transactions include the movement in value of the foreign currency relative to the U.S. dollar and the ability of the counterparty to perform. As of April 30, 2003 there were no foreign currency contracts outstanding.

ANNUAL REPORT    /    APRIL 30, 2003

123

NOTES TO FINANCIAL STATEMENTS

For the fiscal year ended April 30, 2003, VEP, CGP, and SCEP had the following written options contracts, respectively:

WRITTEN CALL OPTIONS CONTRACTS
	Principal Amount of Contracts (000)			Premiums (000)
VEP:
Outstanding April 30, 2002	$	—		$	—
Options written		22			5,160
Options terminated in closing transactions		(17	)		(3,880	)
Options exercised		(2	)		(497	)
Options expired		(3	)		(783	)
Outstanding April 30, 2003	$	—		$	—
CGP:
Outstanding April 30, 2002	$	—		$	—
Options written		3			452
Options terminated in closing transactions		(3	)		(452	)
Options exercised		—			—
Options expired		—			—
Outstanding April 30, 2003	$	—		$	—
SCEP:
Outstanding April 30, 2002	$	—		$	—
Options written		5			648
Options terminated in closing transactions		(5	)		(648	)
Options exercised		—			—
Options expired		—			—
Outstanding April 30, 2003	$	—		$	—

Distributions — Dividends from net investment income are declared daily and paid monthly for the money market fund portfolios, STTP, STBP, MTFP, PTFP, IFIP, GBP and IP. EIP declares and pays dividends monthly. BP, VEP, EIDP, BCEP and MCEP declare and pay dividends quarterly; and CGP, SCEP, IEP, and EMEP declare and pay dividends annually from net investment income. Distributions from net capital gains, if any, are declared and paid at least annually by each Portfolio.

Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined under accounting principles generally accepted in the United States of America. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in capital in the period that the difference arises.

All Portfolios have an October 31 tax year end, except STBP, GBP, VEP and IEP, each of which has an April 30 tax year end.

On the Statements of Assets and Liabilities, the following adjustments were made:

Portfolio	Accumulated Net Realized Gain (Loss) (000)			Undistributed Net Investment Income (Loss) (000)			Paid-in- Capital (000)
TMMP	$	(75	)	$	75		$	—
GMMP		(2	)		2			—
MMP		(29	)		28			1
STBP		(34	)		23			11
MTFP		—			10			(10	)
IFIP		(6	)		—			6
GBP		(37	)		26			11
IP		1,282			—			(1,282	)
EIP		34			(1	)		(33	)
VEP		—			(11	)		11
EIDP		4			(4	)		—
CGP		—			266			(266	)
MCEP		41			37			(78	)
SCEP		—			722			(722	)
IEP		253			(185	)		(68	)
EMEP		8			2			(10	)

The tax character of distributions paid during the periods ended April 30, 2003 and April 30, 2002 was as follows:

	Ordinary Income (000)				Long-Term Capital Gains (000)				Return of Capital (000)				Total (000)
Portfolio	2003		2002		2003		2002		2003		2002		2003		2002
STBP	$	2,299	$	3,376	$	—	$	—	$	—	$	—	$	2,299	$	3,376
GBP		4,332		6,236		—		—		—		—		4,332		6,236
VEP		1,276		1,022		3,416		20,826		—		—		4,692		21,848
IEP		454		59		—		—		68		—		522		59

The tax character of distributions paid during the tax years ended October 31, 2002 and October 31, 2001 was as follows:

	Tax-Exempt Income (000)				Ordinary Income (000)				Long-Term Capital Gains (000)				Total (000)
Portfolio	2002		2001		2002		2001		2002		2001		2002		2001
TMMP	$	—	$	—	$	6,701	$	18,850	$	—	$	—	$	6,701	$	18,850
GMMP		—		—		27,356		69,904		—		—		27,356		69,904
MMP		—		—		27,812		60,389		—		—		27,812		60,389
TFMMP		1,756		4,034		—		—		—		—		1,756		4,034
PTFMMP		296		348		—		—		—		—		296		348
STTP		—		—		1,757		2,060		—		—		1,757		2,060
MTFP		5,191		5,076		9		1		—		—		5,200		5,077
PTFP		6,688		7,012		51		22		—		—		6,739		7,034
IFIP		—		—		6,109		7,208		64		—		6,173		7,208
IP		—		—		13,747		22,067		596		—		14,343		22,607
BP		—		—		5,309		10,521		—		20,542		5,309		31,063
EIP		—		—		1,153		2,298		354		6,444		1,507		8,742
EIDP		—		—		1,189		1,953		—		20,777		1,189		22,730
BCEP		—		—		590		1,731		—		6,722		590		8,453
CGP		—		—		—		4,348		—		16,199		—		20,547
MCEP		—		—		46		6,406		—		13,868		46		20,274
SCEP		—		—		30		—		—		—		30		—
EMEP		—		—		26		—		—		—		26		—

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124

NOTES TO FINANCIAL STATEMENTS

At April 30, 2003 the components of net assets (excluding paid-in capital) on a tax basis were as follows:

Portfolio	Undistributed Ordinary Income (000)			Undistributed Long-Term Gain (000)		Net Unrealized Appreciation (Depreciation) (000)			Capital and Other Losses (000)			Total (000)
STBP	$	2		$	—	$	1,436		$	(1,746	)	$	(308	)
GBP		25			—		4,598			(8,650	)		(4,027	)
VEP		129			—		41,570			(281	)		41,418
IEP		(68	)		—		(2,861	)		(19,352	)		(22,281	)

At October 31, 2002 the components of net assets (excluding paid-in capital) on a tax basis were as follows:

Portfolio	Undistributed						Net Unrealized Appreciation (Depreciation) (000)			Capital and Other Losses (000)			Total (000)
	Tax-Exempt Income (000)		Ordinary Income (000)		Long- Term Gain (000)
TMMP	$	—	$	579	$	—	$	(6	)	$	—		$	573
GMMP		—		1,928		—		—			—			1,928
MMP		—		2,006		—		—			—			2,006
TFMMP		178		—		—		—			(2	)		176
PTFMMP		20		—		—		—			—			20
STTP		—		188		466		1,504			—			2,158
MTFP		418		—		—		6,605			(899	)		6,124
PTFP		567		—		—		8,088			(3,780	)		4,875
IFIP		—		471		—		7,171			(195	)		7,447
IP		—		1,052		—		9,243			(2,549	)		7,746
BP		—		354		—		(21,713	)		(54,799	)		(76,158	)
EIP		—		9		—		940			(118	)		831
EIDP		—		94		—		(33,791	)		(8,919	)		(42,616	)
BCEP		—		148		—		(39,742	)		(41,044	)		(80,638	)
CGP		—		—		—		(11,187	)		(70,252	)		(81,439	)
MCEP		—		—		—		(1,143	)		(12,739	)		(13,882	)
SCEP		—		—		—		(10,229	)		(23,254	)		(33,483	)
EMEP		—		—		—		(112	)		(13,103	)		(13,215	)

The following Portfolios had estimated capital loss carryforwards at October 31, 2002, which are available to offset future net realized capital gains:

Portfolio	Accumulated Capital Loss Carryforwards (000)		Year Expires
TFMMP	$	1	2009
		1	2010
MTFP		899	2008
PTFP		874	2007
		2,864	2008
		42	2009
IFIP		195	2010
IP		1,412	2003
		745	2004
		392	2006
BP		12,285	2009
		42,514	2010
EIP		118	2010
EIDP		602	2009
		8,317	2010
BCEP		3,208	2009
		37,836	2010
CGP		16,703	2009
		53,549	2010
MCEP		1,967	2009
		10,772	2010
SCEP		4,237	2006
		10,031	2009
		8,986	2010
EMEP		9,841	2006
		755	2007
		2,508	2009

The following Portfolios had estimated capital loss carryforwards at April 30, 2003, which are available to offset future net realized capital gains:

Portfolio	Accumulated Capital Loss Carryforwards (000)		Year Expires
STBP	$	185	2008
		555	2009
		1,006	2011
GBP		498	2006
		919	2007
		1,280	2008
		4,506	2009
		1,446	2011
VEP		281	2011
IEP		5,543	2010
		9,479	2011

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125

NOTES TO FINANCIAL STATEMENTS

The following Portfolio has incurred post-October realized losses:

Portfolio	Short- Term (000)		Long- Term (000)		Total (000)
IEP	$	1,137	$	3,193	$	4,330

Other — Security transactions are accounted for on the date the security is purchased or sold (trade date). Net realized capital gains and losses on the sale of investment securities are determined using the identified cost method. Dividend income is recognized on the ex-dividend date, and interest income is recognized using the accrual method. Discounts and premiums on securities purchased are amortized over the lives of the respective securities.

3. INVESTMENT ADVISORY AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Allied Investment Advisors, Inc. (“AIA”) is the investment advisor to each Portfolio. Pursuant to an investment advisory contract on behalf of each Portfolio, AIA is entitled to receive fees for its advisory services at the annual rates shown in the following table based on the daily average net assets of the Portfolio:

Portfolio	Annual Rate
TMMP	0.25	%
GMMP	0.25	%
MMP	0.25	%
TFMMP	0.25	%
PTFMMP	0.25	%
STTP	0.35	%
STBP	0.75	%
MTFP	0.65	%
PTFP	0.65	%
IFIP	0.60	%
GBP	0.75	%
IP	0.60	%
BP	0.65	%
EIP	0.70	%
VEP	1.00	%
EIDP	0.20	%
BCEP	0.70	%
CGP	0.70	%
MCEP	0.80	%
SCEP	0.80	%
IEP	1.00	%
EMEP	1.00	%

AIA has contractually agreed to waive a portion of its fees or reimburse expenses for all of the Portfolios in order to limit total operating expenses of the Portfolios.

Pursuant to an exemptive order issued by the Securities and Exchange Commission, the Portfolios may invest in affiliated money market fund Portfolios, provided that the investments in affiliated money market fund Portfolios do not exceed 25% of the investing Portfolio’s total assets.

Effective April 1, 2003, AIA became a wholly-owned subsidiary of Manufacturers and Traders Trust Company (“M&T Trust”), the principal financial services operating subsidiary of M&T Bank Corporation (“M&T”), a publicly-traded holding company based in Buffalo, New York. M&T’s ownership of AIA is a result of an agreement entered into on September 26, 2002, among M&T, Allfirst Financial, Inc. and Allied Irish Banks, p.l.c. (“AIB”), under which M&T was to acquire Allfirst Financial Inc. the indirect parent corporation of AIA, and parent corporation of Allfirst Bank, the direct parent of AIA (the “Acquisition”). At a special meeting of shareholders held on January 31, 2003, shareholders of each Portfolio approved a new investment advisory agreement between AIA and the Fund with respect to each Portfolio. The 1940 Act, which regulates investment companies such as the Fund, requires a shareholder vote to approve a new advisory agreement in connection with business transactions such as the Acquisition. The new advisory agreement is substantially identical to the former advisory agreement, except for the dates of execution and termination. The new advisory agreement became effective upon consummation of the Acquisition on April 1, 2003.

Also as a result of the Acquisition, M&T Trust acquired Allfirst Trust Company, N.A. (“Allfirst Trust”), which as of April 30, 2003, served as the Portfolios’ administrator, transfer agent and custodian pursuant to administration, transfer agency, and custodian agreements with the Fund. (See Note 8 for additional information concerning the administrator, transfer agent, and custodian subsequent to the Portfolios’ fiscal year end.)

Effective September 1, 2002, AIB Investment Managers, Ltd. and Govett Investment Management, Ltd., affiliates of AIB, serve as subadvisors for IEP and EMEP. AIB Investment Managers Limited (“AIBIM”) and Govett provide their respective Portfolios with day-to-day management services and make investment decisions on behalf of these Portfolios in accordance with their respective investment policies. In accordance with an investment subadvisory agreement, AIA pays AIBIM and Govett subadvisory fees from the fees it receives from IEP and EMEP.

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NOTES TO FINANCIAL STATEMENTS

Prior to September 1, 2002, AIB Govett, Inc., an indirect majority owned subsidiary of AIB, served as the subadvisor for IEP and EMEP.

Allfirst Trust serves as administrator and transfer agent for the Fund pursuant to an administration agreement. For its services as administrator, Allfirst Trust is entitled to receive an administration fee from the Fund at the annual rate of $24,000 per Portfolio, plus 0.085% of the annual average daily net assets of the Portfolios. Allfirst Trust receives annually a $60,000 base fee that is allocated to each portfolio of the Fund based on respective average daily net assets. Under a separate agreement, Allfirst Trust has subcontracted the services to be provided by it under the administration agreement to Forum Administrative Services, LLC (the “Sub-administrator”). Allfirst Trust is responsible for paying a portion of the administration fee it receives from the Fund to the Sub-administrator for the services it provides.

Pursuant to an agreement between the Fund and Allfirst Trust, Allfirst Trust performs transfer agency services. Pursuant to an agreement between Boston Financial Data Services, Inc. (“Boston Financial”) and Allfirst Trust, Boston Financial performs sub-transfer agency services. For the services provided under the agreement with Allfirst Trust, the Fund pays an annual fee of up to $16 per Portfolio account and activity based fees ranging from $0.50 to $12.50 per item and reimbursements for out-of-pocket expenses. Allfirst Trust pays the transfer agency fees and expense reimbursements that it receives from the Fund to Boston Financial.

Pursuant to a custody agreement between the Fund and Allfirst Trust, Allfirst Trust was appointed and serves as the custodian of the Portfolios. Pursuant to an agreement between Bankers Trust Company (“BTC”) and Allfirst Trust, BTC performs sub-custodial services. For the services provided under the agreement with Allfirst Trust, the Fund pays 0.015% of the market value of assets of the Portfolios, plus transaction fees ranging from $5 to $75 per item and reimbursement for out-of-pocket expenses. Allfirst Trust is responsible for paying a portion of the custody fees it receives from the Fund to BTC for the custody services it provides.

