<PAGE> 1
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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE ARCH FUND, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
THE ARCH FUND(R), INC.
------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE INTERNATIONAL EQUITY PORTFOLIO
------------------------------
September 9, 1996
To the Shareholders of the
International Equity Portfolio of
The ARCH Fund, Inc.
A Special Meeting of Shareholders of the International Equity Portfolio
(the "Portfolio") of The ARCH Fund, Inc. (the "Fund") will be held on October
18, 1996, at 10:00 A.M. Eastern Time, at the offices of BISYS Fund Services
Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, for the purpose of
considering and voting upon:
(1) A proposal to ratify and approve a new sub-advisory agreement
between Mississippi Valley Advisors Inc. ("MVA") and Clay Finlay Inc. ("CF
Inc.") with respect to the International Equity Portfolio, the terms of
which are substantially the same as the terms of the previous sub-advisory
agreement between MVA and CF Inc.;
(2) A proposal to ratify and approve the payment of sub-advisory fees
to CF Inc. for the period from August 29, 1996 through the conclusion of
the Special Meeting of Shareholders; and
(3) The transaction of such other business as may properly come
before the meeting or any adjournment thereof.
The proposals referred to above are discussed in the Proxy Statement
attached to this Notice. Each shareholder is invited to attend the Special
Meeting of Shareholders in person. Shareholders of record at the close of
business on August 23, 1996 have the right to vote at the meeting. If you cannot
be present at the meeting, we urge you to fill in, sign and promptly return the
enclosed proxy in order that the meeting can be held and a maximum number of
shares may be voted.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSALS.
W. BRUCE McCONNEL, III
Secretary
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL. BY
LAW, THE SPECIAL MEETING OF SHAREHOLDERS OF THE FUND'S INTERNATIONAL EQUITY
PORTFOLIO SCHEDULED FOR OCTOBER 18, 1996 WILL HAVE TO BE ADJOURNED WITHOUT
CONDUCTING ANY BUSINESS IF LESS THAN A MAJORITY OF THE SHARES ELIGIBLE TO VOTE
ARE REPRESENTED. IN THAT EVENT, THE FUND WOULD CONTINUE TO SOLICIT VOTES IN AN
ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL IN ALLOWING
THE FUND TO HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD
IMMEDIATELY.
<PAGE> 3
THE ARCH FUND(R), INC.
3435 STELZER ROAD
COLUMBUS, OHIO 43219
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The ARCH Fund, Inc. (the "Fund") for use at
a Special Meeting of Shareholders of the Fund's International Equity Portfolio
(the "Portfolio") to be held at the offices of the Fund's administrator and
transfer agent, BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus,
Ohio 43219 on October 18, 1996, at 10:00 A.M. Eastern Time (such meeting and any
adjournment thereof is referred to as the "Meeting"). It is expected that the
solicitation of proxies will be primarily by mail. In connection with the
solicitation of certain shareholders, the Fund's service contractors have
retained Automatic Data Processing to assist in the solicitation of proxies by
mail and to tabulate votes returned at a cost of approximately $500. The Fund's
officers and service contractors may also solicit proxies by telephone,
telegraph, facsimile or personal interview. Clay Finlay Inc. ("CF Inc."), the
proposed sub-adviser for the Portfolio as discussed in this Proxy Statement, or
its parent, United Asset Management Corporation ("UAM"), will bear all proxy
solicitation costs. Any shareholder giving a proxy may revoke it at any time
before it is exercised by submitting to the Fund a written notice of revocation
or a subsequently executed proxy or by attending the Meeting and electing to
vote in person. This Proxy Statement and the enclosed Proxy are expected to be
distributed to shareholders on or about September 18, 1996.
A Proxy is enclosed with respect to the shares you own in the Portfolio. If
the Proxy is executed properly and returned, the shares represented by it will
be voted at the Meeting in accordance with the instructions thereon. Each full
share is entitled to one vote and each fractional share to a proportionate
fractional vote. If you do not expect to be present at the Meeting and wish your
shares to be voted, please complete the enclosed Proxy and mail it in the
enclosed reply envelope.
INTRODUCTION
Mississippi Valley Advisors Inc. ("MVA"), the investment adviser for the
Portfolio, appointed CF Inc. as sub-adviser to the Portfolio pursuant to a
sub-advisory agreement dated January 25, 1994 (the "Previous Agreement"). On or
about July 17, 1996, MVA was notified that CF Inc. and its principal
stockholders had entered into a merger agreement with UAM pursuant to which CF
Inc. would become a wholly-owned subsidiary of UAM (the "UAM Merger"). MVA was
advised that the UAM Merger would be completed on August 29, 1996. The UAM
Merger constituted an "assignment" of, and automatically terminated, the
Previous Agreement under the Investment Company Act of 1940, as amended (the
"1940 Act").
At a special meeting of the Board of Directors of the Fund held on August
21, 1996, MVA recommended that CF Inc. be reappointed as sub-adviser to the
Portfolio. At that meeting, a new sub-advisory agreement (the "New Agreement")
for the Portfolio between MVA and CF Inc. was approved by a majority of the
Board of Directors, as well as by a majority of those members of the Board of
Directors who were not "interested persons" (as that term is defined in the 1940
Act) of any party to the New Agreement.
