<PAGE>
- --------------------------------------------------------------------------------
Semi-Annual Report
May 31, 1996
- --------------------------------------------------------------------------------
[ART WORK APPEARS HERE]
Money Market Portfolio
Treasury Money Market Portfolio
Tax-Exempt Money Market Portfolio
Growth & Income Equity Portfolio
Emerging Growth Portfolio
Balanced Portfolio
Government & Corporate Bond Portfolio
U.S. Government Securities Portfolio
Missouri Tax-Exempt Bond Portfolio
Short-Intermediate Municipal Portfolio
International Equity Portfolio
The ARCH Funds
<PAGE>
THE ARCH FUND, INC.
MESSAGE FROM YOUR CHAIRMAN
Dear Shareholders:
We are pleased to present this report for The ARCH Fund, Inc. for the six
months ended May 31, 1996. During the period, the ARCH family of mutual funds
saw its assets increase to $2.3 billion.
The successful continued growth of the ARCH Asset Adviser program offered
investors an opportunity to create and manage a diversified portfolio of ARCH
funds with professional guidance. We also are considering other new entries
that will offer investors an even broader menu of choices.
The past six months also have delivered strong gains for many investors, who
shared in the 11.8% gain posted by the Standard & Poor's 500 index of stock
prices. Those results were tempered by weakness in the bond market, caused by
concerns that surprisingly strong economic growth could rekindle inflation.
Some observers are concerned that the stock market's rise could be
interrupted by a continued correction in the near future. For example, that
might occur if interest rates or inflation rise sharply. But no matter how
stocks and bonds perform during the coming months, it's important to remember
that investing is a long-term activity. The best results normally come to
investors who stay the course over long periods.
You will find a discussion of each Portfolio of The ARCH Fund, Inc. in the
pages that follow. Those reports will help you to understand your investment,
its recent performance and its current prospects. If you'd like more
information about any of the Portfolios, please call 1-800-452-ARCH.
MESSAGE FROM YOUR INVESTMENT ADVISOR, MISSISSIPPI VALLEY ADVISORS INC.
The latest economic data suggest that the economy is growing rapidly.
Nevertheless, we believe that economic growth will slow in the months ahead,
in part due to the fact that bond yields have climbed significantly.
Already, both capital spending and consumer spending are slowing down.
Capital goods spending rose at a 13% rate during the first quarter of 1996,
but appears to be roughly flat for the second quarter and may even decline.
Meanwhile, consumer spending gains appear to be slowing to around a 3% rate
for the second quarter, compared to 3.6% during the first quarter.
The projected second-half slowdown supports our view that inflation will
remain in check and long-term interest rates will come down from their recent
high levels. Thus, it's worth reviewing some of the reasons that we expect
slower economic growth:
. Unemployment is low, and plants are operating at or near capacity.
Stronger economic growth would require faster growth in the labor force
or more net investment in factories.
. The expansion is mature. There is no pent-up demand for big-ticket items
such as houses and autos.
. Food prices have climbed sharply--by 11.6% in 1995 and a projected 8% in
1996. Those higher prices redistribute income from consumers to producers
and undermine consumer spending.
. Real federal consumption and gross investment are declining for the fifth
straight year.
. Long-term interest rates have risen, which will limit growth in autos,
housing, business investment and net exports.
. Consumer debt has climbed.
. The dollar has strengthened, which will likely quell exports. Meanwhile,
most of our largest export markets are experiencing slower economic
growth than they did in 1995.
THE ARCH FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL
AGENCY, ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, THE DISTRIBUTOR, OR ANY OF THEIR AFFILIATES; AND INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
-1-
<PAGE>
The prospects for a slower economy mean that inflation will likely stay low.
That could fuel a rally in the bond market late in the year, helping fixed-
income investors to recover some of the losses sustained during the recent
period. We expect bond yields to remain around current levels until Fall, and
then move lower in late 1996 and 1997.
Current high interest rates may lead to a more modest performance for stocks
in the short run. In addition, stock prices may also suffer from slower
earnings momentum as the economy cools down.
That said, it is important to remember that investing in stocks and bonds is
a long-term proposition--and it is difficult to forecast the performance of
those markets with any precision. It rarely makes sense to make major shifts
in long-term strategy on the basis of short-term forecasts. At the same time,
any money that you will need for short-term goals should be kept in a safe
place--such as a money market fund or other short-term income fund--where it
will be relatively safe from market fluctuations.
THE ARCH MONEY MARKET PORTFOLIO+
The following Portfolio commentary for The ARCH Money Market and The ARCH
Treasury Money Market Portfolios were conducted by Jo Ann Dotson. Ms. Dotson
has more than 21 years of investment management experience and has been with
MVA since 1973.
Q: What is the Portfolio's goal?
A: The ARCH Money Market Portfolio seeks current income with liquidity and
stability of principal. The Portfolio's net assets on May 31, 1996, were
approximately $822 million.
Q: How did you pursue this goal during the recent period?
A: During much of the six-month period ended May 31, 1996, the Portfolio
maintained a relatively short average maturity. But as signs of a stronger
economy boosted yields later in the period, we increased the Portfolio's
average maturity from 24 days to 45 days to lock in higher rates.
The Portfolio's largest investment during the period was in commercial
paper--short-term obligations of various companies. A relatively large amount
of commercial paper was issued during the period, and companies were forced to
offer attractive yields to compete for buyers. Floating rate notes comprised
the Portfolio's second largest holding. Such notes offer some additional yield
without adding much risk.
Q: How will you pursue this goal during the coming months?
A: We will continue to invest most of the Portfolio's assets in commercial
paper and also will add more floating rate securities. We also will maintain a
modest average maturity for the Portfolio for now, given the uncertainty over
the future direction of short-term interest rates.
ARCH TREASURY MONEY MARKET PORTFOLIO+
Q: What is the Portfolio's objective?
A: The ARCH Treasury Money Market Portfolio seeks a high level of current
income consistent with liquidity and stability of principal. The Portfolio
increased its total assets to more than $277 million during the six-month
period ended May 31, 1996.
- ------
+ An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the
Portfolio will be able to maintain a stable NAV of $1.00 per share.
-2-
<PAGE>
Q: How did you manage the Portfolio during the recent period?
A: The Portfolio's holdings mainly consisted of Treasury Bills. They
included issues with a series of "laddered" maturity dates, primarily in the
one-to-two month range, but extending as far out as four months. That laddered
maturity structure can accommodate large cash flows. The Portfolio will
maintain an average maturity of less than 60 days to keep its AAAm-G credit
rating from Standard & Poor's.+ The average maturity of the Portfolio on May
31, 1996, was 48 days.
Looking ahead, we will continue to structure the Portfolio with a laddered
maturity schedule and an average maturity in the mid-40 to mid-50 day range.
THE ARCH TAX-EXEMPT MONEY MARKET PORTFOLIO++
The following Portfolio commentary for The ARCH Tax-Exempt Money Market, The
ARCH Short-Intermediate Municipal, The ARCH Missouri Tax-Exempt Bond, and The
ARCH Balanced Portfolios were conducted by Peter Merzian. Mr. Merzian is a
Senior Associate with MVA and has more than seven years of investment
management experience. (Mr. Merzian took over management responsibilities on
The ARCH Balanced Portfolio effective May 28, 1996.)
Q: How did you manage the Portfolio during the recent period?
A: The ARCH Tax-Exempt Money Market Portfolio seeks as high a level of
current interest income exempt from federal income tax as is consistent with
liquidity and stability of principal. The Portfolio attempts to achieve this
objective while maintaining extremely strict credit quality standards.
During the six months ended May 31, 1996, the Portfolio took advantage of
market fluctuations to buy short-term notes and commercial paper at attractive
rates. The average maturity declined to 49 days, offering greater flexibility
to take advantage of any increase in rates.
Q: What is the Portfolio's current strategy?
A: The Portfolio holds a mix of longer maturity notes and very short-term
daily securities. That "barbell structure" allows it to take advantage of
higher yields on the longer-term securities while maintaining a relatively
short average maturity.
- ------
+ The ARCH Treasury Money Market Portfolio is AAAm-G rated by Standard &
Poor's. This rating is historical and is based upon the Portfolio's credit
quality, market price exposure and management. It signifies that the
Portfolio's safety is excellent and that it has a superior capacity to
maintain a $1.00 net asset value per share.
++The Portfolio may be subject to certain state and local taxes and, depending
on an investor's tax status, the federal alternative minimum tax. An
investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. Yield will fluctuate, and there can be no assurance that the
Portfolio will be able to maintain a stable NAV of $1.00 per share.
-3-
<PAGE>
The ARCH Short-Intermediate Municipal Portfolio
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Investor A Investor A Lehman Municipal Bond Index - 3 year
Date No Load Load Index
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
07/11/95 10,000 9,747 10,000
- ----------------------------------------------------------------------------
11/30/95 10,080 9,825 10,220
- ----------------------------------------------------------------------------
05/31/96 10,095 9,840 10,342
- ----------------------------------------------------------------------------
</TABLE>
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ---------------------------------------------
Aggregate Total Return
as of 5/31/96
- ---------------------------------------------
Since
Inception
(7/10/95)
- ---------------------------------------------
<S> <C>
Investor A* -1.60%
Investor A (No load) 0.95%
- ---------------------------------------------
</TABLE>
*Reflects 2.50% sales charge
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Trust Lehman Municipal Bond Index - 3 year
Date No Load Index
- ----------------------------------------------------------------------------
<S> <C> <C>
07/11/95 10,000 10,000
- ----------------------------------------------------------------------------
11/30/95 10,213 10,220
- ----------------------------------------------------------------------------
05/31/96 10,227 10,342
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------
Aggregate Total Return
as of 5/31/96
- ---------------------------------------------
Since
Inception
(7/10/95)
- ---------------------------------------------
<S> <C>
Trust 2.27%
- ---------------------------------------------
</TABLE>
The ARCH Short-Intermediate Municipal Portfolio is measured against the
Lehman Brothers Municipal Bond Index-3 year, an unmanaged Index representative
of the total return of municipal bonds with remaining maturities of 3 years or
less. Investors are unable to purchase the Index directly, although they can
invest in the underlying securities. The performance of the Index does not
reflect the deduction of expenses associated with a mutual fund, such as sales
charges, investment management and fund accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of these
value-added services, as well as the deduction of a 2.50% sales charge on
Investor A shares. The Portfolio may be subject to certain state and local
taxes and, depending on an investor's tax status, the federal alternative
minimum tax.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q: How did you manage the Portfolio during the recent period?
A: The ARCH Short-Intermediate Municipal Portfolio seeks as high a level of
current interest income, exempt from Federal income tax, as is consistent with
capital preservation. The Portfolio's average maturity will be between two and
five years.
During the recent six-month period ended May 31, 1996, municipal bonds with
shorter-term maturities outperformed those with longer-term maturities. During
most of the period we attempted to keep the Portfolio's average maturity in the
four-year range, down from closer to five years at the start of the period.
Q: Why did you reduce the Portfolio's average maturity?
A: The move reduced the Portfolio's risk, while allowing it to maintain an
attractive yield. The average credit rating of the Portfolio's holdings for the
six months was AA1. We will continue to maintain an average maturity of four to
five years for the Portfolio, and hold issues of high credit quality.
-4-
<PAGE>
THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Investor A Investor A CDSC CDSC Lehman Brothers Municipal Bond
Date No Load Load No Load Load Index
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/15/88 10,000 9,551 10,000 9,500 10,000
11/30/88 10,523 10,050 10,523 10,023 10,341
11/30/89 11,622 11,100 11,622 11,222 11,480
11/30/90 12,320 11,767 12,320 12,020 12,363
11/30/91 13,493 12,887 13,493 13,193 13,632
11/30/92 14,833 14,166 14,760 14,560 14,999
11/30/93 16,393 15,657 16,313 16,213 16,662
11/30/94 15,387 14,696 15,312 15,312 15,787
11/30/95 18,221 17,403 18,007 18,007 18,770
05/31/96 18,010 17,201 17,728 17,728 18,662
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -------------------------------------------------------
Since
Inception
1 Year 5 Year (7/15/88)
- -------------------------------------------------------
<S> <C> <C> <C>
Investor A* -1.50% 6.00% 7.12%
Investor A (No Load) 3.11% 6.98% 7.75%
Investor B (CDSC)** -2.65% 6.48% 7.53%
Investor B (No CDSC) 2.27% 6.64% 7.53%
- -------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------
Trust Lehman Brothers Municipal Bond
Date No Load Index
- --------------------------------------------------------------
<S> <C> <C>
07/15/88 10,000 10,000
11/30/88 10,523 10,341
11/30/89 11,622 11,480
11/30/90 12,353 12,363
11/30/91 13,546 13,632
11/30/92 14,915 14,999
11/30/93 16,517 16,662
11/30/94 15,535 15,787
11/30/95 18,430 18,770
05/31/96 18,235 18,662
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -------------------------------------------------------
Since
Inception
1 Year 5 Year (7/15/88)
- -------------------------------------------------------
<S> <C> <C> <C>
Trust 3.30% 7.17% 7.92%
- -------------------------------------------------------
</TABLE>
The ARCH Missouri Tax-Exempt Bond Portfolio is measured against the Lehman
Brothers Municipal Bond Index, an unmanaged Index representative of the total
return of municipal bonds. Investors are unable to purchase the Index directly,
although they can invest in the underlying securities. The performance of the
Index does not reflect the deduction of expenses associated with a mutual fund,
such as sales charges, investment management and fund accounting fees. By
contrast, the performance of the Portfolio shown on the graph reflects the
deduction of these value-added services, as well as the deduction of a 4.50%
sales charge on Investor A shares and the applicable contingent deferred sales
charge on Investor B shares. The Portfolio may be subject to certain state and
local taxes and, depending on an investor's tax status, the federal alternative
minimum tax.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and services fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q: What special factors affected the Portfolio's performance during the
recent period?
A: During the six months ended May 31, 1996, the supply of municipal issues
in the Missouri market was limited. The issues that did come to market were
rather small and relatively illiquid. The Portfolio's average maturity
increased during the period to 12.7 years. We maintained a high-quality credit
rating of the underlying securities, averaging AA1.
Q: How will you manage the Portfolio in the coming months?
A: Going forward, we will likely lengthen the Portfolio's average maturity to
take advantage of attractive long-term yields. At the same time we will
maintain the Portfolio's high credit quality to safeguard investors from credit
risk.
-5-
<PAGE>
ARCH INTERNATIONAL EQUITY PORTFOLIO
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Investor A Investor A Morgan Stanley Europe, Australia & Far East
Date No Load Load CDSC No CDSC Index
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
04/04/94 10,000 9,551 10,000 10,000 10,000
11/30/94 9,900 9,456 9,405 9,900 10,370
11/30/95 10,780 10,296 10,330 10,730 11,189
05/31/96 11,641 11,119 11,231 11,531 12,118
- -------------------------------------------------------------------------------------------------
</TABLE>
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -----------------------------------------------------------------
Since
Inception
1 Year (4/4/94)
- -----------------------------------------------------------------
<S> <C> <C>
Investor A* 10.35% 5.03%
Investor A (No Load) 15.51% 7.28%
Investor B(CDSC)** 9.53% 5.52%
Investor B(No CDSC) 14.53% 6.81%
- -----------------------------------------------------------------
</TABLE>
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Trust Institutional Morgan Stanley Europe, Australia & Far East
Date No Load No Load Index
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
04/04/94 10,000 10,000 10,000
11/30/94 9,920 9,900 10,370
11/30/95 10,810 10,770 11,189
05/31/96 11,691 11,621 12,118
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -----------------------------------------------------------------
Since
Inception
1 Year (4/4/94)
- -----------------------------------------------------------------
<S> <C> <C>
Trust 15.66% 7.50%
Institutional 15.31% 7.20%
- -----------------------------------------------------------------
</TABLE>
The ARCH International Equity Portfolio is measured against the unmanaged
Morgan Stanley EAFE (Europe, Australia and Far East) Index, which generally is
representative of the performance of international stocks. Investors are unable
to purchase the Index directly, although they can invest in the underlying
securities. The performance of the Index does not reflect the deduction of
expenses associated with a mutual fund, such as sales charges, investment
management and fund accounting fees. By contrast, the performance of the
Portfolio shown on the graph reflects the deduction of these value-added
services, as well as the deduction of a 4.50% sales charge on Investor A shares
and the applicable contingent deferred sales charge on Investor B shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and services fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
International investing is subject to certain factors such as currency
exchange, rate volatility, possible political, social or economic instability,
foreign taxation and differences in auditing and other financial standards.
The following Portfolio commentary was conducted by Frances Dakers of Clay
Finlay, Inc. Ms. Dakers is a principal of Clay Finlay and has been with the
firm since January, 1982.
Q: How did overseas markets perform during the period?
A: The six months ended May 31, 1996, saw impressive returns for many
international markets. Stocks in southern Europe, Australia and southeast Asia
performed particularly well. The Portfolio benefited from its holdings in those
regions.
Performance in the Pacific Rim was excellent, with Hong Kong and Malaysian
markets turning in particularly impressive results. Emerging market returns
were generally solid during the six months, with good performances also turned
in by Argentina and Brazil.
Even so, international markets as a group continued to lag the U.S. market--in
part because the Japanese market's performance was poor.
-6-
<PAGE>
Q: How did you manage the Portfolio in that environment?
A: Our ability to take a long-term view of investment prospects helped the
Portfolio to record gains during the period, as many European companies that
had a difficult fourth quarter recovered nicely in 1996. Markets in France, the
Netherlands, Norway, Sweden, Italy and Spain all posted gains greater than 10%.
We also overweighted the luxury goods sector of the Portfolio's holdings in
many of the southern European markets, and were rewarded with substantial
gains.
Q: What's your current approach?
A: As of May 31, 1996, the Portfolio was heavily weighted in Europe (49.3%)
and Japan (32.2%) and weighted to a lesser extent in the Pacific Rim (8.5%),
South America (3.3%), India (0.8%) and Australia (0.9%).+
We anticipate no major changes in the Portfolio's strategy in the near
future. We continue to maintain a broad-based exposure in Japan to participate
as that country recovers from a multi-year recession. We intend to monitor
valuations in our Italian holdings closely, as many of these companies have
delivered very strong results so far in 1996. We'll also give careful
consideration to a large flow of initial public offerings from Italy and
elsewhere in Europe.
ARCH GROWTH & INCOME EQUITY PORTFOLIO
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Investor A Investor A S&P 500
Date No Load Load CDSC NO CDSC Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
06/02/88 10,000 9,551 10,000 10,000 10,000
11/30/88 10,346 9,882 9,646 10,346 10,620
11/30/89 13,151 12,561 12,751 13,151 13,912
11/30/90 12,973 12,390 12,673 12,973 13,439
11/30/91 15,228 14,545 14,928 15,228 16,167
11/30/92 18,364 17,539 18,164 18,364 19,142
11/30/93 20,135 19,267 20,035 20,135 21,075
11/30/94 20,176 19,305 20,176 20,176 21,307
11/30/95 26,622 25,473 26,472 26,472 29,188
05/31/96 29,427 28,106 29,200 29,200 32,633
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -----------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- -----------------------------------------------------------------
<S> <C> <C> <C>
Investor A* 18.93% 12.08% 13.78%
Investor A (No Load) 24.56% 13.11% 14.44%
Investor B (CDSC)** 18.96% 12.81% 14.33%
Investor B (No CDSC) 23.96% 12.94% 14.33%
- -----------------------------------------------------------------
</TABLE>
* Reflects 4.5% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Trust Institutional S&P 500
Date No Load No Load Index
- --------------------------------------------------------------------------
<S> <C> <C> <C>
06/02/88 10,000 10,000 10,000
11/30/88 10,345 10,346 10,620
11/30/89 13,150 13,151 13,912
11/30/90 12,971 12,973 13,439
11/30/91 15,227 15,228 16,167
11/30/92 18,362 18,364 19,142
11/30/93 20,134 20,135 21,075
11/30/94 20,206 20,173 21,307
11/30/95 26,727 26,604 29,188
05/31/96 29,618 29,427 32,633
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -----------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- -----------------------------------------------------------------
<S> <C> <C> <C>
Trust 25.03% 13.26% 14.53%
Institutional 26.66% 13.11% 14.44%
- -----------------------------------------------------------------
</TABLE>
The performance of the ARCH Growth & Income Equity Portfolio is measured
against the Standard & Poor's 500 Index, an unmanaged Index generally
representative of the U.S. stock market. Investors are unable to purchase the
Index directly, although they can invest in the underlying securities. The
performance of the Index does not reflect the deduction of expenses associated
with a mutual fund, such as sales charges, investment management and fund
accounting fees. By contrast, the performance of the Portfolio shown on the
graph reflects the deduction of these value-added services, as well as the
deduction of a 4.50% sales charge on Investor A shares and the applicable
contingent deferred sales charge on Investor B shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and services fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
- ------
+Portfolio composition is subject to change.
-7-
<PAGE>
The following Portfolio commentary was conducted by Timothy Engelbrecht. Mr.
Engelbrecht has been with MVA for the past sixteen years and has had portfolio
management and other responsibilities for MVA for the past fifteen years. (Mr.
Engelbrecht took over management responsibilities on The ARCH Growth & Income
Equity Portfolio, effective May 28, 1996.)
Q: What factors affected the Portfolio's performance?
A: The string of record highs registered by the major stock market indices
throughout the second half of 1995 continued through May. Record money flows
into mutual funds that invest in U.S. stocks continued. Although interest
rates rose roughly one percentage point, many investors assumed that a
resurgence in economic growth and continued modest inflation were sufficient
to justify higher stock prices.
The strongest areas of the stock market were in the consumer cyclical and
technology sectors, whose earnings prospects are closely linked to the
strength of the economy. Interest rate sensitive and energy sectors performed
relatively poorly.
Q: How have you managed the Portfolio in that environment?
A: As of May 31, 1996, the Portfolio was most heavily weighted in the drug
and hospital supply industries (16.4%); banking and finance industries
(11.1%); energy (8.7%) and chemicals (8.1%). The Portfolio's largest
individual holdings at the end of the period were General Electric Co. (2.7%);
Union Texas Petroleum Holdings, Inc. (2.5%); Eli Lilly & Co. (2.5%); Home
Depot Inc. (2.5%); Dresser Industries, Inc. (2.3%) and AT&T Corp. (2.3%). +
Q: What changes are you likely to make during the coming year?
A: We continue to find individual stocks as well as selected industries
attractive. The Portfolio is well-diversified, with a bias towards stocks of
companies with potentially high earnings growth prospects and those whose
profit cycles are largely unaffected by the general level of economic
activity. In particular, we are currently finding excellent values in some
specialty chemical, medical and financial services issues.
- ------
+Portfolio composition is subject to change.
-8-
<PAGE>
ARCH BALANCED PORTFOLIO
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Investor A Investor A S&P 500 Lehman Brothers Aggregate Bond
Date No Load Load CDSC NO CDSC Index Index
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
04/01/93 10,000 9,551 10,000 10,000 10,000 10,000
11/30/93 10,386 9,920 10,174 10,674 10,421 10,529
11/30/94 10,188 9,730 9,950 10,335 10,536 10,207
11/30/95 12,719 12,148 12,506 12,806 14,433 12,007
05/31/96 13,402 12,800 13,150 13,450 16,136 11,869
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- ---------------------------------------------------------------
Since
Inception
1 Year (4/1/93)
- ---------------------------------------------------------------
<S> <C> <C>
Investor A* 9.98% 8.10%
Investor A (No Load) 15.17% 9.68%
Investor B (CDSC)** 9.21% 9.02%
Investor B (No CDSC) 14.21% 9.80%
- ---------------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Trust Institutional S&P 500 Lehman Brothers Aggregate Bond
Date No Load No Load Index Index
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
04/01/93 10,000 10,000 10,000 10,000
11/30/93 10,387 10,386 10,421 10,529
11/30/94 10,199 10,179 10,536 10,207
11/30/95 12,744 12,690 14,433 12,007
05/31/96 13,460 13,374 16,136 11,869
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- ---------------------------------------------------------------
Since
Inception
1 Year (4/1/93)
- ---------------------------------------------------------------
<S> <C> <C>
Trust 15.41% 9.83%
Institutional 15.01% 9.61%
- ---------------------------------------------------------------
</TABLE>
The performance of the ARCH Balanced Portfolio is measured against the
Standard & Poor's 500 Index, an unmanaged index generally representative of the
U.S. stock market, and the Lehman Brothers Aggregate Bond Index, an unmanaged
Index comprised of the Lehman Brothers Government/Corporate Bond Index and two
Lehman Brothers asset-backed securities indices. Investors are unable to
purchase the Indices directly, although they can invest in the underlying
securities. The performance of the Indices does not reflect the deduction of
expenses associated with a mutual fund, such as sales charges, investment
management and fund accounting fees. By contrast, the performance of the
Portfolio shown on the graph reflects the deduction of these value-added
services, as well as the deduction of a 4.50% sales charge on Investor A shares
and the applicable contingent deferred sales charge on Investor B Shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and services fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q: Who should consider investing in this Portfolio?
A: The Portfolio is designed for investors who want to participate in the
stock and fixed-income markets with the portfolio mix being determined by
investment professionals.
Q: What kinds of stocks and bonds do you purchase for the Portfolio?
A: The stock portion of the Portfolio is managed similarly to the ARCH Growth
& Income Equity Portfolio. The fixed-income portion of the Portfolio is managed
similarly to the ARCH Government & Corporate Bond Portfolio.
Q: How did you manage the Portfolio's balance between stocks and bonds during
the period?
A: In our view, stocks appeared to be fully priced at the end of 1995. Thus,
we reduced the Portfolio's equity holdings from 60% of total assets to 55%, the
low end of its normal range. In the wake of bond market weakness, we increased
the Portfolio's bond investments to 40% of assets.+
- ------
+Portfolio composition is subject to change.
-9-
<PAGE>
Q: Will stocks outperform bonds during the coming period?
A: Such predictions are difficult to make with any near-term precision. But
in our view, the recent strength in the economy is not sustainable. A slower
economy should be good for bonds--but could reduce earnings growth and make
stocks vulnerable to a correction.
ARCH EMERGING GROWTH PORTFOLIO
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Investor A Investor A NO Russell 2000
Date No Load Loan CDSC CDSC Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
05/06/92 10,000 9,551 10,000 10,000 10,000
11/30/92 11,255 10,750 10,755 11,255 11,032
11/30/93 13,478 12,873 13,078 13,478 13,128
11/30/94 14,473 13,823 14,172 14,472 12,981
11/30/95 17,579 16,790 17,187 17,487 16,680
05/31/96 18,898 18,050 18,536 18,735 19,699
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -----------------------------------------------------------
Since
Inception
1 Year (5/6/92)
- -----------------------------------------------------------
<S> <C> <C>
Investor A* 8.15% 15.60%
Investor A (No Load) 13.23% 10.91%
Investor B (CDSC)** 7.44% 16.35%
Investor B (No CDSC) 12.44% 16.66%
- -----------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Institutional Russell 2000
Date No Load No Loan Index
- -----------------------------------------------------------
<S> <C> <C> <C>
05/06/92 10,000 10,000 10,000
11/30/92 11,255 11,255 11,032
11/30/93 13,478 13,478 13,128
11/30/94 14,497 14,436 12,981
11/30/95 17,642 17,531 16,680
05/31/96 18,989 18,836 19,699
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- -----------------------------------------------------------
Since
Inception
1 Year (5/6/92)
- -----------------------------------------------------------
<S> <C> <C>
Trust 13.52% 17.05%
Institutional 13.19% 16.81%
- -----------------------------------------------------------
</TABLE>
The ARCH Emerging Growth Portfolio is measured against the Russell 2000
Index, an unmanaged index generally representative of the total return of
small- to mid-sized companies. Investors cannot purchase the Index directly,
although they can invest in the underlying securities.The performance of the
Index does not reflect the deduction of expenses associated with a mutual fund,
such as sales charges, investment management and fund accounting fees. By
contrast, the performance of the Portfolio shown on the graph reflects the
deduction of these value-added services, as well as the deduction of a 4.50%
sales charge on Investor A shares and the applicable contingent deferred sales
charge on Investor B shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and services fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Small capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure, and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
The following Portfolio commentary was conducted by Robert J. Anthony. Mr.
Anthony has more than 22 years of investment management experience and has been
managing the Portfolio since its inception on May 1, 1992.
Q: How is this Portfolio different from other ARCH equity portfolios?
A: The ARCH Emerging Growth Portfolio invests in smaller capitalization
companies. In particular, its manager seeks attractively priced stocks in
emerging growth industries and in specialized segments of more mature
industries. The Portfolio also invests in small companies with undervalued
assets and high cash flow or struggling firms with the potential to turn around
their businesses.