4. DISTRIBUTION AND SHAREHOLDER SERVICES PLANS

Distribution and Services Plans — The Fund’s Board of Trustees has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act on behalf of the Class A Shares of each Portfolio. The plan permits payment of distribution fees up to 0.75% of the average daily net assets of the class. The Trustees have authorized payment of the following distribution fees by Class A Shares:

Class	Percentage of Average Net Assets		Portfolio
Class A	0.25	%	TMMP, GMMP, MMP, TFMMP, PTFMMP
	0.30	%	MTFP, PTFP, IFIP, GBP, IP
	0.40	%	STTP, BP, EIP, VEP, EIDP, CGP, MCEP, SCEP, IEP, EMEP
	0.55	%	BCEP

The Fund’s Board of Trustees has also adopted a Distribution and Shareholder Services Plan pursuant to Rule 12b-1 under the 1940 Act on behalf of the Class B shares of MMP, MTFP, PTFP, IP, BP, VEP, BCEP, CGP, SCEP and the Institutional II Class Shares of TMMP, GMMP, MMP, TFMMP, and PTFMMP. Pursuant to the Class B Shares plan, distribution fees of 0.75% and shareholder services fees of 0.25% of the average daily net assets of the Class B Shares of each of the Portfolios are paid. For Institutional II Class Shares, distribution and shareholder services fees, as a percentage of average daily net assets of the class, may be up to 0.75% as authorized by the Trustees. Currently, the Trustees have set distribution and shareholder services fees at an annual rate of 0.15% of the average daily net assets of the Institutional II Class Shares.

A contingent deferred sales charge (“CDSC”) is imposed on certain redemptions of Class B Shares. The CDSC varies depending on the number of years from the time of payment for the purchase of Class B Shares until the redemption of such shares. Following the seventh year, Class B Shares automatically convert to Class A Shares.

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127

NOTES TO FINANCIAL STATEMENTS

Years Purchases Made	Contingent Deferred Sales Charge
First	5%
Second	4%
Third	3%
Fourth	3%
Fifth	2%
Sixth	1%
Seventh and Following	None

A CDSC of 1% is imposed on redemptions of Class C Shares if redeemed within one year from the time of purchase.

Distribution and/or service fees under the plans are paid to ARK Funds Distributors, LLC (the “Distributor”), which acts as distributor for the Fund pursuant to a distribution agreement on behalf of each Portfolio. The Distributor may voluntarily waive all or a portion of its fees for certain Portfolios. These waivers are voluntary and may be discontinued at any time.

Shareholder Services Plans — The Fund has adopted a Shareholder Services Plan on behalf of Class A Shares and the Institutional Class Shares of each Portfolio. With the exception of the Institutional Class Shares of PTFMMP, each plan permits payment of the shareholder services fees at an annual rate of up to 0.25% of the average daily net assets of Class A Shares and 0.15% of the average daily net assets of Institutional Class Shares, respectively. PTFMMP’s plan permits payment of up to 0.25% of the average daily net assets of Institutional Class Shares. Currently, the Trustees have set shareholder services fees at an annual rate of 0.15% of the average daily net assets of Class A Shares and Institutional Class Shares of each Portfolio with the exception of the Institutional Class Shares of PTFMMP, for which the Trustees have set shareholder services fees at the annual rate of 0.20% of average daily net assets. A portion of the shareholder services fees paid by the Class A Shares and Institutional Class Shares of certain Portfolios is being waived voluntarily. All or a portion of these waivers may be discontinued at any time.

5. INVESTMENT TRANSACTIONS

The cost of securities purchased and the proceeds from the sale of securities, other than short-term investments and U.S. government securities, during the year ended April 30, 2003 were as follows:

Portfolio	Purchases (000)		Sales (000)
STTP	$	—	$	—
STBP		27,599		25,746
MTFP		22,140		22,893
PTFP		18,713		21,295
IFIP		63,534		51,572
GBP		6,517		15,936
IP		80,803		55,463
BP		176,757		228,191
EIP		17,907		17,585
VEP		69,181		99,852
EIDP		90,888		79,675
BCEP		89,603		105,666
CGP		266,511		277,856
MCEP		170,877		174,084
SCEP		296,383		288,291
IEP		15,560		21,335
EMEP		6,402		6,507

The purchases and sales of U.S. government securities were as follows:

Portfolio	Purchases (000)		Sales (000)
STTP	$	35,187	$	27,913
STBP		78,133		91,003
IFIP		264,645		283,088
GBP		45,077		52,523
IP		730,683		756,410
BP		10,054		32,490

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128

NOTES TO FINANCIAL STATEMENTS

For federal income tax purposes, cost and aggregate gross unrealized appreciation and depreciation of securities at April 30, 2003 were not materially different from the amounts reported for financial statement purposes and for each Portfolio were as follows:

Portfolio	Appreciated Securities (000)		Depreciated Securities (000)			Net Unrealized Appreciation (Depreciation) (000)
STTP	$	1,015	$	—		$	1,015
STBP		1,451		(16	)		1,435
MTFP		8,129		(287	)		7,842
PTFP		10,477		(266	)		10,211
IFIP		6,083		(26	)		6,057
GBP		4,677		(79	)		4,598
IP		11,747		(125	)		11,622
BP		12,596		(16,498	)		(3,902	)
EIP		7,238		(5,090	)		2,148
VEP		44,136		(2,405	)		41,731
EIDP		5,954		(32,348	)		(26,394	)
BCEP		11,540		(27,908	)		(16,368	)
CGP		8,559		(3,965	)		4,594
MCEP		5,452		(1,885	)		3,567
SCEP		8,587		(3,169	)		5,418
IEP		914		(2,120	)		(1,206	)
EMEP		500		(330	)		170

6. SECURITIES LENDING TRANSACTIONS

In order to generate additional income, certain Portfolios may lend portfolio securities representing up to one-third of the value of total assets (which includes collateral received for securities on loan) to broker/dealers, banks or other institutional borrowers of securities. As with other extensions of credit, there may be risks of delay in recovery of the securities or even loss of rights in the collateral should the borrower of the security fail financially. The market value of the securities on loan at April 30, 2003, income generated from the program during the fiscal year ended April 30, 2003, and collateral received and held at April 30, 2003, with respect to such loans were as follows:

Portfolio	Market Value of Loaned Securities (000)		Income Received from Securities Lending (000)
STBP	$	—	$	4
IFIP		2,127		29
GBP		10,564		23
IP		24,995		61

Collateral
Portfolio	Repurchase Agreements (000)		Cash and Cash Equivalents (000)		Market Value of Corporate and Fixed Income Securities (000)		Market Value of U.S. Treasury Obligations (000)		Total (000)
IFIP	$	2,000	$	166	$	—	$	250	$	2,416
GBP		2,300		4,219		4,000		332		10,851
IP		13,100		292		11,000		1,374		25,766

7. CONCENTRATION OF RISK

IEP and EMEP invest in securities of foreign issuers in various countries. These investments may involve certain considerations and risks not typically associated with investments in the United States as a result of, among other factors, the possibility of future political and economic developments, lack of liquidity, low market capitalizations, foreign currency fluctuations, and the level of governmental supervision and regulation of securities markets in the respective countries.

PTFMMP, MTFP and PTFP invest in debt instruments of municipal issuers. Although these Portfolios monitor investment concentration, the issuers’ ability to meet their obligations may be affected by economic developments in a specific state or region.

PTFMMP, MTFP and PTFP invest in securities that include revenue and general obligation bonds.

8. SIGNIFICANT EVENTS AFTER APRIL 30, 2003

As a result of the Acquisition described in Note 3 above, effective June 13, 2003, Allfirst Trust, the administrator, transfer agent and custodian to the Fund was merged into M&T Trust and no longer maintains a separate corporate existence. In connection with that merger, effective June 16, 2003, M&T Trust serves as the administrator and transfer agent to the Fund as a result of the assignment of the Fund’s administration agreement and transfer agency agreement with Allfirst Trust to M&T Trust. The compensation provisions under the agreements are unchanged.

Effective June 1, 2003, State Street Bank and Trust Company (“State Street”) serves as custodian of the assets of the Portfolios pursuant to a custodian agreement between State Street and the Fund.

M&T Trust also serves as the administrator to the VISION Group of Funds (“VISION Funds”), a mutual fund family that offers different classes of shares in separate investment portfolios for which M&T Asset Management, a department of M&T Trust, serves as investment adviser. In connection with the Acquisition described above, the Board of Trustees

ANNUAL REPORT    /    APRIL 30, 2003

129

NOTES TO FINANCIAL STATEMENTS

of the Fund has authorized the reorganization of each Portfolio into a newly created or existing portfolio of the VISION Funds. On May 16, 2003, the VISION Funds filed a preliminary proxy statement/prospectus on Form N-14, which sets forth the reorganization proposals to be submitted to shareholders of each Portfolio, who will vote separately on the proposal to reorganize their respective Portfolio. The VISION Funds filed an amendment to the Form N-14 filing on May 23, 2003 with a proposed effective date for the preliminary proxy statement/prospectus of June 23, 2003. According to the preliminary proxy statement/prospectus, only shareholders of record of the Fund at the close of business on June 16, 2003 will be entitled to notice of and to vote at the shareholder meeting scheduled for August 14, 2003, and any postponement or adjournment thereof. Under the proposed agreement and plan of reorganization, if approved by shareholders of a Portfolio, the shareholders of that Portfolio will receive shares of a comparable VISION Fund. According to the preliminary proxy statement/prospectus, the reorganization is currently anticipated to occur in August, assuming shareholder approval is obtained.

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NOTES TO FINANCIAL STATEMENTS

9. SHARES ISSUED AND REDEEMED (000):

For the Fiscal Years Ended April 30, 2003 and 2002
Transactions in Portfolio Shares were as follows:	TMMP				GMMP				MMP				TFMMP
	05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02
Shares Issued and Redeemed:
Institutional Class Shares
Shares Issued	595,456		466,051		2,455,363		1,809,961		2,016,169		2,527,316		121,416		82,024
Shares Issued in Lieu of Cash Distributions	34		23		45		—		1,122		1,712		—		—
Shares Redeemed	(594,272	)	(475,352	)	(2,550,591	)	(1,725,723	)	(2,196,098	)	(2,184,923	)	(93,962	)	(74,801	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS	1,218		(9,278	)	(95,183	)	84,238		(178,807	)	344,105		27,454		7,223
Class A Shares
Shares Issued	23,764		30,179		169,780		154,038		107,969		123,836		19,710		25,344
Shares Issued in Lieu of Cash Distributions	140		447		—		—	†	2,585		7,648		318		651
Shares Redeemed	(23,682	)	(29,821	)	(178,670	)	(194,408	)	(163,837	)	(169,143	)	(28,554	)	(15,121	)
TOTAL CLASS A SHARE TRANSACTIONS	222		805		(8,890	)	(40,370	)	(53,283	)	(37,659	)	(8,526	)	10,874
Class B Shares
Shares Issued	—		—		—		—		125		96		—		—
Shares Issued in Lieu of Cash Distributions	—		—		—		—		1		3		—		—
Shares Redeemed	—		—		—		—		(45	)	(48	)	—		—
TOTAL CLASS B SHARE TRANSACTIONS	—		—		—		—		81		51		—		—
Institutional II Class Shares
Shares Issued	488,538		507,157		1,251,005		1,045,057		1,348,148		2,294,308		88,282		98,032
Shares Issued in Lieu of Cash Distributions	—		—		—		—		—		—		—		—
Shares Redeemed	(437,433	)	(463,193	)	(1,254,483	)	(948,855	)	(1,528,331	)	(2,201,705	)	(72,422	)	(109,667	)
TOTAL INSTITUTIONAL II CLASS SHARE TRANSACTIONS	51,105		43,964		(3,478	)	96,202		(180,183	)	92,603		15,860		(11,635	)
NET INCREASE (DECREASE) IN SHARE TRANSACTIONS	52,545		35,491		(107,551	)	140,070		(412,192	)	399,100		34,788		6,462

† Amount rounds to less than one thousand.

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132

NOTES TO FINANCIAL STATEMENTS

PTFMMP				STTP				STBP				MTFP				PTFP
05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02
41,730		79,059		2,539		1,051		1,538		1,858		809		1,385		726		1,135
—		—	†	14		18		109		150		50		45		23		22
(52,328	)	(55,008	)	(1,465	)	(996	)	(2,928	)	(2,361	)	(882	)	(845	)	(1,494	)	(1,641	)
(10,598	)	24,051		1,088		73		(1,281	)	(353	)	(23	)	585		(745	)	(484	)
—		—		794		198		—		—		330		1,000		116		33
—		—		23		34		—		—		67		82		7		7
—		—		(581	)	(291	)	—		—		(621	)	(929	)	(64	)	(90	)
—		—		236		(59	)	—		—		(224	)	153		59		(50	)
—		—		—		—		—		—		51		60		30		9
—		—		—		—		—		—		3		2		—	†	1
—		—		—		—		—		—		(9	)	(12	)	(7	)	(1	)
—		—		—		—		—		—		45		50		23		9
8,751		5,095		—		—		—		—		—		—		—		—
—		—	†	—		—		—		—		—		—		—		—
(7,380	)	(3,027	)	—		—		—		—		—		—		—		—
1,371		2,068		—		—		—		—		—		—		—		—
(9,227	)	26,119		1,324		14		(1,281	)	(353	)	(202	)	788		(663	)	(525	)

ANNUAL REPORT    /    APRIL 30, 2003

133

NOTES TO FINANCIAL STATEMENTS

SHARES ISSUED AND REDEEMED (000) (continued):

For the Fiscal Years Ended April 30, 2003 and 2002
Transactions in Portfolio Shares were as follows:	IFIP				GBP				IP
	05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02
Shares Issued and Redeemed:
Institutional Class Shares
Shares Issued	1,414		2,169		1,252		1,250		3,451		3,719
Shares Issued in Lieu of Cash Distributions	99		140		101		155		561		1,144
Shares Redeemed	(2,531	)	(2,230	)	(2,448	)	(4,188	)	(6,974	)	(15,914	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS	(1,018	)	79		(1,095	)	(2,783	)	(2,962	)	(11,051	)
Class A Shares
Shares Issued	—		—		582		230		625		478
Shares Issued in Lieu of Cash Distributions	—		—		14		14		41		45
Shares Redeemed	—		—		(484	)	(127	)	(632	)	(287	)
TOTAL CLASS A SHARE TRANSACTIONS	—		—		112		117		34		236
Class B Shares
Shares Issued	—		—		—		—		68		75
Shares Issued in Lieu of Cash Distributions	—		—		—		—		5		4
Shares Redeemed	—		—		—		—		(18	)	(8	)
TOTAL CLASS B SHARE TRANSACTIONS	—		—		—		—		55		71
NET INCREASE (DECREASE) IN SHARE TRANSACTIONS	(1,018	)	79		(983	)	(2,666	)	(2,873	)	(10,744	)