1
<PAGE> 4
To ensure that the automatic termination of the Previous Agreement would
not disrupt the sub-advisory services provided to the Portfolio, on August 22,
1996 the Fund, MVA and CF Inc. filed an application with the Securities and
Exchange Commission ("SEC") seeking an exemptive order (the "Order") permitting
CF Inc. to continue to act as sub-adviser to the Portfolio under the New
Agreement after the termination of the Previous Agreement until approval of the
New Agreement by shareholders of the Portfolio at a meeting to be held within
120 days after August 29, 1996 (the "Interim Period"). As a condition to the
requested Order, during the Interim Period all sub-advisory fees payable under
the New Agreement are being held in escrow. Such escrowed fees will be received
by CF Inc. only if the New Agreement is ratified and approved by shareholders of
the Portfolio. Although the Fund believes that the SEC will grant the requested
Order, there is no assurance that the SEC will do so, even if the proposals
presented to the Meeting are approved by shareholders of the Portfolio. In such
an event, the Fund would consider what action would be appropriate in light of
the SEC's response to the application for the Order.
The Board of Directors of the Fund is now proposing that shareholders of
the Portfolio ratify and approve (a) the New Agreement, which became effective
on August 29, 1996, the effective date of the UAM Merger, and (b) the payment of
sub-advisory fees to CF Inc. for the Interim Period.
A copy of the New Agreement is attached to this Proxy Statement as Exhibit
A. The description of the New Agreement that follows is qualified in its
entirety by Exhibit A.
DESCRIPTION OF THE NEW AGREEMENT
TERMS AND FEES. Except as set forth below, the terms and conditions of the
New Agreement with CF Inc. are substantially the same as those in the Previous
Agreement.
As investment adviser, MVA has agreed, subject to the general supervision
of the Fund's Board of Directors and in accordance with the Portfolio's
investment objective and policies, either directly or through a sub-adviser, to
manage the Portfolio's assets, and to provide investment research and to be
responsible for, make decisions with respect to and place orders for all
purchases and sales of portfolio securities.
The New Agreement provides that, subject to the supervision of the Fund's
Board of Directors, CF Inc. will assist MVA in providing a continuous investment
program for the Portfolio, including research and management with respect to all
securities, investments and cash equivalents. Pursuant to the New Agreement, CF
Inc.: (a) will prepare, subject to MVA's approval, lists of foreign countries
for investment by the Portfolio and determine from time to time what securities
and other investments will be purchased, retained or sold for the Portfolio,
including, with the assistance of MVA, the Portfolio's investments in futures
and forward currency contracts; (b) will manage in consultation with MVA the
Portfolio's temporary investments in securities; (c) will place orders pursuant
to its investment determinations for the Portfolio either directly with the
issuer or with any broker or dealer; (d) will not purchase shares of the
Portfolio for itself or for accounts with respect to which it exercises sole
investment discretion in connection with such transactions except as permitted
by law and by the Fund's Board of Directors; (e) will manage the Portfolio's
overall cash position and determine from time to time what portion of the
Portfolio's assets will be held in different currencies; (f) will provide MVA
with foreign broker research, a quarterly review of international economic and
investment developments, and occasional "White Papers" on international
investment issues; (g) will attend regular business and investment-related
meetings with the Fund's Board of Directors and MVA if requested to do so by the
Fund and/or MVA; and (h) will maintain books and records with respect to the
Portfolio's
2
<PAGE> 5
securities transactions, furnish to MVA and the Fund's Board of Directors such
periodic and special reports as they may request with respect to the Portfolio,
and provide in advance to MVA all reports to the Board of Directors for
examination and review within a reasonable time prior to the Fund's Board
meetings.
THE MAXIMUM ADVISORY FEES PAYABLE BY THE PORTFOLIO TO MVA WILL NOT CHANGE
AS A RESULT OF APPROVAL OF THE NEW AGREEMENT, ALTHOUGH THE SUB-ADVISORY FEES
PAYABLE BY MVA TO CF INC. WILL CHANGE. The maximum annual advisory fee rate
payable by the Portfolio to MVA is 1.00% of the Portfolio's average daily net
assets, computed daily and payable monthly. Under the Previous Agreement, the
annual sub-advisory fee rate payable by MVA to CF Inc. was .75% of the
Portfolio's average daily net assets, computed daily and payable monthly. Under
the New Agreement, the annual sub-advisory fee rate payable by MVA to CF Inc. is
.75% of the first $50 million of the Portfolio's average daily net assets, plus
.50% of the next $50 million of average daily net assets, plus .25% of average
daily net assets in excess of $100 million, computed daily and payable monthly.
As of August 23, 1996, the Portfolio's net assets totalled approximately $60.8
million. Based on the Portfolio's net assets as of such date, the annual
sub-advisory fees payable under the Previous Agreement would have been $456,272,
whereas the annual sub-advisory fees payable under the New Agreement would be
$429,000. The sub-advisory fees payable by MVA to CF Inc. under both the
Previous Agreement and the New Agreement are the responsibility of MVA and do
not represent an additional charge to the Portfolio.
The aggregate investment advisory fees (net of waivers) and sub-advisory
fees paid with respect to the Portfolio for the fiscal year ended November 30,
1995 were $239,167 and $239,167, respectively, and the corresponding effective
rates of the advisory fees (net of waivers) and sub-advisory fees paid by the
Portfolio during the fiscal year ended November 30, 1995 were .75% and .75%,
respectively, of the Portfolio's average daily net assets. If the sub-advisory
fees payable under the New Agreement had been in effect during the Portfolio's
fiscal year ended November 30, 1995, CF Inc. would have earned $239,167 in fees,
or 100% of the sub-advisory fees actually paid to CF Inc. during the fiscal
year. MVA has advised the Fund that it intends to continue waiving all advisory
fees with respect to the Portfolio over and above the amount of sub-advisory
fees paid to CF Inc. This fee waiver by MVA is voluntary and may be terminated
at any time. A provision in the Previous Agreement providing for the waiver of
sub-advisory fees by CF Inc. while the Portfolio was in a start-up mode has not
been included in the New Agreement.