-10-
<PAGE>
Q: What factors affected the Portfolio's performance during the recent
period?
A: Small company stocks performed well, but the best performers were growth
stocks with high earnings momentum. Unfortunately, such stocks often trade at
very high prices. We continued to seek shares that traded at more attractive
prices, on the grounds that we feel they offer the best opportunities for long-
term gains at relatively modest risk.
Q: What market sectors did you favor?
A: During the recent period, the Portfolio's holdings included shares of
banks and finance companies, food and restaurant stocks, health care stocks,
and specialty chemicals.
Its largest holdings at the end of May 1996 were Advanta Corp. (2.4%);
Allergan (2.4%); Hanna (M.A.) Co. (2.2%); and Fisher Scientific Intl. (2.1%).+
ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Investor A Investor A Lehman Brothers Aggregate Bond
Date No Load Load CDSC NO CDSC Index
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
06/15/88 10,000 9,551 10,000 10,000 10,000
11/30/88 10,266 9,805 9,770 10,266 10,265
11/30/89 11,476 10,960 11,076 11,476 11,738
11/30/90 12,045 11,504 11,754 12,045 12,627
11/30/91 13,586 12,976 13,286 13,586 14,447
11/30/92 14,647 13,989 14,447 14,647 15,727
11/30/93 16,145 15,367 16,045 16,145 17,441
11/30/94 15,609 14,857 15,609 15,609 16,907
11/30/95 18,104 17,232 17,994 17,994 19,889
05/31/96 17,702 16,906 17,533 17,533 19,660
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- ---------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/15/88)
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Investor A* -1.94% 5.81% 6.81%
Investor A (No Load) 2.72% 6.80% 7.43%
Investor B (CDSC)** -2.73% 6.44% 7.30%
Investor B (No CDSC) 2.11% 6.60% 7.30%
- ---------------------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Trust Institutional Lehman Brothers Aggregate Bond
Date No Load No Load Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
06/15/88 10,000 10,000 10,000
11/30/88 10,266 10,266 10,265
11/30/89 11,476 11,476 11,738
11/30/90 12,045 12,045 12,627
11/30/91 13,616 13,586 14,447
11/30/92 14,724 14,647 15,727
11/30/93 16,278 16,145 17,441
11/30/94 15,785 15,609 16,907
11/30/95 18,359 18,104 19,889
05/31/96 17,978 17,702 19,660
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- ---------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/15/88)
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Trust 3.01% 7.12% 7.64%
Institutional 2.72% 6.80% 7.43%
- ---------------------------------------------------------------------
</TABLE>
The ARCH Government & Corporate Bond Portfolio is measured against the Lehman
Brothers Aggregate Bond Index, an unmanaged Index which is comprised of the
Lehman Brothers Government-Corporate Bond Index and two Lehman Brothers asset-
backed securities Indices. Investors cannot purchase the Index directly,
although they can invest in the underlying securities. The performance of the
Index does not reflect the deduction of expenses associated with a mutual fund,
such as sales charges, investment management and fund accounting fees. By
contrast, the performance of the Portfolio shown on the graph reflects the
deduction of these value-added services, as well as the deduction of a 4.50%
sales charge on Investor A shares and the applicable contingent deferred sales
charge on Investor B shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and services fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
- ------
+ Portfolio composition is subject to change.
-11-
<PAGE>
The following Portfolio commentaries for The ARCH Government & Corporate
Bond and The ARCH U.S. Government Securities Portfolios were conducted by
David Bethke. Mr. Bethke is a Chartered Financial Analyst with over 11 years'
investment management experience.
Q: How did the bond market behave during the recent period?
A: Interest rates fell during the first few months of the period but turned
higher in February and continued to rise during the period. That was bad news
for bonds because generally bonds lose value in an increasing rate market.
Q: What did you do in that environment?
A: The Portfolio's average maturity was slightly below average through most
of December and January. Late in January, we increased the average maturity of
the Portfolio because we expected the Federal Reserve Board to reduce short-
term interest rates. Later in the period, we scaled back the Portfolio's
average maturity as interest rates rose.
Q: Did you make other adjustments to adapt to the changing environment?
A: The structure of the Portfolio recently changed from a "barbell" to a
"bullet." The barbell emphasizes a mix of very short and very long maturities.
The bullet structure emphasizes intermediate maturities ranging from 4 to 10
years, which currently offer the best combination of attractive yields,
capital gains potential and flexibility.
Q: How did you manage credit risk in the Portfolio?
A: The Portfolio primarily held Treasury and government agency securities
during the period. In our view, the slightly higher yields on corporate
securities were not high enough to compensate for their additional credit
risk.
Q: Will you make major changes going forward?
A: In the near term, we will maintain a bulleted maturity structure and an
average maturity closer to that of the market. It seems likely that interest
rates will remain high during the coming months as the economy continues to
exhibit solid growth.
-12-
<PAGE>
ARCH U.S GOVERNMENT SECURITIES PORTFOLIO
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Investor A Investor A NO Lehman Intermediate Government
Date No Load Load CDSC CDSC Index
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
06/02/88 10,000 9,551 10,000 10,000 10,000
11/30/88 10,305 9,842 9,808 10,305 10,374
11/30/89 11,339 10,830 10,939 11,339 11,666
11/30/90 12,435 11,877 12,135 12,435 12,644
11/30/91 13,972 13,345 13,672 13,972 14,281
11/30/92 14,978 14,306 14,778 14,978 15,442
11/30/93 16,480 15,699 16,380 16,480 16,849
11/30/94 15,962 15,205 15,962 15,962 16,512
11/30/95 18,302 17,434 18,012 18,012 18,833
05/31/96 18,220 17,402 17,869 17,869 18,826
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- --------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investor A* -1.19% 5.89% 7.17%
Investor A (No Load) 3.50% 6.87% 7.78%
Investor B (CDSC)** -2.07% 6.30% 7.52%
Investor B (No CDSC) 2.79% 6.49% 7.52%
- --------------------------------------------------------------------------------
</TABLE>
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Trust Institutional Lehman Intermediate Government
Date No Load No Load Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
06/02/88 10,000 10,000 10,000
11/30/88 10,305 10,305 10,374
11/30/89 11,339 11,339 11,666
11/30/90 12,435 12,435 12,644
11/30/91 14,004 13,972 14,281
11/30/92 15,056 14,978 15,442
11/30/93 16,616 16,480 16,849
11/30/94 16,142 15,910 16,512
11/30/95 18,564 18,247 18,833
05/31/96 18,508 18,161 18,826
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return
as of 5/31/96
- --------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust 3.81% 7.19% 8.00%
Investor A (No Load) 3.48% 6.80% 7.74%
- --------------------------------------------------------------------------------
</TABLE>
The ARCH U.S. Government Securities Portfolio is measured against the
unmanaged Lehman Bros. Intermediate Government Bond Index, which is generally
representative of the total return of intermediate-term U.S. Government
securities. Investors are unable to purchase the Index directly, although they
can invest in the underlying securities. The performance of the Index does not
reflect the deduction of expenses associated with a mutual fund, such as sales
charges, investment management and fund accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of these
value-added services, as well as the deduction of a 4.50% sales charge on
Investor A shares and the applicable contingent deferred sales charge on
Investor B Shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and services fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q: How did you cope with the difficult fixed-income markets during the past
six months?
A: The composition of the Portfolio's holdings changed substantially. We
began the period with about 20% in government agency notes. We sold these and
directed the proceeds toward U.S. Treasuries, which offered comparable yields
at less risk. As of May 31, agency securities represented only 1% of the
Portfolio's total assets.+
Q: What about mortgage-backed securities?
A: The Portfolio's holdings in mortgage-backed securities fell from 30% to
22% as homeowners prepaid their mortgages. These securities still are
attractive, however, and we anticipate increasing the Portfolio's holdings
soon.
Q: Did you reduce the Portfolio's average maturity as rates climbed?
A: Yes. We used new cash to buy Treasury securities that mature in two to
three years. That helped to lower the Portfolio's average maturity from 5 years
in December to 4.5 years at the end of May, reducing the potential risk of loss
if a stronger economy causes interest rates to rise further.
- ------
+ Portfolio composition is subject to change.
-13-
<PAGE>
TABLE OF CONTENTS
Statements of Assets and Liabilities
Page 15
Statements of Operations
Page 21
Statements of Changes in Net Assets
Page 24
Schedules of Portfolio Investments
Page 31
Notes to Financial Statements
Page 56
Financial Highlights
Page 71
-14-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$822,160,732; $278,313,229;
$86,151,840, respectively)....... $822,160,732 $278,313,229 $86,151,840
Cash............................... -- 480 --
Interest and dividends receivable 3,408,502 111,843 698,373
Unamortized organization costs..... -- 3,674 --
Prepaid expenses and other assets 30,066 13,046 3,418
------------ ------------ -----------
Total Assets................... 825,599,300 278,442,272 86,853,631
------------ ------------ -----------
LIABILITIES:
Cash overdraft..................... 517 -- 46,312
Dividends payable.................. 3,336,973 1,012,491 243,704
Accrued expenses and other
payables:
Investment advisory fees......... 245,987 79,074 27,095
Administration fees.............. 22,632 7,367 2,459
Distribution and services fees... 15,222 1,114 1,283
Accounting and custodian fees.... 15,601 5,237 2,705
Other............................ 140,055 32,573 32,264
------------ ------------ -----------
Total Liabilities.............. 3,776,987 1,137,856 355,822
------------ ------------ -----------
NET ASSETS:
Capital............................ 821,821,537 277,307,042 86,497,737
Accumulated undistributed net
realized gains (losses) from
investment transactions........... 776 (2,626) 72
------------ ------------ -----------
Net Assets..................... $821,822,313 $277,304,416 $86,497,809
============ ============ ===========
</TABLE>
Continued
-15-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Net Assets
Investor A Shares.............. $ 69,709,706 $ 5,226,958 $ 5,265,356
Investor B Shares.............. 26,397 -- --
Trust Shares................... 737,689,529 271,793,013 81,232,453
Institutional Shares........... 14,396,681 284,445 --
------------ ------------ -----------
Total........................ $821,822,313 $277,304,416 $86,497,809
============ ============ ===========
Outstanding shares of common
stock
Investor A Shares.............. 69,709,682 5,227,020 5,265,319
Investor B Shares.............. 26,397 -- --
Trust Shares................... 737,688,806 271,795,562 81,232,419
Institutional Shares........... 14,396,652 284,460 --
----------- ------------ -----------
Total........................ 821,821,537 277,307,042 86,497,738
=========== ============ ===========
Net asset value
Investor A Shares(a)........... $ 1.00 $ 1.00 $ 1.00
Investor B Shares(b)........... 1.00 -- --
Trust Shares(a)................ 1.00 1.00 1.00
Institutional Shares(a)........ 1.00 1.00 --
=========== ============ ===========
</TABLE>
- -----------------
(a) Offering price and redemption price are the same.
(b) Offering price per share. Redemption price varies based on length of time
held since initial purchase of Investor B Shares in a Portfolio of The ARCH
Fund, Inc.
See notes to financial statements
-16-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Growth & Emerging Government &
Income Equity Growth Balanced Corporate Bond
Portfolio Portfolio Portfolio Portfolio
------------- --------- --------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost $334,857,031;
$201,314,188; $115,529,292; and
$144,248,182, respectively)................................... $413,541,446 $218,288,764 $128,908,931 $143,793,152
Cash............................................................ 212 128 812 7,154
Interest and dividends receivable............................... 651,707 118,618 746,578 1,994,722
Receivable from brokers for investments sold.................... -- 2,303,346 -- --
Receivable for portfolio shares issued.......................... 26,515 5,859 -- --
Unamortized organization costs.................................. -- 6,184 9,571 --
Prepaid expenses and other assets............................... 17,878 25,080 16,786 8,708
------------ ------------ ------------ ------------
Total Assets............................................. 414,237,758 220,747,979 129,682,678 145,803,736
------------ ------------ ------------ ------------
LIABILITIES:
Dividends payable............................................... -- -- -- 785,156
Payable to brokers for investments purchased.................... 2,545,291 129,599 -- --
Payable for portfolio shares redeemed........................... -- 3,977 -- --
Accrued expenses and other payables:
Investment advisory fees...................................... 188,709 138,882 82,039 55,218
Administration fees........................................... 11,273 6,069 3,554 7,881
Distribution and services fees................................ 9,987 4,582 2,516 1,686
Accounting and custodian fees................................. 13,197 8,395 4,181 4,830
Other......................................................... 56,470 21,456 22,396 16,113
------------ ------------ ------------ ------------
Total Liabilities........................................ 2,824,927 312,960 114,686 870,884
------------ ------------ ------------ ------------
NET ASSETS:
Capital......................................................... 315,081,780 197,430,312 113,338,435 147,891,452
Undistributed net investment income............................. 1,114,647 326,768 770,746 --
Net unrealized appreciation (depreciation) from
investments................................................... 78,684,415 16,974,576 13,379,639 (455,030)
Accumulated undistributed net realized gains (losses)
from investment transactions.................................. 16,531,989 5,703,363 2,079,172 (2,503,570)
------------ ------------ ------------ ------------
Net Assets............................................... $411,412,831 $220,435,019 $129,567,992 $144,932,852
============ ============ ============ ============
</TABLE>
Continued
-17-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Growth & Emerging Government &
Income Equity Growth Balanced Corporate Bond
Portfolio Portfolio Portfolio Portfolio
------------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
Net Assets
Investor A Shares........................................... $ 32,214,812 $ 14,424,922 $ 8,701,733 $ 5,355,693
Investor B Shares........................................... 2,452,016 1,141,602 258,002 406,705
Trust Shares................................................ 324,840,454 181,576,581 76,583,283 127,944,139
Institutional Shares........................................ 51,905,549 23,291,914 44,024,974 11,226,315
------------ ------------ ------------ ------------
Total.................................................. $411,412,831 $220,435,019 $129,567,992 $144,932,852
============ ============ ============ ============
Outstanding shares of common stock
Investor A Shares........................................... 1,907,965 1,084,735 745,627 537,261
Investor B Shares........................................... 145,851 86,611 22,260 40,794
Trust Shares................................................ 19,200,551 13,581,597 6,564,016 12,834,674
Institutional Shares........................................ 3,074,355 1,757,390 3,782,817 1,126,177
------------ ------------ ------------ ------------
Total.................................................. 24,328,722 16,510,333 11,114,720 14,538,906
============ ============ ============ ============
Net asset value
Investor A Shares--redemption price per share............... $ 16.88 $ 13.30 $ 11.67 $ 9.97
Investor B Shares--offering price per share*................ 16.81 13.18 11.59 9.97
Trust Shares--offering and redemption price
per share................................................. 16.92 13.37 11.67 9.97
Institutional Shares--offering and redemption price
per share................................................. 16.88 13.25 11.64 9.97
============ ============ ============ ============
Maximum Sales Charge: Investor A Shares......................... 4.50% 4.50% 4.50% 4.50%
------------ ------------ ------------ ------------
Maximum Offering Price (100%/ (100%-Maximum
Sales Charge) of net asset value adjusted to nearest
cent) per share: Investor A Shares............................ $ 17.68 $ 13.93 $ 12.22 $ 10.44
============ ============ ============ ============
</TABLE>
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-18-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Missouri Short-
U.S. Government Tax-Exempt Intermediate International
Securities Bond Municipal Equity
Portfolio Portfolio Portfolio Portfolio
--------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost $62,953,348;
$68,933,856; $27,185,148; and
$50,777,589 respectively........................... $62,036,366 $69,256,010 $26,859,898 $56,576,242
Cash................................................. 111,549 36,034 39,183 --
Foreign currency (Cost $134,696)..................... -- -- -- 132,933
Interest and dividends receivable.................... 693,686 1,191,675 387,456 142,447
Receivable from brokers for
investments sold................................... -- -- -- 393,650
Receivable for portfolio shares
issued............................................. 1,000 -- -- --
Unamortized organization costs....................... -- -- 13,689 15,624
Prepaid expenses and other assets.................... 12,390 12,871 27,400 15,120
----------- ----------- ----------- -----------
Total Assets.................................. 62,854,991 70,496,590 27,327,626 57,276,016
----------- ----------- ----------- -----------
LIABILITIES:
Dividends payable.................................... 311,190 294,244 96,594 --
Payable to brokers for investments
purchased.......................................... -- -- -- 570,155
Payable for portfolio shares redeemed................ -- 10,591 -- --
Net payable for forward foreign currency
contracts purchased and sold....................... -- -- -- 2,660
Accrued expenses and other payables:
Investment advisory fees......................... 23,867 26,633 -- 34,666
Administration fees.............................. 1,714 1,932 746 2,281
Distribution and services fees................... 2,128 4,660 10 1,648
Accounting and custodian fees.................... 2,084 2,970 385 25,968
Other............................................ 4,879 7,894 2,477 3,530
----------- ----------- ----------- -----------
Total Liabilities............................. 345,862 348,924 100,212 640,908
----------- ----------- ----------- -----------
NET ASSETS:
Capital.............................................. 63,680,738 70,069,512 27,552,664 50,107,023
Undistributed net investment
income............................................. -- -- -- 119,174
Net unrealized appreciation
(depreciation) from investments.................... (916,982) 322,154 (325,250) 6,959,246
Net unrealized depreciation from
translation of assets and liabilities
in foreign currencies.............................. -- -- -- (1,167,385)
Accumulated undistributed net realized
gains (losses) from investment
transactions....................................... (254,627) (244,000) -- 2,543,092
Accumulated undistributed net realized
losses from foreign currency transactions.......... -- -- -- (1,926,042)
----------- ----------- ----------- -----------
Net Assets.................................... $62,509,129 $70,147,666 $27,227,414 $56,635,108
=========== =========== =========== ===========
</TABLE>
Continued
-19-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Missouri Short-
U.S. Government Tax-Exempt Intermediate International
Securities Bond Municipal Equity
Portfolio Portfolio Portfolio Portfolio
--------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Net Assets
Investor A Shares................. $ 7,433,406 $24,021,046 $ 49,222 $ 2,092,461
Investor B Shares................. 260,675 689,430 -- 284,420
Trust Shares...................... 53,138,878 45,437,190 27,178,192 50,607,209
Institutional Shares.............. 1,676,170 -- -- 3,651,018
----------- ----------- ----------- -----------
Total...................... $62,509,129 $70,147,666 $27,227,414 $56,635,108
=========== =========== =========== ===========
Outstanding shares of common stock
Investor A Shares................. 711,303 2,119,684 4,978 180,084
Investor B Shares................. 24,964 60,858 -- 24,703
Trust Shares...................... 5,085,016 4,009,869 2,750,133 4,336,227
Institutional Shares.............. 160,905 -- -- 314,726
----------- ----------- ----------- -----------
Total...................... 5,982,188 6,190,411 2,755,111 4,855,740
=========== =========== =========== ===========
Net asset value
Investor A Shares--redemption
price per share.................. $ 10.42 $ 11.33 $ 9.89 $ 11.62
Investor B Shares--offering
price per share *................ 10.45 11.33 -- 11.51
Trust Shares--offering and
redemption price per share....... 10.44 11.33 9.88 11.67
Institutional Shares--offering and
redemption price per share....... 10.45 -- -- 11.60
=========== =========== =========== ===========
Maximum Sales Charge: Investor
A Shares............................ 4.50% 4.50% 2.50% 4.50%
----------- ----------- ----------- -----------
Maximum Offering Price (100%/(100%-
Maximum Sales Charge) of net asset
value adjusted to nearest cent) per
share: Investor A Shares............ $ 10.91 $ 11.86 $ 10.14 $ 12.17
=========== =========== =========== ===========
</TABLE>
- --------------------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-20-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the six months ended May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Investment Income:
Interest income................................................ $23,864,600 $6,995,681 $1,645,171
----------- ---------- ----------
Total Income............................................ 23,864,600 6,995,681 1,645,171
----------- ---------- ----------
Expenses:
Investment advisory fees....................................... 1,722,064 541,977 181,650
Administration fees............................................ 861,032 270,989 45,412
Distribution and services fees--Investor A Shares.............. 82,545 4,801 8,007
Distribution and services fees--Investor B Shares.............. 145 -- --
Administrative services fees--Trust Shares..................... 230,854 96,534 5,947
Administrative services fees--Institutional Shares............. 21,339 744 --
Accounting and custodian fees.................................. 60,743 17,966 8,235
Legal and audit fees........................................... 77,088 23,769 2,262
Organization costs............................................. -- 3,477 --
Directors' fees and expenses................................... 16,926 5,295 2,148
Transfer agent fees............................................ 98,997 30,981 11,985
Registration and filing fees................................... 34,698 2,484 6
Printing costs................................................. 40,791 23,199 2,091
Other.......................................................... 17,359 5,409 2,342
Expenses voluntarily reduced................................... (645,069) (204,641) (22,642)
----------- ---------- ----------
Total Expenses.......................................... 2,619,512 822,984 247,443
Net Investment Income.......................................... 21,245,088 6,172,697 1,397,728
Realized Gains (Losses) from................................... ----------- ---------- ----------
Realized Gains (Losses) from Investment Transactions........... 97 (3,144) --
----------- ---------- ----------
Change in net assets resulting from operations................. $21,245,185 $6,169,553 $1,397,728
=========== ========== ==========
</TABLE>
See notes to financial statements.