APRIL 30, 2003    /    ANNUAL REPORT

134

NOTES TO FINANCIAL STATEMENTS

BP				EIP				VEP				EIDP				BCEP
05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02
999		1,235		1,407		814		2,243		2,671		4,218		2,868		1,640		3,087
319		397		8		35		397		1,525		123		83		31		11
(10,043	)	(3,165	)	(860	)	(793	)	(5,921	)	(5,676	)	(2,577	)	(1,987	)	(3,145	)	(1,921	)
(8,725	)	(1,533	)	555		56		(3,281	)	(1,480	)	1,764		964		(1,474	)	1,177
172		500		189		214		183		161		153		107		193		585
45		57		8		8		11		38		5		5		1		4
(654	)	(532	)	(158	)	(93	)	(257	)	(180	)	(410	)	(144	)	(687	)	(666	)
(437	)	25		39		129		(63	)	19		(252	)	(32	)	(493	)	(77	)
77		178		—		—		22		45		—		—		54		140
8		12		—		—		3		8		—		—		—		—
(202	)	(134	)	—		—		(29	)	(7	)	—		—		(134	)	(72	)
(117	)	56		—		—		(4	)	46		—		—		(80	)	68
(9,279	)	(1,452	)	594		185		(3,348	)	(1,415	)	1,512		932		(2,047	)	1,168

ANNUAL REPORT    /    APRIL 30, 2003

135

NOTES TO FINANCIAL STATEMENTS

SHARES ISSUED AND REDEEMED (000) (continued):

For the Fiscal Years Ended April 30, 2003 and 2002 Transactions in Portfolio Shares were as follows:	CGP				MCEP
	05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02
Shares Issued and Redeemed:
Institutional Class Shares
Shares Issued	1,534		2,647		533		1,731
Shares Issued in Lieu of Cash Distributions	—		—		2		—
Shares Redeemed	(2,456	)	(1,972	)	(1,256	)	(1,816	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS	(922	)	675		(721	)	(85	)
Class A Shares
Shares Issued	112		544		132		280
Shares Issued in Lieu of Cash Distributions	—		—		—		—
Shares Redeemed	(539	)	(499	)	(129	)	(147	)
TOTAL CLASS A SHARE TRANSACTIONS	(427	)	45		3		133
Class B Shares
Shares Issued	34		128		—		—
Shares Issued in Lieu of Cash Distributions	—		—		—		—
Shares Redeemed	(133	)	(100	)	—		—
TOTAL CLASS B SHARE TRANSACTIONS	(99	)	28		—		—
Class C Shares
Shares Issued	—		—		—		—
Shares Issued in Lieu of Cash Distributions	—		—		—		—
Shares Redeemed	—		—		—		—
TOTAL CLASS C SHARE TRANSACTIONS	—		—		—		—
NET INCREASE (DECREASE) IN SHARE TRANSACTIONS	(1,448	)	748		(718	)	48

† Amount rounds to less than one thousand.

(1) Class C Shares commenced operations on October 1, 2002.

APRIL 30, 2003    /    ANNUAL REPORT

136

NOTES TO FINANCIAL STATEMENTS

SCEP				IEP				EMEP
05/01/02 to 04/30/03(1)		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02		05/01/02 to 04/30/03		05/01/01 to 04/30/02
1,581		2,386		3,396		527		—		—
—		1		44		4		—		—
(1,524	)	(2,736	)	(4,204	)	(1,049	)	—		—
57		(349	)	(764	)	(518	)	—		—
1,270		1,171		3,374		240		271		265
—		—		16		1		—		3
(1,099	)	(799	)	(3,402	)	(376	)	(377	)	(428	)
171		372		(12	)	(135	)	(106	)	(160	)
100		41		—		—		—		—
—		—		—		—		—		—
(10	)	(1	)	—		—		—		—
90		40		—		—		—		—
12		—		—		—		—		—
—		—		—		—		—		—
—	†	—		—		—		—		—
12		—		—		—		—		—
330		63		(776	)	(653	)	(106	)	(160	)

ANNUAL REPORT    /    APRIL 30, 2003

137

INDEPENDENT AUDITORS’ REPORT

The Board of Trustees and Shareholders

ARK Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of U.S. Treasury Money Market Portfolio, U.S. Government Money Market Portfolio, Money Market Portfolio, Tax-Free Money Market Portfolio, Pennsylvania Tax-Free Money Market Portfolio, Short-Term Treasury Portfolio, Short-Term Bond Portfolio, Maryland Tax-Free Portfolio, Pennsylvania Tax-Free Portfolio, Intermediate Fixed Income Portfolio, U.S. Government Bond Portfolio, Income Portfolio, Balanced Portfolio, Equity Income Portfolio, Value Equity Portfolio, Equity Index Portfolio, Blue Chip Equity Portfolio, Capital Growth Portfolio, Mid-Cap Equity Portfolio, Small-Cap Equity Portfolio, Emerging Markets Equity Portfolio, and International Equity Portfolio, portfolios of ARK Funds (the “Portfolios”), as of April 30, 2003, and the related statements of operations for the year then ended, statements of changes in net assets for each of the years or periods in the two-year period then ended, and financial highlights for each of the years or periods in the five-year period then ended, except as noted below. These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. For Emerging Markets Equity Portfolio and International Equity Portfolio the financial highlights for each of the years or periods ended prior to January 1, 2000 were audited by other auditors whose report dated February 11, 2000 expressed an unqualified opinion thereon.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2003 by correspondence with the custodian and brokers. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Money Market Portfolio, Tax-Free Money Market Portfolio, U.S. Government Money Market Portfolio, U.S. Treasury Money Market Portfolio, Pennsylvania Tax-Free Money Market Portfolio, Short-Term Treasury Portfolio, Short-Term Bond Portfolio, Maryland Tax-Free Portfolio, Pennsylvania Tax-Free Portfolio, Intermediate Fixed Income Portfolio, U.S. Government Bond Portfolio, Income Portfolio, Balanced Portfolio, Equity Income Portfolio, Value Equity Portfolio, Equity Index Portfolio, Blue Chip Equity Portfolio, Capital Growth Portfolio, Mid-Cap Equity Portfolio, Small-Cap Equity Portfolio, Emerging Markets Equity Portfolio, and International Equity Portfolio as of April 30, 2003, the results of their operations, the changes in their net assets and their financial highlights for each of the years or periods specified above (except for the Portfolios and periods audited and reported on by other auditors as specified above), in conformity with accounting principles generally accepted in the United States of America.

Boston, Massachusetts

June 16, 2003

APRIL 30, 2003    /    ANNUAL REPORT

138

SUPPLEMENTARY INFORMATION (UNAUDITED)

For taxpayers filing on a calendar year basis, this notice is for informational purposes only.

For the fiscal year ended April 30, 2003, each Portfolio is designating the following items with regard to distribution paid during the year.

Portfolio	Long-Term Capital Gain Distribution (Tax Basis)		Ordinary Income Distribution (Tax Basis)		Return of Capital (Tax Basis)		Total		Qualifying Dividends (1)		Foreign Tax Credit (2)
STBP	0	%	100	%	0	%	100	%	0	%	0	%
GBP	0	%	100	%	0	%	100	%	4	%	0	%
VEP	73	%	27	%	0	%	100	%	100	%	0	%
IEP	0	%	87	%	13	%	100	%	8	%	17	%

(1) Qualifying dividends represent those dividends that qualify for the corporate dividends received deduction.

(2) IEP had $681,362 in gross foreign income, of which $108,322 was foreign tax credits passed through to shareholders.

The Fund intends to elect to pass through to its shareholders the credit for taxes paid in foreign countries during its fiscal year ended April 30, 2003. In accordance with the current tax laws, the foreign income and foreign tax per share (for a share outstanding April 30, 2003) is as follows:

Country	Dividends		Foreign Tax
Australia	$	0.000760	$	0.000190
Brazil		0.003923		0.000562
China		0.008256		—
Czech Republic		0.000512		0.000075
Finland		0.001641		0.000246
France		0.040458		0.012459
Germany		0.017594		0.002662
Hong Kong		0.002815		—
Israel		0.000480		0.000072
Italy		0.006439		0.000972
Japan		0.010442		0.001568
Korea		0.004943		0.000995
Malaysia		0.001562		0.000437
Mexico		0.002945		—
Netherlands		0.022829		0.003424
South Africa		0.001392		—
Spain		0.002050		0.000259
Sweden		0.009399		0.001407
Switzerland		0.011872		0.001780
Taiwan		0.001795		0.000746
United Kingdom		0.060852		0.005978
United States		0.002787		—

ANNUAL REPORT    /    APRIL 30, 2003

139

TRUSTEES OF THE FUND (Unaudited)

Name, Age and Contact Address	Position with the Trust	Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Trusteeships or Directorships Held by Trustees outside ARK Funds Complex
Interested Trustee
Rick A Gold(1) Born: August 4, 1949 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	President and Trustee	since 2000	Senior Vice President of M&T Trust, the parent company of AIA (since 2003); Executive Vice-President of Asset Management Group of Allfirst Financial, Inc., the former parent company to Allfirst Trust and AIA (1999-2003); Chief Executive Officer and Director of AIA and Allfirst Trust (1997-2003).	30	None
Disinterested Trustees
William H. Cowie, Jr. Born: January 24, 1931 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee and Chairman	since 1993	Retired	30	None
David D. Downes Born: July 16, 1935 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 1995	Attorney in private practice (since October 1996).	30	None
Sir Victor Garland Born: May 5, 1934 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 2000	Private Investor (since 1994)	30	Director and Chairman: Henderson Far East Income Trust plc (Chairman since 1990). Director: The Throgmorton Trust plc. Director: Framington Income and Capital Trust plc. Director and Chairman: Fidelity Asian Values plc (Chairman since 2001). Director and Chairman: Govett Enhanced Income Investment Trust plc. Director: GEIIT plc. Director: Govett Asian Income and Growth Trust Ltd.

APRIL 30, 2003    /    ANNUAL REPORT

140

TRUSTEES OF THE FUND (Unaudited)

Name, Age and Contact Address	Position with the Trust	Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Trusteeships or Directorships Held by Trustees outside ARK Funds Complex
Charlotte R. Kerr Born: September 26, 1946 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 1993	Practitioner and faculty member of Traditional Acupuncture Institute.	30	None
Richard B. Seidel Born: April 20, 1941 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 1998	Director and President (since 1994) of Girard Partners (a registered broker-dealer).	30	None

(1)    Mr. Gold is deemed to be an “interested person” due to his affiliation with AIA and M&T Trust (see Note 8 of Notes to the Financial Statements).

Additional information concerning the Trustees is contained in the Statement of Additional Information (“SAI”) and is available by contacting the Fund at 1-800-275-3863.

ANNUAL REPORT    /    APRIL 30, 2003

141

OFFICERS OF THE FUND (Unaudited)

Name, Age and Contact Address	Position with the Trust	Length of Time Served	Principal Occupation(s) During Past 5 Years
Officers
Stacey E. Hong Born: May 10, 1966 Two Portland Square, Portland, ME 04101	Treasurer	since 2002	Director of Forum Accounting Services, LLC (since 1998).
Michele L. Dalton Born: February 16, 1959 100 East Pratt Street, 15th Floor, Baltimore, MD 21202	Vice President and Assistant Secretary	since 2000	Vice President of M&T Trust (since 2003); Senior Vice President of Allfirst Financial, Inc. (1994-2003).
Thomas R. Rus Born: October 11, 1959 Allfirst Bank Building 25 South Charles Street, M/C 101-621 Baltimore, MD 21201	Secretary	since 2000	Vice President of M&T Trust (since 2003); Vice-President and Counsel of Allfirst Trust and Allfirst Bank, and Compliance Officer of Allfirst Trust (1995-2003).
D. Blaine Riggle Born: November 12, 1966 Two Portland Square, Portland, ME 04101	Vice President and Assistant Secretary	since 2002	Relationship Manager and Counsel for Forum Financial Group, LLC (associated since 1998).
Cheryl O. Tumlin Born: June 30, 1966 Two Portland Square, Portland, ME 04101	Vice President and Assistant Secretary	since 2002	Counsel for Forum Financial Group, LLC (associated from 1996-1999 and again since 2001); Counsel for I-many, Inc. (1999-2001).
Dawn L. Taylor Born: May 14, 1964 Two Portland Square, Portland, ME 04101	Assistant Treasurer	since 2002	Tax Manager at Forum Financial Group, LLC (since 1997).
Nathan V. Gemmiti Born: August 6, 1970 Two Portland Square, Portland, ME 04101	Assistant Secretary	since 2002	Staff Attorney, Forum Financial Group, LLC (since 2001); Associate, Pierce Atwood (a law firm) (1998-2001).

APRIL 30, 2003    /    ANNUAL REPORT

142

GLOSSARY

Glossary

The following list of indexes is provided for your reference. Investments may not be made into an index.

Lehman Brothers 1-3 Year U.S. Government Bond Index is an unmanaged aggregate of the Treasury Bond Index and the Agency Bond Index with maturities of one to three years.

Lehman Brothers 5 Year Municipal Bond Index is an unmanaged index comprised of investment-grade, fixed rate securities larger than $50 million with maturities of at least 4 years, and less than 6 years.

Lehman Brothers 7 Year Municipal Bond Index is an unmanaged index comprised of investment-grade, fixed rate securities larger than $50 million with maturities of at least 6 years, and less than 8 years.

Lehman Brothers 10 Year Municipal Bond Index is an unmanaged index comprised of investment-grade, fixed rate securities larger than $50 million with maturities of at least 8 years and less than 12 years.

Lehman Brothers Intermediate Government/Credit Index is an unmanaged index consisting of all Lehman Brothers Government and Corporate Bond Indices containing bonds with maturities of one to ten years.

Lehman Brothers Intermediate U.S. Government Bond Index is an unmanaged aggregate of the Treasury Bond Index and the Agency Bond Index with maturities of one to ten years.

Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index composed of fixed income securities from the Lehman Brothers Government/Credit Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index.

Merrill Lynch 1-3 Year Treasury Index is a widely recognized index of U.S. government obligations with maturities between one and three years.

MSCI EAFE^® Index is an unmanaged index composed of more than 1,000 equities from Europe, Asia and the Far East, and is typically used to measure the performance of international stock funds.