The New Agreement provides that CF Inc. will pay all expenses incurred by
it in connection with its activities under the New Agreement other than the cost
of securities, commodities and other investments (including brokerage
commissions and other transaction charges, if any) purchased for the Portfolio.
The New Agreement also provides that CF Inc. will exercise due care and
diligence and use the same skill and care in providing services under the New
Agreement as it uses in providing services to other investment companies, but
that CF Inc. shall not be liable for any action taken or omitted by it in the
absence of bad faith, willful misconduct, gross negligence or reckless disregard
of its duties.
The New Agreement provides that CF Inc. will bear a proportionate share of
any expense reimbursements made by MVA under its advisory agreement with respect
to the Portfolio, by waiving fees otherwise payable to it under the New
Agreement, in the event that the Portfolio's aggregate expenses exceed the
expense limitations of any state having jurisdiction over the Portfolio. As of
the date hereof, the most restrictive expense limitation applicable to the
Portfolio limits its aggregate annual expenses (as defined by applicable
regulations which generally exclude distribution plan fees, foreign custody fees
and certain other
3
<PAGE> 6
expenses) to 2-1/2% of the first $30 million of its average net assets, 2% of
the next $70 million of its average net assets, and 1-1/2% of its remaining net
assets.
Under the New Agreement, CF Inc. agrees that it will place orders for the
purchase and sale of portfolio securities and will solicit broker-dealers to
execute transactions in accordance with the Portfolio's policies and
restrictions regarding brokerage allocations. In executing portfolio
transactions and selecting brokers or dealers, CF Inc. will use its reasonable
best efforts to seek the most favorable execution of orders, after taking into
consideration all factors that CF Inc. deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
Consistent with this obligation, CF Inc. may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers that
provide brokerage and research services. These brokerage and research services
might consist of reports and statistics on specific companies or industries,
general summaries of groups of stocks or bonds and their comparative earnings
and yields, or broad overviews of the securities markets and the economy.
Commissions paid to brokers or dealers providing these services may be higher
than those which other qualified brokers or dealers would charge for effecting
the same transactions, provided that CF Inc. determines in good faith that such
commissions are reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either a
particular transaction or CF Inc.'s overall responsibility to the Portfolio and
to the Fund.
Supplementary research information so received is in addition to, and not
in lieu of, services required to be performed by MVA and CF Inc., and does not
reduce the advisory fees payable to MVA by the Portfolio. It is possible that
certain of the supplementary research or other services received will primarily
benefit one or more other investment companies or other accounts for which MVA
or CF Inc. exercises investment discretion. Conversely, the Portfolio may be the
primary beneficiary of the research or services received as a result of
portfolio transactions effected for such other investment companies or accounts.
Investment decisions for the Portfolio and for other investment accounts
managed by MVA and CF Inc. will be made independently of each other in light of
differing conditions. However, the same investment decision may be made for two
or more of such accounts. In such cases, simultaneous transactions are
inevitable. Purchases or sales are then allocated in a manner believed by MVA or
CF Inc. to be equitable to each such account. While in some cases this practice
could have a detrimental effect on the price or value of the security as far as
the Portfolio is concerned, in other cases it may be beneficial to the
Portfolio. To the extent permitted by law, CF Inc. may aggregate the securities
to be sold or purchased for the Portfolio with those to be sold or purchased for
other investment companies or accounts in executing transactions. Portfolio
securities will not be purchased from or sold to MVA, CF Inc., the Fund's
principal underwriter, or any affiliated person thereof, except as permitted by
law.
If ratified and approved by the shareholders of the Portfolio, the New
Agreement will continue in effect until January 25, 1998. Thereafter, the New
Agreement will continue in effect with respect to the Portfolio for successive
annual periods, provided that its continuance is approved at least annually (a)
by the vote of a majority of those members of the Board of Directors who are not
"interested persons" (as that term is defined in the 1940 Act) of any party to
the New Agreement cast in person at a meeting called for the purpose of voting
on such approval and (b) by the Board of Directors or by vote of a majority of
the outstanding shares of the Portfolio.
4
<PAGE> 7
The New Agreement provides that it will terminate automatically in the
event of its "assignment" (as that term is defined in the 1940 Act). The New
Agreement also provides that it is terminable without penalty, by the Portfolio
(by vote of the Board of Directors of the Fund or by vote of a majority of the
outstanding shares of the Portfolio) or by MVA or CF Inc. on 60 days' written
notice.
EVALUATION BY THE FUND'S DIRECTORS. As described above, the Previous
Agreement automatically terminated on August 29, 1996 as a result of the UAM
Merger. In anticipation of this termination, and in order to minimize any
potential disruption of the sub-advisory services provided to the Portfolio, on
August 6, 1996, the Fund's Board of Directors authorized the filing of the
exemptive application described above with the SEC seeking the Order that
permits CF Inc. to continue to act as sub-adviser to the Portfolio during the
Interim Period. In addition, at a special meeting held on August 21, 1996, a
majority of the Fund's Board of Directors, including a majority of those members
of the Board of Directors who are not "interested persons" (as that term is
defined in the 1940 Act) of any party to the New Agreement, approved the New
Agreement that became effective upon consummation of the UAM Merger on August
29, 1996, subject to approval by the Portfolio's shareholders.