-21-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the six months ended May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Growth & Emerging Government &
Income Equity Growth Balanced Corporate Bond
Portfolio Portfolio Portfolio Portfolio
---------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income.......................................... $ 644,580 $ 389,598 $1,695,227 $ 4,979,965
Dividend income.......................................... 3,828,383 712,122 819,816 18,817
Income from securities lending........................... 23,705 60,811 14,713 32,457
----------- ----------- ---------- -----------
Total Income........................................ 4,496,668 1,162,531 2,529,756 5,031,239
----------- ----------- ---------- -----------
Expenses:
Investment advisory fees................................. 1,049,186 737,312 468,122 322,500
Administration fees...................................... 381,522 196,616 124,832 143,280
Distribution and services fees--Investor A Shares........ 42,524 20,899 13,294 8,412
Distribution and services fees--Investor B Shares........ 7,853 4,293 734 1,204
Administrative services fees--Institutional Shares....... 69,762 30,981 61,105 16,380
Accounting and custodian fees............................ 60,041 31,628 20,433 22,516
Legal and audit fees..................................... 34,338 17,502 11,214 12,789
Organization costs....................................... -- 3,477 2,562 --
Directors' fees and expenses............................. 7,677 3,603 2,580 3,192
Transfer agent fees...................................... 47,268 22,779 15,633 19,095
Registration and filing fees............................. 18,381 14,901 11,010 2,169
Printing costs........................................... 18,882 9,114 6,189 7,245
Other.................................................... 5,115 4,478 7,057 7,839
Expenses voluntarily reduced............................. (190,848) (98,401) (62,430) (71,622)
----------- ----------- ---------- -----------
Total Expenses...................................... 1,551,701 999,182 682,335 494,999
Net Investment Income.................................... 2,944,967 163,349 1,847,421 4,536,240
----------- ----------- ---------- -----------
Realized/Unrealized Gains (Losses) from Investments:
Net realized gains (losses) from investment transactions. 17,631,982 6,240,417 2,449,658 (186,697)
Change in unrealized appreciation (depreciation) from
investments............................................ 18,623,626 8,904,961 2,322,254 (7,429,346)
----------- ----------- ---------- -----------
Net realized/unrealized gains (losses) from investments.. 36,255,608 15,145,378 4,771,912 (7,616,043)
----------- ----------- ---------- -----------
Change in net assets resulting from operations........... $39,200,575 $15,308,727 $6,619,333 $(3,079,803)
=========== =========== ========== ===========
</TABLE>
See notes to financial statements
-22-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the six months ended May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Missouri Short-
U.S. Government Tax-Exempt Intermediate International
Securities Bond Municipal Equity
Portfolio Portfolio Portfolio Portfolio
--------------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income......................................... $1,953,732 $1,970,864 $ 550,849 $ 79,689
Dividend income......................................... 22,317 22,830 18,233 341,574
Income from securities lending.......................... 15,404 -- -- --
Foreign tax withholding................................. -- -- -- (18,467)
---------- ---------- ---------- ----------
Total Income..................................... 1,991,453 1,993,694 569,082 402,796
---------- ---------- ---------- ----------
Expenses:
Investment advisory fees................................ 129,951 159,508 71,186 237,757
Administration fees..................................... 57,755 70,844 25,886 47,551
Distribution and services fees--Investor A Shares....... 11,830 36,724 39 2,778
Distribution and services fees--Investor B Shares....... 907 2,827 -- 915
Administrative services fees--Institutional Shares...... 1,457 -- -- 4,457
Accounting and custodian fees........................... 9,323 10,994 4,063 41,202
Legal and audit fees.................................... 5,160 3,573 3,354 4,233
Organization costs...................................... -- -- 5,229 2,745
Directors' fees and expenses............................ 1,104 1,599 537 951
Transfer agent fees..................................... 7,182 10,113 3,192 5,229
Registration and filing fees............................ 3,960 622 4,509 4,486
Printing costs.......................................... 2,997 1,437 795 2,025
Other................................................... 4,072 6,313 3,375 955
Expenses voluntarily reduced............................ (28,892) (47,623) (84,141) (71,662)
---------- ---------- ---------- ----------
Total Expenses................................... 206,806 256,931 38,025 283,622
---------- ---------- ---------- ----------
Net Investment Income................................... 1,784,647 1,736,763 531,058 119,174
---------- ---------- ---------- ----------
Realized/Unrealized Gains (Losses) from
Investments and Foreign Currency:
Net realized gains (losses) from investment
transactions........................................... (253,280) 70,213 -- 1,791,528
Net realized losses from foreign currency
transactions........................................... -- -- -- (476,976)
Change in unrealized appreciation (depreciation)
from investments....................................... (1,765,337) (2,461,409) (549,389) 3,408,714
Change in unrealized depreciation from translation of
assets and liabilities in foreign currencies........... -- -- -- (1,065,385)
---------- ---------- ---------- ----------
Net realized/unrealized gains (losses) from investments
and foreign currency................................... (2,018,617) (2,391,196) (549,389) 3,657,881
---------- ---------- ---------- ----------
Change in net assets resulting from operations.......... $(233,970) $(654,433) $ (18,331) $3,777,055
========== ========== ========== ==========
- ------
</TABLE>
See notes to financial statements
-23-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Money Market Treasury Money
Portfolio Market Portfolio
------------------------------- --------------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income................................. $ 21,245,088 $ 33,761,482 $ 6,172,697 $ 11,520,298
Net realized gains (losses) from
investment transactions.............................. 97 (6,772) (3,144) 10,481
------------- ------------- ------------- -------------
Change in net assets resulting from operations........ 21,245,185 33,754,710 6,169,553 11,530,779
------------- ------------- ------------- -------------
Distributions to Investor A shareholders:
From net investment income............................ (1,571,244) (2,861,060) (83,564) (132,984)
From net realized gains from investment transactions.. (389) -- (132) --
Distributions to Investor B shareholders:
From net investment income............................ (401) -- -- --
Distributions to Trust shareholders:
From net investment income............................ (19,266,578) (30,299,854) (6,076,012) (11,386,621)
From net realized gains from investment transactions.. (4,265) -- (12,046) --
Distributions to Institutional shareholders:
From net investment income............................ (406,865) (600,568) (13,121) (693)
From net realized gains from investment transactions.. (79) -- (1) --
------------- ------------- ------------- -------------
Change in net assets from shareholder distributions.... (21,249,821) (33,761,482) (6,184,876) (11,520,298)
------------- ------------- ------------- -------------
Capital Transactions:
Proceeds from shares issued........................... 942,093,700 1,902,144,644 424,908,020 839,832,064
Dividends reinvested.................................. 6,969,844 11,376,917 1,674,690 3,013,118
Cost of shares redeemed............................... (903,572,285) (1,740,810,431) (404,847,961) (831,082,824)
------------- ------------- ------------- -------------
Change in net assets from share transactions........... 45,491,259 172,711,130 21,734,749 11,762,358
------------- ------------- ------------- -------------
Change in net assets................................... 45,486,623 172,704,358 21,719,426 11,772,839
Net Assets:
Beginning of period................................... 776,335,690 603,631,332 255,584,990 243,812,151
------------- ------------- ------------- -------------
End of period......................................... $ 821,822,313 $ 776,335,690 $ 277,304,416 $ 255,584,990
============= ============= ============= =============
Share Transactions:
Issued................................................ 942,093,701 1,902,144,644 424,908,020 839,832,064
Reinvested............................................ 6,969,844 11,376,917 1,674,690 3,013,118
Redeemed.............................................. (903,572,286) (1,740,810,431) (404,847,961) (831,082,824)
------------- ------------- ------------- -------------
Change in shares....................................... 45,491,259 172,711,130 21,734,749 11,762,358
============= ============= ============= =============
</TABLE>
- ------------
See notes to financial statements
-24-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Tax-Exempt Growth & Income
Money Market Portfolio Equity Portfolio
---------------------------------------------- ------------------------------
Six months Six months Year Six months Year
ended ended ended ended ended
May 31, November 30, May 31, May 31, November 30,
1996 1995(a) 1995 1996 1995
-------------- ------------- ------------- ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
From Investment Activities
Operations:
Net investment income......................... $ 1,397,728 $ 1,425,002 $ 3,002,806 $ 2,944,967 $ 5,821,152
Net realized gains (losses) from
investment transactions..................... - 4,193 (102) 17,631,982 19,924,501
Net change in unrealized appreciation
from investments............................ - - - 18,623,626 61,722,240
------------- ------------- ------------- ------------ --------------
Change in net assets resulting from
operations.................................. 1, 397,728 1,429,195 3,002,704 39,200,575 87,467,893
------------- ------------- -------------- ------------ -------------
Distributions to investor A shareholders:
From net investment income................... (91,033) (81,409) (174,372) (176,338) (333,955)
In excess of net investment income........... - - - - (4,006)
From net realized gains from
investment transactions.................... (250) - - (1,443,631) (202,448)
Distributions to Investor B shareholders:
From net investment income................... - - - (5,239) (2,563)
In excess of net investment income........... - - - - (31)
From net realized gains from
investment transactions..................... - - - (49,605) -
Distribution to Trust shareholders:
From net investment income................... (1,306,694) (1,343,593) (2,828,434) (2,368,261) (5,053,238)
In excess of net investment income........... - - - - (60,612)
From net realized gains from
investment transactions..................... (3,631) - - (16,436,950) (2,589,698)
Distributions to Institutional shareholders:
From net investment income................... - - - (289,576) (436,396)
In excess of net investment income........... - - - - (5,175)
From net realized gains from
investment transactions..................... - - - (2,330,241) (241,715)
------------ ------------ ------------- ------------- -----------
Change in net assets from shareholder
distributions............................... (1,401,608) (1,425,002) (3,002,806) (23,099,841) (3,924,837)
------------- ------------ ------------- -------------- ------------
</TABLE>
- ---------------
(a) Upon reorganizing as a portfolio of the ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets, Continued
<TABLE>
<CAPTION>
Tax-Exempt Growth & Income
Money Market Porfolio Equity Porfolio
------------------------------------------------ -----------------------------
Six months Six months Year Six months Year
ended ended ended ended ended
May 31, November 30, May 31, May 31, November 30,
1996 1995 (a) 1995 1996 1995
------------ ------------ ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
(Unaudited) (Unaudited)
Capital Transactions:
Proceeds from shares issued............... 91,265,220 108,021,357 258,130,980 43,845,162 52,046,659
Dividends reinvested...................... 255,836 216,746 412,936 19,595,077 7,546,386
Cost of shares redeemed................... (88,453,992) (115,269,717) (289,306,657) (20,764,669) (61,695,190)
------------ ------------- ------------- ------------ ------------
Change in net assets from share
transactions.............................. 3,067,064 (7,031,614) (30,762,741) 42,675,570 (2,102,145)
------------ ------------- ------------- ------------ ------------
Change in net assets........................ 3,063,184 (7,027,421) (30,762,843) 58,776,304 76,440,911
Net Assets:
Beginning of period....................... 83,434,625 90,462,046 121,224,889 352,636,527 276,195,616
------------ ------------- ------------- ------------ ------------
End of period............................. $ 86,497,809 $ 83,434,625 $ 90,462,046 $411,412,831 $352,636,527
============ ============= ============= ============ ============
Share Transactions:
Issued.................................... 91,265,220 108,021,357 258,130,980 2,732,283 3,553,184
Reinvested................................ 255,836 216,746 412,936 1,259,717 558,779
Redeemed.................................. (88,453,992) (115,269,717) (289,306,657) (1,281,345) (4,212,791)
------------ ------------- ------------- ------------ ------------
Change in shares............................ 3,067,064 (7,031,614) (30,762,741) 2,710,655 (100,828)
============ ============= ============= ============ ============
</TABLE>
- ----------
(a) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-26-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets, Continued
May 31, 1996
<TABLE>
<CAPTION>
Emerging Growth Portfolio Balanced Portfolio
---------------------------- ---------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1996 1995 1996 1995
------------ ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income.................................. $ 163,349 $ 163,419 $ 1,847,421 $ 3,284,357
Net realized gains from investment transactions........ 6,240,417 13,478,311 2,449,658 4,625,170
Net change in unrealized appreciation from investments. 8,904,961 8,231,506 2,322,254 14,959,325
------------ ------------ ------------ ------------
Change in net assets resulting from operations........... 15,308,727 21,873,236 6,619,333 22,868,852
------------ ------------ ------------ ------------
Distributions to Investor A shareholders:
From net investment income............................. -- -- (118,242) (224,231)
From net realized gains from investment transactions... (1,177,710) (831,483) (306,345) --
Distributions to Investor B shareholders:
From net investment income............................. -- -- (1,241) (225)
From net realized gains from investment transactions... (51,148) -- (1,338) --
Distributions to Trust shareholders:
From net investment income............................. -- -- (1,128,463) (2,182,251)
From net realized gains from investment transactions... (11,321,459) (5,902,352) (2,656,748) --
Distributions to Institutional shareholders:
From net investment income............................. -- -- (542,955) (790,342)
From net realized gains from investment transactions... (1,397,709) (432,261) (1,351,993) --
------------ ------------ ------------ ------------
Change in net assets from shareholder distributions...... (13,948,026) (7,166,096) (6,107,325) (3,197,049)
------------ ------------ ------------ ------------
Capital Transactions:
Proceeds from shares issued............................ 43,267,862 70,516,196 14,108,781 26,225,962
Dividends reinvested................................... 12,201,373 5,971,760 5,963,982 3,130,438
Cost of shares redeemed................................ (9,355,063) (12,457,399) (8,896,455) (26,478,191)
------------ ------------ ------------ ------------
Change in net assets from share transactions............. 46,114,172 64,030,557 11,176,308 2,878,209
------------ ------------ ------------ ------------
Change in net assets..................................... 47,474,873 78,737,697 11,688,316 22,550,012
Net Assets:
Beginning of period.................................... 172,960,146 94,222,449 117,879,676 95,329,664
------------ ------------ ------------ ------------
End of period.......................................... $220,435,019 $172,960,146 $129,567,992 $117,879,676
============ ============ ============ ============
Share Transactions:
Issued................................................. 3,423,947 5,411,069 1,231,917 2,500,588
Reinvested............................................. 997,295 549,194 527,903 299,781
Redeemed............................................... (743,796) (975,925) (775,225) (2,584,883)
------------ ------------ ------------ ------------
Change in shares......................................... 3,677,446 4,984,338 984,595 215,486
============ ============ ============ ============
</TABLE>
See notes to financial statements
-27-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
<TABLE>
<CAPTION>
Government & Corporate U.S Government
Bond Portfolio Securities Portfolio
------------------------- ------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1996 1995 1996 1995
------------ ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income .......................... $ 4,536,240 $ 9,249,020 $ 1,784,647 $ 2,914,916
Net realized gains (losses) from investment
transactions .................................. (186,697) (1,171,676) (253,280) 588,948
Net change in unrealized appreciation (depreciation)
from investments .............................. (7,429,346) 14,042,027 (1,765,337) 2,891,528
------------ ------------ ----------- ------------
Change in net assets resulting from operations (3,079,803) 22,119,371 (233,970) 6,395,392
------------ ------------ ----------- ------------
Distributions to Investor A shareholders:
From net investment income ..................... (170,111) (309,012) (234,283) (543,517)
From net realized gains from
investment transactions ....................... (10,112) -- (27,732) --
Distributions to Investor B shareholders:
From net investment income ..................... (6,515) (1,688) (4,707) (603)
From net realized gains from
investment transactions ....................... (207) -- (165) --
Distributions to Trust shareholders:
From net investment income ..................... (4,027,937) (8,521,373) (1,517,100) (2,346,666)
From net realized gains from
investment transactions ........................ (232,345) -- (154,648) --
Distributions to Institutional shareholders:
From net investment income ..................... (331,677) (416,947) (28,557) (24,130)
From net realized gains
from investment transactions .................. (17,276) -- (2,280) --
------------ ------------ ----------- ------------
Change in net assets from
shareholder distributions ..................... (4,796,180) (9,249,020) (1,969,472) (2,914,916)
------------ ------------ ----------- ------------
Capital Transactions:
Proceeds from shares issued .................... 20,435,016 22,004,332 12,999,299 12,388,111
Dividends reinvested ........................... 2,977,057 6,496,071 1,241,286 2,029,261
Cost of shares redeemed ........................ (13,359,264) (42,323,482) (3,928,268) (6,345,525)
------------ ------------ ----------- ------------
Change in net assets from
share transactions ............................. 10,052,809 (13,823,079) 10,312,317 8,071,847
------------ ------------ ----------- ------------
Change in net assets ............................ 2,176,825 (952,728) 8,108,875 11,552,323
Net Assets:
Beginning of period ............................ 142,756,026 143,708,754 54,400,254 42,847,930
------------ ------------ ----------- ------------
End of period .................................. $144,932,851 $142,756,026 $62,509,129 $54,400,253
============ =========== ========== ==========
Share Transactions:
Issued ......................................... 1,982,746 2,156,859 1,219,051 1,156,552
Reinvested ..................................... 286,797 646,557 115,595 193,708
Redeemed ....................................... (1,287,504) (4,153,696) (366,003) (599,690)
------------ ------------ ----------- ------------
Change in shares ................................ 982,039 (1,350,280) 968,643 750,570
============ =========== ========== ==========
</TABLE>
- -----------------
See notes to financial statements
-28-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Missouri Tax-Exempt Short-Intermediate
Bond Portfolio Municipal Portfolio
--------------------------------- --------------------------
For the
Six months Six months Year Six months period July 10,
ended ended ended ended 1995 to
May 31, November 30, May 31, May 31, November 30,
1996 1995(a) 1995 1996 1995(b)
---------- ------------ -------- ---------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income....................... $ 1,736,763 $ 1,654,275 $ 3,690,016 $ 531,058 $ 264,700
Net realized gains (losses) from investment
transactions............................... 70,213 1,611 (190,330) -- --
Net change in unrealized appreciation
(depreciation) from investments............ (2,461,409) 1,343,976 2,083,405 (549,389) 224,139
----------- ----------- ----------- ----------- -----------
Change in net assets resulting from
operations.................................. (654,433) 2,999,862 5,583,091 (18,331) 488,839
----------- ----------- ----------- ----------- -----------
Distributions to Investor A shareholders:
From net investment income.................. (585,349) (565,623) (1,301,629) (503) --
From net realized gains from investment
transactions................................ -- -- (19,180) -- --
Distributions to Investor B shareholders:
From net investment income.................. (11,312) (5,588) (593) -- --
Distributions to Trust shareholders:
From net investment income (1,140,102) (1,083,064) (2,387,794) (530,555) (264,700)
From net realized gains from investment
transactions................................ -- -- (31,970) -- --
----------- ----------- ----------- ----------- -----------
Change in net assets from shareholder
distributions............................... (1,736,763) (1,654,275) (3,741,166) (531,058) (264,700)
----------- ----------- ----------- ----------- -----------
Capital Transactions:
Proceeds from shares issued................. 7,025,733 8,449,317 13,215,405 6,243,257 23,945,082
Dividends reinvested........................ 677,228 610,700 1,366,231 37,454 9,378
Cost of shares redeemed..................... (8,095,611) (6,221,755) (23,338,004) (2,257,593) (424,913)
----------- ----------- ----------- ----------- -----------
Change in net assets from share transactions (392,650) 2,838,262 (8,756,368) 4,023,118 23,529,547
----------- ----------- ----------- ----------- -----------
Change in net assets......................... (2,783,846) 4,183,849 (6,914,443) 3,473,729 23,753,686
Net Assets:
Beginning of period......................... 72,931,512 68,747,663 75,662,106 23,753,686 --
----------- ----------- ----------- ----------- -----------
End of period............................... $70,147,666 $72,931,512 $68,747,663 $27,227,414 $23,753,686
=========== =========== =========== =========== ===========
Share Transactions:
Issued...................................... 611,150 735,228 1,199,549 618,687 2,399,958
Reinvested.................................. 58,129 53,264 124,846 3,728 938
Redeemed.................................... (692,740) (540,692) (2,158,695) (225,596) (42,604)
----------- ----------- ----------- ----------- -----------
Change in shares............................. (23,461) 247,800 (834,300) 396,819 2,358,292
=========== =========== =========== =========== ===========
</TABLE>
(a) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
(b) Period from commencement of operations.
See notes to financial statements
-29-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets, Continued
International Equity
<TABLE> Portfolio
<CAPTION> --------------------------------
Six months Year
ended ended
May 31, November 30,
1996 1995
----------- ------------
(Unaudited)
From Investment Activities:
<S> <C> <C>
Operations:
Net investment income.............................. $ 119,174 $ 114,721
Net realized gains from investment transactions.... 1,791,528 905,432
Net realized losses from foreign currency
transactions...................................... (476,976) (1,899,048)
Net change in unrealized appreciation from
investments ...................................... 3,408,714 4,500,515
Change in unrealized depreciation from translation
of assets and liabilities in foreign currencies... (1,065,385) (595,181)
---------- ---------
Change in net assets resulting from operations..... 3,777,055 3,026,439
========= =========
Distributions to Investor A shareholders:
From net investment income....................... -- (261)
Tax return of capital............................ -- (1,179)
Distributions to Trust shareholders:
From net realized gains from investment
transactions.................................... -- (7,793)
Tax return of capital............................ -- (35,169)
Distributions to Institutional shareholders:
From net realized gains from investment
transactions.................................... -- (71)
Tax return of capital............................ -- (318)
--------- -------
Change in net assets from shareholder
distributions.................................... -- (44,791)
========= ========
Capital Transactions:
Proceeds from shares issued...................... 15,073,360 16,109,115
Dividends reinvested............................. -- 28,077
Cost of shares redeemed.......................... (2,139,804) (3,928,946)
----------- ----------
Change in net assets from share transactions...... 12,933,556 12,208,246
---------- ----------
Change in net assets.............................. 16,710,611 15,189,894
Net Assets:
Beginning of period.............................. 39,924,497 24,734,603
---------- ----------
End of period.................................... $56,635,108 $39,924,497
========== ==========
Share Transactions:
Issued........................................... 1,346,387 1,588,686
Reinvested....................................... -- 2,857
Redeemed......................................... (190,571) (386,418)
---------- ----------
Change in shares.................................. 1,155,816 1,205,125
=========== ===========
</TABLE>
See notes to financial statements
-30-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Security Amortized Principal Security Amortized
Amount Description Cost Amount Description Cost
- ----------- ---------------------------- ------------- ----------- --------------------------- -----------
Commercial Paper (75.1%): Commercial Paper, continued:
Aircraft Engines (3.6%): Finance, continued:
<S> <C> <C> <C> <C> <C>
30,000,000 Allied Signal, 5.29%*, 5,000,000 Duff & Phelps, 4.96%*,
6/18/96................... $ 29,925.058 7/24/96.................. $ 4,963,489
------------
Banking (1.8%): 8,000,000 Pemex Capital (Swiss Bank),
15,135,000 Bank of New York, 5.27%, 5.30%*, 7/17/96.......... 7,945,822
6/28/96................... 15,075,179 -----------
------------ 40,822,638
-----------
Banking & Financial Services (2.4%): Financial Services (4.7%):
20,000,000 NationsBank Corp., 5.24%*, 20,000,000 Dean Witter Discover,
7/31/96................... 19,825,333 5.30%*, 8/14/96.......... 19,782,111
------------
Beverages (2.3%): 9,434,000 Ford Motor Credit, 5.92%*,
19,000,000 PepsiCo., 5.25%*, 6/28/96... 18,925,188 6/5/96................... 9,428,444
------------ 9,600,000 General Motors Acceptance
Brokerage (2.4%): Corp., 5.31%*, 6/20/96... 9,573,096
20,000,000 Merrill Lynch & Companies, -----------
6.10%*, 6/07/96........... 19,982,400 38,783,651
------------ -----------
Chemicals (5.6%): Forest Products (1.9%):
11,067,000 Dow Chemical, 5.35%*, 15,250,000 Kimberly Clark, 5.28%*,
6/3/96.................... 11,063,711 6/28/96.................. 15,189,610
35,000,000 Monsanto, 0.00%*, 6/17/96... 34,918,334 -----------
------------ Greeting Cards (1.2%):
45,982,045 10,150,000 American Greetings, 5.30%*,
------------ 6/11/96.................. 10,135,057
Computers (3.3%): -----------
27,550,000 Hewlett Packard, 5.05%*, Industrial Goods & Services (2.5%):
6/19/96................... 27,480,436 9,421,000 Air Products & Chemical,
------------ 5.30%*, 6/13/96.......... 9,404,419
Consumer Goods & Services (3.6%): 11,000,000 Air Products & Chemical,
30,000,000 PHH Corp., 5.29%*, 6/28/96.. 29,880,975 5.30%*, 7/8/96........... 10,940,081
------------ -----------
Electrical & Electronic (8.0%): 20,344,500
30,000,000 Ciesco LP, 5.40%*, 6/3/96... 29,991,000 -----------
10,000,000 CSC Enterprises, 5.37%*, Insurance (3.6%):
6/3/96.................... 9,996,972 30,000,000 Prudential Funding Corp.,
10,000,000 CSC Enterprises, 5.37%*, 5.30%*, 6/06/96.......... 29,977,917
6/18/96................... 9,974,642 -----------
15,420,000 Honeywell, Inc., 5.37%*, Miscellaneous (4.9%):
6/7/96.................... 15,406,199 15,000,000 Cargill, Inc., 5.30%*, 6/6/96 14,988,958
----------- 25,000,000 Cargill, Inc., 5.30%*, 6/7/96 24,978,125
65,368,813 -----------
----------- 39,967,083
Entertainment (1.8%): -----------
15,000,000 Walt Disney, 5.25%*, Oil & Gas Exploration Production & Services (2.3%):
12/09/96.................. 14,582,188 11,250,000 Texaco, 4.85%*, 11/1/96........ 11,018,109
----------- 5,200,000 Texaco Corp., 4.79%*,
Finance (5.0%): 11/4/96 ................... 5,092,065
20,000,000 American Express, 5.05%*, 3,000,000 Texaco, Inc., 4.80%*,
7/24/96................... 19,851,306 10/29/96................... 2,940,000
8,000,000 Associates Corp America, -----------
5.33%, 10/15/96........... 8,062,021 19,050,174
-----------
</TABLE>
Continued
-31-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Security Amortized Principal Security Amortized
Amount Description Cost Amount Description Cost
- -------------- -------------------------- ----------- ------------- ------------------------------ ------------
<S> <C> <C> <C>
Commercial Paper, continued: Medium Term Note (4.8%):
Pharmaceuticals (4.3%): Finance (1.0%):
19,252,000 American Home Products, 8,000,000 General Motors Acceptance
5.31%*, 8/8/96 ............ $19,058,902 Corp., 7.80%, 11/15/96..... $8,075,344
16,000,000 Smithkline Beecham, ------------
5.28%*, 6/24/96 ........... 15,946,027 Financial Services (3.8%):
------------ 31,500,000 General Electric Capital,
35,004,929 4.70%, 11/19/96.............. 31,390,808
------------ ------------
Printing & Publishing (1.4%): Total Medium Term Note 39,466,152
11,500,000 McGraw-Hill, 5.23%*, U.S. Government Agencies (9.2%): ------------
6/28/96 ................... 11,454,891 Federal Farm Credit Bank:
----------- 20,000,000 5.26%, 7/1/96.................. 20,000,000
Retail - General Merchandise (1.7%): Federal Home Loan Mortgage Corp.:
13,995,000 Sears Roebuck Acceptance, 15,000,000 7.88%, 12/20/96 ................ 15,186,941
5.30%*, 6/19/96 ......... 13,957,913 Federal National Mortgage Association:
----------- 10,800,000 5.63%, 6/28/96.................. 10,801,582
Telecommunications (4.9%): 20,000,000 5.26%*, 10/15/96................ 19,993,698
40,000,000 Bell Communications Student Loan Marketing Assoc.:
Research, 5.35%*, 6/03/96 39,988,112 10,000,000 5.45%, 12/20/96.................. 10,000,000
----------- ------------
Utilities (1.9%): Total U.S. Government Agencies 75,982,221
15,500,000 Oklahoma Gas & Electric, ------------
5.35%*, 6/10/96............. 15,479,269 U.S. Treasury Notes (3.6%):
----------- 29,156,000 7.50%, 12/31/96................ 29,520,623
Total Commercial Paper 617,183,359 ------------
----------- Total U.S. Treasury Notes 29,520,623
Corporate Bonds (2.4%): ------------
Banking (1.8%): Total (Cost$822,160,732)(a) $822,160,732
15,000,000 Huntington Bank, 5.32%, ============
12/02/96................. 14,995,950
-----------
Finance (0.6%):
5,000,000 Ford Motor Credit Co.,
8.88%, 8/01/96........... 5,023,577
----------
Total Corporate Bonds 20,019,527
----------
Floating Rate Notes (4.9%):
(4.9%):
20,000,000 CIT Group Holdings, 5.30%,
12/23/96 ................ 19,988,850
20,000,000 Merrill Lynch Note, 5.48%,
6/17/96................. 20,000,000
----------
39,988,850
----------
Total Floating Rate Notes 39,988,850
----------
</TABLE>
- ---------
Percentages indicated are based on net assets of $821,822,313.
* Variable rate securities having liquidity sources through bank
letters of credit and/or liquidity agreements. The interest rate,
which will change periodically, is based upon bank prime rates or
an index of Market interest rates. The rate reflected on the
Schedule of Portfolio Investments is the rate in effect at May 31, 1996.
(a) Cost for federal income tax and financial reporting purposes are the
same.
See notes to financial statements
-32-
<PAGE>
THE ARCH FUND, INC.
Treasury Money Market Fund
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- --------- ----------------------------------------------------------------------- -------------
<S> <C> <C>
U.S. Treasury Bills (96.7%):
14,063,000 6/6/96................................................................. $14,053,234
334,000 6/13/96................................................................. 333,452
65,197,000 6/20/96................................................................. 65,023,221
42,402,000 6/27/96................................................................. 42,250,896
20,000,000 7/11/96................................................................. 19,890,667
17,871,000 7/25/96................................................................. 17,738,844
42,311,000 8/1/96................................................................. 41,954,962
26,040,000 8/8/96................................................................. 25,794,737
<CAPTION>
U.S. Treasury Bills, continued:
<S> <C> <C>
18,367,000 8/15/96................................................................ $18,175,753
23,326,000 8/22/96................................................................ 23,058,218
------------
Total U.S. Treasury Bills 268,273,984
------------
<CAPTION>
<S> <C>
U.S. Treasury Notes (3.6%):
10,000,000 6.50%, 9/30/96.................................................................. 10,039,245
------------
Total U.S. Treasury Notes 10,039,245
------------
Total (Cost $277,378,355) (a) $278,313,229
============
</TABLE>
Percentages indicated are based on net assets of $277,304,416.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements
-33-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Amortized Principal Security Amortized
Amount Description Cost Amount Description Cost
- ------------ ------------------------------ ------------- ------------- ----------------------------- -------------
<S> <C> <C> <C>
Anticipation Notes (3.5%):
Pennsylvania (3.5%) Daily Demand Notes, continued:
3,000,000 Philadelphia, 4.50%, 6/27/96.... $3,001,130 Virginia (4.9%):
----------- 4,250,000 Penninsula Port Authority
Total Anticipation Notes 3,001,130 Revenue - Shell Co.,
----------- 3.70%*, 12/1/05............... $4,249,999
Daily Demand Notes (39.4%): -----------
Illinois (5.2%): Total Daily Demand Notes 34,099,999
1,000,000 Chicago O'Hare International -----------
Airport, 3.65%*, 12/1/17......... 1,000,000 Municipal Bonds (16.9%):
3,000,000 Chicago, O'Hare International Arizona (1.2%):
Airport, 3.75%*, 12/1/17......... 3,000,000 1,000,000 Chandler, 3.60%*, 12/1/02...... 1,000,000
500,000 Illinois Development Finance -----------
Auth. Series Olin, 3.65%* Florida (1.8%):
3/1/16....................... 500,000 1,500,000 Florida State Board of
----------- Education, 7.63%, 6/1/97...... 1,586,508
4,500,000 -----------
Lousiana (4.6%): ----------- Georgia (3.5%):
4,000,000 West Felincia Parish, Gulf 3,000,000 Monroe County, 3.65%*,
States Utilities, 3.75%* 7/1/25......................... 3,000,000
12/1/15........................ 4,000,000 -----------
Mississippi (2.3%): ----------- Michigan (4.6%):
2,000,000 Perry County PCR, 3.70%*, 4,000,000 Michigan State GO, 4.00%,
3/1/02......................... 2,000,000 9/30/96........................ 4,005,233
New Mexico (0.7%): ----------- -----------
600,000 Farmington PCR, 3.70%*, Missouri (2.3%):
9/1/24......................... 600,000 2,000,000 Missouri State Health &
North Carolina (4.6%): ----------- Educational Facitlies,
4,000,000 North Carolina Medical Care 4.50%, 8/19/96................ 2,002,287
Commission Hospital -----------
Revenue Series A, 3.75%*, Texas (3.5%):
10/1/20....................... 4,000,000 1,000,000 Austin Independent School
Tennessee (4.0%): ----------- District, 4.40%, 8/1/96........ 1,001,607
3,450,000 Bradley County, 3.65%*, 2,000,000 Texas State, 4.75%, 8/30/96...... 2,003,076
11/1/17..................... 3,450,000 -----------
----------- 3,004,683
Texas (13.1%): -----------
1,400,000 Angelina & Neches River Total Municipal Bonds 14,598,711
Authority, 3.80%*, 5/1/14..... 1,400,000 -----------
2,000,000 Angelina & Nechs River Short-Term Puts (16.4%):
Authority, 3.80%*, 5/1/14..... 2,000,000 California (1.2%):
4,000,000 Harris County Health Care Fac., 1,000,000 California Higher Education,
3.70%*, 12/1/25.............. 4,000,000 3.90%, 7/1/96................. 1,000,000
3,900,000 North Central Health, 3.75%*, -----------
10/1/15...................... 3,900,000 Florida (2.5%):
----------- 2,200,000 Pinellas County Educational
11,300,000 Facilities, 3.55%, 8/20/96.... 2,200,000
----------- -----------
Georgia (3.7%):
3,200,000 Georgia Gas Authority,
3.50%, 10/15/96.............. 3,200,000
-----------
</TABLE>
Continued
-34-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Amortized
Amount Description Cost
- --------- ------------------------------ -----------
<S> <C> <C>
Short-Term Puts, continued
Illinois (1.5%):
1,300,000 Chicago Adjustable-tender
Notes-series A, 3.65%
10/31/96 ................... $ 1,300,000
-----------
Minnesota (3.5%):
3,000,000 Becker Northern States Power,
3.35%, 9/20/96 ............. 3,000,000
-----------
Missouri (4.0%):
3,500,000 Missouri State Environmental
Improvement, 3.65%,
6/1/97 ..................... 3,500,000
-----------
Total Short-term Puts 14,200,000
-----------
Weekly Demand Notes (23.4%):
Louisiana (3.4%):
1,000,000 Calcasieu Parish, 3.65%,
2/1/16 ..................... 1,000,000
1,900,000 Louisiana Public Faciliites,
3.65%/*/, 9/1/15 ........... 1,900,000
-----------
2,900,000
-----------
Minnesota (2.8%):
2,450,000 Minneapolis PCR, 3.70%/*/,
3/1/11 .................... 2,450,000
-----------
Missouri (10.3%):
3,000,000 Missouri Health & Educational
Facilities Authority,
3.60%/*/, 12/1/19 .......... 3,000,000
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Amortized
Amount Description Cost
- --------- ------------------------------ -----------
Weekly Demand Notes, continued
Missouri, continued
<S> <C> <C>
2,800,000 Missouri Health & Educational
Facilities Authority,
3.60%/*/, 12/1/15 ......... $ 2,800,000
1,600,000 Missouri Health & Educational
Facilities Authority,
3.55%/*/, 6/1/06 .......... 1,600,000
500,000 Missouri Health & Educational
Facilities Authority,
3.60%/*/, 9/1/10 .......... 500,000
1,000,000 Monsanto County, 3.65%/*/,
6/1/23 .................... 1,000,000
-----------
8,900,000
-----------
Montana (4.4%):
2,200,000 Forsyth Montana PCR Series B,
3.70%/*/, 6/1/13 .......... 2,200,000
1,600,000 Forsyth PCR, 3.75%/*/, 6/1/13 1,600,000
-----------
3,800,000
Texas (2.5%):
2,200,000 Port Corpus Christi, Nueces
County Marine Trem,
3.65%/*/, 9/1/14 .......... 2,200,000
-----------
Total Weekly Demand Notes 20,250,000
-----------
Investment Companies (0.0%):
1,000 Federated Tax-Free Trust Fund. 1,000
1,000 Nuveen Tax-Exempt Money
Market Fund ............... 1,000
-----------
Total Investment Companies 2,000
-----------
Total (Cost-$86,151,840)(a) $86,151,840
===========
</TABLE>
- -------------------
Percentages indicated are based on net assets of $86,497,809.