MSCI Emerging Markets Free Index is an unmanaged index that represents the general performance of equity markets in emerging market countries.

Russell 1000^® Growth Index is an unmanaged index that measures the performance of Russell 1000^® companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000^® Index is an unmanaged market value weighted index which is widely regarded to be representative of large company stocks in general.

Russell 2000^®Index is an unmanaged market value weighted index which is widely regarded to be representative of small company stocks in general.

Russell 2000^®Growth Index is an unmanaged index that measures the performance of Russell 2000^® companies with higher price-to-book ratios and higher forecasted growth values.

S&P 500/Barra Value Index is an unmanaged index of stocks in the S&P 500 Index that have lower price-to-book ratios.

S&P 500 Index is a broad-based unmanaged index representing the average performance of 500 widely held, publicly traded, large capitalization stocks.

S&P Mid-Cap 400 Index is an unmanaged, capitalization weighted index that measures the performance of the mid range sector of the U.S. stock market.

ANNUAL REPORT    /    APRIL 30, 2003

143

NOTES

NOTES

100 EAST PRATT STREET, 15^TH FLOOR  |  MAIL CODE 104-410  |  BALTIMORE, MD 21202

We are pleased to send you our Annual Report for the fiscal year ended April 30, 2003. This report contains important information about your investments in ARK Funds. Because we are sending a report to each person listed as shareholder, you (or your household) may receive more than one report.

INVESTMENT ADVISOR

Allied Investment Advisors, Inc.

Baltimore, Maryland

INVESTMENT SUBADVISORS

Govett Investment Management Limited

London, England

AIB Investment Managers Limited

Dublin, Ireland

TRUSTEES

William H. Cowie, Jr.

David D. Downes

Sir Victor Garland

Rick A. Gold

Charlotte R. Kerr

Richard B. Seidel

ADMINISTRATOR

Allfirst Trust Company, N.A.

Baltimore, Maryland

DISTRIBUTOR

ARK Funds Distributors, LLC

Portland, Maine

LEGAL COUNSEL

Kirkpatrick & Lockhart LLP

Washington, D.C.

INDEPENDENT AUDITORS

KPMG LLP

Boston, Massachusetts

CUSTODIAN

Allfirst Trust Company, N.A.

Baltimore, Maryland

This material must be preceded or accompanied by a current prospectus. recycled content

[GRAPHIC]

[LOGO] ARK FUNDS(R)

CLEAR-CUT STRATEGIES FOR CONFIDENT INVESTING.

APRIL 30, 2003

SOCIAL ISSUES ANNUAL REPORT

Social Issues Intermediate Fixed Income Portfolio

Social Issues Blue Chip Equity Portfolio

Social Issues Capital Growth Portfolio

Social Issues Small-Cap Equity Portfolio

MANAGED BY ALLIED INVESTMENT ADVISORS, INC.

[GRAPHIC]

ARK FUNDS

ARK FUNDS

[GRAPHIC]

CONTENTS

Letter to Shareholders	1
Fixed Income Portfolio
Management Discussion and Analysis / Schedule of Investments	3
Equity Portfolios
Management Discussion and Analysis / Schedules of Investments	9
Statements of Assets and Liabilities	21
Statements of Operations	22
Statements of Changes in Net Assets	23
Financial Highlights	24
Notes to Financial Statements	25
Independent Auditors’ Report	29
Trustees and Officers of the Fund	30

This report and the financial statements contained herein are submitted for the general information of shareholders of the ARK Funds and do not constitute investment advice. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus for each of the portfolios included. Shares of the Portfolios are not deposits of any bank, and are not insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investing in the shares involves investment risks including the possible loss of principal amount invested. The views in this report are those of the respective portfolio managers as of April 30, 2003, and may not reflect the managers’ views as of the date this report was first published or anytime thereafter. For information about ARK Funds Portfolios, please call 1-800-ARK-FUND (1-800-275-3863).

LETTER TO SHAREHOLDERS

JUNE 2003

Dear Shareholders,

With this Annual Report, we will update you on the progress of the ARK Social Issues Portfolios as of April 30, 2003. We are proud to have been able to grow net assets to over $4.8 million, as of April 30, 2003, during the continuing difficult economic conditions that have impacted us all during the past fiscal year.

In addition to providing you with information about the Portfolios’ performance, diversification, and holdings, the portfolio managers’ Management Discussion and Analyses provide information about economic factors affecting the Portfolios.

The past six months have been full of activity for ARK Funds. In our Semi Annual Report dated October 31, 2002, we told you about the pending acquisition of Allfirst Financial, Inc. by M&T Bank Corporation of Buffalo, New York. That acquisition was completed on April 1, 2003.

Earlier this year, the respective boards of trustees of ARK Funds and the VISION Group of Funds (the proprietary mutual fund company of M&T Bank Corporation) each met and authorized a tax-free reorganization of certain ARK and VISION portfolios, subject to shareholder approval. A Special Meeting of Shareholders of each of the affected portfolios will be scheduled, and a proxy/prospectus containing additional information will be sent to shareholders soon.

We thank you for investing in the ARK Funds, and we look forward to continuing to help you meet your financial goals.

Sincerely,

William H. Cowie, Jr.

Chairman

ANNUAL REPORT    /    APRIL 30, 2003

1

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SOCIAL ISSUES PORTFOLIOS

Social Issues Fixed Income

Portfolio

Our investment management philosophy for the Social Issues Fixed Income Portfolio centers on four core beliefs. We believe that over a full interest-rate cycle, a portfolio of fixed income investments should provide real returns that exceed any loss of purchasing power due to inflation, be competitive with the specified portfolio benchmark return, be competitive versus portfolios of similar risk, and maintain low-to-moderate principal volatility.

With the understanding of the Portfolio’s constraints and tolerance for risk, we employ a value approach to fixed income investing involving over- or under-weighting market sectors, industries, or yield curve segments deemed to be relatively undervalued or expensive. We undertake rigorous analysis utilizing the following components to construct a portfolio: sector selection, duration, management, credit analysis, industry and issue selection, and yield curve management.

In selecting corporate securities, we look for businesses that meet the Portfolio’s social criteria. We utilize social research and screening technology provided for investment managers by various outside research services, and have adopted social screens seeking to exclude companies that derive revenue from tobacco and alcohol, gambling, nuclear power, weapons, and abortion and contraceptives.

The fixed income process is an actively managed bottom-up sector selection approach, wherein risk containment is paramount. Our objective is to position the Portfolio in such a way that our sector, interest rate, yield curve, and credit analysis can add value without assuming an inordinate risk of underperformance. As part of the construction and management process, we continually test the Portfolio to assess and mitigate risk. This disciplined fixed income philosophy has been in place within our organization for more than 15 years, has been consistently applied, and has generated historically strong results.

3

SOCIAL ISSUES PORTFOLIOS

SOCIAL ISSUES

INTERMEDIATE FIXED INCOME PORTFOLIO

Wilmer C. Stith III, CFA

PORTFOLIO MANAGER

Wilmer C. Stith III, CFA is manager of the Social Issues Intermediate Fixed Income Portfolio, and is manager or co-manager of other ARK Funds Portfolios. He has been Vice President of Allied Investment Advisors, Inc. (“AIA”), and Portfolio Manager since 1996. He manages separate accounts, assists in the management of the money market portfolios, and is responsible for analyzing and trading various fixed income securities. Mr. Stith has more than 10 years of experience in the investment industry, and is a Chartered Financial Analyst.

Management Discussion and Analysis

The Portfolio reduced its exposure to U.S. Treasury securities to roughly 30%, its lowest allocation since inception. We took this action, anticipating that as the Federal government finances its budget deficit for 2003, Treasuries will be issued at a much greater volume as compared to last year. The potential result of this action may cause Treasuries to underperform other sectors. Our strategic decision has contributed positively to Portfolio performance. Conversely, as corporate profit margins continued to compress amidst global competition and little to no pricing power, we increased our exposure to select corporate and mortgage-backed securities (‘‘MBS’’).

We purchased AT&T Wireless (above average subscriber growth and dominant wireless provider). We also expanded our exposure in the energy sector with Devon Financing. We anticipate that as the summer driving season picks up and the economy grows, the potential demand for refined oil products will be strong. Unlike last year, we believe the worst of prepayment risks are behind us, indicating that MBS are well positioned to potentially outperform U.S. Treasuries. Based on this assumption, we increased the Portfolio’s exposure to MBS.

APRIL 30, 2003    /    ANNUAL REPORT

4

SOCIAL ISSUES INTERMEDIATE FIXED INCOME PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $50,000 INVESTMENT

	Inst’l Class Shares	Lehman Brothers Intermediate Gov't./Credit Index	Lehman Brothers Intermediate U.S. Government Bond Index
Three month cumulative return	1.95%	2.29%	1.43%
Six month cumulative return	2.91%	4.43%	2.27%
One year total return	10.25%	10.76%	9.22%
Annualized total return inception to date	5.86%	—	—

Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. Institutional Class Shares were offered beginning May 29, 2001.

The mountain chart illustrates the comparative performance of $50,000 invested in Institutional Class Shares of the Social Issues Intermediate Fixed Income Portfolio, the Lehman Brothers Intermediate Government/Credit Index and the Lehman Brothers Intermediate U.S. Government Bond Index from May 29, 2001, commencement of operations, to April 30, 2003. The performance of the indices reflects an initial investment at the end of the month following the Portfolios’s inception. The performance of the Portfolio assumes the reinvestment of all dividends and capital gains. The total return of the Portfolio includes expenses that reduce returns, while the total return of the benchmark comparisons do not include expenses. The Portfolio is professionally managed, while the benchmark comparisons are unmanaged and are not available for investment.

During the period certain fees were waived or expenses reimbursed, otherwise total returns would have been lower. The Portfolios’s investments are subject to social screens. Because of these screens, Portfolio management may forego opportunities to buy certain securities when it is economically advantageous to do so, or may sell certain securities for social reasons when it is otherwise disadvantageous to do so.

The performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

Schedule of Investments

Description	Principal Amount		Market Value
U.S. Treasury Obligations — 34.0%
Treasury Inflation Index Bonds
3.500%, 01/15/11	$	20,000	$     23,288
3.375%, 01/15/12		100,000	113,880
3.000%, 07/15/12		50,000	54,688
U.S. Treasury Bonds
5.375%, 02/15/31		5,000	5,456
4.375%, 05/15/07		200,000	214,602
U.S. Treasury Notes
6.125%, 08/15/07		100,000	114,387
5.750%, 11/15/05		200,000	219,805
4.750%, 11/15/08		110,000	119,612
4.375%, 08/15/12		190,000	198,379
3.875%, 02/15/13		20,000	20,026
3.250%, 08/15/07		25,000	25,682
TOTAL U.S. TREASURY OBLIGATIONS (COST $1,054,466)			$1,109,805
U.S. Government Agency Obligations — 18.2%
FHLB
6.875%, 08/15/05		80,000	89,221
6.500%, 11/15/05		100,000	111,356
2.500%, 12/15/05		100,000	101,233
FHLMC
4.000%, 10/29/07		75,000	76,997
FNMA
5.500%, 05/02/06		100,000	108,859
4.250%, 07/15/07		100,000	105,901
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $568,099)			$   593,567

ANNUAL REPORT    /    APRIL 30, 2003

5

SOCIAL ISSUES INTERMEDIATE FIXED INCOME PORTFOLIO (continued)

Description	Principal Amount		Market Value
U.S. Government Agency Mortgage-Backed Obligations — 7.2%
FHLMC, Ser T
4.105%, 10/27/31	$	25,000	$	25,758
FNMA
5.500%, 11/01/17		200,000		208,196
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (COST $231,938)			$	233,954
Corporate Obligations — 27.6%
Banks — 5.0%
Fleet National Bank
5.750%, 01/15/09		20,000		21,942
Wachovia
5.625%, 12/15/08		75,000		83,542
Wells Fargo
6.125%, 04/18/12		50,000		56,645
TOTAL BANKS			$	162,129
Consumer Discretionary — 3.0%
Comcast Cablevision Communications
8.875%, 05/01/17		25,000		31,662
Newell Rubbermaid
6.350%, 07/15/08		30,000		33,772
Target
7.500%, 02/15/05		30,000		32,938
TOTAL CONSUMER DISCRETIONARY			$	98,372
Energy — 4.2%
Devon Financing
6.875%, 09/30/11		25,000		28,754
Kerr-McGee
6.625%, 10/15/07		75,000		83,199
Kinder Morgan
6.650%, 03/01/05		25,000		27,008
TOTAL ENERGY			$	138,961
Financials — 9.0%
Bear Stearns
7.250%, 10/15/06		25,000		28,481
Goldman Sachs Group, Ser B, MTN
7.500%, 01/28/05		25,000		27,268
Heller Financial
6.375%, 03/15/06		25,000		27,649
JP Morgan
7.625%, 09/15/04		25,000		26,816
John Deere Capital
5.100%, 01/15/13		40,000		41,097

Description	Principal Amount		Market Value
Kimco Realty
6.875%, 02/10/09	$	100,000	$	113,724
National Rural Utilities
6.500%, 03/01/07		25,000		27,784
TOTAL FINANCIALS			$	292,819
Industrials — 0.8%
Canadian National Railway
7.000%, 03/15/04		25,000		26,109
TOTAL INDUSTRIALS			$	26,109
Insurance — 0.9%
American General Finance
5.375%, 10/01/12		30,000		31,174
TOTAL INSURANCE			$	31,174
Materials — 0.9%
MeadWestvaco
6.850%, 04/01/12		25,000		28,271
TOTAL MATERIALS			$	28,271
Telecommunication Services — 1.3%
AT&T Wireless Services
7.875%, 03/01/11		10,000		11,521
Verizon Wireless ‡
1.659%, 12/17/03		30,000		29,978
TOTAL TELECOMMUNICATION SERVICES			$	41,499
Utilities — 1.7%
Consolidated Natural Gas, Ser C
6.250%, 11/01/11		50,000		55,724
TOTAL UTILITIES			$	55,724
Real Estate Investment Trust — 0.8%
Boston Properties +
6.250%, 01/15/13		25,000		26,804
TOTAL REAL ESTATE INVESTMENT TRUST			$	26,804
TOTAL CORPORATE OBLIGATIONS (COST $853,913)			$	901,862
Asset-Backed Securities — 7.8%
ANRC Auto Owner Trust, Ser 2001-A, Cl A-4
4.320%, 06/16/08		100,000		103,840
Residential Asset Securities, Ser 2001-KS3, Cl AI3
5.180%, 07/25/27		100,000		101,489

APRIL 30, 2003    /    ANNUAL REPORT

6

SOCIAL ISSUES INTERMEDIATE FIXED INCOME PORTFOLIO (concluded)

Description	Principal/Share Amount		Market Value
Whole Auto Loan Trust, Ser 2002-1, Cl A3
2.600%, 08/15/06	$	50,000	$	50,830
TOTAL ASSET-BACKED SECURITIES (COST $249,978)			$	256,159
Bank Note — 1.7%
U.S. Bank
6.375%, 08/01/11		50,000		57,120
TOTAL BANK NOTE (COST $51,008)			$	57,120
Repurchase Agreements — 5.2%
Credit Suisse First Boston, 1.270%, dated 04/30/03, matures 05/01/03, repurchase price $169,006 (102% collateralized by various U.S. Treasury Obligations)		169,000		169,000
TOTAL REPURCHASE AGREEMENTS (COST $169,000)			$	169,000
Related Party Money Market Portfolio — 3.2%
ARK Money Market Portfolio Institutional Class Ú		105,299		105,299
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $105,299)			$	105,299
TOTAL INVESTMENTS — 104.9% (COST $3,283,701)			$	3,426,766
OTHER ASSETS & LIABILITIES, NET — (4.9)%			$	(160,044	)
TOTAL NET ASSETS — 100.0%			$	3,266,722

‡ Variable Rate Security. The rate reported on the Schedule of Investments is the rate in effect on 04/30/03. The date shown is the stated maturity.

+ Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration normally qualified to institutional investors.

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

Cl — Class

FHLB — Federal Home Loan Bank

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

MTN — Medium Term Note

Ser — Series

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

7

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SOCIAL ISSUES PORTFOLIOS

Social Issues Equity

Portfolios

Simply stated, our investment management philosophy for the Social Issues Equity Portfolios is quality for the long term. We look for outstanding businesses that are reasonably priced, because over the long haul, experience has shown the benefits of buying a quality company at a fair price, versus a fair business at a bargain price. In selecting securities, we utilize social research and screening technology provided for investment managers by various outside research services, and have adopted social screens to seek to exclude companies that derive revenue from tobacco and alcohol, gambling, nuclear power, weapons, and abortion and contraceptives.

In their research, our Portfolio Managers look for businesses that meet the Portfolios’ social criteria and demonstrate faster-than-average growth, strong cash flows, and returns on capital in excess of the cost of capital.

We believe history has become a less-than-accurate predictor of the future, thus we place greater emphasis on meeting with management to assess each company’s future. Increasingly important is the teaming of strong financials with enlightened corporate leadership, a combination necessary to thrive in today’s highly competitive, rapidly evolving business environment. Our team of professionals, which includes all of our Portfolio Managers, searches for the best companies based on our specific screening criteria.

Next, we assess future earnings prospects seeking to identify the companies that can continue to generate superior sales and profit growth. We examine industry dynamics, the companies’ relative positions, cost structures, margin trends, and management plans. Finally, we assess each company’s current stock valuation relative to future earnings stream against history, competitors, and the S&P 500.

Typically, we review a portfolio holding for sale under the following circumstances: when the price objective is achieved; when fundamentals deteriorate and make the achievement of objectives unlikely; when the stock underperforms the S&P 500 by 20 percent or more on a relative basis; and when a more attractive opportunity presents itself.

9

SOCIAL ISSUES PORTFOLIOS

SOCIAL ISSUES

BLUE CHIP EQUITY PORTFOLIO

Allen J. Ashcroft, Jr.

CO-PORTFOLIO MANAGER

Allen J. Ashcroft, Jr. is co-manager of the Social Issues Blue Chip Equity Portfolio and is co-manager of another ARK Funds Portfolio. He has been a Principal of AIA and Portfolio Manager since 1996, a Vice President of Allfirst Bank from 1995 to 2003 and a Vice President of Manufacturers and Traders Trust Company (“M&T Trust”) since 2003. Mr. Ashcroft has more than 20 years of experience in investment research and equity analysis.

Clyde L. Randall II, CFA

CO-PORTFOLIO MANAGER

Clyde L. Randall II, CFA is co-manager of the Social Issues Blue Chip Equity Portfolio and is co-manager of another ARK Funds Portfolio. Mr. Randall has been a Principal of AIA and Portfolio Manager since 1996, a Vice President of Allfirst Bank from 1995 to 2003 and a Vice President of M&T Trust since 2003. He has more than 14 years of experience in investment research and equity analysis, and is a Chartered Financial Analyst.

Management Discussion and Analysis

This fiscal year was challenging to the Portfolio from an investment standpoint since its inception. The equity markets recently completed their third straight year of negative returns. This three-year span is somewhat unprecedented in that you would have to go back to the late 1930’s to witness a similar period of market contraction. Many equity investors remained on the sidelines concerned about the health of the economy, and the conflict that seemed imminent in the Middle East. Historically, in uncertain times investors have tended to seek cover by transferring assets into blue chip equities that had the perceived strength and balance sheets to weather the pending storm; however, this wasn’t the case this year. Investors questioned management and their accounting principles, among other things, and as a result capital exited even the most respected of institutions. For the most part, fixed income assets or short-term money market instruments were the only investments that delivered positive returns.

The best contributors to Portfolio performance this year were Amgen and Lowe’s — a health care company and a home improvement company. Demographics certainly were a factor in this group, delivering positive returns in a tough environment. The Portfolio’s worst performers in our fiscal year were Interpublic Group and Sun Microsystems. Interpublic, an advertising company, had accounting concerns, and Sun Microsystems got caught up in the technology swoon.

The Portfolio’s primary focus is to invest in established large-cap franchise companies while seeking to stay competitive with the returns of the S&P 500. We remain committed to our strategy of diversifying the Portfolio so that it has representation in each major market sector. Our investment style guides us to concentrate on those companies that we believe are well managed and have long-term investment horizons. This approach has not changed even in the tough and unpleasant market environment of the past couple of years.

APRIL 30, 2003    /    ANNUAL REPORT

10

SOCIAL ISSUES BLUE CHIP EQUITY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $50,000 INVESTMENT

	Inst’l Class Shares	S&P 500 Index
Three month cumulative return	8.19%	7.64%
Six month cumulative return	4.98%	4.47%
One year total return	-14.05%	-13.31%
Annualized total return inception to date	-17.47%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. Institutional Class Shares were offered beginning May 30, 2001.

The mountain chart illustrates the comparative performance of $50,000 invested in Institutional Class Shares of the Social Issues Blue Chip Equity Portfolio and the S&P 500 Index from May 30, 2001, commencement of operations, to April 30, 2003. The performance of the index reflects an initial investment at the end of the month following the Portfolio’s inception. The performance of the Portfolio assumes the reinvestment of all dividends and capital gains. The total return of the Portfolio includes expenses that reduce returns, while the total return of the index does not include expenses. The Portfolio is professionally managed, while the index is unmanaged and is not available for investment.

During the period certain fees were waived or expenses reimbursed; otherwise total returns would have been lower. The Portfolio’s investments are subject to social screens. Because of these screens, Portfolio management may forego opportunities to buy certain securities when it is economically advantageous to do so, or may sell certain securities for social reasons when it is otherwise disadvantageous to do so. The Portfolio’s low asset level may subject the fund to greater volatility due to the potential impact of large shareholder transactions or an individual security’s performance. Such events increase the Portfolio’s volatility compared with similarly managed portfolios that have higher asset levels.

The performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

Schedule of Investments

Description	Shares	Market Value
Common Stock — 94.0%
Consumer Discretionary — 12.8%
AOL Time Warner *	1,100	$	15,048
Best Buy *	600		20,748
Clear Channel Communications *	300		11,733
Lowe’s	400		17,556
Newell Rubbermaid	300		9,144
Target	600		20,064
TOTAL CONSUMER DISCRETIONARY		$	94,293
Consumer Staples — 10.0%
General Mills	300		13,533
Kraft Foods, Cl A	500		15,450
PepsiCo	400		17,312
Procter & Gamble	300		26,955
TOTAL CONSUMER STAPLES		$	73,250
Energy — 7.9%
Exxon Mobil	700		24,640
Nabors Industries *	300		11,760
Smith International *	600		21,336
TOTAL ENERGY		$	57,736
Financials — 18.4%
American Express	500		18,930
American International Group	400		23,180
Citigroup	500		19,625
JP Morgan Chase	500		14,675
Morgan Stanley	500		22,375
Northern Trust	500		17,550
Wells Fargo	400		19,304
TOTAL FINANCIALS		$	135,639

ANNUAL REPORT    /    APRIL 30, 2003

11

SOCIAL ISSUES BLUE CHIP EQUITY PORTFOLIO (concluded)

Description	Shares	Market Value
Health Care — 15.7%
Amgen *	400	$	24,524
Baxter International	500		11,500
Cardinal Health	200		11,056
Eli Lilly	400		25,528
Medtronic	400		19,096
Merck	400		23,272
TOTAL HEALTH CARE		$	114,976
Industrials — 5.6%
Danaher	300		20,694
Emerson Electric	400		20,280
TOTAL INDUSTRIALS		$	40,974
Information Technology — 18.9%
Celestica *	600		6,936
Cisco Systems *	1,000		15,040
Intel	500		9,200
International Business Machines	300		25,470
Jabil Circuit *	800		14,960
Koninklijke Philips Electronics	700		13,076
Microsoft	1,000		25,570
Nokia — ADR	500		8,285
Texas Instruments	500		9,245
Veritas Software *	500		11,005
TOTAL INFORMATION TECHNOLOGY		$	138,787
Telecommunication Services — 4.7%
BellSouth	700		17,843
SBC Communications	700		16,352
TOTAL TELECOMMUNICATION SERVICES		$	34,195
TOTAL COMMON STOCK (COST $737,152)		$	689,850
Related Party Money Market Portfolio — 3.9%
ARK Money Market Portfolio Institutional Class Ú	28,823		28,823
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $28,823)		$	28,823

Description	Principal Amount		Market Value
Repurchase Agreements — 1.4%
Credit Suisse First Boston, 1.270%, dated 04/30/03, matures 05/01/03, repurchase price $10,001 (102% collateralized by various U.S. Treasury Obligations)	$	10,000	$	10,000
TOTAL REPURCHASE AGREEMENTS (COST $10,000)			$	10,000
TOTAL INVESTMENTS — 99.3% (COST $775,975)			$	728,673
OTHER ASSETS & LIABILITIES, NET — 0.7%			$	4,825
TOTAL NET ASSETS — 100.0%			$	733,498

* Non-income producing security

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

Cl — Class

ADR — American Depositary Receipt

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

12

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SOCIAL ISSUES PORTFOLIOS

SOCIAL ISSUES

CAPITAL GROWTH PORTFOLIO

Thomas D. DeHudy, CFA

PORTFOLIO MANAGER

Thomas D. DeHudy, CFA is manager of the Social Issues Capital Growth Portfolio and another ARK Funds Portfolio. Mr. DeHudy has been a Principal of AIA since 2001. Mr. DeHudy is also an equity analyst and provides research coverage for the technology sector and selected consumer cyclical areas. Mr. DeHudy has more than 20 years of experience in investment research, and is a Chartered Financial Analyst.

Management Discussion and Analysis

During the first half of fiscal year 2003, the Portfolio underperformed its benchmark (the S&P 500 Index) primarily because of a premature assumption for a reaccelerating economy. Portfolio performance for the second half of the year more closely followed that of the benchmark. Generally, sector weighting helped performance as overweights in energy, financials, and consumer cyclicals/services benefited Portfolio performance (as did the underweight in consumer staples).

Among the stocks that detracted most from Portfolio performance were: Sprint PCS, Best Buy, Baxter International, Freemarkets and Taiwan Semiconductor. Most of the performance detractors were either technology-related or economically-sensitive. Conversely, stocks that contributed positively to Portfolio performance were either health care-related (e.g., Forest Laboratories and Amgen) or had unique industry circumstances such as radio broadcasting (Clear Channel) or homebuilders (Centex).

The Portfolio remains positioned for a reacceleration of the economy, but we continue to favor: 1) consumer-related groups such as homebuilders, restaurants and radio broadcasting; 2) financials such as real estate investment trusts and Fannie Mae/Freddie Mac; and 3) energy service companies that have exposure to natural gas. Currently, the Portfolio is approximately neutrally weighted to technology and moderately underweighted to health care.

APRIL 30, 2003    /    ANNUAL REPORT

14

SOCIAL ISSUES CAPITAL GROWTH PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $50,000 INVESTMENT

	Inst’l Class Shares	S&P 500 Index
Three month cumulative return	5.20%	7.64%
Six month cumulative return	4.02%	4.47%
One year total return	-14.52%	-13.31%
Annualized total return inception to date	-21.20%	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. Institutional Class Shares were offered beginning July 3, 2001.

The mountain chart illustrates the comparative performance of $50,000 invested in Institutional Class Shares of the Social Issues Capital Growth Portfolio and the S&P 500 Index from July 3, 2001, commencement of operations, to April 30, 2003. The performance of the index reflects an initial investment at the end of the month following the Portfolio’s inception. The performance of the Portfolio assumes the reinvestment of all dividends and capital gains. The total return of the Portfolio includes expenses that reduce returns, while the total return of the index does not include expenses. The Portfolio is professionally managed, while the index is unmanaged and is not available for investment.

During the period certain fees were waived or expenses reimbursed; otherwise total returns would have been lower. The Portfolio invests in smaller to medium capitalization companies which may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, these companies may have limited product lines, markets and financial resources, and may depend upon a relatively small management group. In addition, the Portfolio’s investments are subject to social screens. Because of these screens, Portfolio management may forego opportunities to buy certain securities when it is economically advantageous to do so, or may sell certain securities for social reasons when it is otherwise disadvantageous to do so. The Portfolio’s low asset level may subject the fund to greater volatility due to the potential impact of large shareholder transactions or an individual security’s performance. Such events increase the Portfolio’s volatility compared with similarly managed portfolios that have higher asset levels.

The performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares.