In considering whether to approve the New Agreement and to submit the New
Agreement to shareholders of the Portfolio for their ratification and approval,
the Board of Directors considered the following factors: (a) CF Inc.'s
representations that it would provide investment advisory and other services to
the Portfolio of a scope and quality at least equivalent, in the Board's
judgment, to the scope and quality of services previously provided to the
Portfolio; (b) the performance of the Portfolio since the commencement of
operations; (c) the terms and conditions contained in the New Agreement, that
are substantially the same as those in the Previous Agreement; (d) CF Inc.'s
willingness to share economies of scale with the Portfolio's shareholders
through the incorporation of breakpoints into its fee schedule; (e) the fees and
expense ratios of comparable mutual funds; (f) the assurances provided to the
Board that the Portfolio would receive during the Interim Period the same
investment advisory services, provided in the same manner, as it received under
the Previous Agreement; (g) CF Inc.'s representation that the persons
responsible for the investment policies of CF Inc. are the same persons who
directed CF Inc.'s investment policies prior to the UAM Merger and that in the
event of any material change in personnel providing services under the New
Agreement during the Interim Period, the Board of Directors of the Fund would be
consulted for the purpose of assuring themselves that the services provided
would not be diminished in scope or quality; and (h) the benefits which CF Inc.
may derive from the New Agreement, including receipt of investment research and
information in return for allocating portfolio brokerage. Additionally, the
Directors considered the benefits that would be obtained by the Portfolio in
maintaining continuity in sub-advisory services during the Interim Period, and
determined that continuity was advantageous to the Portfolio as it would serve
to minimize uncertainty and confusion, and would minimize any potential
disruption in the sub-advisory services provided to the Portfolio resulting from
the UAM Merger.
Based on the foregoing factors, each of which was considered material by
the Fund's Board of Directors, the Directors concluded that approval of the New
Agreement was in the best interests of the Portfolio and its shareholders. The
Board of Directors further concluded that the payment of sub-advisory fees under
the New Agreement during the Interim Period would be appropriate and fair
considering that (a) the fees to be paid would not be increased, and the
services to be provided therefor would not be changed, under the New Agreement;
(b) the fees would be maintained in an interest-bearing escrow account until
payment was approved or disapproved by the Portfolio's shareholders; (c) because
of the relatively short period between
5
<PAGE> 8
notice of and consummation of the UAM Merger, there was insufficient time to
seek prior shareholder approval of the New Agreement; and (d) the non-payment of
sub-advisory fees during the Interim Period would be an unduly harsh result to
CF Inc. in view of the services provided by CF Inc. to the Portfolio, and the
expenses incurred in connection with such services, under the New Agreement.
Ronald D. Winney, a member of the Board of Directors and Treasurer of the
Fund, owns shares of Mercantile Bancorporation, Inc., MVA's ultimate parent.
VOTING PROCEDURES. The ratification and approval of (a) the New Agreement
and (b) the payment of sub-advisory fees to CF Inc. for the Interim Period
requires the affirmative vote of the holders of a "majority of the outstanding
shares" of the Portfolio (as defined by the 1940 Act), which means the lesser of
(i) the holders of 67% or more of the shares of the Portfolio present at the
Meeting if the holders of more than 50% of the outstanding shares of the
Portfolio are present in person or by proxy or (ii) more than 50% of the
outstanding shares of the Portfolio.
If the New Agreement is ratified and approved by shareholders at the
Meeting, MVA, which has principal offices located at One Mercantile Center,
Seventh & Washington Streets, St. Louis, Missouri 63101, will continue to serve
as the Portfolio's investment adviser under its existing advisory agreement
dated as of April 1, 1991 and CF Inc. will continue to serve as the Portfolio's
sub-adviser under the New Agreement. In the event that the New Agreement is not
ratified and approved by shareholders at the Meeting, MVA will consider other
alternatives, including the possible recommendation of another sub-adviser. In
the event that the payment of sub-advisory fees to CF Inc. for the Interim
Period is not ratified and approved by shareholders at the Meeting, the
sub-advisory fees payable by MVA during the Interim Period (plus any interest
earned thereon) will be returned to the Portfolio.
THE FUND'S BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" (1) THE NEW AGREEMENT AND
(2) THE PAYMENT OF SUB-ADVISORY FEES TO CF INC. FOR THE INTERIM PERIOD.
VOTING INFORMATION
RECORD DATE. Only shareholders of record at the close of business on
August 23, 1996 will be entitled to vote at the Meeting. On that date, there
were 196,725.588 shares of Class H Common Stock (Investor A Shares),
4,500,697.237 shares of Class H Common Stock -- Special Series 1 (Trust Shares),
484,272.400 shares of Class H Common Stock -- Special Series 2 (Institutional
Shares) and 33,248.045 shares of Class H Common Stock -- Special Series 3
(Investor B Shares) of the Portfolio outstanding and entitled to be voted at the
Meeting. All shares of the Portfolio will vote in the aggregate and not by class
at the Meeting.