/*/ Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity agreements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of Market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at May 31, 1996.
(a) Cost for federal income tax and financial reporting purposes are the same.
PCR - Pollution Control Revenue
GO - General Obligation
See notes to financial statements
-35-
<PAGE>
THE ARCH FUND, INC.
Growth and Income Equity Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------- ------------
Commercial Paper (5.5%):
Chemicals (5.5%):
<S> <C><C>
22,478,000 Dow Chemical, 5.35%,
6/03/96 ................... $ 22,471,318
------------
Total Commercial Paper 22,471,318
------------
Common Stocks (93.8%):
Airlines (1.7%):
257,000 Southwest Airlines.......... 7,035,375
------------
Banking (3.9%):
114,600 Chase Manhattan Corp........ 8,022,000
96,550 NationsBank Corp............ 7,832,619
------------
15,854,619
------------
Banking & Financial Services (2.1%):
155,000 Crestar Financial Corp...... 8,738,125
------------
Beverages (1.8%):
220,000 PepsiCo, Inc................ 7,315,000
------------
Chemicals (6.4%):
120,000 Great Lakes Chemical Corp... 7,740,000
133,500 Millipore Corp.............. 5,857,313
170,000 Morton International, Inc... 6,460,000
85,000 WR Grace & Co............... 6,332,500
------------
26,389,813
------------
Communications Equipment (1.8%):
250,000 DSC Communications Corp...... 7,531,250
------------
Containers & Packaging (1.2%):
83,552 Avery Dennison.............. 4,762,464
------------
Electric Utility (3.5%):
134,800 Central & South West Corp... 3,723,850
132,000 Cinergy Corp................ 3,910,500
160,000 PacifiCorp.................. 3,220,000
90,000 Union Electric Co........... 3,543,750
------------
14,398,100
------------
Electrical Equipment (6.3%):
166,000 Duracell International, Inc. 7,739,750
135,000 General Electric Co......... 11,171,249
106,914 Grainger W.W., Inc.......... 7,149,874
------------
26,060,873
------------
Financial Services (4.4%):
100,000 First USA, Inc.............. 5,800,000
214,935 PMI Group................... 9,295,939
100,000 United Companies............
Financial Corp............. $ 3,037,500
------------
18,133,439
------------
Food & Related (1.8%):
225,000 H. J. Heinz Co.............. 7,481,250
------------
Food Processing (2.1%):
320,000 IBP, Inc..................... 8,760,000
------------
Health Care Drugs (3.7%):
160,000 Abbott Laboratories......... 6,900,000
138,678 Schering Plough Corp........ 8,129,998
------------
15,029,998
------------
Health Care General (1.8%):
88,058 Bristol Myers Squibb Co..... 7,517,952
------------
Leasing (1.8%):
310,000 Consolidated Freightways.... 7,362,500
------------
Machinery & Equipment (2.2%):
415,000 McDermott International,
Inc........................ 9,026,250
------------
Manufacturing-Consumer Goods (3.8%):
240,000 Newell Co................... 7,200,000
337,363 Whitman Corp................ 8,476,245
------------
15,676,245
------------
Medical Equipment & Supplies (2.0%):
125,000 Allergan.................... 4,812,500
100,000 CR Bard..................... 3,287,500
------------
8,100,000
------------
Oil & Gas Equipment/Services (2.3%):
321,300 Dresser Industries, Inc..... 9,398,025
------------
Oil & Gas Exploration Production &
Services (6.7%):
85,000 Amoco Corp.................. 6,162,500
175,000 Murphy Oil Corp............. 7,721,875
110,000 Ultramar Corp............... 3,533,750
552,600 Union Texas Petroleum
Holdings, Inc.............. 10,292,175
------------
27,710,300
------------
Oil & Gas Utility (2.2%):
250,000 Vastar Resources............ 9,093,750
------------
</TABLE>
Continued
-36-
<PAGE>
THE ARCH FUND, INC.
Growth and Income Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- ----------- ------------------------------- ------------- ----------- ------------------------------- ------------
<S> <C> <C> <C>
Common Stocks, continued: Common Stocks, continued:
Pharmaceuticals (7.8%): Tobacco (1.9%):
140,000 American Home Products Corp.... $ 7,490,000 80,000 Philip Morris Cos., Inc......... $ 7,950,000
160,000 Eli Lilly & Co................. 10,280,000 ------------
100,000 Pfizer, Inc.................... 7,075,000 Transportation & Shipping (2.0%):
140,000 Smithkline Beecham PLC......... 7,140,000 120,000 Union Pacific Corp............. 8,415,000
------------- ------------
31,985,000 Utilities - Telecommunications (1.7%):
------------- 160,000 GTE Corp....................... 6,840,000
Railroad (1.9%): ------------
160,000 CSX Corp....................... 7,920,000 Utilities Telephone (2.3%):
------------- 150,000 AT&T Corp...................... 9,356,250
Retail Stores (4.5%): ------------
200,000 Home Depot, Inc................. 10,225,000 Wholesale Distribution (2.0%):
321,363 Wal-Mart Stores, Inc............ 8,315,268 239,935 Sysco Corp..................... 8,187,782
------------- ------------
18,540,268 Total Common Stocks....................... 385,902,128
-------------
Technology (6.2%): Investment Companies (1.3%):
200,000 Automatic Data Processing, 5,168,000 Cash Assets Trust Money
Inc........................... 7,675,000 Market Fund................ 5,168,000
70,000 Microsoft(b).................... 8,312,500 ------------
140,000 Motorola, Inc................... 9,345,000 Total Investment Companies............... 5,168,000
------------- ------------
25,332,500 Total (Cost $334,857,031)(a).............. $413,541,446
------------- =============
</TABLE>
- ------------------------
Percentages indicated are based on net assets of $411,412,831.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $1,285,802. Cost for federal income tax purposes differs
from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................... $ 81,215,029
Unrealized depreciation......................... (3,816,416)
Net unrealized appreciation..................... $ 77,398,613
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements
-37-
<PAGE>
THE ARCH FUND, INC.
Emerging Growth Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- ------------ ------------------------- ------------- ------------ --------------------------- -----------
<S> <C> <C> <C>
Commercial Paper (7.0%): Common Stocks, continued:
Chemicals (7.0%): Consumer Goods & Services (1.7%):
15,378,000 Dow Chemical, 5.35%, 155,000 Department 56, Inc.(b)......... $ 3,720,000
6/03/96............... $15,373,429 -----------
------------- Containers (0.9%):
Total Commercial Paper 15,373,429 70,000 Ball Corp...................... 1,933,750
------------- -----------
Common Stocks (91.6%): Electric Utility (0.9%):
Airlines (1.0%): 75,000 Central Louisiana Electric..... 1,996,875
114,800 Skywest Inc................. 2,195,550 -----------
------------- Electrical Equipment (1.9%):
Appliances & Household Durable (0.5%): 60,000 Hubbell, Inc., Class B......... 4,192,500
60,000 Heilig-Meyers Co............ 1,237,500 -----------
------------- Financial Services (12.5%):
Banking (2.5%): 71,250 Aames Financial Corp........... 2,333,438
50,000 First Commerce Corp......... 1,775,000 100,000 Advanta Corp., Class B......... 5,200,000
28,200 Signet Banking Corp......... 729,675 90,000 Charter One Financial, Inc..... 3,273,750
100,000 Union Planters Corp......... 3,062,500 34,000 CMAC Investment Corp........... 1,853,000
------------- 5,000 Credit Acceptance Corp.(b)..... 100,000
5,567,175 75,000 Finova Group, Inc.............. 3,975,000
------------- 40,000 First Finance Corp............. 920,000
Beverages - Foreign (2.4%): 100,000 Resource Bancshares and
100,000 Canadaigua Wine, Inc., Mortgage Group(b)............ 1,325,000
Class A(b)................ 3,025,000 72,000 Standard Federated Bank........ 2,835,000
75,000 Mondavi Robert Corp. 118,600 Union Acceptance(b)............ 1,660,400
Class A(b)................ 2,231,250 137,400 United Companies Financial
------------- Corp......................... 4,173,525
5,256,250 -----------
------------- 27,649,113
Broadcasting (0.7%): -----------
120,000 Paxson Communications Food Processing (4.3%):
Corp.(b).................. 1,530,000 275,000 Flowers Industries, Inc........ 4,331,250
------------- 160,000 Hormel Foods Corp.............. 3,800,000
Chemicals (3.8%): 104,000 J & J Snack Foods Corp.(b)..... 1,365,000
40,000 Cytec Industries, Inc.(b)... 3,580,000 -----------
140,000 Hanna (M.A.) Co............. 4,812,500 9,496,250
------------- -----------
8,392,500 Food Products (1.6%):
------------- 115,000 Performance Food Group(b)...... 3,622,500
Commercial Services (0.7%): -----------
150,000 Barefoot, Inc............... 1,650,000 Informational Services (1.8%):
------------- 105,000 Sungard Data Systems,
Computer Software (0.8%): Inc.(b) ....................... 3,963,750
100,000 Active Voice Corp.(b)....... 1,350,000 -----------
61,700 MySoftware Co.(b)........... 462,750 Insurance (2.0%):
------------- 82,100 American States Financial(b)... 1,888,300
1,812,750 80,000 Nac RE Corp.................... 2,600,000
------------- -----------
Computers (5.1%): 4,488,300
139,800 Norand Corp.(b)............. 2,865,900 -----------
185,000 Quantum Corp.(b)............ 4,416,875 Machinery & Equipment (1.2%):
160,000 Zebra Technologies Corp.(b). 4,040,000 105,200 Modine Manufacturing Co........ 2,656,300
------------- -----------
11,322,775
-------------
</TABLE>
Continued
-38-
<PAGE>
THE ARCH FUND, INC.
Emerging Growth Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- ---------- -------------------------- -------------- ------------ -------------------------- --------------
<S> <C> <S> <C>
Common Stocks, continued: Common Stocks, continued:
Manufacturing - Miscellaneous (0.7%): Printing & Publishing (1.0%):
65,000 Lydall, Inc.(b) ........... $ 1,511,250 180,000 K-111 Communications
------------ Corp.(b)................... $2,295,000
Manufacturing-Capital Goods (0.6%): ------------
70,900 Holophane Corp.(b)............ 1,258,475 Restaurants (2.2%):
------------ 50,000 Ruby Tuesday, Inc.(b)......... 1,062,500
Manufacturing-Consumer Goods (0.6%): 274,000 Ryan's Family Steak Houses,
200,000 First Alert, Inc.(b).......... 1,300,000 Inc.(b)..................... 2,431,750
------------ 105,000 Shoney's, Inc.(b)............. 1,286,250
Medical Equipment & Supplies (7.2%): ------------
135,000 Allergan...................... 5,197,500 4,780,500
70,000 Dentsply International, Inc. 3,010,000 ------------
115,000 Fisher Scientfic Intl......... 4,700,625 Retail Stores (5.5%):
110,000 Penederm, Inc.(b)............. 1,842,500 90,000 Discount Auto Parts, Inc.(b).. 2,317,500
60,100 Resmed, Inc.(b).............. 1,036,725 170,000 Michaels Stores, Inc.(b)...... 2,826,250
------------ 110,000 Micro Warehouse, Inc.(b)...... 4,290,000
15,787,350 75,000 Tractor Supply Co.(b)......... 1,856,250
------------ 68,737 Tuesday Morning Corp.(b)...... 893,581
Medical Services (6.5%): ------------
250,000 Beverly Enterprises, Inc.(b).. 3,062,500 12,183,581
66,000 Emeritus Corp.(b)............. 1,336,500 ------------
160,000 Horizon/CMS Healthcare Telecommunications (5.4%):
Corp.(b)..................... 1,960,000 175,000 Arch Communications Group,
95,000 Living Centers of America(b).. 3,586,250 Inc.(b)..................... 4,025,000
65,000 Sterling House Corp.(b)....... 1,251,250 280,000 Mobile Telecom Tech Corp.(b).. 4,060,000
208,332 Sun Health Care Group, 89,500 Palmer Wireless, Inc.(b)...... 1,913,063
Inc.(b)...................... 3,072,897 120,000 U.S. Order, Inc.(b)........... 1,890,000
------------ ------------
14,269,397 11,888,063
------------ ------------
Miscellaneous (1.1%): Telecommunications-Services & Equipment
50,000 Interim Services, Inc......... 2,375,000 (2.2%):
------------ 55,000 Brite Voice Systems, Inc.(b).. 1,395,625
Office/Business Equipment & Supplies 175,000 Colonial Data Technologies
(1.0%): Corp.(b).................... 3,412,500
118,000 Nu-kote Holding, Inc. ------------
Class A(b)............................. 2,153,500 4,808,125
------------ ------------
Oil & Gas Exploration Production & Trucking & Leasing (2.9%):
Services (5.4%): 173,775 American Freightways
160,000 J. Ray McDermott, S.A.(b)..... 4,000,000 Corp.(b).................. 2,215,631
150,000 Oceaneering International, 190,000 U.S. Freightways Corp......... 4,132,500
Inc.(b).............................. 2,475,000 ------------
180,000 Union Texas Petroleum 6,348,131
Holdings, Inc.......................... 3,352,500 ------------
70,000 United Meridian Corp.(b)...... 1,995,000 Wholesale Distribution (0.9%):
------------ 80,000 Peak Technologies Group(b).... 1,900,000
11,822,500 ------------
------------ Total Common Stocks..................... 201,915,335
Pharmaceuticals (2.1%): ------------
32,500 Noven Pharmaceuticals(b)...... 560,625
95,000 Scherer Rp Corp.(b)........... 3,990,000
------------
4,550,625
</TABLE>
Continued
-39-
<PAGE>
THE ARCH FUND, INC.
Emerging Growth Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ----------------------------- ------------
<S> <C>
Investment Companies (0.5%):
1,000,000 Cash Assets Trust Money
Market Fund............... $ 1,000,000
---------
Total Investment Companies 1,000,000
------------
Total (Cost--$201,314,188)(a) $218,288,764
============
- --------
Percentages indicated are based on net assets of $220,435,019.
</TABLE>
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ........................ $ 30,849,724
Unrealized depreciation ........................ (13,875,148)
-------------
Net unrealized appreciation .................... $ 16,974,576
=============
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements
-40-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- --------- --------------------------- ----------- --------- --------------------------- -----------
<S> <C> <C> <C>
Commercial Paper (0.8%): Common Stocks, continued:
Chemicals (0.8%): Financial Services, continued:
1,077,000 Dow Chemical, 5.35%, 6/3/96 .... $ 1,076,680 20,000 United Companies Financial Corp. $ 607,500
----------- -----------
Total Commercial Paper 1,076,680 3,877,105
----------- -----------
Common Stocks (58.5%): Food & Related (1.0%):
Airlines (0.8%): 38,100 H. J. Heinz Co. ................. 1,266,825
40,000 Southwest Airlines .............. 1,095,000 -----------
----------- Food Processing (1.3%):
Banking (2.2%): 60,000 IBP, Inc. ....................... 1,642,500
20,000 Chase Manhattan Corp. ........... 1,400,000 -----------
18,450 NationsBank Corp. ............... 1,496,756 Health Care-Drugs (2.7%):
----------- 40,100 Abbott Laboratories ............. 1,729,313
2,896,756 30,722 Schering Plough Corp. ........... 1,801,077
----------- -----------
Banking & Financial Services (1.1%): 3,530,390
25,000 Crestar Financial Corp. ......... 1,409,375 Health Care-General (1.3%):
----------- 20,170 Bristol Myers Squibb Co. ........ 1,722,014
Beverages (1.3%): -----------
50,000 PepsiCo, Inc. ................... 1,662,500 Leasing (1.0%):
----------- 55,000 Consolidated Freightways ........ 1,306,250
Chemicals (4.2%): -----------
30,000 Great Lakes Chemical Corp. ...... 1,935,000 Machinery & Equipment (1.0%):
15,000 Millipore Corp. ................. 658,125 60,000 McDermott International, Inc. ... 1,305,000
45,000 Morton International, Inc. ...... 1,710,000 -----------
15,000 W.R. Grace ...................... 1,117,500 Manufacturing-Consumer Goods (2.4%):
----------- 50,000 Newell Co. ...................... 1,500,000
5,420,625 62,480 Whitman Corp. ................... 1,569,810
Communications Equipment (1.4%): -----------
60,000 DSC Communications Corp. ........ 1,807,500 3,069,810
----------- Medical Equipment & Supplies (1.0%):
Containers & Packaging (0.6%): 20,000 Allergan ........................ 770,000
14,626 Avery Dennison .................. 833,682 15,000 CR Bard, Inc. ................... 493,125
----------- -----------
Electric Utility (1.9%): 1,263,125
20,000 Central & South West Corp. ...... 552,500 -----------
25,000 Cinergy Corp. ................... 740,625 Oil & Gas Equipment/Services (1.8%):
30,000 PacifiCorp ...................... 603,750 80,000 Dresser Industries, Inc. ........ 2,340,000
15,000 Union Electric Co. .............. 590,625 -----------
----------- Oil & Gas Exploration Production &
2,487,500 Services (4.5%):
----------- 20,000 Amoco Corp. ..................... 1,450,000
Electrical Equipment (4.6%): 45,300 Murphy Oil Corp. ................ 1,998,863
45,000 Duracell International, Inc. .... 2,098,125 15,000 Ultramar Corp. .................. 481,875
22,640 General Electric Co. ............ 1,873,460 105,000 Union Texas Petroleum
29,978 Grainger W.W., Inc. ............ 2,004,779 Holdings, Inc. ................ 1,955,625
----------- -----------
5,976,364 5,886,363
----------- -----------
Financial Services (3.0%): Oil & Gas Utility (1.1%):
20,000 First USA, Inc. ................. 1,160,000 40,000 Vastar Resources ................ 1,455,000
48,777 PMI Group ....................... 2,109,605 -----------
</TABLE>
Continued
-41-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- --------- --------------------------- ----------- --------- --------------------------- -----------
<S> <C> <C> <C>
Common Stocks, continued: Medium Term Note (1.5%):
Pharmaceuticals (4.4%): Finance (1.5%):
20,000 American Home Products Corp..... $ 1,070,000 2,000,000 Federal Home Loan Bank,
30,000 Eli Lilly & Co. ................ 1,927,500 5.35%, 2/7/01 .............. $ 1,882,160
19,824 Pfizer, Inc. ................... 1,402,548 -----------
26,138 Smithkline Beecham PLC, ADR .... 1,333,038 Total Medium Term Note 1,882,160
----------- -----------
5,733,086 U.S. Government Agencies (9.2%):
-----------
Railroad (1.5%): Federal Home Loan Mortgage Corp.:
38,000 CSX Corp. ...................... 1,881,000 339,753 9.50%, 2/1/98 .............. 348,987
----------- 287,200 7.00%, 3/1/98 .............. 288,096
Retail Stores (2.6%): 553,158 6.00%, 4/1/98 .............. 540,535
35,000 Home Depot, Inc. ............... 1,789,375 109,154 6.50%, 4/1/98 .............. 108,232
60,893 Walmart Stores, Inc. ........... 1,575,606 427,363 6.50%, 4/1/98 .............. 423,756
----------- 128,432 7.00%, 4/1/98 .............. 128,833
3,364,981 651,016 6.50%, 4/1/08 .............. 625,991
----------- 290,890 7.00%, 4/1/08 .............. 285,890
Technology (4.0%): 287,503 7.00%, 4/1/08 .............. 282,561
35,056 Automatic Data Processing, Inc.. 1,345,274 848,039 6.50%, 1/1/09 .............. 815,441
15,000 Microsoft(b) ................... 1,781,250
30,000 Motorola, Inc. ................. 2,002,500 Government National Mortgage Assoc.:
----------- 426,290 7.00%, 7/15/09 .............. 420,429
5,129,024 489,152 6.50%, 10/20/10 .............. 466,681
----------- 17,588 8.50%, 6/15/17 .............. 18,034
Tobacco (1.2%): 450,761 8.00%, 7/15/22 .............. 453,155
15,000 Philip Morris Cos., Inc. ....... 1,490,625 282,387 7.00%, 11/15/22 .............. 269,148
----------- 471,676 7.00%, 11/15/22 .............. 449,564
Transportation & Shipping (0.8%): 738,910 7.50%, 3/15/23 .............. 724,132
15,000 Union Pacific Corp. ............ 1,051,875 13,621 8.50%, 3/15/23 .............. 13,966
----------- 400,377 7.50%, 4/15/23 .............. 392,370
Utilities - Telecommunications (1.0%): 672,660 8.50%, 8/15/24 .............. 689,685
30,000 GTE Corp. ...................... 1,282,500 601,655 8.50%, 9/15/24 .............. 616,883
----------- 157,892 8.50%, 9/15/24 .............. 161,888
Utilities - Telephone (1.7%): 177,093 8.50%, 1/15/25 .............. 181,575
35,000 A T & T Corp. .................. 2,183,125 189,156 8.50%, 2/15/25 .............. 193,943
----------- 417,364 8.50%, 3/15/25 .............. 427,927
Wholesale Distribution (1.1%): 202,327 8.50%, 4/15/25 .............. 207,447
40,669 Sysco Corp. .................... 1,387,830 445,713 8.00%, 8/15/25 .............. 448,080
----------- 24,856 7.50%, 9/15/25 .............. 24,359
Total Common Stocks 75,757,730 24,849 7.50%, 10/15/25 .............. 24,352
----------- 38,341 7.50%, 10/15/25 .............. 37,574
Corporate Bonds (0.8%): 924,989 7.50%, 10/15/25 .............. 906,489
Oil & Exploration Products & Services 26,632 7.50%, 10/15/25 .............. 26,100
(0.8%): 908,454 7.50%, 10/15/25 .............. 890,285
1,000,000 BP America, Inc., 8.88%, -----------
12/1/97 ................................ 1,036,250
----------- Total U.S. Government Agencies 11,892,388
Total Corporate Bonds 1,036,250 -----------
-----------
</TABLE>
Continued
-42-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------ -------------
<S> <C>
U.S. Treasury Bonds (8.2%):
300,000 10.75%, 8/15/05 .............. $ 377,643
2,750,000 12.00%, 8/15/13 .............. 3,842,519
1,500,000 7.50%, 11/15/16 .............. 1,554,240
1,000,000 8.13%, 5/15/21 .............. 1,108,900
1,000,000 8.13%, 8/15/21 .............. 1,109,180
1,200,000 8.00%, 11/15/21 .............. 1,314,204
1,500,000 6.25%, 8/15/23 .............. 1,338,900
-------------
Total U.S. Treasury Bonds 10,645,586
-------------
U.S. Treasury Notes (17.5%):
1,200,000 6.13%, 7/31/96 .............. 1,201,788
1,000,000 4.38%, 8/15/96 .............. 998,360
1,000,000 4.38%, 11/15/96 .............. 995,520
3,000,000 6.25%, 1/31/97 .............. 3,012,540
3,500,000 6.88%, 3/31/97 .............. 3,531,814
2,250,000 5.75%, 9/30/97 .............. 2,242,395
2,000,000 5.00%, 2/15/99 .............. 1,931,840
3,000,000 7.50%, 5/15/02 .............. 3,118,949
3,000,000 6.38%, 8/15/02 .............. 2,949,300
2,700,000 6.50%, 5/15/05 .............. 2,635,632
-------------
Total U.S. Treasury Notes 22,618,138
-------------
Investment Companies (3.1%):
4,000,000 Cash Assets Trust
Money Market Fund ...................... 3,999,999
-------------
Total Investment Companies 3,999,999
-------------
Total (Cost--$115,529,292)(a) $ 128,908,931
=============
</TABLE>
- ------------
Percentages indicated are based on net assets of $129,567,992.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $500,550. Cost for federal income tax purposes differs
from value by net unrealized appreciation of securities as follows:
Unrealized appreciation ........... $14,964,578
Unrealized depreciation ........... (2,085,489)
-----------
Net unrealized appreciation ....... $12,879,089
===========
(b) Represents non-income producing securities.
ADR--American Depository Receipt.
See notes to financial statements
-43-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- --------- ----------------------------- ----------- --------- ----------------------------- -----------
<S> <C> <C> <C> <C> <C>
Collateralized Mortgage Obligations (0.0%): U.S. Government Agencies, continued:
10,199 Collateralized Mortgage Federal National Mortgage Assoc.:
Securities Corp., 8.25%, 463,546 8.50%, 5/25/97 ............. $ 467,602
6/20/96 ....................... $ 10,194 1,554,710 6.00%, 11/1/00, Pool
----------- #190070 ................... 1,493,485
Total Collateralized Mortgage 3,450,089 8.00%, 7/1/24, Pool
Obligations 10,194 #190264 ................... 3,465,166
-----------
Corporate Bonds (5.0%): Government National Mortgage Assoc.:
Financial Services (5.0%):
4,000,000 Associates Corp. America, 44,426 9.50%, 2/15/01 ............. 46,745
8.38%, 1/15/98 ................ 4,115,000 56,860 9.50%, 9/15/01 ............. 59,827
3,000,000 Ford Motor Credit Corp., 230,887 8.00%, 1/15/02 ............. 236,371
9.05%, 5/8/98 ................. 3,135,000 58,977 8.00%, 3/15/02 ............. 60,378
----------- 212,580 8.00%, 3/15/02 ............. 217,628
7,250,000 219,129 8.00%, 4/15/02 ............. 224,333
----------- 218,879 8.00%, 7/15/02 ............. 224,077
Total Corporate Bonds 7,250,000 105,401 9.50%, 10/15/02 ............. 110,901
----------- 156,677 9.50%, 1/15/06 ............. 164,853
U.S. Government Agencies (24.5%): 191,030 8.00%, 5/15/06 ............. 195,567
Federal Home Loan Mortgage Corp.: 85,533 9.50%, 7/15/07 ............. 89,996
311,011 7.50%, 1/15/97 ............. 311,994 475,492 8.00%, 11/15/07 ............. 486,785
1,697,804 6.50%, 2/1/98 ............. 1,683,475 515,038 8.00%, 12/15/07 ............. 527,271
1,154,230 6.50%, 3/1/98 ............. 1,144,488 851,658 9.50%, 8/15/09, Pool
80,067 8.50%, 5/1/01 ............. 82,519 #400219 ................... 896,098
171,358 8.50%, 11/1/01 ............. 175,962 220,122 9.50%, 9/15/09 ............. 231,608
119,037 8.00%, 3/1/02 ............. 121,082 1,113,355 9.50%, 2/15/10 ............. 1,171,450
34,869 8.00%, 3/1/02 ............. 35,468 52,197 8.00%, 5/15/10 ............. 53,436
174,885 7.50%, 4/1/02 ............. 174,173 222,178 8.00%, 9/15/10 ............. 227,455
83,785 8.00%, 5/1/02 ............. 85,224 1,131,771 8.00%, 11/12/10 ............. 1,158,650
10,419 8.00%, 5/1/02 ............. 10,598 280,699 8.00%, 11/15/10 ............. 287,365
6,458 8.00%, 6/1/02 ............. 6,568 367,613 8.00%, 11/15/10 ............. 376,344
386,332 8.00%, 6/1/02 ............. 392,969 2,748,133 8.50%, 4/15/17, Pool
86,057 8.00%, 6/1/02 ............. 87,536 #0212112 .................. 2,817,689
21,013 8.00%, 6/1/02 ............. 21,374 1,684,914 8.00%, 4/15/22, Pool
46,871 8.00%, 7/1/02 ............. 47,677 #0320818 .................. 1,693,861
233,558 8.00%, 7/1/02 ............. 237,571 3,973,538 7.50%, 1/15/23, Pool
136,945 8.50%, 3/1/05 ............. 140,625 #0331839 .................. 3,894,067
13,289 8.50%, 4/1/05 ............. 13,647 2,273,723 8.00%, 1/15/23, Pool
1,000,000 7.46%, 8/3/05 ............. 1,001,210 #0331841 .................. 2,285,797
89,858 8.50%, 9/1/05 ............. 92,272 1,201,132 7.50%, 4/15/23 .............. 1,177,109
49,308 8.50%, 4/1/06 ............. 50,910 1,915,777 9.00%, 3/15/25 .............. 2,003,768
2,594,091 8.00%, 1/1/23 ............. 2,607,062 -----------
584,395 8.00%, 1/1/23 ............. 587,317 35,457,403
Total U.S. Government Agencies ===========
</TABLE>
Continued
-44-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- ----------- ---------------------------- ------------ ------------ --------------------------- ----------
U.S. Treasury Bonds (31.5%): U.S. Treasury Notes, continued:
<S> <C> <C> <C> <C> <C>
5,300,000 12.75%, 11/15/10........... $ 7,394,189 13,950,000 5.75%, 9/30/97........... $ 13,902,849
9,305,000 12.00%, 8/15/13........... 13,001,690 800,000 5.13%, 2/28/98........... 786,088
1,375,000 9.25%, 2/15/16........... 1,675,685 5,500,000 6.13%, 5/15/98........... 5,490,265
1,675,000 8.75%, 5/15/17........... 1,959,599 650,000 5.25%, 1/31/01........... 615,953
2,865,000 8.88%, 8/15/17........... 3,392,676 7,100,000 6.38%, 8/15/02........... 6,980,010
4,150,000 8.88%, 2/15/19........... 4,931,321 2,000,000 7.25%, 8/15/04........... 2,050,500
4,000,000 8.13%, 8/15/19........... 4,423,240 2,000,000 7.88%, 11/15/04........... 2,128,440
1,550,000 8.50%, 2/15/20........... 1,781,121 1,150,000 6.50%, 8/15/05........... 1,121,169
2,183,000 8.75%, 8/15/20........... 2,573,342 ----------
5,000,000 6.25%, 8/15/23........... 4,463,000 Total U.S. Treasury Notes 53,557,992
---------- ----------
Total U.S. Treasury Bonds 45,595,863 Investment Companies (1.3%):
---------- 1,821,700 Federated Money Market
Trust Fund............... 1,821,700
U.S. Treasury Notes (37.0%): 100,000 Federated Tax-Free Trust
1,100,000 6.13%, 7/31/96........... 1,101,639 Mutual Fund.............. 100,000
4,500,000 4.38%, 8/15/96........... 4,492,620 ----------
2,650,000 4.38%, 11/15/96........... 2,638,128 Total Investment Companies 1,921,700
6,170,000 6.25%, 1/31/97........... 6,195,791 ----------
6,000,000 6.88%, 3/31/97........... 6,054,540 Total (Cost-$144,248,182)(a) $143,793,152
============
</TABLE>
- -----------------
Percentages indicated are based on net assets of $144,932,852.