Schedule of Investments

Description	Shares	Market Value
Common Stock — 98.8%
Consumer Discretionary — 29.1%
BorgWarner	40	$	2,347
Brinker International *	70		2,222
CBRL Group	75		2,391
Centex	60		3,961
Clear Channel Communications *	100		3,911
Darden Restaurants	125		2,189
Hispanic Broadcasting *	100		2,565
Lear *	100		3,974
Lennar, Cl A	75		4,068
Lennar, Cl B	7		375
NVR *	10		3,577
Outback Steakhouse	50		1,787
Radio One, Cl D *	125		1,913
Ruby Tuesday	125		2,463
Staples *	100		1,904
Toll Brothers *	125		2,906
Viacom, Cl B *	100		4,341
TOTAL CONSUMER DISCRETIONARY		$	46,894
Consumer Staples — 2.9%
Estee Lauder	75		2,437
General Mills	50		2,256
TOTAL CONSUMER STAPLES		$	4,693
Energy — 6.0%
Nabors Industries *	100		3,920
Patterson-UTI Energy *	50		1,655
Weatherford International *	100		4,023
TOTAL ENERGY		$	9,598

ANNUAL REPORT    /    APRIL 30, 2003

15

SOCIAL ISSUES CAPITAL GROWTH PORTFOLIO (concluded)

Description	Shares	Market Value
Financials — 17.8%
American International Group	40	$	2,318
Boston Properties	50		1,960
Equity Office Properties Trust	70		1,818
Fannie Mae	100		7,239
Freddie Mac	100		5,790
General Growth Properties	30		1,669
Morgan Stanley	75		3,356
Rouse	50		1,737
Simon Property Group	75		2,754
TOTAL FINANCIALS		$	28,641
Health Care — 17.8%
Affymetrix *	100	$	1,855
Amgen *	100		6,131
Caremark Rx *	200		3,982
Eli Lilly	50		3,191
Express Scripts *	70		4,127
ICOS *	100		2,675
Medtronic	75		3,581
Pharmaceutical Product Development *	50		1,309
Quest Diagnostics *	30		1,792
TOTAL HEALTH CARE		$	28,643
Industrials — 1.8%
Ryanair Holdings, ADR *	75		2,975
TOTAL INDUSTRIALS		$	2,975
Information Technology — 23.4%
Affiliated Computer Services, Cl A *	80		3,816
Analog Devices *	75		2,484
BearingPoint *	250		2,042
Cadence Design Systems *	150		1,715
Celestica *	150		1,734
Ceridian *	150		2,093
Cisco Systems *	175		2,632
Cognos *	50		1,357
Computer Associates International	200		3,248
Concord EFS *	135		1,867
Cree *	75		1,496
Dell Computer *	100		2,891
Jabil Circuit *	125		2,337
Microsoft	40		1,023
STMicroelectronics NV, ADR	75		1,544
Symantec *	50		2,198
Taiwan Semiconductor Manufacturing, ADR *	150		1,255
Yahoo *	75		1,858
TOTAL INFORMATION TECHNOLOGY		$	37,590
TOTAL COMMON STOCK (COST $148,998)		$	159,034

Description	Shares	Market Value
Related Party Money Market Portfolio — 4.4%
ARK Money Market Portfolio Institutional Class Ú	7,097	$	7,097
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $7,097)		$	7,097
TOTAL INVESTMENTS — 103.2% (COST $156,095)		$	166,131
OTHER ASSETS & LIABILITIES, NET — (3.2)%		$	(5,161	)
TOTAL NET ASSETS — 100.0%		$	160,970

* Non-income producing security

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

ADR — American Depositary Receipt

Cl — Class

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

16

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SOCIAL ISSUES PORTFOLIOS

SOCIAL ISSUES

SMALL-CAP EQUITY PORTFOLIO

H. Giles Knight

PORTFOLIO MANAGER

H. Giles Knight is manager of the Social Issues Small-Cap Equity Portfolio and is manager of another ARK Funds Portfolio. He has been a Principal of AIA and Portfolio Manager since 1996, a Senior Vice President of Allfirst Bank from 1995 to 2003 and a Senior Vice President of M&T Trust since 2003. Mr. Knight has more than 30 years of experience in the investment industry.

Management Discussion and Analysis

Small-cap stocks had a tough year as investors faced the uncertainty of war in Iraq, a very weak and unresponsive economy, and continued destructive revelations concerning the accounting practices of the likes of Enron, WorldCom, and Tyco. Small-cap stocks suffered disproportionately because of their added financial and market risks. Their lack of liquidity made for many jarring declines as a few cents earnings miss could severely diminish a stock’s value.

The Portfolio had a disappointing fiscal year due mainly to weak third and fourth quarters. The third quarter suffered from our lower technology weighting as this group rallied in late October, and the fourth quarter was hurt by earning disappointments from three stocks: Accredo Health, Hilb Rogal & Hamilton, and Overture Services. These companies provided earnings shortfalls or weaker forward guidance, which then triggered selling among shareholders.

It appears that the Federal Reserve’s monetary stimulus has had a positive impact on the United States economy. The Portfolio has been positioned more aggressively with overweightings in information technology, health care, and telecommunications. Standard Pacific, WCI Communities, and Brookfield Homes are home builders that we feel have the potential to continue to do well in an atmosphere of low interest rates. Semiconductor producers such as Intersil, Integrated Circuits, and Micrel have the potential to participate in anticipated “chip” capital spending increases.

APRIL 30, 2003    /    ANNUAL REPORT

18

SOCIAL ISSUES SMALL-CAP EQUITY PORTFOLIO

Performance as of April 30, 2003

INSTITUTIONAL CLASS SHARES: VALUE OF A $50,000 INVESTMENT

	Inst’l Class Shares	Russell 2000 Growth Index	Russell 2000 Index
Three month cumulative return	1.52%	8.16%	7.54%
Six month cumulative return	-4.34%	7.67%	7.55%
One year total return	-29.15%	-23.50%	-20.76%
Annualized total return inception to date	8.75%	—	—

Past performance is no guarantee of future results. Market volatility can significantly impact short-term performance and results of an investment made today may differ substantially from the Portfolio’s historical performance. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Total return figures include the reinvestment of dividends and capital gains. Institutional Class Shares were offered beginning July 3, 2001.

The mountain chart illustrates the comparative performance of $50,000 invested in Institutional Class Shares of the Social Issues Small-Cap Equity Portfolio, the Russell 2000 Growth Index and the Russell 2000 Index from July 3, 2001, commencement of operations, to April 30, 2003. The performance of the indices reflects an initial investment at the end of the month following the Portfolio’s inception. The performance of the Portfolio assumes the reinvestment of all dividends and capital gains. The total return of the Portfolio includes expenses that reduce returns, while the total return of the benchmark comparisons do not include expenses. The Portfolio is professionally managed, while the benchmark comparisons are unmanaged and is not available for investment.

During the period certain fees were waived or expenses reimbursed; otherwise total returns would have been lower. The Portfolio invests in smaller to medium capitalization companies which may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, these companies may have limited product lines, markets and financial resources, and may depend upon a relatively small management group. In addition, the Portfolio’s investments are subject to social screens. Because of these screens, Portfolio management may forego opportunities to buy certain securities when it is economically advantageous to do so, or may sell certain securities for social reasons when it is otherwise disadvantageous to do so. The Portfolio’s low asset level may subject the fund to greater volatility due to the potential impact of large shareholder transactions or an individual security’s performance. Such events increase the Portfolio’s volatility compared with similarly managed portfolios that have higher asset levels.

The performance information presented in the graph and table above does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions of the redemption of Portfolio shares.

Schedule of Investments

Description	Shares	Market Value
Common Stock — 100.5%
Consumer Discretionary — 21.8%
AC Moore Arts & Crafts *	600	$	10,338
Brookfield Homes	1,000		15,150
Central Garden & Pet *	700		16,961
Emmis Communications, Cl A *	600		11,382
Gevity HR	500		4,705
Hot Topics *	450		11,003
Meredith	450		19,449
SCP Pool *	300		9,903
Standard-Pacific	250		7,563
Steven Madden *	700		12,404
Strayer Education	250		16,260
WCI Communities *	400		5,532
TOTAL CONSUMER DISCRETIONARY		$	140,650
Energy — 6.7%
Grant Prideco *	700		7,987
Patina Oil & Gas	300		10,359
Range Resources *	900		5,319
Tom Brown *	800		19,616
TOTAL ENERGY		$	43,281
Financials — 10.2%
Columbia Bancorp	500		12,820
East-West Bancorp	400		13,540
Greater Bay Bancorp	700		11,200
Max Re Capital	200		2,650
Sterling Bancshares	900		10,715
UCBH Holdings	600		15,264
TOTAL FINANCIALS		$	66,189

ANNUAL REPORT    /    APRIL 30, 2003

19

SOCIAL ISSUES SMALL-CAP EQUITY PORTFOLIO (concluded)

Description	Shares	Market Value
Health Care — 18.3%
ICOS *	200	$	5,350
Idexx Laboratories *	450		17,550
Mentor	500		9,255
Orthofix International *	450		12,668
PSS World Medical *	1,100		6,611
Pediatrix Medic Group *	500		15,935
Perrigo	700		10,752
Possis Medical *	800		15,360
Taro Pharmaceuticals *	250		11,440
Zoll Medical *	400		12,920
TOTAL HEALTH CARE		$	117,841
Industrials — 9.7%
Chicago Bridge & Iron	700		14,000
Dionex *	400		13,764
OMI *	2,800		13,580
Oshkosh Truck	200		11,200
Regis	350		9,916
TOTAL INDUSTRIALS		$	62,460
Information Technology — 30.4%
ADC Telecommunications *	1,900		4,537
Anixter International *	500		11,490
Autodesk	900		14,004
Avid Technology *	550		15,108
Cognizant Technology Systems *	775		13,919
Concur Technologies *	600		3,606
Cray *	800		6,040
Cypress Semiconductor *	800		6,976
Exar *	500		7,375
Integrated Circuit Systems *	900		19,548
Intersil, Cl A *	1,000		18,500
Kopin *	100		481
Legato Systems *	125		740
Marvel Technology Group *	600		13,847
Micrel *	900		10,539
Perot Systems, Cl A *	500		5,310
Pixelworks *	1,300		9,685
RSA Security *	600		5,754
Rambus *	600		8,580
Sandisk *	550		13,310
Seachange International *	900		7,245
TOTAL INFORMATION TECHNOLOGY		$	196,594

Description	Shares	Market Value
Telecommunication Services — 2.0%
Nextel Partner, Cl A *	1,200	$	6,972
Western Wireless *	1,000		6,120
TOTAL TELECOMMUNICATION SERVICES		$	13,092
Utilities — 1.4%
AES *	1,500		9,015
TOTAL UTILITIES		$	9,015
TOTAL COMMON STOCK (COST $624,474)		$	649,122
Related Party Money Market Portfolio — 2.7%
ARK Money Market Portfolio Institutional Class Ú	17,615		17,615
TOTAL RELATED PARTY MONEY MARKET PORTFOLIO (COST $17,615)		$	17,615
TOTAL INVESTMENTS — 103.2% (COST $642,089)		$	666,737
OTHER ASSETS & LIABILITIES, NET — (3.2)%		$	(20,964	)
TOTAL NET ASSETS — 100.0%		$	645,773

* Non-income producing security

Ú This money market portfolio is advised by Allied Investment Advisors, Inc. who also serves as advisor of this portfolio.

Cl — Class

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

20

STATEMENTS OF ASSETS AND LIABILITIES

As of April 30, 2003	Social Issues Intermediate Fixed Income Portfolio			Social Issues Blue Chip Equity Portfolio			Social Issues Capital Growth Portfolio			Social Issues Small-Cap Equity Portfolio
Assets:
Investments at Market Value (Cost $3,283,701, $775,975, $156,095, $642,089, respectively)	$	3,426,766		$	728,673		$	166,131		$	666,737
Interest Receivable		39,180			735			77			47
Receivable for Investment Securities Sold		—			—			—			31,769
Receivable for Capital Shares Sold		15,000			—			—			—
Prepaid Expenses		1,094			6,083			4			15
Other Assets		—			—			68			268
TOTAL ASSETS		3,482,040			735,491			166,280			698,836
Liabilities:
Distribution Payable		5,517			—			—			—
Payable for Investment Securities Purchased		207,488			—			1,934			30,985
Payable to Investment Advisor		—			—			1,246			19,706
Accrued Expenses:
Investment Advisory Fees		197			—			—			—
Administrator Fees		28			70			47			—
Shareholder Servicing Fees		26			6			1			5
Custody Fees		945			593			1,237			1,492
Transfer Agency Fees		852			1,200			828			823
Other Expense Payables		265			124			17			52
TOTAL LIABILITIES		215,318			1,993			5,310			53,063
Net Assets:
Paid in Capital		3,221,536			1,409,144			204,448			697,397
Undistributed (Distributions in Excess of) Net Investment Income		(19	)		469			1			—
Accumulated Net Realized Loss on Investments		(97,860	)		(628,813	)		(53,515	)		(76,272	)
Net Unrealized Appreciation (Depreciation) on Investments		143,065			(47,302	)		10,036			24,648
TOTAL NET ASSETS	$	3,266,722		$	733,498		$	160,970		$	645,773
Outstanding Shares of Beneficial Interest (unlimited authorization — no par value)
Institutional Class Shares		312,970			106,993			24,863			64,304
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE —INSTITUTIONAL CLASS SHARES	$	10.44		$	6.86		$	6.47		$	10.04