QUORUM. A quorum is constituted with respect to the Portfolio by the
presence in person or by proxy of the holders of more than 50% of the
outstanding shares of the Portfolio entitled to vote at the Meeting. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions, but not broker "non-votes" (that is, proxies from brokers
or nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power), will be treated as shares that are present at the Meeting but which have
not been voted. Abstentions and broker "non-votes" will have the effect of a
"no" vote for purposes of obtaining the requisite approval of each proposal.
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<PAGE> 9
In the event that a quorum is not present at the Meeting, or in the event
that a quorum is present at the Meeting but sufficient votes to approve either
of the proposals are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit the
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares affected by the adjournment that
are represented at the Meeting in person or by proxy. If a quorum is present,
the persons named as proxies will vote those proxies which they are entitled to
vote FOR either proposal in favor of such adjournments, and will vote those
proxies required to be voted AGAINST both proposals against any adjournment.
OTHER SHAREHOLDER INFORMATION. At the record date for the Meeting,
Mercantile Bank of St. Louis National Association ("Mercantile"), MVA's parent
corporation, and its affiliates held of record 95.28% of the outstanding shares
of the Portfolio in a fiduciary or other representative capacity for the benefit
of their customers. Mercantile has advised the Fund that it and its affiliates
intend to vote the shares of the Portfolio over which they possess voting power
at the Meeting in the same proportion as the votes cast by other shareholders.
At the record date for the Meeting, the name, address and share ownership of
each person who may have possessed sole or shared voting or investment power
with respect to more than 5% of the Portfolio's outstanding share classes were:
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE OF
CLASS OF OF CLASS PORTFOLIO
NAME AND ADDRESS SHARES OWNED OWNED SHARES OWNED
----------------------------------------------- ------------- ---------- -------------
<S> <C> <C> <C>
Olive & Company Trust 45.958 39.664
P.O. Box 387
St. Louis, MO 63166-0387
Locust & Company Trust 48.221 41.617
P.O. Box 387
St. Louis, MO 63166
Boat & Co. Trust 5.629 4.859
P.O. Box 14737
St. Louis, MO 63178-4737
Locust & Company Institutional 98.468 9.144
P.O. Box 387
St. Louis, MO 63166
BHC Securities Inc. Investor A 45.493 1.716
2005 Market Street
Philadelphia, PA 19103
Frances Dakers Investor A 14.213 0.536
200 E. 89th St. 28D
New York, NY 10128
BHC Securities Inc. Investor B 5.924 0.038
FAO 24275966
One Commerce Square
2005 Market Street
Suite 1200
Philadelphia, PA 19103
</TABLE>
7
<PAGE> 10
ADDITIONAL INFORMATION
CF INC. CF Inc., a New York corporation with principal offices at 200 Park
Avenue, New York, New York 10166, is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940, as amended. As a result of
the UAM Merger, CF Inc. is now a wholly-owned subsidiary of UAM, a New York
Stock Exchange-listed company which is principally engaged, through affiliated
firms in the United States and abroad, in providing institutional investment
management services and acquiring institutional investment management firms like
CF Inc. As of June 1996, UAM-affiliated firms had collectively more than $148
billion of assets under management. UAM's corporate headquarters is located at
One International Place, Boston, Massachusetts 02110. As of August 20, 1996,
Tiger Management Corp., 101 Park Avenue, New York, New York 10178 owned 10.78%
of UAM's outstanding common stock. To the Fund's knowledge, at such date no
other person owned beneficially or of record 10% or more of any class of issued
and outstanding voting securities of UAM.
The name and principal occupation of the principal executive officers and
each director of CF Inc. as of August 29, 1996 were as follows:
<TABLE>
<CAPTION>
NAME AND POSITION
WITH CF INC. PRINCIPAL OCCUPATION
- --------------------------- -------------------------------
<S> <C>
D. Francis Finlay Chief Executive Officer and
Chief Executive Officer Co-Chairman of CF Inc.
and
Co-Chairman of the Board
John P. Clay President and Co-Chairman
President and of the Board of CF Inc.
Co-Chairman of the Board
Frances R. Dakers Principal and Senior Portfolio
Director Manager of CF Inc.
Robert C. Schletter Principal and Senior Portfolio
Director Manager of CF Inc.
</TABLE>
All of the above persons may be reached c/o Clay Finlay Inc., 200 Park
Avenue, New York, New York 10166.
CF Inc. also serves as sub-adviser to the following registered investment
company which has investment objectives similar to the Portfolio:
<TABLE>
<CAPTION>
APPROXIMATE
NET ASSETS ANNUAL RATE OF
NAME OF INVESTMENT COMPANY AT 7/31/96 COMPENSATION
- -------------------------- ------------ --------------------------------------------
<S> <C> <C>
Lincoln National $419 million 0.665% of the first $50 million of average
International Fund, Inc. daily net assets, 0.475% of the next $50
("Lincoln") million of average daily net assets and
0.250% of average daily net assets in excess
of $100 million
</TABLE>
CF Inc. currently does not have any arrangement with Lincoln to waive any
portion of such fee.
8
<PAGE> 11
UAM MERGER. In connection with the UAM Merger, certain key personnel of CF
Inc. entered into employment agreements with CF Inc., thus assuring that CF Inc.
will continue to operate with its same investment personnel and officers. No
change in CF Inc.'s method of operation or the location where it conducts its
business are contemplated as a result of the UAM Merger. In addition, certain of
the former stockholders of CF Inc. have entered into an agreement with CF Inc.
and UAM allowing such persons to participate in CF Inc.'s growth in a
substantial manner, make operating decisions within the limits of CF Inc.'s
share of revenues and continue to have authority over the investment management
process.