(a) Represents cost for federal income tax puposes and differs from value by
net unrealized depreciation of securities as follows:
Unrealized appreciation ........................ $ 1,984,744
Unrealized depreciation ........................ (2,439,774)
---------------
Net unrealized depreciation .................... $ (455,030)
===============
See notes to financial statements
-45-
<PAGE>
THE ARCH FUND, INC.
U.S. Government Securities Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------ ----------
U.S. Government Agencies (25.9%):
Federal Home Loan Mortgage Corp.:
<S> <C> <C>
1,239,721 8.00%, 9/1/96, Pool #M90063... $1,246,688
311,011 7.50%, 1/15/97................ 311,994
318,129 7.50%, 8/1/97................. 319,720
552,279 6.50%, 2/1/98................. 547,618
534,317 9.50%, 2/1/98................. 548,840
647,675 6.00%, 5/1/98................. 632,895
25,141 9.50%, 9/1/04................. 26,115
500,000 7.46%, 8/3/05................. 500,605
377,912 8.50%, 3/1/06................. 390,194
620,428 7.50%, 4/1/08, Pool #E4-5929.. 621,979
Federal National Mortgage Assoc.:
777,355 6.00%, 11/1/00, Pool #190070.. 746,743
1,725,045 8.00%, 7/1/24, Pool #190264... 1,732,583
Government National Mortgage Assoc.:
423,045 8.00%, 1/15/07................ 433,093
402,096 9.00%, 7/15/09................ 422,953
539,416 9.00%, 11/15/09............... 567,395
977,122 8.00%, 10/15/10............... 1,000,329
208,787 8.50%, 5/15/17, Pool #0219152. 214,072
177,023 8.50%, 6/15/21, Pool #0307921. 181,504
1,229,955 7.50%, 12/15/22, Pool
#0347332..................... 1,205,356
762,422 8.00%, 5/15/23, Pool #0352469. 766,470
262,171 9.50%, 1/15/25 .............. 280,358
778,786 9.50%, 2/15/25, Pool # 365292. 832,810
23,486 9.50%, 2/15/25 .............. 25,115
617,553 9.50%, 2/15/25, Pool# 401796.. 660,392
556,367 9.50%, 3/15/25, Pool # 407257. 594,962
351,851 9.50%, 4/15/25, Pool # 386741. 376,259
Tennessee Valley Authority:
1,000,000 8.25%, 11/15/96............... 1,011,250
----------
Total U.S. Government Agencies......... 16,198,292
----------
</TABLE>
- -------------
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------ ----------
<S> <C> <C>
U.S. Treasury Bonds (10.8%):
1,100,000 5.88%, 11/15/05............... $1,025,486
1,000,000 12.75%, 11/15/10............... 1,395,130
3,100,000 12.00%, 8/15/13................ 4,331,568
----------
Total U.S. Treasury Bonds 6,752,184
----------
U.S. Treasury Notes (60.1%):
1,400,000 6.13%, 7/31/96................ 1,402,086
5,800,000 4.38%, 8/15/96................ 5,790,487
1,000,000 4.38%, 11/15/96............... 995,520
5,200,000 5.75%, 9/30/97................ 5,182,424
450,000 5.63%, 10/31/97............... 447,417
1,000,000 5.00%, 1/31/98................ 981,550
5,500,000 5.13%, 2/28/98................ 5,404,354
2,000,000 7.12%, 10/15/98............... 2,035,520
2,100,000 7.00%, 4/15/99................ 2,131,731
1,400,000 7.75%, 11/30/99............... 1,451,646
2,200,000 6.88%, 3/31/00................ 2,221,340
2,850,000 5.50%, 12/31/00............... 2,724,401
600,000 8.00%, 5/15/01................ 633,906
1,650,000 7.50%, 5/15/02................ 1,715,423
1,000,000 7.25%, 5/15/04................ 1,025,370
500,000 7.25%, 8/15/04................ 512,625
3,000,000 6.50%, 8/15/05................ 2,924,790
----------
Total U.S. Treasury Notes 37,580,590
-----------
Investment Companies (2.4%):
1,505,300 Federated U.S. Treasury
Obligation Fund.............. 1,505,300
-----------
Total Investment Companies 1,505,300
-----------
Total (Cost $62,953,348)(a) $62,036,366
===========
</TABLE>
Percentages indicated are based on net assets of $62,509,129.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................... $ 240,574
Unrealized depreciation....................... (1,157,556)
------------
Net unrealized depreciation................... $ (916,982)
============
</TABLE>
See notes to financial statements
-46-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE> <CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------------------------------------------------------------------------ ---------
Municipal Bonds (94.6%):
Missouri (89.8%):
<C> <S> <C>
300,000 Christian County School District R-6, 7.05%, 3/1/11............................................. $ 328,875
1,255,000 Columbia, 5.50%, 10/1/03........................................................................ 1,306,769
1,000,000 Columbia Water & Electrical Revenue, 6.13%, 10/1/12............................................. 1,018,750
750,000 Franklin County, 5.75%, 3/1/13.................................................................. 744,375
1,000,000 Hazelwood School District Series 1994, 5.85%, 3/1/09............................................ 1,012,500
1,000,000 Jefferson City, School District, 6.70%, 3/1/11.................................................. 1,112,500
150,000 Kansas City Municipal Assistance Corp., 7.15%, 4/15/04.......................................... 166,125
2,415,000 Kansas City School District Building, 5.15%, 2/1/08............................................. 2,345,569
1,000,000 Kansas City School District Building, 5.00%, 2/1/14............................................. 908,750
1,000,000 Kansas City Sewer Revenue, 7.25%, 4/1/03........................................................ 1,075,000
1,000,000 Kansas City, School District, 5.38%, 7/1/05..................................................... 1,012,500
700,000 Lincoln County Industrial Deve Revenue, 7.50%, 5/1/05........................................... 752,500
1,500,000 Mehlville School District 09, 6.00%, 2/15/13.................................................... 1,522,500
1,500,000 Missouri Board Public Buildings, 6.40%, 12/1/09................................................. 1,571,250
1,000,000 Missouri Environmental Resources Authority, 6.45%, 7/1/08....................................... 1,077,500
720,000 Missouri Environmental Resources Authority, 7.00%, 10/1/10...................................... 788,400
1,100,000 Missouri Environmental Resources Authority, 6.88%, 6/1/14....................................... 1,188,000
500,000 Missouri Environmental Resources Authority, 6.55%, 7/1/14....................................... 530,625
1,250,000 Missouri Environmental Resources Authority, 5.63%, 7/1/16....................................... 1,218,750
200,000 Missouri Environmental Resources Authority, 7.40%, 5/1/20....................................... 217,000
100,000 Missouri Environmental Resources Authority, 7.40%, 5/1/20....................................... 108,750
1,000,000 Missouri GO, 5.25%, 8/1/08...................................................................... 987,540
1,000,000 Missouri GO, 5.13%, 8/1/09...................................................................... 966,030
800,000 Missouri Health & Educational Facilities Authority, 7.75%, 6/1/07............................... 838,736
600,000 Missouri Health & Educational Facilities Authority, 6.63%, 11/1/09.............................. 663,750
500,000 Missouri Health & Educational Facilities Authority, 7.12%, 12/15/12............................. 559,375
2,000,000 Missouri Health & Educational Facilities Authority, 5.10%, 11/15/13............................. 1,850,000
1,000,000 Missouri Health & Educational Facilities Authority, 5.38%, 2/15/14.............................. 948,750
750,000 Missouri Health & Educational Facilities Authority, 6.25%, 6/1/15............................... 776,250
2,000,000 Missouri Health & Educational Facilities Authority, 6.25%, 6/1/16............................... 2,065,000
2,500,000 Missouri Health & Educational Facilities Authority, 5.25%, 5/15/21.............................. 2,268,750
1,200,000 Missouri Health & Educational Facilities Authority Child Mercy, 5.63%, 5/15/12.................. 1,170,000
1,000,000 Missouri Higher Education Loan Authority, 5.75%, 2/15/02........................................ 1,027,500
500,000 Missouri Housing Development, 7.00%, 9/1/10..................................................... 529,375
500,000 Missouri Housing Development, 6.90%, 7/1/18..................................................... 517,500
1,000,000 Missouri Housing Development, 6.60%, 7/1/24..................................................... 1,030,000
750,000 Missouri Southern State College, 5.25%, 12/1/12................................................. 705,000
200,000 Missouri Water PCR, 7.12%, 12/1/10.............................................................. 221,000
1,000,000 Missouri Water PCR, 5.75%, 8/1/12............................................................... 1,005,560
1,000,000 Missouri Western State College, 5.40%, 10/1/16.................................................. 947,500
</TABLE>
Continued
-47-
<PAGE>
[CAPTION]
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments,
Continued
May 31, 1996
(Unaudited)
[S] [C] [C]
Shares
or
Principal Security Market
Amount Description Value
- -------------------------------------------------------------------------------
Municipal Bonds, continued:
Missouri, continued:
570,000 O'Fallon, 5.75%, 3/1/10 $ 573,563
600,000 Phelps County Hospital Revenue,
8.20%, 3/1/05 682,500
1,000,000 Sikeston Electric Revenue, 5.00%,
6/1/22 876,250
1,000,000 Sikeston Electric Revenue, 6.25%,
6/1/22 1,092,500
500,000 Southeast Missouri Correctional
Facilities, 5.75%, 10/15/08 501,250
500,000 Southeast Missouri Correctional
Facilities, 5.75%, 10/15/16 483,125
2,000,000 Springfield, R-12 School, 5.25%,
3/1/11 1,897,500
400,000 Springfield, School District R12
Series A, 6.75%, 3/1/11 434,500
2,000,000 Springfield, Water Works Revenue,
5.60%, 5/1/23 1,912,500
500,000 St. Charles County, 5.70%, 2/15/05 513,125
1,000,000 St. Charles County, 6.00%, 2/15/09 1,008,750
500,000 St. Charles County, Public
Facilities, 6.38%, 3/15/07 526,250
1,000,000 St. Louis County, 5.00%, 2/1/04 986,250
750,000 St. Louis County, 6.25%, 2/1/10 803,438
2,500,000 St. Louis County Missouri Series B,
5.50%, 2/1/13 2,406,249
800,000 St. Louis County, IDR, 7.38%, 2/1/14 789,000
400,000 St. Louis IDR, 6.65%, 5/1/16 428,000
500,000 St. Louis Water Revenue, 6.00%, 7/1/14 507,500
1,740,000 St. Peters, 5.80%, 1/1/09 1,757,400
1,065,000 St. Peters, 5.85%, 1/1/13 1,054,350
1,400,000 University of Missouri Industrial
Development, 5.95%, 12/20/25 1,372,000
925,000 University of Missouri Revenue Bonds,
6.50%, 11/1/11 986,281
2,000,000 University of Missouri Revenue Bonds,
5.50%, 11/1/23 1,845,000
400,000 Webster Groves, 6.60%, 2/1/10 440,000
62,961,885
Continued
-48-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ----------- --------------------------------------------------------------------------- -------------
<S> <C> <C>
Municipal Bonds, continued:
Puerto Rico (4.8%):
1,000,000 Commonwealth, 6.00%, 7/1/06.............................................. $ 1,031,250
500,000 Commonwealth, 6.45%, 7/1/17.............................................. 519,375
2,000,000 Public Buildings Authority, 5.50%, 7/1/21................................ 1,837,500
-------------
3,388,125
-------------
Total Municipal Bonds.............................................................. 66,350,010
--------------
Investment Companies (4.1%):
604,000 Federated Tax-Free Trust Fund............................................ 604,000
2,302,000 Nuveen Tax Exempt Money Market Fund...................................... 2,302,000
---------------
Total Investment Companies......................................................... 2,906,000
---------------
Total (Cost-$68,933,856)(a)........................................................ $69,256,010
---------------
</TABLE>
- -----------
Percentages indicated are based on net assets of $70,147,666.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<C> <C>
Unrealized appreciation ....................... $ 1,554,407
Unrealized depreciation ....................... (1,232,253)
------------------
Net unrealized appreciation ................... $ 322,154
==================
</TABLE>
PCR-Pollution Control Revenue.
GO-General Obligation.
IDR-Industrial Development Revenue.
Continued
-49-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- --------- ------------------------------- ---------- --------- ------------------------------- ----------
Municipal Bonds (93.4%): Municipal Bonds continued:
Alabama (3.6%): Maryland (3.3%):
<S> <C> <C> <C> <C> <C>
1,000,000 Alabama State GO, 4.40%, 400,000 Maryland Transportation
12/1/00 .................... $ 987,500 Authority, 4.10%, 12/15/00 . $ 390,500
---------- 500,000 Washington, Suburban
Alaska (1.1%): Sanitation District, 5.00%,
300,000 Anchorage, 5.40%, 8/1/98....... 306,000 6/1/00 ..................... 506,250
---------- -----------
Colorado (1.5%): 896,750
390,000 Aurora-Colorado Springs, -----------
5.40%, 9/1/98 .............. 398,288 Michigan (7.9%):
---------- 400,000 Chelsea, 5.25%, 5/1/01 ...... 407,000
Hawaii (3.5%): 800,000 Kent City Building Authority
1,000,000 Hawaii State, 4.10%, GO, 4.50%, 12/1/01 ........ 788,000
11/1/01 .................... 951,250 500,000 Mississippi State Capital
---------- Improvement, 5.00%, 8/1/99 .. 507,500
Illinois (9.5%): 450,000 Oakland County, Building
500,000 Chicago, Water Revenue, Authority, 4.75%, 4/1/00 ... 453,937
4.70%, 12/1/99 ............. 502,500 -----------
500,000 Dupage County, 5.90%, 2,156,437
11/1/01 .................... 526,250 -----------
400,000 Illinois State GO, 5.25%, Minnesota (3.2%):
4/1/01 ..................... 411,792 365,000 Duluth, 4.65%, 2/1/02 ....... 360,894
400,000 Illinois State GO Refunding, 500,000 Minnesota State, 5.50%,
5.60%, 10/1/99 ............. 406,256 8/1/98 ..................... 513,125
750,000 Toll Highway Authority, -----------
4.75%, 1/1/02 .............. 739,687 874,019
----------- -----------
2,586,485 Missouri (1.2%):
----------- 320,000 Jefferson County, School
Indiana (1.8%): District, 4.70%, 3/1/01 .... 319,200
500,000 Muncie, School Board, ----------
4.95%, 1/15/02 ............. 494,375 Nevada (5.1%):
----------- 900,000 Sparks GO, 4.80%, 3/1/04 .... 880,875
Iowa (1.6%): 500,000 Washoe County, 5.30%,
425,000 Ottumwa County, 8/1/00 ..................... 512,500
5.10%, 6/1/01 .............. 431,906 -----------
----------- 1,393,375
Kentucky (1.4%): -----------
380,000 Kenton County, Water New Mexico (3.8%):
Revenue, 5.60%, 2/1/99 ...... 389,500 345,000 Albuquerque, 4.40%, 7/1/00 .. 341,550
----------- 700,000 New Mexico State Capital
Maine (2.9%): Projects GO, 4.60%,
800,000 Maine Municipal Bond 8/1/00 ..................... 697,375
Refunding, 4.90%, 11/1/02 .. 798,000 -----------
----------- 1,038,925
-----------
New York (1.9%):
500,000 New York Power Authority,
5.85%, 1/1/00 .............. 518,750
-----------
</TABLE>
Continued
-50-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- ---------- --------------------------- ------------ ---------- --------------------------- ------------
Municipal Bonds, continued: Municipal Bonds, continued:
Pennsylvania (3.3%): Vermont (1.0%):
<S> <C> <C> <C> <C> <C>
500,000 Bucks County, 5.60%, 3/1/98 $ 510,625 270,000 Vermont, 4.50%, 12/1/01.... $ 266,288
400,000 Delaware County, 4.35%, ------------
10/1/00 ................ 396,500 Virginia (3.0%):
------------ 400,000 Virginia Beach GO, 4.20%,
907,125 7/15/98 ................. 400,000
------------ 400,000 Virginia Public Building
Rhode Island (3.2%): Refunding, 5.70%, 8/1/00.. 414,500
900,000 Commonwealth Construction ------------
Capital Development, 814,500
4.60%, 11/1/03 .......... 868,500 ------------
------------ Washington (7.7%):
South Carolina (1.7%): 500,000 Clark County, 4.60%, 1/1/01 493,750
450,000 Charleston School District, 500,000 Grant County Public Utilities
4.40%, 2/1/98 ............ 450,563 District, 4.80%, 1/1/04... 488,750
------------ 600,000 Seattle, 4.80%, 5/1/02..... 250,312
South Dakota (3.8%): 250,000 Seattle Water System
400,000 Charleston S.C. GO, 4.50%, Refunding Bonds, 4.70%,
2/1/00 ................... 398,000 12/1/00 ................ 595,500
640,000 South Dakota Building 250,000 Washington State Refunding
Authority Finance Bonds, Bonds Series R-92C,
5.00%, 9/1/02 ........... 636,000 5.75%, 9/1/02............. 261,250
------------ ------------
1,034,000 2,089,562
------------ ------------
Texas (7.8%): Wisconsin (2.6%):
450,000 Dallas, Water & Sewer 325,000 Brown County, 4.80%,
Revenue, 4.60%, 4/1/01.... 446,062 11/1/01 ................ 325,813
800,000 Houston, Series C, 5.50%, 380,000 Milwaukee County Refunding
4/1/01 ................. 822,000 Bonds Series A, 5.25%,
400,000 San Antonio GO, 4.88%, 9/1/00 ................. 386,175
8/1/99 ................. 405,000 ------------
450,000 Tarrant Water Control, 5.60%, 711,988
3/1/00 ................. 465,188 ------------
------------ Total Municipal Bonds 25,442,898
2,138,250 ------------
------------ Investment Companies (5.2%):
Utah (6.0%): 874,000 Federated Tax-free Trust
675,000 Box Elder School District, Mutual Fund ............ 874,000
4.80%, 6/15/01 ......... $ 678,375 543,000 Nuveen Tax Exempt Money
560,000 North Davis County School Market Fund ............ 543,000
District, 5.70%, 3/1/02... 580,300 ------------
350,000 North Davis County School Total Investment Companies 1,417,000
District, 5.70%, 3/1/03... 362,687 ------------
------------ Total (Cost-$27,185,148)(a) $ 26,859,898
1,621,362 ============
------------
</TABLE>
- ---------
Percentages indicated are based on net assets of $27,227,414.
Represents cost for federal income tax purposes and differs from value by net
unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ............................
Unrealized depreciation ............................ (325,250)
---------
Net unrealized depreciation ........................ $(325,250)
=========
</TABLE>
See notes to financial statements
-51-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or or
Principal Security Market Principal Security Market
Amount Description Value Amount Description Value
- --------- ------------------------------- ----------- --------- ------------------------------- -----------
Common Stocks (94.4%): Common Stocks, continued:
<S> <C> <C> <C> <C> <C>
Australia (0.9%): Germany, continued:
Insurance (0.9%): Electronics (0.8%):
92,000 QBE Insurance ............. $ 525,232 8,500 Siemens AG ................ $ 476,223
----------- -----------
Total Australia 525,232 Healthcare (1.9%):
----------- 750 Altana .................... 471,849
Denmark (1.0%): 940 Gehe AG ................... 604,308
Multiple Industry (1.0%): -----------
4,200 Sophus Berendsen A/S - 1,076,157
Ordinary "B" ............ 558,567 -----------
----------- Manufacturing-Engineering (0.9%):
Total Denmark 558,567 1,400 Mannesmann AG Ordinary ... 485,119
----------- -----------
Finland (1.1%): Miscellaneous Materials (0.5%):
Electronics (1.1%): 2,700 SGL Carbon ................ 286,350
13,600 Nokia Preferred Free ...... 590,678 -----------
----------- Utilities (1.1%):
Total Finland 590,678 11,500 Veba ...................... 601,162
----------- -----------
France (7.3%): Total Germany 3,836,749
Data Processing (0.5%): -----------
2,100 Axime .................... 283,976 Hong Kong (4.4%):
----------- Financial Services (0.8%):
Energy (1.1%): 285,000 Peregrine Investment
8,200 Total SA-B ............... 591,971 Holdings ................ 442,003
----------- -----------
Insurance (0.8%): Merchandising (0.3%):
8,342 AXA ...................... 472,335 237,000 Goldlion Holdings ........ 194,501
----------- -----------
Media (1.2%): Multiple Industry (2.2%):
6,000 Tf1 ....................... 698,928 319,000 First Pacific Co. Limited . 439,076
----------- 45,000 Hutchison Whampoa ........ 289,047
Merchandising (1.7%): 57,000 Swire Pacific A .......... 506,499
1,230 Carrefour ................ 672,443 -----------
7,000 Casino Guichard-Perrachon 1,234,622
Cie .................... 293,442 -----------
----------- Real Estate (1.1%):
965,885 82,000 Cheung Kong .............. 606,721
----------- -----------
Recreation (1.1%): Total Hong Kong 2,477,847
880 Salomon SA ............... 630,696 -----------
----------- Italy (4.5%):
Industrial Components (0.9%): Banking (1.1%):
7,100 Strafor-Facom ............. 495,827 315,000 Banca Fideuram ........... 626,764
----------- -----------
Total France 4,139,618 Energy (1.1%):
----------- 130,000 ENI ....................... 615,588
Germany (6.8%): -----------
Banking (0.8%): Recreation (1.3%):
10,200 Deutsche Bank ............. 478,448 47,500 Bulgari ................... 757,938
----------- -----------
Business Services (0.8%): Telecommunications (1.0%):
3,100 Sap Preference ............ 433,290 258,000 Telecom Italia Mobile .... 550,018
----------- -----------
Total Italy 2,550,308
-----------
</TABLE>
Continued
-52-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Shares
or Market Value or Market Value
Principal Security in U.S. Principal Security in U.S.
Amount Description Dollars Amount Description Dollars
- --------- ---------------------------- -------------- --------- -------------------------- --------------
<S> <C> <C> <C> <C> <C>
Common Stocks, continued: Common Stocks, continued:
Japan (31.7%): Japan, continued:
Appliances (2.0%): Electronics (continued):
33,000 Sharp Corp.................. $ 537,280 7,000 Mabuchi Motor............. $ 433,858
9,000 Sony Corp................... 571,970 15,000 Omron..................... 303,885
-------------- --------------
1,109,250 1,343,664
-------------- --------------
Automotive (1.8%): Financial Services (1.0%):
43,000 Honda Motor................. 1,034,228 44,000 Daiwa Securities.......... 590,194
-------------- --------------
Banking (2.5%): Healthcare (1.1%):
47,000 Asahi Bank.................. 565,217 12,700 Amway Japan............... 610,916
12,600 Bank of Tokyo, Mitsubishi --------------
Banking................... 298,390 Industrial Components (0.9%):
32,000 Mitsubishi Trust & Banking.. 532,840 31,000 Bridgestone............... 539,130
-------------- --------------
1,396,447 Manufacturing Engineering (1.4%):
-------------- 75,000 Hitachi Zosen Corp......... 415,587
Business Services (1.0%): 47,000 Mitsubishi Heavy Industry.. 403,913
7 NTT Data.................... 215,634 --------------
5,000 Secom & Co.................. 323,774 819,500
-------------- --------------
539,408 Media (0.6%):
-------------- 1,200 Nippon Television Network.. 339,685
Chemicals (1.7%): --------------
35,000 Kuraray(3405)............... 398,242 Merchandising (2.9%):
29,400 Shin-Etsu Chemical.......... 584,736 9,000 Nichiei Co................. 614,431
-------------- 34,000 Nichii Co. Ltd............. 537,835
982,978 7,700 Seven-Eleven Japan......... 469,408
-------------- --------------
Construction (1.0%): 1,621,674
2,200 Kinden (1944)............... 35,208 --------------
53,000 Toda Construction........... 529,510 Metals (1.1%):
-------------- 84,000 Nippon Steel............... 285,180
564,718 120,000 NKK Corp................... 350,786
-------------- --------------
Data Processing (2.2%): 635,966
47,000 Canon, Inc.................. 921,739 --------------
34,000 Ricoh....................... 342,831 Real Estate (1.0%):
-------------- 40,000 Mitsubishi Estate Co. Ltd.. 558,742
1,264,570 --------------
-------------- Recreation (1.1%):
Electronic Components (3.9%): 8,500 Nintendo................... 625,902
6,000 Keyence Corp................ 788,159 --------------
5,000 Kyocera Corp................ 342,276 Telecommunications (1.4%):
9,000 Rohm Co..................... 562,812 55 DDI Corp................... 476,226
30,000 Yamatake-Honeywell.......... 535,615 40 Nippon Telephone
-------------- & Telegraph.............. 290,842
2,228,862 --------------
-------------- 767,068
Electronics (2.4%): --------------
19,000 Anritsu Corp................ 263,645 Transportation Rail (0.7%):
37,000 Hitachi, Limited............ 342,276 32,000 Yamato Transport........... 384,829
--------------
Total Japan 17,957,731
--------------
</TABLE>
Continued
-53-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------------------- --------------- --------------
<S> <C>
Common Stocks, continued:
Malaysia (0.3%):
Financial Services (0.3%):
39,000 Mal Hong Leong Credit ........... $ 184,191
----------
Multiple Industry (0.0%):
6,000 Renong .......................... 36
3,750 Renong Warrant Rights............ 1,051
----------
1,087
----------
Total Malaysia 185,278
----------
Netherlands (6.0%):
Appliances (1.1%):
13,500 Ahrend Groep Nv ................. 599,404
----------
Business Services (1.1%):
9,000 Randstadt Holdings .............. 652,509
----------
Construction (1.1%):
13,000 IHC Caland ...................... 598,469
----------
Financial Services (0.9%):
6,400 International Nederlanden ....... 525,700
----------
Healthcare (0.9%):
15,600 Gist Brocades ................... 484,851
----------
Recreation (0.9%):
9,100 Polygram ........................ 531,635
----------
Total Netherlands 3,392,568
----------
New Zealand (0.4%):
Media (0.4%):
34,200 Wilson & Horton ................. 218,891
----------
Total New Zealand 218,891
----------
Norway (0.8%):
Telecommunications (0.8%):
13,100 Nera AS ......................... 445,230
----------
Total Norway 445,230
----------
Singapore (1.4%):
Banking (0.8%):
34,000 Ocbc Foreign .................... 434,135
----------
Multiple Industry (0.6%):
44,000 Keppel Corporation, Ltd. ........ 368,305
----------
Total Singapore 802,440
----------
Spain (2.6%):
Energy (1.0%):
17,100 Repsol Sa ....................... 583,595
----------
Insurance (0.6%):
6,000 Mapfre Vida ..................... 334,148
----------
Shares
or
Principal Security Market
Amount Description Value
- --------------------------- --------------- -----------
<S> <C>
Common Stocks, continued:
Spain, continued:
Merchandising (1.0%):
24,500 Esp Pryca ....................... $ 574,850
----------
Total Spain 1,492,593
Sweden (2.1%):
Electronics (1.1%):
27,200 Ericsson Free ................... 608,280
----------
Healthcare (1.0%):
12,000 Astra A Free .................... 548,308
----------
Total Sweden 1,156,588
Switzerland (5.2%):
Electronics (1.1%):
500 Brown Boveri Series A
Bearer ......................... 597,301
----------
Healthcare (2.2%):
400 Ares Serono ..................... 309,511
50 Roche Genussshein ............... 383,295
550 Sandoz SA Registered Swit ....... 570,071
----------
1,262,877
Insurance (0.8%):
500 Swiss Reinsurance
Registered ..................... 482,313
----------
Utilities (1.1%):
1,600 Elektrowatt ..................... 603,050
----------
Total Switzerland 2,945,541
----------
United Kingdom (9.3%):
Banking (1.1%):
63,900 Standard Chartered Bank ......... 639,594
----------
Business Services (0.9%):
45,000 Reuters Holdings ................ 523,280
----------
Electronic Components (1.0%):
94,000 Electrocomponents ............... 566,563
----------
Energy (0.9%):
58,200 British Petroleum ............... 500,931
----------
Leisure (0.7%):
55,500 Carlton Communications
PLC ............................ 416,207
----------
Media (1.0%):
31,000 Reed Elsevier International ..... 536,040
----------
Miscellaneous Materials (1.0%):
119,000 Cookson Group PLC ............... 562,364
----------
</TABLE>
Continued
-54-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
- ---------- --------------- ----------
<S> <C> <C>
Common Stocks, continued:
United Kingdom, continued:
Recreation (1.0%):
20,000 Thorn Emi Ordinary........ $ 555,934
----------
Telecommunications (0.9%):
130,000 Vodafone.................. 513,635
----------
Utilities (0.8%):
59,200 Powergen.................. 471,472
----------
Total United Kingdom 5,286,020
----------
United States (8.6%):
Beverages & Tobacco (0.8%):
10,800 Panamerican Beverages A... 459,000
----------
Closed-End Investment Companies (3.1%):
11,200 Genesis Chile Fund........ 448,000
8,400 India Magnum Fund......... 436,800
3,100 Korea International
Investment Fund......... 468,007
3,800 Korea International
Investment Fund (IV).... 413,288
----------
1,766,095
----------
Financial Services (0.8%):
12,000 Brazilian Investment Co... 435,120
----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------- ----------
<C> <C> <C>
Common Stocks, continued:
United States, continued:
Healthcare (1.9%):
19,500 De Rigo Spa ADR........ $ 555,750
8,200 Elan ADR 512,500
------------
1,068,250
------------
Multiple Industry (0.9%):
13,000 Argentinian Investor Co. 291,330
270,000 China North Industries
Investment LTD....... 199,800
------------
491,130
------------
Telecommunications (0.4%):
3,800 Telebras ADR........... 242,725
------------
Textile (0.7%):
6,275 Gucci Group ADR........ 420,425
------------
Total United States 4,882,745
------------
Total Common Stocks 53,444,624
------------
U.S. Government Agencies (5.5%):
Federal Home Loan Mortgage Corp:
3,133,000 0.00%, 6/3/96.......... 3,131,616
------------
Total U.S. Government Agencies....... 3,131,616
------------
Total (Cost $50,777,589)(a).......... $ 56,576,242
============
</TABLE>
Percentages indicated are based on net assets of $56,635,108.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................................ $ 5,939,382
Unrealized depreciation........................................................ (140,729)
-----------------
Net unrealized appreciation $ 5,798,653
=================
</TABLE>
ADR American Depository Receipt.