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

21

STATEMENTS OF OPERATIONS

For the Fiscal Year Ended April 30, 2003	Social Issues Intermediate Fixed Income Portfolio			Social Issues Blue Chip Equity Portfolio			Social Issues Capital Growth Portfolio			Social Issues Small-Cap Equity Portfolio
Investment Income:
Dividend	$	1,471		$	16,408		$	1,152		$	2,434
Less: Foreign Taxes Withheld		—			(64	)		(8	)		—
Interest		109,123			340			44			291
TOTAL INVESTMENT INCOME		110,594			16,684			1,188			2,725
Expenses:
Investment Advisory Fees		15,976			7,575			1,012			2,697
Administrator Fees		22,420			25,145			24,318			24,394
Shareholder Servicing Fees — Institutional Class Shares		3,994			1,623			217			506
Transfer Agency Fees		5,189			5,560			5,239			5,271
Custodian Fees		8,144			5,411			11,891			10,905
Accounting Fees		24,367			24,252			24,059			23,895
Professional Fees		346			100			17			47
Registration Fees		143			85			7			20
Printing		204			55			11			27
Trustee Fees and Expenses		107			50			5			12
Compliance Fees		5,487			3,719			379			415
Miscellaneous Fees		7,096			781			159			307
TOTAL EXPENSES		93,473			74,356			67,314			68,496
Less Waivers:
Investment Advisory Fees		(15,779	)		(7,575	)		(1,012	)		(2,697	)
Administrator Fees		(1,997	)		(812	)		(103	)		(232	)
Shareholder Servicing Fees — Institutional Class Shares		(3,082	)		(979	)		(164	)		(377	)
TOTAL WAIVERS		(20,858	)		(9,366	)		(1,279	)		(3,306	)
Less Expense Reimbursement by Advisor		(49,448	)		(53,844	)		(64,489	)		(61,077	)
TOTAL NET EXPENSES		23,167			11,146			1,546			4,113
NET INVESTMENT INCOME (LOSS)		87,427			5,538			(358	)		(1,388	)
Net Realized Gain (Loss) on Investments		14,475			(595,669	)		(27,145	)		(110,485	)
Net Unrealized Appreciation (Depreciation) on Investments		136,910			181,794			9,353			2,674
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS		151,385			(413,875	)		(17,792	)		(107,811	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	238,812		$	(408,337	)	$	(18,150	)	$	(109,199	)

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

22

STATEMENTS OF CHANGES IN NET ASSETS

For the Fiscal Year Indicated	Social Issues Intermediate Fixed Income Portfolio						Social Issues Blue Chip Equity Portfolio						Social Issues Capital Growth Portfolio						Social Issues Small-Cap Equity Portfolio
	05/01/02 to 04/30/03			05/29/01* to 04/30/02			05/01/02 to 04/30/03			05/30/01* to 04/30/02			05/01/02 to 04/30/03			07/03/01* to 04/30/02			05/01/02 to 04/30/03			07/03/01* to 04/30/02
Operations:
Net Investment Income (Loss)	$	87,427		$	93,655		$	5,538		$	5,875		$	(358	)	$	(198	)	$	(1,388	)	$	(434	)
Net Realized Gain (Loss) on Investments		14,475			(110,696	)		(595,669	)		(33,144	)		(27,145	)		(26,370	)		(110,485	)		59,261
Net Change in Unrealized Appreciation (Depreciation) on Investments		136,910			6,155			181,794			(229,096	)		9,353			683			2,674			21,974
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS		238,812			(10,886	)		(408,337	)		(256,365	)		(18,150	)		(25,885	)		(109,199	)		80,801
Distributions to Shareholders:
Net Investment Income
Institutional Class Shares		(87,426	)		(93,655	)		(5,975	)		(4,969	)		(12	)		(90	)		—			—
Net Capital Gains
Institutional Class Shares		—			(1,659	)		—			—			—			—			(20,601	)		(3,697	)
TOTAL DISTRIBUTIONS		(87,426	)		(95,314	)		(5,975	)		(4,969	)		(12	)		(90	)		(20,601	)		(3,697	)
Capital Share Transactions:
Institutional Class Shares
Shares Issued		1,073,007			5,093,222			174,575			2,114,439			69,947			140,100			570,948			408,378
Shares Issued in Lieu of Cash Distributions		39,721			64,877			3,181			1,473			9			51			20,601			3,697
Shares Redeemed		(56,511	)		(2,992,780	)		(784,524	)		(100,000	)		(5,000	)		—			(142,457	)		(162,698	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS		1,056,217			2,165,319			(606,768	)		2,015,912			64,956			140,151			449,092			249,377
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS		1,056,217			2,165,319			(606,768	)		2,015,912			64,956			140,151			449,092			249,377
NET INCREASE (DECREASE) IN NET ASSETS		1,207,603			2,059,119			(1,021,080	)		1,754,578			46,794			114,176			319,292			326,481
Net Assets:
Beginning of period		2,059,119			—			1,754,578			—			114,176			—			326,481			—
END OF PERIOD	$	3,266,722		$	2,059,119		$	733,498		$	1,754,578		$	160,970		$	114,176		$	645,773		$	326,481
Shares Issued and Redeemed:
Institutional Class Shares
Shares Issued		104,213			505,545			25,244			229,838			10,555			15,071			53,083			31,922
Shares Issued in Lieu of Cash Distributions		3,886			6,494			494			170			1			6			2,032			295
Shares Redeemed		(5,511	)		(301,657	)		(137,232	)		(11,521	)		(770	)		—			(11,068	)		(11,960	)
TOTAL INSTITUTIONAL CLASS SHARE TRANSACTIONS		102,588			210,382			(111,494	)		218,487			9,786			15,077			44,047			20,257
UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT INCOME	$	(19	)	$	—		$	469		$	906		$	1		$	—		$	—		$	—

* Commencement of Operations

The accompanying notes are an integral part of the financial statements.

ANNUAL REPORT    /    APRIL 30, 2003

23

FINANCIAL HIGHLIGHTS

For a Share Outstanding Throughout the Fiscal Years Ended April 30,
	Net Asset Value Beginning of Period		Net Investment Income (Loss)		Realized and Unrealized Gains (Losses) on Investments		Distributions from Net Investment Income		Distributions from Capital Gains		Net Asset Value End of Period (000)		Total Return		Net Assets End of Period (000)		Ratio of Expenses to Average Net Assets*		Ratio of Net Investment Income to Average Net Assets*		Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements)*		Portfolio Turnover Rate
Social Issues Intermediate Fixed Income Portfolio
INSTITUTIONAL CLASS SHARES
2003	$	9.79	0.34		0.65		(0.34	)	—		$	10.44	10.25	%	$	3,267	0.87	%	3.28	%	3.51	%	82	%
2002(1)		10.00	0.33		(0.21	)	(0.33	)	—	^		9.79	1.18	†		2,059	0.83		3.53		1.39		260
Social Issues Blue Chip Equity Portfolio
INSTITUTIONAL CLASS SHARES
2003	$	8.03	0.04		(1.17	)	(0.04	)	—		$	6.86	(14.05	)%	$	733	1.03	%	0.51	%	6.89	%	40	%5
2002(2)		10.00	0.03		(1.98	)	(0.02	)	—			8.03	(19.49	)†		1,755	1.00		0.38		1.88		22
Social Issues Capital Growth Portfolio
INSTITUTIONAL CLASS SHARES
2003	$	7.57	(0.01	)	(1.09	)	—	^	—		$	6.47	(14.52	)%	$	161	1.07	%	(0.25	)%	46.52	%	210	%
2002(3)		10.00	(0.01	)	(2.41	)	(0.01	)	—			7.57	(24.25	)†		114	1.05		(0.25	)	17.07		154
Social Issues Small-Cap Equity Portfolio
INSTITUTIONAL CLASS SHARES
2003	$	16.12	(0.02	)	(4.66	)	—		(1.40	)	$	10.04	(29.15	)%	$	646	1.22	%	(0.41	)%	20.26	%	279	%
2002(3)		10.00	(0.02	)	6.39		—		(0.25	)		16.12	64.47	†		326	1.18		(0.34	)	11.13		600

 † Total return is for the period indicated and has not been annualized.

 ^ Amount rounds to less than $0.01.

 * Periods of less than one year have been annualized.

(1) Commenced operations on May 29, 2001.

(2) Commenced operations on May 30, 2001.

(3) Commenced operations on July 3, 2001.

The accompanying notes are an integral part of the financial statements.

APRIL 30, 2003    /    ANNUAL REPORT

24

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

ARK Funds (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company organized as a Massachusetts business trust pursuant to a Declaration of Trust dated October 22, 1992, amended and restated on March 19, 1993, and further amended on December 10, 1999.

The Fund offers thirty separate investment portfolios as of April 30, 2003:

Social Issues Intermediate Fixed Income Portfolio (“SIIFIP”)

Social Issues Blue Chip Equity Portfolio (“SIBCEP”)

Social Issues Capital Growth Portfolio (“SICGP”)

Social Issues Small-Cap Equity Portfolio (“SISCEP”)

(individually a “Portfolio” and collectively, the “Portfolios”)

U.S. Treasury Cash Management Portfolio

U.S. Government Cash Management Portfolio

Prime Cash Management Portfolio

Tax-Free Cash Management Portfolio

U.S. Treasury Money Market Portfolio

U.S. Government Money Market Portfolio

Money Market Portfolio

Tax-Free Money Market Portfolio

Pennsylvania Tax-Free Money Market Portfolio

Short-Term Treasury Portfolio

Short-Term Bond Portfolio

Maryland Tax-Free Portfolio

Pennsylvania Tax-Free Portfolio

Intermediate Fixed Income Portfolio

U.S. Government Bond Portfolio

Income Portfolio

Balanced Portfolio

Equity Income Portfolio

Value Equity Portfolio

Equity Index Portfolio

Blue Chip Equity Portfolio

Capital Growth Portfolio

Mid-Cap Equity Portfolio

Small-Cap Equity Portfolio

International Equity Portfolio

Emerging Markets Equity Portfolio

The financial statements and notes presented herein are those of SIIFIP, SIBCEP, SICGP, and SISCEP. The financial statements of the other portfolios listed above are not presented herein, but are presented separately. The Fund may issue an unlimited number of shares of each of the Portfolios and may issue shares of one or more classes of each Portfolio.

2. SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported therein. Although actual results could differ from these estimates, any such differences are expected to be immaterial to the net assets of the Portfolios.

The following is a summary of significant accounting policies followed by the Portfolios.

Security Valuation — Securities of the Portfolios are generally valued by independent pricing services. Securities listed on a securities exchange for which market quotations are readily available are valued at the last reported sale price on the principal exchange on which they are traded on the valuation date or, if there is no such reported sale on the valuation date, at the most recently quoted bid price. Unlisted securities for which market quotations are readily available are valued at the most recently quoted bid price. Debt obligations exceeding sixty days to maturity for which market quotations are readily available are valued at the most recently quoted bid price. Debt obligations with sixty days or less to maturity are valued at their amortized cost.

Income Taxes — It is the intention of each Portfolio to comply with the requirements of the Internal Revenue Code, qualify as a regulated investment company and to distribute all of its taxable income. Accordingly, no provision for federal income taxes is considered necessary.

Net Asset Value Per Share — The net asset value per share (“NAV”) of each class of each Portfolio is calculated every business day (i.e., any day that both the New York Stock Exchange and the Federal Reserve Bank are open for business). The NAV is computed by dividing the total assets of each class of the Portfolio, less the liabilities of the class, by the number of outstanding shares of the Portfolio.

Repurchase Agreements — Securities pledged as collateral for repurchase agreements are held by the custodian bank until maturity of the repurchase agreements. Provisions of the repurchase agreements and procedures adopted by the Board of Trustees require that market value of collateral, including accrued interest thereon, be sufficient in the event of default by the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the Portfolio may be delayed or limited.

When-Issued Purchases and Forward Commitments — The Portfolios may purchase securities on a “when-issued” basis and may purchase or sell securities on a “forward

ANNUAL REPORT    /    APRIL 30, 2003

25

NOTES TO FINANCIAL STATEMENTS

commitment” basis. These transactions, which involve a commitment by a Portfolio to purchase or sell particular securities with payment and delivery taking place at a future date (perhaps one or two months later), permit the Portfolio to lock in a price or yield on a security it owns or intends to purchase, regardless of future changes in interest rates. When-issued and forward commitment transactions involve the risk, however, that the yield obtained in a transaction (and therefore the value of the security) may be less favorable than the yield available in the market when the securities delivery takes place. The Portfolios maintain cash, U.S. government securities, or liquid, high-grade debt obligations in an amount sufficient to meet the purchase price in a segregated account until the settlement date. No Portfolio intends to engage in when-issued purchases and forward commitments for speculative purposes.

Distributions — Dividends from net investment income are declared and paid according to the following table:

Portfolio	Frequency of Declaration of Dividends	Frequency of Payment of Dividends
SIIFIP	Daily	Monthly
SIBCEP	Quarterly	Quarterly
SICGP	Annually	Annually
SISCEP	Annually	Annually

Each Portfolio makes distributions of capital gains, if any, at least annually.

Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, and may differ from those amounts determined under generally accepted accounting principles. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in capital in the period that the difference arises.

The Portfolios have a tax year end of October 31.

On the Statements of Assets and Liabilities, the following adjustments were made:

Portfolio	Undistributed Net Investment Income (Loss)			Undistributed Net Realized Gain (Loss)			Paid-in- Capital
SIIFIP	$	(20	)	$	20		$	—
SICGP		371			—			(371	)
SISCEP		1,388			(5,145	)		3,757

The tax character of distributions paid during the tax year ended October 31, 2002 and period ended October 31, 2001 was as follows:

	Ordinary Income				Total
Portfolio	2002		2001		2002		2001
SIIFIP	$	110,740	$	24,043	$	110,740	$	24,043
SIBCEP		6,257		2,044		6,257		2,044
SICGP		102		—		102		—
SISCEP		3,697		—		3,697		—

At October 31, 2002 the components of net assets (excluding paid-in capital) on a tax basis were as follows:

Portfolio	Undistributed Ordinary Income		Undistributed Long-Term Gain		Net Unrealized Appreciation (Depreciation)			Capital and Other Losses
SIIFIP	$	6,754	$	—	$	112,829		$	(111,854	)
SIBCEP		1,324		—		(166,648	)		(541,910	)
SICGP		—		—		(1,594	)		(48,205	)
SISCEP		14,585		858		(19,155	)		—

The following Portfolios have estimated capital loss carryforwards at October 31, 2002, which are available to offset future net realized capital gains:

Portfolio	Accumulated Capital Loss Carryforward		Year Expires
SIIFIP	$	111,854	2010
SIBCEP		10,680	2009
		531,230	2010
SICGP		6,772	2009
		41,433	2010

Other — Security transactions are accounted for on the date the security is purchased or sold (trade date). Net realized capital gains and losses on the sale of investment securities are determined using the identified cost method. Dividend income is recognized on the ex-dividend date, and interest income is recognized using the accrual method. Discounts and premiums on securities purchased are amortized over the lives of the respective securities.

APRIL 30, 2003    /    ANNUAL REPORT

26

NOTES TO FINANCIAL STATEMENTS

3. INVESTMENT ADVISORY AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Allied Investment Advisors, Inc. (“AIA”) is the investment advisor to each Portfolio. Pursuant to an investment advisory contract on behalf of each Portfolio, AIA is entitled to receive fees for its advisory services at the annual rates shown in the following table based on the daily average net assets of the Portfolio.