Section 15(f) of the 1940 Act provides that when a change in control of an
investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as two
conditions are satisfied. First, an "unfair burden" must not be imposed on the
investment company as a result of the transaction relating to the change in
control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden", as defined in the 1940 Act,
includes any arrangement during the two-year period after the change in control
whereby the investment adviser (or predecessor or successor adviser), or any
interested person of such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
shareholders (other than fees for bona fide investment advisory and other
services). To avoid any "unfair burden" being imposed on the Fund, extraordinary
expenses incurred by the Fund on account of the UAM Merger and certain proxy and
shareholder meeting expenses will be paid directly by either CF Inc. or UAM. The
second condition is that, during the three-year period immediately following
consummation of the transaction, at least 75% of the investment company's board
of directors must not be "interested persons" of the investment adviser or
predecessor investment adviser within the meaning of the 1940 Act. No interested
person of CF Inc. or UAM within the meaning of the 1940 Act is a director of the
Fund, and no such person will serve on the Fund's Board of Directors during such
period if such service would cause this condition to be violated.
PAYMENTS TO AFFILIATES. Mercantile serves as the custodian of the Fund's
assets. The Fund pays Mercantile an annual fee for its custodial services equal
to .17% of the first $50 million of the Portfolio's average daily net assets,
.155% of the next $50 million of average daily net assets, .13% of the next $150
million of average net assets, and .105% of average daily net assets in excess
of $250 million, as well as certain transaction charges. For the fiscal year
ended November 30, 1995, the Portfolio paid Mercantile custody fees of $55,398.
Affiliates of MVA are also entitled to receive fees ("Plan Fees") under the
Fund's Administrative Services Plans with respect to the Portfolio's Trust
Shares and Institutional Shares and under the Fund's Distribution and Services
Plans with respect to the Portfolio's Investor A Shares and Investor B Shares at
the maximum annual rates of .30%, .30%, .30% and 1.00% of the average daily net
asset value of the respective share classes that are outstanding from time to
time. These fees are for shareholder liaison, shareholder administrative support
and distribution-related services. For the fiscal year ended November 30, 1995,
Plan Fees paid by the Portfolio to affiliates of MVA were $0 with respect to
Trust Shares, $4,305 with respect to Institutional Shares, $3,517 with respect
to Investor A Shares and $271 with respect to Investor B Shares.
It is expected that the entities named above will continue to provide the
services described to the Portfolio after the Meeting.
PREVIOUS AGREEMENT. The Previous Agreement was approved by the Fund's
Board of Directors on January 25, 1994 and was thereafter approved by the
Portfolio's sole shareholder. CF Inc. served as
9
<PAGE> 12
sub-adviser under the Previous Agreement, which was last approved by the Fund's
Board of Directors on January 23, 1996, until August 29, 1996 when the Previous
Agreement automatically terminated as a result of the UAM Merger.
ADMINISTRATOR AND DISTRIBUTOR. BISYS Fund Services Ohio, Inc. (the
"Administrator") serves as the Fund's administrator. BISYS Fund Services (the
"Distributor") serves as the exclusive distributor of the shares of the Fund.
The Administrator and Distributor are both subsidiaries of The BISYS Group, Inc.
The Administrator and Distributor's principal offices are located at 3435
Stelzer Road, Columbus, Ohio 43219.
MISCELLANEOUS. For the fiscal year ended November 30, 1995, Mercantile
Investment Services, Inc., a wholly-owned subsidiary of Mercantile, received
$25,038 in commissions in connection with the sale of shares of the Portfolio,
representing 100% of all such commissions paid with respect to the Portfolio.
OTHER MATTERS
The Fund does not intend to hold Annual Meetings of Shareholders except to
the extent that such meetings may be required under the 1940 Act or state law.
Shareholders who wish to submit proposals for inclusion in the Proxy Statement
for a subsequent shareholder meeting should send their written proposals to the
Fund at its principal office within a reasonable time before such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment of the Meeting, the persons
named in the enclosed Proxy will vote thereon according to their best judgment
in the interests of the Portfolio.
Dated: September 9, 1996
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO COMPLETE THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
THE FUND WILL FURNISH, WITHOUT CHARGE, COPIES OF THE FUND'S ANNUAL AND
SEMI-ANNUAL REPORTS TO SHAREHOLDERS DATED NOVEMBER 30, 1995 AND MAY 31, 1996,
RESPECTIVELY, TO ANY SHAREHOLDER UPON REQUEST. THE FUND'S ANNUAL AND SEMI-ANNUAL
REPORTS TO SHAREHOLDERS MAY BE OBTAINED FROM THE FUND BY WRITING TO THE FUND AT
P.O. BOX 78069, ST. LOUIS, MISSOURI 63178 OR BY CALLING 1-800-551-3731.
10
<PAGE> 13
EXHIBIT A
SUB-ADVISORY AGREEMENT
(INTERNATIONAL EQUITY FUND)
AGREEMENT made as of August 29, 1996 between Mississippi Valley Advisors
Inc., a Missouri corporation (the "Adviser"), and Clay Finlay, Inc., a New York
corporation ("Sub-Adviser").