Forward Foreign Currency Contracts
<TABLE>
<CAPTION>
Delivery Contract Contract Value Market Value Appreciation
Date Price (U.S. Dollars) (U.S. Dollars) (Depreciation)
-------- -------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Currency Sold:
Italian Lire..................................... 6/4/96 $1549.38 $303,787 $304,068 $ 281
-------- -------- -------
Total Currency Sold.............................. $303,787 $304,068 $ 281
======== ======== =======
Currency Purchased:
Dutch Guilder.................................... 6/3/96 1.7182 $ 5,971 $ 5,994 $ (23)
French Franc..................................... 6/28/96 5.2358 254,718 257,636 (2,918)
Hong Kong Dollar................................. 6/3/96 7.7377 8,219 8,219 --
-------- -------- -------
Total Currency Purchased......................... $268,908 $271,849 $(1,357)
======== ======== =======
Net payable for forward foreign currency
contracts purchased and sold............................. $(2,660)
=======
</TABLE>
See notes to financial statements
-55-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements
May 31, 1996
(Unaudited)
1. Organization
The ARCH Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. As of May 31, 1996, the Fund is authorized to offer the
following investment portfolios: Money Market, Treasury Money Market, Tax-
Exempt Money Market, Growth & Income Equity, Emerging Growth, Balanced,
Government & Corporate Bond, U.S. Government Securities, Missouri Tax-Exempt
Bond, Short Intermediate Municipal, International Equity and Kansas Tax-
Exempt Bond Portfolios (referred to individually as a "Portfolio" and
collectively, the "Portfolios"). The Fund was organized as a Maryland
corporation on September 9, 1982. The Kansas Tax-Exempt Bond Portfolio has
not yet commenced operations.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for
the period. Actual results could differ from these estimates.
Securities valuation:
The securities of the Money Market, Treasury Money Market and Tax-Exempt
Money Market Portfolios (collectively, "the money market portfolios") are
valued at amortized cost. Amortized cost valuation involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the
effect of fluctuating interest rates on the market value of the instrument.
In addition, the money market portfolios may not (a) purchase any instrument
with a remaining maturity greater than 397 days unless such instrument is
subject to a demand feature, or (b) maintain a dollar-weighted-average
portfolio maturity which exceeds 90 days. The securities of the Growth &
Income Equity, Emerging Growth, Balanced, Government & Corporate Bond, U.S.
Government Securities, Missouri Tax-Exempt Bond, Short-Intermediate
Municipal and International Equity Portfolios (collectively, "the variable
net asset value portfolios") that are traded on a recognized exchange are
valued at the last sale price on the national securities market. Securities
traded only on over-the-counter markets are valued on the basis of market
value when available. Securities for which there were no transactions are
valued at the mean of the most recent bid and asked prices. Securities
maturing in 60 days or less are valued at amortized cost. Securities,
including restricted securities, for which market quotations are not readily
available, are valued at fair market value by the investment adviser (or the
sub-investment adviser) in accordance with guidelines approved by the Fund's
Board of Directors. Quotations of foreign securities in foreign currency are
converted to the U.S. dollar equivalent at the prevailing exchange rate on
the date of conversion. Investments in investment companies are valued at
their respective net asset values as reported by such companies. The
differences between cost and market values of the investments of the
variable net asset portfolios are reflected as unrealized appreciation or
depreciation.
Repurchase agreements:
The Portfolios may engage in repurchase agreement transactions. Under the
terms of a typical repurchase agreement, a Portfolio takes possession of an
underlying debt obligation subject to an obligation of the seller to
repurchase, and the Portfolio to resell, the obligation at an agreed upon
price and time, thereby determining the
Continued
-56-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
yield during the Portfolio's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the Portfolio's
holding period. The value of the collateral exceeds at all times the total
amount of the repurchase obligations, including interest. In the event of
counterparty default, the Portfolio has the right to use the collateral to
offset losses incurred. There is potential for loss to the Portfolio in the
event the Portfolio is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the value of the underlying securities during the period while the Portfolio
seeks to assert its rights. The Portfolios' investment adviser, acting under the
supervision of the Board of Directors, reviews the value of the collateral and
the creditworthiness of those banks and dealers with which the Portfolios enter
into repurchase agreements to evaluate potential risks.
Securities transactions and investment income:
Securities transactions are recorded on the trade date. Realized gains and
losses on investments sold are recorded on the identified cost basis. Interest
income is accrued on a daily basis. Dividend income is recorded on the ex-
dividend date. Realized and unrealized gains and losses are allocated based upon
relative net assets of each class of shares.
Foreign currency translation:
The market value of investment securities, other assets and liabilities of the
International Equity Portfolio denominated in a foreign currency are translated
into U.S. dollars at the current exchange rate. Purchases and sales of
securities, income receipts and expense payments are translated into U.S.
dollars at the exchange rate on the dates of the transactions.
The International Equity Portfolio isolates that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuation arising from changes in market prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of foreign securities, sales of foreign currencies, currency exchange
fluctuations between the trade and settlement dates on securities transactions,
and the difference between the amount of assets and liabilities recorded and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities, including investments in securities, resulting from changes in
exchange rates.
Risks associated with foreign securities and currencies:
Investments in securities of foreign issuers carry certain risks not ordinarily
associated with investments in securities of domestic issuers. Such risks
include future political and economic developments, and the possible imposition
of exchange controls or other foreign governmental laws and restrictions. In
addition, with respect to certain countries, there is the possibility of
expropriation of assets, confiscatory taxation, political or social instability
or diplomatic developments which could adversely affect investments in those
countries.
Certain countries may also impose substantial restrictions on investments in
their capital markets by foreign entities, including restrictions on investments
in issuers of industries deemed sensitive to relevant national interests. These
factors may limit the investment opportunities available in the International
Equity Portfolio and
Continued
-57-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements
May 31, 1996
(Unaudited)
result in a lack of liquidity and a high price volatility with respect to
securities of issuers from developing countries.
Forward currency exchange contracts:
The International Equity Portfolio may enter into forward foreign currency
exchange contracts ("forwards"). A forward is an agreement between two
parties to buy and sell a currency at a set price on a future date. The
market value of the forward fluctuates with changes in currency exchange
rates. The forward is marked-to-market daily and the change in market value
is recorded by the Fund as unrealized appreciation or depreciation. When the
forward is closed, the Portfolio records a realized gain or loss equal to the
fluctuation in value during the period the forward was opened. The Portfolio
could be exposed to risk if a counter party is unable to meet the terms of a
forward or if the value of the currency changes unfavorably.
Securities lending:
To increase return, the Growth & Income Equity, Emerging Growth, Balanced,
Government & Corporate Bond, U.S. Government Securities and Short-
Intermediate Municipal Portfolios may, from time to time, lend portfolio
securities to broker-dealers, banks or institutional borrowers of securities
pursuant to agreements requiring that the loans be continuously secured by
collateral equal, at all times, in value to at least the market value of the
securities loaned. Collateral for such loans may include cash, securities of
the U.S. Government, or its agencies or instrumentalities, irrevocable letters
of credit, or any combination thereof. The collateral must be valued daily,
and, should the market value of the loaned securities increase, the borrower
must furnish additional collateral to the lending Portfolio. By lending its
securities, a Portfolio can increase its income by continuing to receive
interest or dividends on the loaned securities as well as any either investing
the cash collateral in short-term instruments or obtaining yield in the form
of interest paid by the borrower when U.S. Government securities are used as
collateral. Loans are subject to termination by the Portfolio or the borrower
at any time. The risks, to the Portfolios, of securities lending are that the
borrower may not provide additional collateral when required or return the
securities when due. In addition, if cash collateral invested by a Portfolio
is less than the amount required to be returned to the borrower as a result of
a decrease in the value of the cash collateral investments, the Portfolio must
compensate the borrower for the deficiency.
Dividends and distributions to shareholders:
Dividends on each share of the Portfolios are determined in the same manner,
irrespective of class, except that shares of each class bear separate fees
under either a Distribution and Services Plan or an Administrative Services
Plan adopted for each class and enjoy certain exclusive voting rights on
matters relating to these fees. It is the policy of the Money Market,
Treasury Money Market, Tax-Exempt Money Market, Government & Corporate Bond,
U.S. Government Securities, Missouri Tax-Exempt Bond and Short-Intermediate
Portfolios to declare dividends daily from net investment income and to pay
such dividends no later than five business days after the end of the month.
The Growth & Income Equity, Emerging Growth, Balanced and International
Equity Portfolios declare and pay dividends from net investment income
quarterly. Net realized capital gains for each Portfolio, if any, are
distributed at least annually. Additional distributions of net investment
income and capital gains may be made at the discretion of the Board of
Directors in order to avoid the 4% excise tax to which a Portfolio is subject
with respect to certain undistributed amounts of net investment income and
capital gains.
Continued
-58-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements
May 31, 1996
(Unaudited)
During the year ended November 30, 1994, the Fund adopted Statement of
Position 93-2, Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. Accordingly, permanent book and tax basis differences
relating to shareholder distributions have been reclassified to additional
paid-in capital. Net investment income, net realized gains and net assets
were not affected by this change.
Dividends from net investment income and from net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily
due to differing treatments for foreign currency transactions, expiring
capital loss carryforwards and deferrals of certain losses.
Federal income taxes:
It is the policy of each of the Portfolios to qualify or to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of net investment
income and net realized capital gains sufficient to relieve it from all, or
substantially all, federal income taxes.
Organization costs:
The Portfolios bear all costs in connection with their organization,
including the fees and expenses of registering and qualifying shares for
distribution under Federal and state securities regulations. All such costs
are amortized using the straight-line method over a period of five years
from the dates each Portfolio commenced operations: from December 2, 1991,
for the Treasury Money Market Portfolio; from May 1, 1992, for the Emerging
Growth Portfolio; from April 1, 1993, for the Balanced Portfolio; from April
4, 1994, for the International Equity Portfolio; and from July 10, 1995, for
the Short-Intermediate Municipal Portfolio. As of November 30, 1995, all
costs were fully amortized for the Money Market, Tax-Exempt Money Market,
Growth & Income Equity, Government & Corporate Bond, U.S. Government
Securities and Missouri Tax-Exempt Bond Portfolios.
Other:
Operating expenses of the Fund not directly attributable to a Portfolio or
to any class of shares of a Portfolio are prorated among the Portfolios
based on the relative net assets of each Portfolio or other appropriate
basis. Operating expenses directly attributable to a Portfolio are charged
directly to that Portfolio's operations. Fees paid under either a
Distribution and Services Plan or an Administrative Services Plan are borne
by the specific class of shares to which they apply. Certain prior year
balances have been reclassified to be consistent with current year
presentation.
3. Shares of Common Stock
The Fund is authorized to issue four classes of Portfolio shares in each
Portfolio (except as noted): Investor A Shares, Investor B Shares (except
the Treasury Money Market, Tax-Exempt Money Market and Short-Intermediate
Municipal Portfolios), Trust Shares, and Institutional Shares (except the
Tax-Exempt Money Market, Missouri Tax-Exempt Bond, Kansas Tax-Exempt Bond
and Short-Intermediate Municipal Portfolios). Investor A Shares of the
variable net asset value portfolios are sold with front-end sales charges.
Investor B
Continue
-59-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
Shares of the variable net asset value portfolios may be subject to contingent
deferred sales charges ("CDSC") based on the lesser of the net asset value of
the shares on the redemption date or the original cost of the shares redeemed.
The following table sets forth the time schedule of redemptions of Investor B
Shares subject to CDSC:
<TABLE>
<CAPTION>
CDSC
(percentage of
Number of Years amount subject
Elapsed Since Purchase to the charge)
- ---------------------- --------------
<S> <C>
Less than one ...................................... 5.0%
One, but less than two ............................. 4.0%
Two, but less than three ........................... 3.0%
Three, but less than four .......................... 3.0%
Four, but less than five ........................... 2.0%
Five, but less than six ............................ 1.0%
Six or more ........................................ None
</TABLE>
Investor B Shares of the Money Market Portfolio may not be purchased directly
but are available only through exchanges of Investor B Shares of the variable
net asset value portfolios. Each class of shares in a Portfolio has identical
rights and privileges except with respect to the fees paid by the classes under
either a Distribution and Services Plan or an Administrative Services Plan,
expenses allocable exclusively to each class of shares, voting rights on matters
affecting a single class of shares, the exchange privilege of each class of
shares, and the automatic conversion of Investor B Shares of a Portfolio into
Investor A Shares of that Portfolio eight years after purchase.
As of May 31, 1996, the Fund's Articles of Incorporation authorize the Board of
Directors, in its discretion, to issue up to seven billion full and fractional
shares of capital stock, $0.001 par value per share, and to classify or
reclassify any unissued shares of the Fund into one or more additional classes.
Pursuant to such authority, as of May 31, 1996, the Fund's shares were
classified as follows:
<TABLE>
<CAPTION>
Currently Represent Interests In:
Authorized -------------------------------------------------
Class Shares (000) Portfolio Class
- ---------------------------------- ------------ --------------------------------- --------------
<S> <C> <C> <C>
Class A Shares.................... 550,000 Money Market Investor A
Class A-Special Series 1 Shares... 1,800,000 Money Market Trust
Class A-Special Series 2 Shares... 300,000 Money Market Institutional
Class A-Special Series 3 Shares... 50,000 Money Market Investor B
Class B Shares.................... 100,000 Treasury Money Market Investor A
Class B-Special Series 1 Shares... 1,000,000 Treasury Money Market Trust
Class B-Special Series 2 Shares... 300,000 Treasury Money Market Institutional
Class C Shares.................... 5,000 Growth & Income Equity Investor A
Class C-Special Series 1 Shares... 50,000 Growth & Income Equity Trust
Class C-Special Series 2 Shares... 20,000 Growth & Income Equity Institutional
Class C-Special Series 3 Shares... 50,000 Growth & Income Equity Investor B
</TABLE>
Continued
-60-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Currently Represent Interests In:
Authorized ---------------------------------------------
Class Shares (000) Portfolio Class
- ------------------------------------- ------------ ---------------------------- -------------
<S> <C> <C> <C>
Class D Shares....................... 5,000 Government & Corporate Bond Investor A
Class D-Special Series 1 Shares...... 50,000 Government & Corporate Bond Trust
Class D-Special Series 2 Shares...... 20,000 Government & Corporate Bond Institutional
Class D-Special Series 3 Shares...... 50,000 Government & Corporate Bond Investor B
Class E Shares....................... 5,000 U.S. Government Securities Investor A
Class E-Special Series 1 Shares...... 15,000 U.S. Government Securities Trust
Class E-Special Series 2 Shares...... 20,000 U.S. Government Securities Institutional
Class E-Special Series 3 Shares...... 50,000 U.S. Government Securities Investor B
Class F Shares....................... 5,000 Emerging Growth Investor A
Class F-Special Series 1 Shares...... 15,000 Emerging Growth Trust
Class F-Special Series 2 Shares...... 20,000 Emerging Growth Institutional
Class F-Special Series 3 Shares...... 50,000 Emerging Growth Investor B
Class G Shares....................... 5,000 Balanced Investor A
Class G-Special Series 1 Shares...... 15,000 Balanced Trust
Class G-Special Series 2 Shares...... 20,000 Balanced Institutional
Class G-Special Series 3 Shares...... 50,000 Balanced Investor B
Class H Shares....................... 10,000 International Equity Investor A
Class H-Special Series 1 Shares...... 10,000 International Equity Trust
Class H-Special Series 2 Shares...... 10,000 International Equity Institutional
Class H-Special Series 3 Shares...... 50,000 International Equity Investor B
Class I Shares....................... 25,000 Short-Intermediate Municipal Investor A
Class I-Special Series 1 Shares...... 25,000 Short-Intermediate Municipal Trust
Class J Shares....................... 50,000 Tax-Exempt Money Market Investor A
Class J-Special Series 1 Shares...... 300,000 Tax-Exempt Money Market Trust
Class K Shares....................... 25,000 Missouri Tax-Exempt Bond Investor A
Class K-Special Series 1 Shares...... 25,000 Missouri Tax-Exempt Bond Trust
Class K-Special Series 2 Shares...... 10,000 Missouri Tax-Exempt Bond Investor B
Class L Shares....................... 25,000 Kansas Tax-Exempt Bond Investor A
Class L-Special Series 1 Shares...... 25,000 Kansas Tax-Exempt Bond Trust
Class L-Special Series 2 Shares...... 10,000 Kansas Tax-Exempt Bond Investor B
Unclassified......................... 1,780,000
</TABLE>
Each Portfolio share represents an equal, proportionate interest in the
Portfolio with respect to other shares outstanding, irrespective of series.
Continued
-61-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
4. Capital Share Transactions
Transactions in portfolio shares of the Fund were as follows:
<TABLE>
<CAPTION>
Money Market Treasury Money
Portfolio Market Portfolio
------------------------------- --------------------------------
Six months Year Six Months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1996 1995 1996 1995
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued.............................. $ 49,354,577 $ 112,310,285 $ 5,633,181 $ 6,460,977
Dividends reinvested..................................... 1,556,405 2,767,393 75,064 128,151
Shares redeemed.......................................... (46,066,142) (98,595,971) (3,257,374) (5,526,091)
------------- ------------- ------------- -----------
Change in net assets from Investor A share
transactions........................................... $ 4,844,840 $ 16,481,707 $ 2,450,871 $ 1,063,037
============= ============== ============= ===========
Investor B Shares:
Proceeds from shares issued $ 49,932 --
Dividends reinvested 270 --
Shares redeemed (23,804) --
------------- -------------
Change in net assets from Investor B
share transactions $ 26,398 --
============= =============
Trust Shares:
Proceeds from shares issued $ 855,121,963 $ 1,743,384,071 $ 413,624,187 $ 833,331,145
Dividends reinvested 5,412,846 8,609,524 1,599,415 2,884,381
Shares redeemed (820,971,946) (98,595,971) (396,195,847) (825,544,533)
------------- ---------------- ------------- -------------
Change in net assets from Trust share transactions $ 39,562,863 $ 1,653,397,624 $ 19,027,755 $ 10,670,993
============= ================ ============= =============
Institutional Shares:
Proceeds from shares issued $ 37,567,228 $ 46,450,288 $ 5,650,652 $ 39,942
Dividends reinvested 322 -- 210 586
Shares redeemed (36,510,392) (43,405,997) (5,394,739) (12,200)
------------ --------------- ------------- ------------
Change in net assets from Institutional share
transactions $ 1,057,158 $ 3,044,291 $ 256,123 $ 28,328
============= ================ ============= =============
SHARE TRANSACTIONS:
Investor A Shares:
Issued 49,354,579 112,310,285 5,633,181 6,460,977
Reinvested 1,556,405 2,767,393 75,064 128,151
Redeemed (46,066,142) (98,595,971) (3,257,374) (5,526,091)
------------- ---------------- ------------- ------------
Change in Investor A Shares 4,844,842 16,481,707 2,450,871 1,063,037
============== ================ ============= ============
Investor B Shares:
Issued 49,932 --
Reinvested 269 --
Redeemed (23,804) --
------------- ----------------
Change in Investor B Shares 26,397 --
============= ================
Trust Shares:
Issued 855,121,963 1,743,384,071 413,624,187 833,331,145
Reinvested 5,412,846 8,609,524 1,599,415 2,884,381
Redeemed (820,971,947) (1,598,808,463) (396,195,847) (825,544,533)
------------ ---------------- ------------- ------------
Change in Trust Shares 39,562,862 153,185,132 19,027,755 10,670,993
============ ================ ============= ===========
Institutional Shares:
Issued 37,567,228 46,450,288 5,650,652 39,942
Reinvested 322 -- 210 586
Redeemed (36,510,392) (43,405,997) (5,394,739) (12,200)
------------ ---------------- ------------- -----------
Change in Institutional Shares 1,057,158 3,044,291 256,123 28,328
============ ================ ============= ===========
</TABLE>
Continued
-62-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION> Tax-Exempt Money Growth & Income
Market Portfolio Equity Portfolio
---------------------------- ----------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1996 1995 1996 1995
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued............................. $ 8,223,233 $ 2,077,331 $ 5,519,190 $ 4,047,263
Dividends reinvested.................................... 89,655 83,299 1,607,539 533,478
Shares redeemed......................................... (8,450,766) (1,895,782) (1,247,089) (98,595,971)
------------- -------------- ------------- -------------
Change in net assets from Investor A share transactions. $ (137,878) $ 264,848 $ 5,879,640 $(94,015,230)
============= ============== ============= =============
Investor B Shares:
Proceeds from shares issued............................. $ 1,562,165 $ 739,310
Dividends reinvested.................................... 53,662 2,484
Shares redeemed......................................... (42,249) (27,250)
------------- --------------
Change in net assets from Investor B share transactions. $ 1,573,578 $ 714,544
============= ==============
Trust Shares:
Proceeds from shares issued............................. $ 83,041,987 $ 105,944,026 $ 28,454,136 $ 33,387,661
Dividends reinvested.................................... 166,181 133,447 15,314,061 6,332,138
Shares redeemed......................................... (80,003,226) (113,373,935) (18,144,098) (55,583,498)
------------ ------------- ------------ -----------
Change in net assets from Trust share transactions $ 3,204,942 $ (7,296,462) $ 25,624,099 $(15,863,699)
============ ============= ============ ============
Institutional Shares:
Proceeds from shares issued............................. $ 8,309,671 $ 13,872,425
Dividends reinvested.................................... 2,619,816 678,286
Shares redeemed......................................... (1,331,234) (3,081,128)
------------ -------------
Change in net assets from Institutional share transactions $ 9,598,253 $ 11,469,583
============ =============
SHARE TRANSACTIONS:
Investor A Shares:
Issued.................................................. 8,223,233 -- 342,876 274,340
Reinvested.............................................. 89,655 2,077,331 103,456 39,596
Redeemed................................................ (8,450,766) 83,299 (76,996) (291,461)
------------ ------------- ------------ ------------
Change in Investor A Shares............................... (137,878) 2,160,630 369,336 22,475
============ ============= ============ ============
Investor B Shares:
Issued.................................................. 96,913 49,645
Reinvested.............................................. 3,467 162
Redeemed................................................ (2,617) (1,719)
------------ ------------
Change in Investor B Shares............................. 97,763 48,088
Trust Shares:
Issued.................................................. 83,041,987 105,944,026 1,775,487 2,315,536
Reinvested.............................................. 166,181 133,447 984,090 468,940
Redeemed................................................ (80,003,226) (113,373,935) (1,120,148) (3,773,562)
------------ ------------- ------------ ------------
Change in Trust Shares.................................. 3,204,942 (7,296,462) 1,639,429 (989,086)
============ ============= ============ ============
Institutional Shares:
Issued.................................................. 517,007 913,663
Reinvested.............................................. 168,704 50,081
Redeemed................................................ (81,584) (218,049)
------------ ------------
Change in Institutional Shares.......................... 604,127 745,695
============ ============
</TABLE>
Continued
-63-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Emerging Growth Balanced
Portfolio Portfolio
-------------------------- ---------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1996 1995 1996 1995
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued. $ 1,788,939 $ 2,716,088 $ 959,388 $ 725,604
Dividends reinvested........ 1,169,036 828,227 423,791 220,854
Shares redeemed............. (3,399,168) (1,041,887) (1,075,073) (1,372,493)
----------- ------------ ----------- ------------
Change in net assets from
Investor A share
transactions............... $ (441,195) $ 2,502,428 $ 308,106 $ (426,035)
=========== ============ =========== ============
Investor B Shares:
Proceeds from shares issued. $ 485,677 $ 605,912 $ 215,461 $ 33,778
Dividends reinvested........ 51,148 - 2,578 225
Shares redeemed............. (15,190) (5,173) (579) -
----------- ------------ ----------- ------------
Change in net assets from
Investor B share
transactions............... $ 521,635 $ 600,739 $ 217,460 $ 34,003
=========== ============ =========== ============
Trust Shares:
Proceeds from shares issued. $35,254,193 $ 56,170,238 $ 5,985,778 $ 12,537,321
Dividends reinvested........ 9,583,481 4,711,272 3,642,663 2,119,017
Shares redeemed............. (4,293,407) (10,894,683) (5,983,966) (20,150,860)
----------- ------------ ----------- ------------
Change in net assets from
Trust share transactions... $40,544,267 $ 49,986,827 $ 3,644,475 $ (5,494,522)
=========== ============ =========== ============
Institutional Shares:
Proceeds from shares issued. $ 5,739,053 $ 11,023,958 $ 6,948,155 $ 12,929,259
Dividends reinvested........ 1,397,709 432,261 1,894,949 790,342
Shares redeemed............. (1,647,296) (515,656) (1,836,837) (4,954,838)
----------- ------------ ----------- ------------
Change in net assets from
Institutional share
transactions............... $ 5,489,466 $ 10,940,563 $ 7,006,267 $ 8,764,763
=========== ============ =========== ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued...................... 143,345 218,241 84,033 68,078
Reinvested.................. 95,811 76,260 37,479 21,139
Redeemed.................... (274,347) (83,578) (92,725) (134,533)
----------- ------------ ----------- ------------
Change in Investor A Shares. (35,191) 210,923 28,787 (45,316)
=========== ============ =========== ============
Investor B Shares:
Issued...................... 38,467 45,495 18,944 3,119
Reinvested.................. 4,217 - 228 20
Redeemed.................... (1,194) (374) (51) -
----------- ------------ ----------- ------------
Change in Investor B Shares. 41,490 45,121 19,121 3,139
=========== ============ =========== ============
Trust Shares:
Issued...................... 2,780,349 4,303,611 522,838 1,216,163
Reinvested.................. 782,325 433,021 322,198 203,146
Redeemed.................... (334,234) (852,124) (521,376) (1,964,748)
----------- ------------ ----------- ------------
Change in Trust Shares...... 3,228,440 3,884,508 323,660 (545,439)
=========== ============ =========== ============
Institutional Shares:
Issued...................... 461,785 843,722 606,102 1,213,228
Reinvested.................. 114,943 39,913 167,998 75,476
Redeemed.................... (134,021) (39,849) (161,073) (485,602)
----------- ------------ ----------- ------------
Change in Institutional
Shares...................... 442,707 843,786 613,027 803,102
=========== ============ =========== ============
</TABLE>
Continued
-64-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Government & Corporate U.S. Government
Bond Portfolio Securities Portfolio
----------------------------- --------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1996 1995 1996 1995
------------ ------------ ----------- ------------
CAPITAL TRANSACTIONS:
Investor A Shares:
<S> <C> <C> <C> <C>
Proceeds from shares issued .............................. $ 791,442 $ 532,904 $ 49,724 $ 262,858
Dividends reinvested ..................................... 152,736 259,920 283,511 485,224
Shares redeemed .......................................... (773,217) (911,926) (783,697) (2,896,079)
------------ ------------ ----------- -----------
Change in net assets from Investor A share transactions .. $ 170,961 $ (119,102) $ (450,462) $(2,147,997)
============ ============ =========== ===========
Investor B Shares:
Proceeds from shares issued .............................. $ 325,132 $ 136,699 $ 226,722 $ 43,386
Dividends reinvested ..................................... 3,564 1,155 3,928 436
Shares redeemed .......................................... (12,343) (33,852) (2,854) (2,869)
------------ ------------ ----------- -----------
Change in net assets from Investor B share transactions .... $ 316,353 $ 104,002 $ 227,796 $ 40,953
============ ============ =========== ===========
Trust Shares:
Proceeds from shares issued .............................. $ 16,049,080 $ 17,932,992 $11,697,290 $11,497,995
Dividends reinvested ..................................... 2,484,652 5,831,411 927,528 1,522,604
Shares redeemed .......................................... (11,423,928) (40,412,534) (3,136,440) (3,434,036)
------------ ------------ ----------- -----------
Change in net assets from Trust share transactions ......... $ 7,109,804 $(16,648,131) $ 9,488,378 $ 9,586,563
============ ============ =========== ===========
Institutional Shares:
Proceeds from shares issued .............................. $ 3,269,362 $ 3,401,735 $ 1,025,564 $ 583,872
Dividends reinvested ..................................... 336,105 403,585 26,319 20,997
Shares redeemed .......................................... (1,149,776) (965,170) (5,278) (12,541)
------------ ------------ ----------- -----------
Change in net assets from Institutional share transactions . $ 2,455,691 $ 2,840,150 $ 1,046,605 $ 592,328
============ ============ =========== ===========
SHARE TRANSACTIONS:
Investor A Shares:
Issued ................................................... 77,056 51,880 4,654 24,838
Reinvested ............................................... 14,716 25,848 26,348 46,390
Redeemed ................................................. (76,463) (91,838) (73,396) (275,695)
------------- ------------- ----------- -----------
Change in Investor A Shares ................................ 15,309 (14,110) (42,394) (204,467)
============ ============ =========== ===========
Investor B Shares:
Issued ................................................... 31,540 13,279 21,050 4,044
Reinvested ............................................... 347 112 369 41
Redeemed ................................................. (1,205) (3,279) (271) (268)
------------ ------------ ----------- -----------
Change in Investor B Shares ................................ 30,682 10,112 21,148 3,817
============ ============ =========== ===========
Trust Shares:
Issued ................................................... 1,562,033 1,760,564 1,096,103 1,071,870
Reinvested ............................................... 239,301 580,575 86,416 145,303
Redeemed ................................................. (1,097,592) (3,962,515) (291,841) (322,555)
------------ ------------ ----------- -----------
Change in Trust Shares ..................................... 703,742 (1,621,376) 890,678 894,618
============ ============ =========== ===========
Institutional Shares:
Issued .................................................... 312,116 331,136 97,244 55,800
Reinvested ................................................ 32,434 40,022 2,462 1,974
Redeemed .................................................. (112,244) (96,064) (495) (1,172)
------------ ------------ ----------- -----------
Change in Institutional Shares ............................ 232,306 275,094 99,211 56,602
============ ============ =========== ===========
</TABLE>
Continued
-65-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Missouri Tax Exempt Short-Intermediate
Bond Portfolio Municipal Portfolio
--------------------------- -----------------------------
Six months Six months Six months July 10, 1995
ended ended ended to
May 31, November 30, May 31, November 30,
1996 1995 1996 1995(a)
----------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ........................................ $ 1,141,832 $ 1,156,729 $ 49,959 $ 10
Dividends reinvested ............................................... 438,267 425,016 339 --
Shares redeemed .................................................... (1,427,660) (1,628,286) -- --
----------- ----------- ----------- -----------
Change in net assets from Investor A share transactions ............ $ 152,439 $ (46,541) $ 50,298 $ 10
=========== =========== =========== ===========
Investor B Shares:
Proceeds from shares issued ........................................ $ 298,282 $ 329,022
Dividends reinvested ............................................... 3,891 1,975
Shares redeemed .................................................... (24,368) (1,803)
----------- -----------
Change in net assets from Investor B share transactions ............ $ 277,806 $ 329,194
=========== ===========
Trust Shares:
Proceeds from shares issued ........................................ $ 5,585,619 $ 6,963,566 $ 6,193,298 $23,945,072
Dividends reinvested ............................................... 235,069 183,709 37,115 9,378
Shares redeemed .................................................... (6,643,583) (4,591,666) (2,257,593) (424,913)
----------- ----------- ----------- -----------
Change in net assets from Trust share transactions ................. $ (822,895) $ 2,555,609 $ 3,972,820 $23,529,537
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Investor A Shares:
Issued ............................................................. 99,720 101,135 4,943 1
Reinvested ......................................................... 37,620 37,072 34 --
Redeemed ........................................................... (124,185) (141,933) -- --
----------- ----------- ----------- -----------
Change in Investor A Shares ........................................ 13,155 (3,726) 4,977 1
=========== =========== =========== ===========
Investor B Shares:
Issued ............................................................. 25,770 28,689
Reinvested ......................................................... 335 172
Redeemed ........................................................... (2,138) (156)
----------- -----------
Change in Investor B Shares ........................................ 23,967 28,705
=========== ===========
Trust Shares:
Issued ............................................................. 485,660 605,404 613,744 2,399,957
Reinvested ......................................................... 20,174 16,020 3,695 938
Redeemed ........................................................... (566,417) (398,603) (225,597) (42,604)
----------- ----------- ----------- -----------
Change in Trust Shares ............................................. (60,583) 222,821 391,842 2,358,291
=========== =========== =========== ===========
</TABLE>
- ---------------
(a) Period from commencement of operations.