Portfolio	Annual Rate
SIIFIP	0.60%
SIBCEP	0.70%
SICGP	0.70%
SISCEP	0.80%

AIA has contractually agreed to waive a portion of its fees or reimburse expenses for all of the Portfolios in order to limit total operating expenses of such Portfolios.

Pursuant to an exemptive order by the Securities and Exchange Commission, the Portfolios may invest in affiliated money market fund Portfolios, provided that the instruments in affiliated money market fund Portfolios do not exceed 25% of the investing Portfolio’s total assets.

Effective April 1, 2003, AIA became a wholly-owned subsidiary of Manufacturers and Traders Trust Company (“M&T Trust”), the principal financial services operating subsidiary of M&T Bank Corporation (“M&T”), a publicly-traded holding company based in Buffalo, New York. M&T’s ownership of AIA is a result of an agreement entered into on September 26, 2002, among M&T, Allfirst Financial, Inc. and Allied Irish Banks, p.l.c. (“AIB”), under which M&T was to acquire Allfirst Financial Inc. the indirect parent corporation of AIA, and parent corporation of Allfirst Bank, the direct parent of AIA (the “Acquisition”). At a special meeting of shareholders held on January 31, 2003, shareholders of each Portfolio approved a new investment advisory agreement between AIA and the Fund with respect to each Portfolio. The 1940 Act, which regulates investment companies such as the Fund, requires a shareholder vote to approve a new advisory agreement in connection with business transactions such as the Acquisition. The new advisory agreement is substantially identical to the former advisory agreement, except for the dates of execution and termination. The new advisory agreement became effective upon consummation of the Acquisition on April 1, 2003.

Also as a result of the Acquisition, M&T Trust acquired Allfirst Trust Company, N.A., (“Allfirst Trust”) which as of April 30, 2003, served as the Portfolios’ administrator, transfer agent and custodian pursuant to administration, transfer agency and custodian agreements with the Fund. (See Note 6 for additional information concerning the administrator, transfer agent and custodian subsequent to the Portfolios’ fiscal year end.)

Allfirst Trust serves as administrator and transfer agent for the Fund pursuant to an administration agreement. For its services, Allfirst Trust is entitled to receive an administration fee from the Fund at the annual rate of $24,000 per Portfolio, plus 0.085% of the annual average daily net assets of the Portfolios. Allfirst Trust receives annually a $60,000 base fee that is allocated to each portfolio of the Fund based on respective average daily net assets. Under a separate agreement, Allfirst Trust has subcontracted the services to be provided by it under the administration agreement to Forum Administrative Services, LLC (the “Sub-administrator”). Allfirst Trust is responsible for paying a portion of the administration fee it receives from the Fund to the Sub-administrator for the services it provides.

Pursuant to an agreement between the Fund and Allfirst Trust, Allfirst Trust performs transfer agency services. Pursuant to an agreement between Boston Financial Data Services, Inc. (“Boston Financial”) and Allfirst Trust, Boston Financial performs sub-transfer agency services. For the services provided under the agreement with Allfirst Trust, the Fund pays an annual fee of up to $16 per Portfolio account and activity based fees ranging from $0.50 to $12.50 per item and reimbursements for out-of-pocket expenses. Allfirst Trust pays the transfer agency fees and expense reimbursements that it receives from the Fund to Boston Financial.

Pursuant to a custody agreement between the Fund and Allfirst Trust, Allfirst Trust was appointed and serves as the custodian of the assets of the Portfolios. Pursuant to an agreement between Bankers Trust Company (“BTC”) and Allfirst Trust, BTC performs sub-custodial services. For the services provided under the agreement with Allfirst Trust, the Fund pays 0.015% of the market value of the assets of the Portfolios, plus transaction fees ranging from $5 to $75 per item and reimbursement for out-of-pocket expenses. Allfirst Trust is responsible for paying a portion of the custody fees it receives from the fund to BTC for the custody services it provides.

4. SHAREHOLDER SERVICES PLANS

The Fund has adopted a Shareholder Services Plan on behalf of the Institutional Class Shares of each Portfolio. Institutional Class Shares’ shareholder services fees, as a percentage of average daily net assets of the class, may be up to 0.15% as authorized by the Board.

ANNUAL REPORT    /    APRIL 30, 2003

27

NOTES TO FINANCIAL STATEMENTS

5. INVESTMENT TRANSACTIONS

The cost of securities purchased and the proceeds from the sale of securities, other than short-term investments and U.S. government securities during the year ended April 30, 2003, were as follows:

Portfolio	Purchases		Sales
SIIFIP	$	727,091	$	411,402
SIBCEP		414,803		1,007,760
SICGP		355,410		281,631
SISCEP		1,342,660		879,157

The purchases and sales of U.S. government securities were as follows:

Portfolio	Purchases		Sales
SIIFIP	$	2,455,188	$	1,598,074

For federal income tax purposes, cost, aggregate gross unrealized appreciation and depreciation of securities at April 30, 2003 were not materially different from amounts reported for financial reporting purposes. For each Portfolio, these amounts were as follows:

Portfolio	Appreciated Securities		Depreciated Securities			Net Unrealized Appreciation (Depreciation)
SIIFIP	$	143,191	$	(126	)	$	143,065
SIBCEP		43,463		(90,765	)		(47,302	)
SICGP		12,913		(2,877	)		10,036
SISCEP		44,872		(20,224	)		24,648

6. SIGNIFICANT EVENTS AFTER APRIL 30, 2003

As a result of the Acquisition described in Note 3, effective June 13, 2003, Allfirst Trust, the administrator, transfer agent and custodian to the Fund was merged into M&T Trust and no longer maintains a separate corporate existence. In connection with that merger, effective June 16, 2003, M&T Trust serves as the administrator and transfer agent to the Fund as a result of the assignment of the Fund’s administration and transfer agency agreements with Allfirst Trust to M&T Trust. The compensation provisions under the agreements are unchanged.

Effective June 1, 2003, State Street Bank Corporation (“State Street”) serves as custodian of the assets of the Portfolios pursuant to a custodian agreement between State Street and the Fund.

M&T Trust also serves as the administrator to the VISION Group of Funds (“VISION Funds”), a mutual fund family that offers different classes of shares in separate investment portfolios for which M&T Asset Management, a department of M&T Trust, serves as investment adviser. In connection with the Acquisition described above, the Board of Trustees of the Fund has authorized the reorganization of each Portfolio into a newly created or existing portfolio of the VISION Funds. On May 16, 2003, the VISION Funds filed a preliminary proxy statement/prospectus on Form N-14, which sets forth the reorganization proposals to be submitted to shareholders of each Portfolio, who will vote separately on the proposal to reorganize their respective Portfolio. The VISION Funds filed an amendment to the Form N-14 filing on May 23, 2003 with a proposed effective date for the preliminary proxy statement/prospectus of June 23, 2003. According to the preliminary proxy statement/prospectus, only shareholders of record of the Fund at the close of business on June 16, 2003 will be entitled to notice of and to vote at the shareholder meeting scheduled for August 14, 2003, and any postponement or adjournment thereof. Under the proposed agreement and plan of reorganization, if approved by shareholders of a Portfolio, the shareholders of that Portfolio will receive shares of a comparable VISION Fund. According to the preliminary proxy statement/prospectus, the reorganization is currently anticipated to occur in August, assuming shareholder approval is obtained.

APRIL 30, 2003    /    ANNUAL REPORT

28

INDEPENDENT AUDITORS’ REPORT

The Board of Trustees and Shareholders

ARK Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Social Issues Intermediate Fixed Income Portfolio, Social Issues Blue Chip Equity Portfolio, Social Issues Capital Growth Portfolio, and Social Issues Small-Cap Equity Portfolio, portfolios of ARK Funds (the “Portfolios”), as of April 30, 2003, the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years or periods in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2003 by correspondence with the custodian. As to securities purchased or sold but not yet received or delivered, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Social Issues Intermediate Fixed Income Portfolio, Social Issues Blue Chip Equity Portfolio, Social Issues Capital Growth Portfolio, and Social Issues Small Cap Equity Portfolio as of April 30, 2003, the results of their operations, the changes in their net assets and their financial highlights for the years or periods specified above in conformity with accounting principles generally accepted in the United States of America.

Boston, Massachusetts

June 16, 2003

ANNUAL REPORT    /    APRIL 30, 2003

29

TRUSTEES OF THE FUND (Unaudited)

Name, Age and Contact Address	Position with the Trust	Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee	Other Trusteeships or Directorships Held by Trustees outside ARK Funds Complex
Interested Trustee
Rick A Gold1 Born: August 4, 1949 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	President and Trustee	since 2000	Senior Vice President of M&T Trust, the parent company of AIA (since 2003); Executive Vice President of Asset Management Group of Allfirst Financial, Inc., the former parent company to Allfirst Trust and AIA (1999-2003); Chief Executive Officer and Director of AIA and Allfirst Trust (1997-2003).	30	None
Disinterested Trustees
William H. Cowie, Jr. Born: January 24, 1931 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee and Chairman	since 1993	Retired	30	None
David D. Downes Born: July 16, 1935 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 1995	Attorney in private practice (since October 1996)	30	None
Sir Victor Garland Born: May 5, 1934 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 2000	Private Investor (since 1994)	30	Director and Chairman: Henderson Far East Income Trust plc (Chairman since 1990). Director: The Throgmorton Trust plc. Director: Framington Income and Capital Trust plc. Director and Chairman: Fidelity Asian Values plc (Chairman since 2001). Director and Chairman: Govett Enhanced Income Investment Trust plc. Director: GEIIT plc. Director: Govett Asian Income and Growth Trust Ltd.
Charlotte R. Kerr Born: September 26, 1946 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 1993	Practitioner and faculty member of Traditional Acupuncture Institute.	30	None
Richard B. Seidel Born: April 20, 1941 c/o ARK Funds 100 East Pratt Street, 15th Floor, M/C 104-410 Baltimore, MD 21202	Trustee	since 1998	Director and President (since 1994) of Girard Partners (a registered broker-dealer).	30	None

1 Mr. Gold is deemed to be an “interested person” due to his affiliation with AIA and M&T Trust (See Note 6 of Notes to the Financial Statements).

Additional information concerning the Trustees is contained in the Statement of Additional Information (“SAI”) and is available by contacting the Fund at 1-800-275-3863.

APRIL 30, 2003    /    ANNUAL REPORT

30

31

OFFICERS OF THE FUND (Unaudited)

Name, Age and Contact Address	Position with the Trust	Length of Time Served	Principal Occupation(s) During Past 5 Years
Officers
Stacey E. Hong Born: May 10, 1966 Two Portland Square, Portland, ME 04101	Treasurer	since 2002	Director of Forum Accounting Services, LLC (since 1998).
Michele L. Dalton Born: February 16, 1959 100 East Pratt Street, 15th Floor, Baltimore, MD 21202	Vice President and Assistant Secretary	since 2000	Vice President of M&T Trust (since 2003); Senior Vice President of Allfirst Financial, Inc. (1994-2003).
Thomas R. Rus Born: October 11, 1959 100 East Pratt Street, 17th Floor, Baltimore, MD 21202	Secretary	since 2000	Vice President of M&T Trust (since 2003); Vice President and Counsel of Allfirst Trust and Allfirst Bank and Compliance Officer of Allfirst Trust (1995-2003).
D. Blaine Riggle Born: November 12, 1966 Two Portland Square, Portland, ME 04101	Vice President and Assistant Secretary	since 2002	Relationship Manager and Counsel for Forum Financial Group, LLC (associated since 1998).
Cheryl O. Tumlin Born: June 30, 1966 Two Portland Square, Portland, ME 04101	Vice President and Assistant Secretary	since 2002	Counsel for Forum Financial Group, LLC (associated from 1996-1999 and again since 2001); former Counsel at I-many, Inc. (1999-2001).
Dawn L. Taylor Born: May 14, 1964 Two Portland Square, Portland, ME 04101	Assistant Treasurer	since 2002	Tax Manager at Forum Financial Group, LLC (since 1997).
Nathan V. Gemmiti Born: August 6, 1970 Two Portland Square, Portland, ME 04101	Assistant Secretary	since 2002	Staff Attorney, Forum Financial Group, LLC (since 2001); Associate, Pierce Atwood (a law firm) (1998-2001).

ANNUAL REPORT    /    APRIL 30, 2003

NOTES

INVESTMENT ADVISOR

Allied Investment Advisors, Inc.

Baltimore, Maryland

TRUSTEES

William H. Cowie, Jr.

David D. Downes

Sir Victor Garland

Rick A. Gold

Charlotte R. Kerr

Richard B. Seidel

ADMINISTRATOR

Allfirst Trust Company, N.A.

Baltimore, Maryland

DISTRIBUTOR

ARK Funds Distributors, LLC

Portland, Maine

LEGAL COUNSEL

Kirkpatrick & Lockhart LLP

Washington, D.C.

INDEPENDENT AUDITORS

KPMG LLP

Boston, Massachusetts

CUSTODIAN

Allfirst Trust Company, N.A.

Baltimore, Maryland

100 EAST PRATT STREET, 15^TH FLOOR  |  MAIL CODE 104-410  |  BALTIMORE, MD 21202

We are pleased to send you this Annual Report for the fiscal year ended April 30, 2003.  This report contains important information about your investments in ARK Funds. Because we are sending a report to each person listed as shareholder, you  (or your household) may receive more than one report.

This material must be preceded or accompanied by a current prospectus. ARK-AR-003-0603 recycled content

ITEM 2.    CODE OF ETHICS.

Not applicable.

ITEM 3.    AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable.

ITEM 4.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable.

ITEM 5.    [RESERVED]

ITEM 6.    [RESERVED]

ITEM 7.    DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8.    [RESERVED]

ITEM 9.    CONTROLS AND PROCEDURES

(a)—The certifying officers, whose certifications are included herewith, have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing date of this report. In their opinion, based on their evaluation, the registrant’s disclosure controls and procedures are adequately designed, and are operating effectively to ensure, that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared. Further, in their opinion, the registrant’s disclosure controls and procedures are adequately designed, and are operating effectively to ensure that information required to be disclosed by the registrant in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)—There were no significant changes in the registrant’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 10.    EXHIBITS.

(a) Not applicable.

(b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith).

(c) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit filed herewith).