WHEREAS, The ARCH Fund, Inc. (the "Fund") is registered as an open-end,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to the Fund's
International Equity Portfolio (the "Portfolio"); and
WHEREAS, the Adviser desires to retain Sub-Adviser to assist it in the
provision of a continuous investment program for the Portfolio and Sub-Adviser
is willing to do so;
WHEREAS, the Board of Directors of the Fund has approved this Agreement,
subject to approval by the shareholders of the Portfolio, and Sub-Adviser is
willing to furnish such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Adviser hereby appoints Sub-Adviser to act as
sub-advisor to the Portfolio as permitted by the Adviser's Advisory Agreement
with the Fund pertaining to the Portfolio. Intending to be legally bound,
Sub-Adviser accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
2. SUB-ADVISORY SERVICES. Subject to the supervision of the Fund's Board
of Directors, Sub-Adviser will assist the Adviser in providing a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities and investments and cash equivalents
in the Portfolio. Sub-Adviser will provide services under this Agreement in
accordance with the Portfolio's investment objective, policies and restrictions
as stated in the Portfolio's prospectus and resolutions of the Fund's Board of
Directors applicable to the Portfolio.
Without limiting the generality of the foregoing, Sub-Adviser further
agrees that it:
(a) will prepare, subject to the Adviser's approval, lists of foreign
countries for investment by the Portfolio and determine from time to time
what securities and other investments will be purchased, retained or sold
for the Portfolio, including, with the assistance of the Adviser, the
Portfolio's investments in futures and forward currency contracts;
(b) will manage in consultation with the Adviser the Portfolio's
temporary investments in securities;
(c) will place orders pursuant to its investment determinations for
the Portfolio either directly with the issuer or with any broker or dealer;
(d) will not purchase shares of the Portfolio for itself or for
accounts with respect to which it exercises sole investment discretion in
connection with such transactions except as permitted by the Fund's Board
of Directors or by federal, state and local law;
A-1
<PAGE> 14
(e) will manage the Portfolio's overall cash position, and determine
from time to time what portion of the Portfolio's assets will be held in
different currencies;
(f) will provide the Adviser with foreign broker research, a quarterly
review of international economic and investment developments, and
occasional "White Papers" on international investment issues;
(g) will attend regular business and investment-related meetings with
the Fund's Board of Directors and the Adviser if requested to do so by the
Fund and/or the Adviser; and
(h) will maintain books and records with respect to the securities
transactions for the Portfolio, furnish to the Adviser and the Fund's Board
of Directors such periodic and special reports as they may request with
respect to the Portfolio, and provide in advance to the Adviser all reports
to the Board of Directors for examination and review within a reasonable
time prior to the Fund's Board meetings.
3. COVENANTS BY SUB-ADVISER. Sub-Adviser agrees with respect to the
services provided to the Portfolio that it:
(a) will conform with all Rules and Regulations of the Securities and
Exchange Commission;
(b) will telecopy trade information to the Adviser on the first
business day following the day of the trade and cause broker confirmations
to be sent directly to the Adviser; and
(c) will treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund and prior,
present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder (except after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably withheld and
may not be withheld and will be deemed granted where Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities,
or when so requested by the Fund).
4. SERVICES NOT EXCLUSIVE. The services furnished by Sub-Adviser
hereunder are deemed not to be exclusive, and nothing in this Agreement shall
(i) prevent Sub-Adviser or any affiliated person (as defined in the 1940 Act) of
Sub-Adviser from acting as investment adviser or manager for any other person or
persons, including other management investment companies with investment
objectives and policies the same as or similar to those of the Portfolio or (ii)
limit or restrict Sub-Adviser or any such affiliated person from buying, selling
or trading any securities or other investments (including any securities or
other investments which the Portfolio is eligible to buy) for its or their own
accounts or for the accounts of others for whom it or they may be acting;
provided, however, that Sub-Adviser agrees that it will not undertake any
activities which, in its reasonable judgment, will adversely affect the
performance of its obligations to the Portfolio under this Agreement.
5. PORTFOLIO TRANSACTIONS. Investment decisions for the Portfolio shall
be made by Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by Sub-Adviser. The Portfolio and such
investment companies and accounts may, however, invest in the same securities.
When a purchase or sale of the same security is made at substantially the same
time on behalf of the Portfolio and/or another investment company or account,
the transaction will be averaged as to price, and available investments
allocated as to amount, in a manner which Sub-Adviser believes to be equitable
to the
A-2
<PAGE> 15
Portfolio and such other investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by the
Portfolio or the size of the position obtained or sold by the Portfolio. To the
extent permitted by law, Sub-Adviser may aggregate the securities to be sold or
purchased for the Portfolio with those to be sold or purchased for other
investment companies or accounts in order to obtain best execution.
Sub-Adviser shall place orders for the purchase and sale of portfolio
securities and will solicit broker-dealers to execute transactions in accordance
with the Portfolio's policies and restrictions regarding brokerage allocations.
Sub-Adviser shall place orders pursuant to its investment determinations for the
Portfolio either directly with the issuer or with any broker or dealer selected
by Sub-Adviser. In executing portfolio transactions and selecting brokers or
dealers, Sub-Adviser shall use its reasonable best efforts to seek the most
favorable execution of orders, after taking into account all factors Sub-Adviser
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. Consistent with this obligation,
Sub-Adviser may, to the extent permitted by law, purchase and sell portfolio
securities to and from brokers and dealers who provide brokerage and research
services (within the meaning of Section 28(e) of the Securities Exchange Act of
1934) to or for the benefit of the Portfolio and/or other accounts over which
Sub-Adviser or any of its affiliates exercises investment discretion.