Continued
-66-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
International Equity
Portfolio
---------------------------
Six months Year
ended ended
May 31, November 30,
1996 1995
------------- ------------
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ...................................................... $ 664,056 $ 821,313
Dividends reinvested ............................................................. -- 1,748
Shares redeemed .................................................................. (283,984) (153,976)
----------- -----------
Change in net assets from Investor A share transactions .......................... $ 380,072 $ 669,085
=========== ===========
Investor B Shares:
Proceeds from shares issued ...................................................... $ 170,228 $ 99,602
Shares redeemed .................................................................. (993) (5)
----------- -----------
Change in net assets from Investor B share transactions .......................... $ 169,235 $ 99,597
=========== ===========
Trust Shares:
Proceeds from shares issued ...................................................... $12,847,292 $13,203,803
Dividends reinvested ............................................................. -- 25,940
Shares redeemed .................................................................. (1,718,678) (3,599,335)
----------- -----------
Change in net assets from Trust share transactions ............................... $11,128,614 $ 9,630,408
=========== ===========
Institutional Shares:
Proceeds from shares issued ...................................................... $ 1,391,784 $ 1,984,397
Dividends reinvested ............................................................. -- 389
Shares redeemed .................................................................. (136,149) (175,630)
----------- -----------
Change in net assets from Institutional share transactions ....................... $ 1,255,635 $ 1,809,156
=========== ===========
SHARE TRANSACTIONS:
Investor A Shares:
Issued ........................................................................... 60,188 81,235
Reinvested ....................................................................... -- 148
Redeemed ......................................................................... (25,755) (15,655)
----------- -----------
Change in Investor A Shares ...................................................... 34,433 65,728
=========== ===========
Investor B Shares:
Issued ........................................................................... 15,296 9,497
Redeemed ......................................................................... (89) (1)
----------- -----------
Change in Investor B Shares ...................................................... 15,207 9,496
=========== ===========
Trust Shares:
Issued ........................................................................... 1,144,747 1,300,301
Reinvested ....................................................................... -- 2,669
Redeemed ......................................................................... (152,402) (354,075)
----------- -----------
Change in Trust Shares ........................................................... 992,345 948,895
=========== ===========
Institutional Shares:
Issued ........................................................................... 126,156 197,653
Reinvested ....................................................................... -- 40
Redeemed ......................................................................... (12,325) (16,687)
----------- -----------
Change in Institutional Shares ................................................... 113,831 181,006
=========== ===========
</TABLE>
Continued
-67-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
5. Purchases and Sales of Investment Securities
Purchases and sales of securities (excluding short-term securities) during
the six months ended May 31, 1996 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Growth & Income Equity.............. $128,241,382 $108,959,338
Emerging Growth..................... 81,888,793 60,034,796
Balanced............................ 61,869,306 57,022,333
Government & Corporate Bond......... 85,868,439 88,626,059
U.S. Government Securities.......... 25,830,632 18,011,223
Missouri Tax-Exempt Bond............ 953,750 2,521,075
Short-Intermediate Municipal........ 3,256,132 600,000
International Equity................ 24,513,703 17,854,967
</TABLE>
6. Related Party Transactions
Investment advisory services are provided to the Fund by Mississippi Valley
Advisors Inc. ("MVA"), a wholly owned subsidiary of Mercantile Bank of St.
Louis National Association ("Mercantile"), which in turn is a wholly owned
subsidiary of Mercantile Bancorporation Inc. Under the terms of the
investment advisory agreement, MVA is entitled to receive fees based on a
percentage of the average daily net assets of the Fund. Mercantile serves as
custodian for the Fund.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS")
is an Ohio limited partnership. BISYS Fund Services Ohio, Inc. (the
"Company"), and BISYS are subsidiaries of The BISYS Group, Inc.
The Company, with whom certain officers of the Fund are affiliated, serves
the Fund as Administrator. Such officers are paid no fees directly by the
Portfolios for serving as officers of the Fund. Under the terms of the
administration agreement, the Company receives fees computed as 0.20% (0.10%
for the Tax-Exempt Money Market Portfolio) of the average daily net assets
of each Portfolio. The Company serves the Fund as Transfer Agent. BISYS
serves as the Funds' distributor and is entitled to receive commissions on
sales of Investor A Shares and Investor B Shares of the variable net asset
value portfolios. For the six months ended May 31, 1996, BISYS received
approximately $281,540 from commissions earned on sales of Investor A Shares
and redemptions of Investor B Shares of which BISYS re-allowed $90,428 to
affiliated dealers of the Fund's shares.
With respect to Investor A Shares of the Portfolios, the Fund has adopted a
Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under the
1940 Act. Under the Plan, each Portfolio may pay (i) up to 0.10% of the
average daily net assets of each Portfolio's outstanding Investor A Shares
to BISYS or another organization for distribution services performed and
expenses assumed relating to the Fund's Investor A shares and (ii) up to
0.20% (0.15% for the money market portfolios) of the average daily net
assets of each Portfolio's outstanding Investor A Shares to broker-dealers
and other organizations for shareholder administrative services provided
pursuant to servicing agreements under the Plan.
Similarly, with respect to Investor B Shares, the Fund has adopted a
Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Under the Plan, a Portfolio may
Continued
-68-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
pay (i) up to 0.75% of the average daily net assets of the Portfolio's
outstanding Investor B Shares to BISYS or another organization for
distribution services performed and expenses assumed relating to the Fund's
Investor B Shares and (ii) up to 0.25% of the average daily net assets of the
Portfolio's Investor B Shares to broker-dealers and other organizations for
shareholder administrative services provided pursuant to servicing agreements
under the Plan.
With respect to Trust and Institutional Shares of the Portfolios, the Fund has
adopted separate Administrative Services Plans pursuant to which Trust Shares
are sold to banks and other financial institutions on behalf of their
qualified accounts and Institutional Shares are sold to banks and other
financial institutions acting on behalf of their accounts for which they do
not exercise investment discretion. A Portfolio may pay these banks and other
financial institutions, which have agreed to provide certain shareholder
administrative services for their clients or account holders, up to 0.30%
(0.25% for money market portfolios) of the average daily net assets of the
Portfolio's Trust or Institutional Shares, respectively.
Fees may be voluntarily reduced to assist the Portfolios in maintaining
competitive expense ratios.
Information regarding these transaction is as follows for the six months ended
May 31, 1996:
<TABLE>
<CAPTION>
Investment Advisory Administration
Fees Fees
--------------------- --------------
Annual fee
before
voluntary Voluntary Fund
fee fee Voluntary fee Custodian Accounting Transfer
reductions reductions reductions Fees Fees Agent Fees
---------- ---------- ------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Money Market Portfolio........ 0.40% $214,680 $430,347 $60,743 $ 714 $98,997
Treasury Money Market
Portfolio................... 0.40% 68,829 135,812 17,966 183 30,981
Tax-Exempt Money Market
Portfolio................... 0.40% 22,642 8,235 50 11,985
Growth & Income Portfolio..... 0.55% 190,803 60,041 1,080 47,268
Emerging Growth Portfolio..... 0.75% 98,401 31,628 1,434 22,779
Balanced Portfolio............ 0.75% 62,424 20,433 3,942 15,633
Government & Corporate
Bond Portfolio.............. 0.45% 71,614 22,516 4,785 19,095
U.S. Government Securities
Portfolio................... 0.45% 28,886 9,323 2,838 7,182
Missouri Tax-Exempt Bond
Portfolio................... 0.45% 35,397 10,994 5,253 10,113
Short-Intermediate Municipal
Portfolio................... 0.55% 71,186 12,948 4,063 2,838 3,192
International Equity
Portfolio................... 1.00% 59,714 11,943 41,202 66 5,229
</TABLE>
Continued
-69-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1996
(Unaudited)
7. Concentration of Credit Risk
The Missouri Tax-Exempt Bond Portfolio invests a substantial proportion of
its assets in debt obligations issued by the State of Missouri and its
political subdivisions, agencies and public authorities. The Portfolio is
more susceptible to factors adversely affecting issuers of Missouri
municipal securities than a fund that is not concentrated in these issuers
to the same extent.
Continued
-70-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Investor A Shares
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -------------------------------------------
May 31, 1996 1995 1994 (a) 1993 1992
------------ ----------- ---------- -------- --------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------ -------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.................. 0.024 0.052 0.033 0.025 0.032
------- ------- ------- ------- -------
Distributions
Net investment income.................. (0.024) (0.052) (0.033) (0.025) (0.032)
------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return............................ 2.41%(b) 5.33% 3.37% 2.52% 3.21%
Ratios/Supplementary Data:
Net Assets at end of period (000)...... $69,710 $64,865 $48,384 $46,920 $52,224
Ratio of expenses to average net assets 0.78%(c) 0.77% 0.78% 0.79% 0.80%
Ratio of net investment income to
average net assets.................... 4.76%(c) 5.20% 3.35% 2.50% 3.21%
Ratio of expenses to average net 0.93%(c) 0.92% 0.93% 0.93% 0.94%
assets*...............................
Ratio of net investment income to
average net assets*................... 4.61%(c) 5.05% 3.20% 2.36% 3.07%
- ----------------------------------------
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-71-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
January 26,1996
to
May 31, 1996 (a)
----------------
Investor B
Shares
----------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period........................... $1.00
-----
Investment Activities
Net investment income........................................ 0.014
-----
Distributions
Net investment income........................................ (0.014)
-----
Net Asset Value, End of Period................................. $1.00
======
Total Return (excludes sales charge)........................... 1.36%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)............................ $ 26
Ratio of expenses to average net assets...................... 1.09%(c)
Ratio of net investment income to average net assets......... 2.75%(c)
Ratio of expenses to average net assets*..................... 1.66%(c)
Ratio of net investment income to average net assets*........ 2.18%(c)
- ----------
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-72-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -----------------------------------
May 31, 1996 1995 1994 1993 1992
-------------- ------- ------ ------- ------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
-------------- ------- ------- ------- ------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income............ 0.025 0.054 0.035 0.026 0.034
------- ------- ------- ------- -------
Distributions
Net investment income............ (0.025) (0.054) (0.035) (0.026) (0.034)
------- ------- ------- ------- -------
Net Asset Value, End of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return...................... 2.50%(a) 5.52% 3.55% 2.72% 3.44%
Ratios/Supplementary Data:
Net Assets at end of
period (000)................... $737,690 $698,131 $544,952 $621,717 574,941
Ratio of expenses to
average net assets.............. 0.59%(b) 0.59% 0.61% 0.59% 0.57%
Ratio of net investment income to
average net assets............... 4.95%(b) 5.38% 3.45% 2.70% 3.44%
Ratio of expenses to average net
assets*.......................... 0.74%(b) 0.74% 0.93% 0.80% 0.71%
Ratio of net investment income
to average net assets*........... 4.80%(c) 5.23% 3.13% 2.49% 3.30%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements
-73-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -----------------------------------------------------------------
May 31, 1996 1995 1994(a) 1993 1992
-------------- -------------- --------------- ----------- ----------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
-------------- -------------- --------------- ----------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income................. 0.024 0.052 0.033 0.025 0.032
------- ------- ------- ------- -------
Distributions
Net investment income................. (0.024) (0.052) (0.033) (0.025) (0.032)
------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return............................ 2.41%(b) 5.33% 3.34% 2.52% 3.21%
Ratios/Supplementary Data:
Net Assets at end of period (000)..... $14,397 $13,340 $10,295 $46,920 $52,224
Ratio of expenses to average
net assets........................... 0.78%(c) 0.77% 0.78% 0.79% 0.80%
Ratio of net investment
income to average net assets......... 4.77%(c) 5.20% 3.48% 2.50% 3.21%
Ratio of expenses to
average net assets*.................. 0.93%(c) 0.92% 0.95% 0.93% 0.94%
Ratio of net investment income
to average net assets*............... 4.62%(c) 5.05% 3.31% 2.36% 3.07%
</TABLE>
- --------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on January 3, 1994, the Portfolio
issued a new series of shares which were designated as "Institutional"
Shares. The financial highlights presented for the periods prior to January
3, 1994 represent financial highlights applicable to the Investor Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-74-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
December 2, 1991
Six Months Years Ended November 30, to
Ended ---------------------------- November 30,
May 31, 1996 1995 1994 (a) 1993 1992 (b)(c)
------------ ---------- ---------- -------- ------------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------ ----------- ----------- --------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------ -------
Investment Activities
Net investment income.................................... 0.022 0.048 0.031 0.024 0.017
------- ------- ------- ------ -------
Distributions
Net investment income.................................... (0.022) (0.048) (0.031) (0.024) (0.017)
------- -------- ------- ------ -------
Net Asset Value, End of Period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======== ======== ====== ========
Total Return............................................... 2.22%(d) 4.93% 3.16% 2.43% 1.79%(d)
Ratios/Supplementary Data:
Net Assets at end of period (000)........................ $ 5,227 $ 2,776 $ 1,713 $1,411 $ 3,257
Ratio of expenses to average net assets.................. 0.78%(e) 0.78% 0.71% 0.64% 0.58%
Ratio of net investment income (loss) to average net
assets................................................. 4.35%(e) 4.84% 3.14% 2.41% 2.88%(e)
Ratio of expenses to average net assets*................. 0.93%(e) 0.93% 0.94% 0.97% 1.02%(e)
Ratio of net investment income to average net
assets*................................................ 4.20%(e) 4.69% 2.90% 2.08% 2.44%(e)
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Period from commencement of operations.
(c) On December 2, 1991, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on April 20, 1992 the Portfolio
issued a second series of shares which were designated as "Investor" Shares.
The financial highlights presented for the period prior to April 20, 1992
represent financial highlights applicable to the Trust Shares.
(d) Not annualized.
(e) Annualized.
See notes to financial statements
-75-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
December 2, 1991
Six Months Years Ended November 30 to
Ended ------------------------------------------- November 30,
May 31, 1996 1995 1994 1993 1992 (a)(b)
------------ ---------- ----------- ---------- ---------------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------------ ---------- ----------- ---------- ---------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset, Beginning of Period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------ ------- --------- ---------
Investment Activities
Net investment income..................... 0 .023 0.050 0.033 0.026 0.034
-------- ------- -------- --------- --------
Distributions
Net investment income..................... (0.023) (0.050) (0.033) (0.026) (0.034)
------- -------- -------- ----------
Net Asset Value, End of Period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ========= ======== ========= ========
Total Return................................ 2.31%(c) 5.12% 3.38% 2.67% 3.16%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000)......... $271,793 $252,760 $242,099 $256,503 $229,288
Ratio of expenses to average net assets... 0.60%(d) 0.60% 0.49% 0.41% 0.28%(d)
Ratio of net investment income to average
net assets.............................. 4.56%(d) 5.01% 3.26% 2.64% 3.35%(d)
Ratio of expenses to average net assets*.. 0.76%(d) 0.75% 0.94% 0.85% 0.72%(d)
Ratio of net investment income to average
net assets*............................. 4.41%(d) 4.86% 2.82% 2.21% 2.91%(d)
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) On December 2, 1991, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on April 20, 1992, the Portfolio
issued a second series of shares which were designated as "Investor" Shares.
(c) Not annualized.
(d) Annualized.
See notes to financial statements
-76-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
January 26, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
--------------- -------------
Institutional Institutional
Shares Shares
--------------- -------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period............... $ 1.00 $ 1.00
---------- ----------
Investment Activities
Net investment income............................. 0.022 0.042
---------- ----------
Distributions
Net investment income ............................. (0.022) (0.042)
---------- ----------
Net Asset Value, End of Period..................... $ 1.00 $ 1.00
========== ==========
Total Return....................................... 2.22%(d) 4.94%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000).................. $ 284 $ 28
Ratio of expenses to average net assets............ 0.78%(c) 0.92%(c)
Ratio of net investment income to
average net assets................................ 4.41%(c) 5.76%(c)
Ratio of expenses to average net assets*........... 0.93%(c) 1.07%(c)
Ratio of net investment income to
average net assets*............................... 4.26%(c) 5.61%(c)
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
January 25, 1995 plus the total return for the Institutional Shares from
January 26, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
See notes to financial statements
-77-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Six Months Ended Years Ended May 31,
Ended November ----------------------------------------
May 31, 1996 30, 1995(d) 1995(a) 1994 1993 1992
------------- ---------- ---------- -------- -------- --------
Investor A Investor A Investor A Investor Investor Investor
Shares Shares Shares Shares Shares Shares
------------- ---------- ---------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income ........................... 0.014 0.014 0.027 0.017 0.019 0.031
------- ------- ------- ------- ------- -------
Distributions
Net investment income ........................... (0.014) (0.014) (0.027) (0.017) (0.019) (0.031)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total Return ...................................... 1.45%(b) 1.45%(b) 2.70% 1.73% 1.90 3.16%
Ratios/Supplementary Data:
Net Assets at end of period (000) ............... $ 5,265 $ 5,403 $ 5,138 $ 8,631 $ 6,837 $10,956
Ratio of expenses to average net assets ......... 0.76%(c) 0.94%(c) 0.84% 0.76% 0.80% 0.87%
Ratio of net investment income to average
net assets ..................................... 2.84%(c) 2.87%(c) 2.63% 1.72% 1.88% 3.10%
Ratio of expenses to average net assets* ........ 0.81%(c) 0.99%(c) 0.93% 0.86% 0.90% 0.97%
Ratio of net investment income to average
net assets* ..................................... 2.79%(c) 2.82%(c) 2.54% 1.62% 1.78% 3.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Not annualized.
(c) Annualized.
(d) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-78-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Six Months Ended Years Ended May 31,
Ended November 30, -------------------------------------------------------
May 31,1996 1995 (c) 1995 1994 1993 1992
------------ ------------ ----------- ------------- ------------ -----------
Trust Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares Shares
------------ ------------ ----------- ------------- ------------ -----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------- -------- --------
Investment Activities
Net investment income............. 0.016 0.016 0.029 0.020 0.021 0.034
------- ------- ------- -------- -------- --------
Distributions
Net investment income............. (0.016) (0.016) (0.029) (0.020) (0.021) (0.034)
------- ------- ------- -------- -------- --------
Net Asset Value, End of Period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======== ======== ========
Total Return........................ 1.57%(a) 1.57%(a) 2.93% 1.97% 2.16% 3.44%
Ratios/Supplementary Data:
Net Assets at end of period (000).. $81,232 $78,031 $85,324 $112,594 $137,602 $126,079
Ratio of expenses to average net
assets............................. 0.53%(b) 0.70%(b) 0.61% 0.52% 0.52% 0.59%
Ratio of net investment income
to average net assets.............. 3.10%(b) 3.10%(b) 2.87% 1.95% 2.13% 3.38%
Ratio of expenses to average net
assets*............................ 0.58%(b) 0.75%(b) 0.70% 0.86% 0.62% 0.69%
Ratio of net investment income to
average net assets*................ 3.05%(b) 3.05%(b) 2.78% 1.61% 2.03% 3.28%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such volun-
tary fee reductions had not occurred, the ratios would have been as
indicated.
(a) Not annualized.
(b) Annualized.
(c) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to
November 30.