Sub-Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Sub-Adviser's overall responsibilities to the Portfolio and to the Fund. In no
instance will portfolio securities be purchased from or sold to Sub-Adviser, or
the Portfolio's principal underwriter, or any affiliated person thereof except
as permitted by the Securities and Exchange Commission.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request.
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
7. EXPENSES. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased for the
Portfolio.
8. COMPENSATION.
(a) For the services provided and the expenses assumed with respect to
the Portfolio pursuant to this Agreement, Sub-Adviser will be entitled to a
fee, computed daily and payable monthly, from Adviser, calculated at the
annual rate of .75% of the first $50 million of the Portfolio's average
daily net assets, plus .50% of the next $50 million of average daily net
assets, plus .25% of average daily net assets in excess of $100 million.
A-3
<PAGE> 16
(b) If the Adviser reimburses the Fund, pursuant to Section 8(b) of
the Advisory Agreement, with respect to the Portfolio, the Sub-Adviser will
bear its share of the amount of such reimbursement by waiving fees
otherwise payable to it hereunder on a proportionate basis to be determined
by comparing the aggregate fees otherwise payable to it hereunder with
respect to the Portfolio to the aggregate fees otherwise payable by the
Fund to the Adviser under the Advisory Agreement with respect to the
Portfolio.
9. STANDARD OF CARE; LIMITATION OF LIABILITY. Sub-Adviser shall exercise
due care and diligence and use the same skill and care in providing its services
hereunder as it uses in providing services to other investment companies, but
shall not be liable for any action taken or omitted by Sub-Adviser in the
absence of bad faith, willful misconduct, gross negligence or reckless disregard
of its duties.
10. REFERENCE TO SUB-ADVISER. Neither the Adviser nor any affiliate or
agent of it shall make reference to or use the name of Sub-Adviser or any of its
affiliates, or any of their clients, except references concerning the identity
of and services provided by Sub-Adviser to the Portfolio, which references shall
not differ in substance from those included in the current registration
statement pertaining to the Portfolio, this Agreement and the Advisory Agreement
between the Adviser and the Fund with respect to the Portfolio, in any
advertising or promotional materials without the prior approval of Sub-Adviser,
which approval shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause the Fund and any affiliate
thereof to satisfy the foregoing obligation.
11. DURATION AND TERMINATION. Unless sooner terminated, this Agreement
shall continue until January 25, 1998, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by the Fund's Board of Directors or vote
of the lesser of (a) 67% of the shares of the Portfolio represented at a meeting
if holders of more than 50% of the outstanding shares of the Portfolio are
present in person or by proxy or (b) more than 50% of the outstanding shares of
the Portfolio, provided that in either event its continuance also is approved by
a majority of the Fund's Directors who are not "interested persons" (as defined
in the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable at any time without penalty, on 60 days' notice, by Adviser,
Sub-Adviser or by the Fund's Board of Directors or by vote of the lesser of (a)
67% of the shares of the Portfolio represented at a meeting if holders of more
than 50% of the outstanding shares of the Portfolio are present in person or by
proxy or (b) more than 50% of the outstanding shares of the Portfolio. This
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective with respect to the Portfolio until approved by the vote of a majority
of the outstanding voting securities of the Portfolio.
13. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To Sub-Adviser at:
200 Park Avenue
New York, NY 10166
A-4
<PAGE> 17
To the Adviser at:
-----------------
One Mercantile Center
7th and Washington Streets
Suite 2100
St. Louis, MO 63101
To the Fund at:
--------------
1345 Chestnut Street, Suite 1100
Philadelphia, PA 19107
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by Maryland
law.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
[SIGNATURES OMITTED]
A-5
<PAGE> 18
PROXY THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS of The ARCH
Fund, Inc. (the "Fund") for use at a Special Meeting of Shareholders
(the "Meeting") of the International Equity Portfolio to be held at
the offices of BISYS Fund Services Ohio, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219 on October 18, 1996 at 10:00 A.M. Eastern Time.
The undersigned hereby appoints R. Jeffrey Young, Dana A. Gentile
and Sue A. Walters, and each of them, with full power of substitution,
as proxies of the undersigned to vote at the Special Meeting, and at
all adjournments or postponements thereof, all shares of Class H
Common Stock (evidencing interests in the International Equity
Portfolio) held of record by the undersigned on August 23, 1996, the
record date for the Meeting, UPON THE FOLLOWING MATTERS AND UPON ANY
OTHER MATTER WHICH MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
1. Proposal to ratify and approve a new sub-advisory agreement
dated August 29, 1996 between Mississippi Valley Advisors Inc.
("MVA") and Clay Finlay Inc. ("CF Inc.") with respect to the
International Equity Portfolio, the terms of which are
substantially the same as the terms of the previous
sub-advisory agreement between MVA and CF Inc.
/ / FOR / / AGAINST / / ABSTAIN
2. Proposal to ratify and approve the payment of sub-advisory fees
to CF Inc. for the period from August 29, 1996 through the
conclusion of the Meeting.
/ / FOR / / AGAINST / / ABSTAIN
(This Proxy continues and must be
signed on the reverse side)
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Meeting.
Every properly signed proxy will be voted in the manner specified
hereon and, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS
GRANTING AUTHORITY TO VOTE FOR PROPOSALS 1 AND 2.
Dated: , 1996
-----------------
-----------------------------
Signature
-----------------------------
Signature, if held jointly
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as attorney or as
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
president or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