See notes to financial statements
-79-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ----------------------------------------------------------------
May 31, 1996 1995 1994 (a) 1993 1992
------------- ------------ ------------ ---------- ---------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------- ------------ ------------ ---------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $ 16.30 $ 12.70 $14.74 $ 14.49 $12.33
------- ------- ------ ------- ------
Investment Activities
Net investment income................ 0.10 0.23 0.20 0.25 0.25
Net realized and unrealized gains
(losses) from investments.......... 1.52 3.74 (0.17) 1.06 2.24
------- ------- ------ ------- ------
Total from Investment Activities. 1.62 3.97 0.03 1.31 2.49
------- ------- ------ ------- ------
Distributions
Net investment income................ (0.10) (0.23) (0.21) (0.25) (0.26)
Net realized gains................... (0.94) (0.14) (0.18) (0.81) (0.07)
In excess of net realized gains...... -- -- (1.68) -- --
------- ------- ------ ------- ------
Total Distributions................ (1.04) (0.37) (2.07) (1.06) (0.33)
------- ------- ------ ------- ------
Net Asset Value, End of Period......... $ 16.88 $16.30 $12.70 $ 14.74 $14.49
======= ======= ====== ======= ======
Total Return (excludes sales charge)... 10.54%(b) 31.95% 0.20% 9.65% 20.59%
Ratios/Supplementary Data:
Net Assets at end of period (000).... $32,215 $25,082 $18,343 $11,157 $6,044
Ratio of expenses to average net
assets............................. 1.05%(c) 1.05% 1.05% 0.74% 0.71%
Ratio of net investment income
to average net assets.............. 1.32%(c) 1.59% 1.45% 1.74% 1.94%
Ratio of expenses to average
net assets*........................ 1.15%(c) 1.15% 1.15% 0.96% 0.85%
Ratio of net investment income
to average net assets*............. 1.22%(c) 1.49% 1.35% 1.52% 1.80%
Portfolio turnover................... 30.67% 58.50% 65.00% 41.00% 79.00%
Average commission rate paid (d)....... $0.0597 -- -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-80-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
March 1, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
------------ ------------
Investor B Investor B
Shares Shares
------------ ------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period ...................................... $ 16.23 $13.43
------- ------
Investment Activities
Net investment income .................................................... 0.06 0.14
Net realized and unrealized gains from investments and foreign currency .. 1.52 2.81
------- ------
Total from Investment Activities ........................................ 1.58 2.95
------- ------
Distributions
Net investment income ..................................................... (0.06) (0.15)
Net realized gains ........................................................ (0.94) --
------- ------
Total Distributions ..................................................... (1.00) (0.15)
------- ------
Net Asset Value, End of Period ............................................ $ 16.81 $16.23
======= ======
Total Return (excludes sales charge) ...................................... 10.31%(d) 31.20%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................................ $ 2,452 $ 781
Ratio of expenses to average net assets .................................. 1.74%(c) 1.75%(c)
Ratio of net investment income to average net assets ..................... 0.66%(c) 0.87%(c)
Ratio of expenses to average net assets* ................................. 1.85%(c) 1.85%(c)
Ratio of net investment income to average net assets* .................... 0.55%(c) 0.77%(c)
Portfolio turnover ....................................................... 30.67% 58.50%
Average commission rate paid (e) ......................................... $0.0597 --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the Portfolio
authorized the issuance of a series designated as "Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from March
1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-81-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ----------------------------------------------
May 31, 1996 1995 1994 1993 1992
------------- ----------- ---------- ---------- ---------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
-------------- ---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $ 16.32 $ 12.72 $ 14.74 $ 14.49 $ 12.33
--------- --------- -------- -------- --------
Investment Activities
Net investment income....................... 0.13 0.27 0.22 0.25 0.24
Net realized and unrealized gains (losses)
from investments.......................... 1.54 3.74 (0.17) 1.06 2.25
--------- --------- -------- -------- --------
Total from Investment Activities........ 1.67 4.01 0.05 1.31 2.49
--------- --------- -------- -------- --------
Distributions
Net investment income....................... (0.13) (0.27) (0.21) (0.25) (0.26)
Net realized gains.......................... (0.94) (0.14) (0.18) (0.81) (0.07)
In excess of net realized gains............. -- -- (1.68) -- --
--------- --------- -------- -------- --------
Total Distributions..................... (1.07) (0.41) (2.07) (1.06) (0.33)
--------- --------- -------- -------- --------
Net Asset Value, End of Period................. $16.92 $16.32 $12.72 $14.74 $14.49
========= ========= ======== ======== ========
Total Return................................... 10.82%(a) 32.27% 0.36% 9.65% 20.59%
Ratios/Supplementary Data:
Net Assets at end of period (000)........... $324,840 $286,546 $235,955 $238,771 $232,967
Ratio of expenses to average net assets..... 0.75%(b) 0.75% 0.75% 0.74% 0.71%
Ratio of net investment income to average
net assets.................................. 1.61%(b) 1.89% 1.72% 1.74% 1.94%
Ratio of expenses to average net assets*.... 0.85%(b) 0.85% 1.15% 0.96% 0.85%
Ratio of net investment income to average
net assets*................................. 1.51%(b) 1.79% 1.32% 1.52% 1.60%
Portfolio turnover.......................... 30.67% 58.50% 65.00% 41.00% 79.00%
Average commission rate paid (c)............ $0.0597 -- -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-82-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended --------------------------------------------------------
May 31, 1996 1995 1994 (a) 1993 1992
----------------- ------------- ------------- ------------ -------------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
----------------- ------------- ------------- ------------ -------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 16.29 $ 12.70 $ 14.74 $ 14.49 $12.33
-------- ------- ------- ------- -------
Investment Activities
Net investment income......................... 0.10 0.23 0.20 0.25 0.25
Net realized and unrealized gains
(losses) from investments.................... 1.53 3.74 (0.17) 1.06 2.24
-------- ------- ------- ------- -------
Total from Investment Activities......... 1.63 3.97 (0.03) 1.31 2.49
-------- ------- ------- ------- -------
Distributions
Net investment income...................... (0.10) (0.24) (0.21) (0.25) (0.26)
Net realized gains......................... (0.94) (0.14) (0.18) (0.81) (0.07)
In excess of net realized gains............ -- -- (1.68) -- --
-------- ------- ------- ------- --------
Total Distributions........................... (1.04) (0.38) (2.07) (1.06) (0.33)
-------- ------- ------- ------- --------
Net Asset Value, End of Period................ $ 16.88 $ 16.29 $ 12.70 $ 14.74 $14.49
======== ======= ======= ======= ========
Total Return.................................. 10.61 %(b) 31.88 % 0.19 % 9.65 % 20.59 %
Ratios/Supplementary Data:
Net Assets at end of period (000)............ $51,906 $40,228 $21,897 $11,157 $6,044
Ratio of expenses to average net assets....... 1.05 %(c) 1.05 % 1.05 % 0.74 % 0.71 %
Ratio of net investment income
to average net assets........................ 1.31 %(c) 1.58 % 1.41 % 1.74 % 1.94 %
Ratio of expenses to average net assets*...... 1.15 %(c) 1.15 % 1.16 % 0.96 % 0.85 %
Ratio of net investment income to average net
assets*...................................... 1.21 %(c) 1.48 % 1.30 % 1.52 % 1.80 %
Portfolio turnover............................ 30.67 % 58.50 % 65.00 % 41.00 % 79.00 %
Average commission rate paid (d).............. $0.0597 -- -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on January 3, 1994, the Portfolio
issued a new series of shares which were designated as "Institutional"
Shares. The financial highlights presented for the periods prior to January
3, 1994 represent financial highlights applicable to the Investor Shares.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-83-
<PAGE>
THE ARCH FUND, INC.
EMERGING GROWTH PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
May 6, 1992
Six Months Ended to
Ended Years Ended November 30, November 30,
----------------------------
May 31, 1996 1995 1994 (a) 1993 1992 (b)(c)
-------------- ---------- ---------- -------- -------------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
-------------- ---------- ---------- -------- -------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $ 13.44 $ 11.99 $ 13.14 $ 11.23 $ 10.10
-------------- ----------- ---------- --------- ------------
Investment Activities
Net investment income (loss)....................... (0.01) -- (0.03) 0.03 0.02
Net realized and unrealized gains from
investments...................................... 0.92 2.36 0.89 2.14 1.13
-------------- ------------ ---------- --------- -----------
Total from Investment Activities............... 0.91 2.36 0.86 2.17 1.15
-------------- ------------ ---------- --------- -----------
Distributions
Net investment income.............................. -- -- -- (0.05) (0.02)
Net realized gains................................. (1.05) (0.91) (1.78) (0.21) --
In excess of net realized gains.................... -- -- (0.23) -- --
-------------- ------------- ---------- --------- ------------
Total Distributions............................ (1.05) (0.91) (2.01) (0.26) (0.02)
-------------- ------------- ---------- --------- ------------
Net Asset Value, End of Period....................... $ 13.30 $ 13.44 $ 11.99 $13.14 $11.23
============== ============ ========== ========= ============
Total Return (excludes sales charge)................. 7.50%(d) 21.47% 7.38% 19.75% 12.55%
Ratios/Supplementary Data:
Net Assets at end of period (000).................. $14,425 $15,056 $10,899 $4,559 $ 753
Ratio of expenses to average net assets............ 1.26%(e) 1.26% 1.25% 0.61% 0.30%
Ratio of net investment income (loss) to average
net assets....................................... (0.09)%(e) (0.12)% (0.44)% 0.19% 0.78%(e)
Ratio of expenses to average net assets*........... 1.36%(e) 1.36% 1.36% 1.23% 1.12%(e)
Ratio of net investment loss to average net
assets*.......................................... (0.19)%(e) (0.22)%(e) 0.55% (0.43)% (0.04)%(e)
Portfolio turnover................................. 32.82% 83.13% 85.00% 65.00% 56.00%
Average commission rate paid (f)................... $0.0575 -- -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Period from commencement of operations.
(c) On May 6, 1992, the Emerging Growth Portfolio issued a series of shares
which were designated as "Investor" Shares.
(d) Not annualized.
(e) Annualized.
(f) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-84-
<PAGE>
THE ARCH FUND, INC.
EMERGING GROWTH PORTFOLIO
Investor B Shares
Financial Hightlights
<TABLE>
<CAPTION>
March 1, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
------------- -------------
Investor B Investor B
Shares Shares
------------- -------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period............ $ 13.37 $ 11.83
------- ---------
Investment Activities
Net investment income (loss)................. (0.02) (0.03)
Net realized and unrealized gains from
investments................................ 0.88 1.57
------- --------
Total from Investment Activities......... 0.86 1.54
------- --------
Distributions
Net realized gains........................... (1.05) --
------- --------
Net Asset Value, End of Period.................. $ 13.18 $ 13.37
======= ========
Total Return (excludes sales charge)............ 7.14 %(d) 20.83 %(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)............ $ 1,142 $ 603
Ratio of expenses to average net assets...... 1.95 %(c) 1.96 %(c)
Ratio of net investment loss to average net
assets.................................... (0.76)%(c) (0.78)%(c)
Ratio of expenses to average net assets*..... 2.06 %(c) 2.06 %(c)
Ratio of net investment loss to average net
assets*................................... (0.86)%(c) (0.88)%(c)
Portfolio turnover........................... 32.82 % 83.13 %
Average commission rate paid (e)............. $0.0575 --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the Portfolio
authorized the issuance of a series designated as "Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from March
1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-85-
<PAGE>
THE ARCH FUND, INC.
EMERGING GROWTH PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Years Ended November 30, May 1, 1992 to
Ended ---------------------------- November 30,
May 31, 1996 1995 1994 1993 1992 (a)
---------- ------- -------- -------- --------------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
---------- -------- -------- -------- --------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............................ $ 13.49 $ 12.01 $ 13.14 $ 11.23 $ 10.00
-------- -------- -------- -------- --------
Investment Activities
Net investment income (loss) ................................... 0.01 0.03 (0.01) 0.03 0.04
Net realized and unrealized gains from
investments ................................................... 0.92 2.36 0.89 2.14 1.21
-------- -------- -------- -------- --------
Total from Investment Activities .............................. 0.93 2.39 0.88 2.17 1.25
-------- -------- -------- -------- --------
Distributions
Net investment income .......................................... -- -- -- (0.05) (0.02)
Net realized gains ............................................. (1.05) (0.91) (1.78) (0.21) --
In excess of net realized gains ................................ -- -- (0.23) -- --
-------- -------- -------- -------- --------
Total Distributions ........................................... (1.05) (0.91) (2.01) (0.26) (0.02)
-------- -------- -------- -------- --------
Net Asset Value, End of Period .................................. $ 13.37 $ 13.49 $ 12.01 $ 13.14 $ 11.23
======== ========= ======== ======== ========
Total Return .................................................... 7.63 %(b) 21.70 % 7.56 % 19.75 % 12.55 %
Ratios/Supplementary Data:
Net Assets at end of period (000) .............................. $181,577 $139,681 $77,690 $47,473 $26,829
Ratio of expenses to average net assets ........................ 0.96 %(c) 0.96 % 0.95 % 0.61 % 0.30 %(c)
Ratio of net investment income (loss) to average net assets .... 0.22 %(c) 0.18 % (0.16)% 0.19 % 0.78 %(c)
Ratio of expenses to average net assets* ....................... 1.06 %(c) 1.06 % 1.36 % 1.23 % 1.12 %(c)
Ratio of net investment income (loss) to average net assets* ... 0.12 %(c) 0.08 %(c) (0.56)% (0.43)% (0.04)%(c)
Portfolio turnover ............................................. 32.82 % 83.13 % 85.00 % 65.00 % 56.00 %
Average commission rate paid (d) ............................... $0.0575 -- -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-86-
<PAGE>
THE ARCH FUND, INC.
EMERGING GROWTH PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
May 6, 1992
Six Months Years Ended November 30, to
Ended -------------------------------------- November 30,
May 31, 1996 1995 1994 (a) 1993 1992 (b)
------------- -------------- ------------- -------- ------------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
------------- -------------- ------------- -------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...... $ 13.40 $ 11.96 $13.14 $11.23 $10.10
------- ------- ------ ------ ------
Investment Activities
Net investment income (loss)............ -- (0.01) (0.03) 0.03 0.02
Net realized and unrealized gains
from investments....................... 0.90 2.36 0.86 2.14 1.13
------- ------- ------ ------ ------
Total from Investment Activities..... 0.90 2.35 0.83 2.17 1.15
------- ------- ------ ------ ------
Distributions
Net investment income................... -- -- -- (0.05) (0.02)
Net realized gains...................... (1.05) (0.91) (1.78) (0.21) --
In excess of net realized gains......... -- -- (0.23) -- --
------- ------- ------ ------ ------
Total Distributions.................. (1.05) (0.91) (2.01) (0.26) (0.02)
------- ------- ------ ------ ------
Net Asset Value, End of Period............ $ 13.25 $ 13.40 $11.96 $13.14 $11.23
======= ======= ====== ====== ======
Total Return.............................. 7.45 %(c) 21.43 % 7.11 % 19.75% 12.55 %(c)
Ratios/Supplementary Data:
Net Assets at end of period (000)....... $23,292 $17,620 $5,633 $4,559 $ 753
Ratio of expenses to average net
assets................................. 1.26 %(d) 1.26 % 1.25 % 0.61 % 0.30 %(d)
Ratio of net investment income (loss)
to average net assets.................. (0.08)%(d) (0.11)% (0.41)% 0.19 % 0.78 %(d)
Ratio of expenses to average net
assets*................................ 1.36 %(d) 1.36 % 1.37 % 1.23 % 1.12 %(d)
Ratio of net investment loss to
average net assets*.................... (0.18)%(d) (0.21)% (0.53) % (0.43)% (0.04)%(d)
Portfolio turnover...................... 32.82 % 83.13 % 85.00 % 65.00 % 56.00 %
Average commission rate paid (e)........ $0.0575 -- -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On May 6, 1992 the Emerging Growth Portfolio issued a series of shares
designated as "Investor" Shares. In addition, on January 3, 1994, the
Portfolio issued a new series of shares designated as "Institutional"
Shares. The financial highlights presented for periods prior to January 3,
1994 represent financial highlights applicable to the Investor Shares.
(b) Period from commencement of operations.
(c) Not annualized.
(d) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-87-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Six Months Years Ended to
Ended November 30, November 30,
May 31, 1996 1995 1994 (a) 1993 (b)
------------ ------------------------ -------------
Investor A Investor A Investor A Investor
Shares Shares Shares Shares
------------ ----------- ----------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.. $ 11.65 $ 9.61 $10.22 $10.00
------- ------ ------ ------
Investment Activities
Net investment Income............... 0.16 0.32 0.28 0.23
Net realized and unrealized gains
(losses) from investments.......... 0.44 2.02 (0.47) 0.15
------- ------ ------ ------
Total from Investment Activities.. 0.60 0.05 0.03 0.38
------- ------ ------ ------
Distributions
Net investment income............... (0.16) (0.30) (0.29) (0.16)
Net realized gains.................. (0.42) -- -- --
In excess of net realized gains..... -- -- (0.13) --
------- ------ ------ ------
Total Distributions............... (0.58) (0.30) (0.42) (0.16)
------- ------ ------ ------
Net Asset Value, End of Period........ $ 11.67 $11.65 $ 9.61 $10.22
======= ====== ====== ======
Total Return (excludes sales charge).. 5.37%(c) 24.85% (1.91)% 3.86%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000)... $ 8,702 $8,348 $7,321 $1,978
Ratio of expenses to average net
assets............................. 1.27%(d) 1.27% 1.27% 0.56%(d)
Ratio of net investment income to
average net assets................. 2.79%(d) 2.98% 2.77% 3.42%(d)
Ratio of expenses to average net
assets*............................ 1.37%(d) 1.37% 1.39% 1.21%(d)
Ratio of net investment income to
average net assets*................ 2.69%(d) 2.88% 2.65% 2.77%(d)
Portfolio turnover.................. 52.91% 58.16% 49.00% 26.00%(d)
Average commission rate paid (e).... $0.0597 -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Period from commencement of operations.
(c) Not annualized.
(d) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-88-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
March 1, 1995
Six Months to
Ended November 30,
May 31, 1996 1995(a)
------------ -------------
Investor B Investor B
Shares Shares
------------ -------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period............. $ 11.59 $10.13
------- ------
Investment Activities
Net investment income.......................... 0.13 0.22
Net realized and unrealized gains from
investments................................... 0.43 1.44
------- ------
Total from Investment Activities............ 0.56 1.66
------- ------
Distributions
Net investment income........................... (0.14) (0.20)
Net realized gains (0.42) --
------- ------
Total Distributions.......................... (0.56) (0.20)
------- ------
Net Asset Value, End of Period................... $ 11.59 $11.59
======= ======
Total Return (excludes sales charge)............. 5.02%(d) 23.92%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000).............. $ 258 $ 36
Ratio of expenses to average net assets........ 1.96%(c) 1.93%(c)
Ratio of net investment income to average net
assets........................................ 2.09%(c) 2.28%(c)
Ratio of expenses to average net assets*....... 2.07%(c) 2.03%(c)
Ratio of net investment income to average net
assets*....................................... 1.98%(c) 2.18%(c)
Portfolio turnover............................. 52.91% 58.16%
Average commission rate paid (e)............... $0.0597 --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the Portfolio
authorized the issuance of a series of shares designated as "Investor B"
Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-89-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Years Ended to
Six Months November 30, November 30,
Ended ------------------- -----------------
May 31, 1996 1995 1994 1993 (a)
------------ -------- -------- -----------------
Trust Trust Trust Trust
Shares Shares Shares Shares
------------ -------- -------- -----------------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................................ $ 11.64 $ 9.62 $ 10.22 $ 10.00
------- ------- ------- -------
Investment Activities
Net investment income............................................. 0.18 0.34 0.29 0.23
Net realized and unrealized gains (losses) from investments....... 0.45 2.02 (0.47) 0.15
------- ------- ------- -------
Total from Investment Activities.............................. 0.63 2.36 (0.18) 0.38
------- ------- ------- -------
Distributions
Net investment income............................................. (0.18) (0.34) (0.29) (0.16)
Net realized gains................................................ (0.42) -- -- --
In excess of net realized gains................................... -- -- (0.13) --
------- ------- ------- -------
Total Distributions........................................... (0.60) (0.34) (0.42) (0.16)
------- ------- ------- -------
Net Asset Value, End of Period...................................... $ 11.67 $ 11.64 $ 9.62 $ 10.22
======= ======= ======= =======
Total Return........................................................ 5.62%(b) 24.97% (1.81)% (3.86)%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)................................. $76,583 $72,669 $65,288 $69,720
Ratio of expenses to average net assets........................... 0.97%(c) 0.98% 0.97% 0.56%(c)
Ratio of net investment income to average net assets.............. 3.08%(c) 3.29% 3.04% 3.42%(c)
Ratio of expenses to average net assets*.......................... 1.07%(c) 1.08% 1.39% 1.21%(c)
Ratio of net investment income to average net assets income
to average net assets *......................................... 2.98%(c) 3.19% 2.63% 2.77%(c)
Portfolio turnover................................................ 52.91% 58.16% 49.00% 26.00%
Average commission rate paid (d).................................. $0.0597 -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-90-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Six Months Years Ended to
Ended November 30, November 30,
May 31, 1996 1995 1994 (a) 1993 (b)
------------ -------------- -------------- -------------
Institutional Institutional Institutional Investor
Shares Shares Shares Shares
------------ -------------- -------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............................... $ 11.62 $ 9.60 $ 10.22 $10.00
------- ------- ------- -------
Investment Activities
Net investment income............................................ 0.16 0.31 0.28 0.23
Net realized and unrealized gains (losses) from investments...... 0.44 2.02 (0.48) 0.15
------- ------- ------- -------
Total from Investment Activities............................. 0.60 2.33 (0.20) 0.38
------- ------- ------- -------
Distributions
Net investment income............................................ (0.16) (0.31) (0.29) (0.16)
Net realized gains............................................... (0.42) -- -- --
In excess of net realized gains.................................. -- -- (0.13) --
------- ------- ------- -------
Total Distributions.......................................... (0.58) (0.31) (0.42) (0.16)
------- ------- ------- -------
Net Asset Value, End of Period..................................... $ 11.64 $ 11.62 $ 9.60 $10.22
======= ======= ======= =======
Total Return....................................................... 5.39%(c) 24.67% (2.00)% 3.86%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000)................................ $44,025 $36,827 $22,723 $1,978
Ratio of expenses to average net assets.......................... 1.27%(d) 1.27% 1.27% 0.56%(d)
Ratio of net investment income to average net assets............. 2.78%(d) 2.97% 2.77% 3.42%(d)
Ratio of expenses to average net assets*......................... 1.37%(d) 1.37% 1.40% 1.21%(d)
Ratio of net investment income income to average net assets*..... 2.68%(d) 2.87% 2.64% 2.77%(d)
Portfolio turnover............................................... 52.91% 58.16% 49.00% 26.00%
Average comission rate paid (e).................................. $0.0597 -- -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) The Balanced Portfolio issued a series of shares designated as "Investor"
Shares on April 1, 1993. In addition, on January 3, 1994, the Portfolio
issued a new series of shares designated as "Institutional" Shares. The
financial highlights presented for periods prior to January 3, 1994
represent financial highlights applicable to the Investor Shares.
(c) Not annualized.
(d) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-91-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended Years Ended November 30,
-------------------------------------------
May 31, 1996 1995 1994 (a) 1993 1992
------------ --------- ---------- ---------- --------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------ --------- ---------- ---------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $10.53 $9.64 $10.65 $10.26 $10.15
------- ------- ------- ------- -------
Investment Activities
Net investment income.................................. 0.33 0.61 0.60 0.64 0.66
Net realized and unrealized gains (losses) from
investments.......................................... (0.56) 0.89 (0.94) 0.39 0.11
------- ------- ------- ------- -------
Total from Investment Activities................... (0.23) 1.50 (0.34) 1.03 0.77
------- ------- ------- ------- -------
Distributions
Net investment income.................................. (0.33) (0.61) (0.60) (0.64) (0.66)
In excess of net investment income..................... -- -- (0.07) -- --
------- ------- ------- ------- -------
Total Distributions................................ (0.33) (0.61) (0.67) (0.64) (0.66)
------- ------- ------- ------- -------
Net Asset Value, End of Period........................... $ 9.97 $10.53 $ 9.64 $ 10.65 $10.26
======= ======= ======= ======= =======
Total Return (excludes sales charge)..................... (2.22)%(b) 15.98% (3.32)% 10.23% 7.81%
Ratios/Supplementary Data:
Net Assets at end of period (000)...................... $5,356 $5,496 $5,167 $3,737 $2,490
Ratio of expenses to average net assets................ 0.95%(c) 0.95% 0.95% 0.95% 0.93%
Ratio of net investment income to average net assets... 6.07%(c) 6.03% 6.00% 6.00% 6.45%
Ratio of expenses to average net assets*............... 1.05%(c) 1.05% 1.05% 1.05% 1.06%
Ratio of net investment income to average net assets*.. 5.97%(c) 5.93% 5.90% 5.90% 6.32%
Portfolio turnover..................................... 66.05% 59.32% 50.00% 31.00% 52.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-92-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
March 1, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
------------ -------------
Investor B Investor B
Shares Shares
------------ -------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period ......................... $10.53 $ 9.92
------ ------
Investment Activities
Net investment income ..................................... 0.30 0.38
Net realized and unrealized gains (losses) from investments (0.56) 0.61
------ ------
Total from Investment Activities ....................... (0.26) 0.99
------ ------
Distributions
Net investment income ..................................... (0.30) (0.38)
------ ------
Net Asset Value, End of Period ............................... $ 9.97 $10.53
====== ======
Total Return (excludes sales charge) ......................... (2.56)%(d) 15.27%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ......................... $ 407 $ 106
Ratio of expenses to average net assets ................... 1.65%(c) 1.65%(c)
Ratio of net investment income to average net assets ...... 5.41%(c) 5.19%(c)
Ratio of expenses to average net assets* .................. 1.76%(c) 1.75%(c)
Ratio of net investment income to average net assets* ..... 5.30%(c) 5.09%(c)
Portfolio turnover ........................................ 66.05% 59.32%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the Portfolio
redesignated the Investor Shares as "Investor A" Shares and authorized the
issuance of a series of shares designated as "Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-93-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ----------------------------------------------
May 31, 1996 1995 1994 1993 1992
------------ -------- -------- -------- --------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------------ -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 10.53 $ 9.64 $ 10.65 $ 10.26 $ 10.15
-------- -------- -------- -------- --------
Investment Activities
Net investment income.................. 0.35 0.64 0.63 0.68 0.70
Net realized and unrealized gains
(losses) from investments............. (0.56) 0.89 (0.94) 0.39 0.11
-------- -------- -------- -------- --------
Total from Investment Activities..... (0.21) 1.53 (0.31) 1.07 0.81
-------- -------- -------- -------- --------
Distributions
Net investment income.................. (0.35) (0.64) (0.63) (0.68) (0.70)
In excess of net realized gains........ -- -- (0.07) -- --
-------- -------- -------- -------- --------
Total Distributions.................. (0.35) (0.64) (0.70) (0.68) (0.70)
-------- -------- -------- -------- --------
Net Asset Value, End of Period........... $ 9.97 $ 10.53 $ 9.64 $ 10.65 $ 10.26
======== ======== ======== ======== ========
Total Return............................. (2.08)%(a) 16.31% (3.03)% 10.55% 8.14%
Ratios/Supplementary Data:
Net Assets at end of period (000)...... $ 127,944 $127,741 $132,577 $149,674 $135,404
Ratio of expenses to average net assets 0.65%(b) 0.65% 0.65% 0.65% 0.63%
Ratio of net investment income
to average net assets................ 6.37%(b) 6.32% 6.25% 6.32% 6.73%
Ratio of expenses to average net assets* 0.75%(b) 0.75% 1.05% 0.88% 0.76%
Ratio of net investment income to
average net assets*.................. 6.27%(b) 6.22% 5.85% 6.09% 6.60%
Portfolio turnover..................... 66.05% 59.32% 50.00% 31.00% 52.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-94-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -------------------------------------------------
May 31, 1996 1995 1994 (a) 1993 1992
--------------- ------------- ------------- -------- --------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
--------------- ------------- ------------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 10.53 $ 9.64 $ 10.65 $10.26 $10.15
-------- ------ ------- ------ ------
Investment Activities
Net investment income ..................... 0.33 0.61 0.60 0.64 0.66
Net realized and unrealized gains
(losses) from investments ................ (0.56) 0.89 (0.94) 0.39 0.11
-------- ------ ------ ------ ------
Total from Investment Activities ....... (0.23) 1.50 (0.34) 1.03 0.77
-------- ------ ------ ------ ------
Distributions
Net investment income ..................... (0.33) (0.61) (0.60) (0.64) (0.66)
In excess of net realized gains ........... -- -- (0.07) -- --
-------- ------ ------ ------ ------
Total Distributions ..................... (0.33) (0.61) (0.67) (0.64) (0.66)
-------- ------ ------ ------ ------
Net Asset Value, End of Period .............. $ 9.97 $10.53 $ 9.64 $ 10.65 $10.26
======== ====== ====== ======= ======
Total Return ................................ (2.22)%(b) 15.98% (3.32)% 10.23% 7.81%
Ratios/Supplementary Data:
Net Assets at end of period (000) ......... $ 11,226 $9,413 $5,965 $ 3,737 $2,490
Ratio of expenses to average net assets ... 0.95%(c) 0.95% 0.96% 0.95% 0.93%
Ratio of net investment income to average
net assets.............................. 6.07%(c) 6.01% 6.03% 6.00% 6.45%
Ratio of expenses to average net assets* .. 1.05%(c) 1.05% 1.07% 1.05% 1.06%
Ratio of net investment income to average
net assets * ........................... 5.97%(c) 5.91% 5.92% 5.90% 6.32%
Portfolio turnover .......................... 66.05% 59.32% 50.00% 31.00% 52.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on January 3, 1994, the Portfolio
issued a new series of shares which were designated as "Institutional"
Shares. The financial highlights presented for the periods prior to January
3, 1994 represent financial highlights applicable to the Investor Shares.
(b) Not annualized.
(c) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-95-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ------------------------------------------------------------
May 31, 1996 1995 1994 (a) 1993 1992
------------ -------------- -------------- -------------- ------------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------ -------------- -------------- -------------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........ $10.85 $10.02 $11.20 $10.80 $10.68
------------ -------------- -------------- -------------- ------------
Investment Activities
Net investment income.................... 0.33 0.63 0.61 0.59 0.62
Net realized and unrealized gains
(losses) from investments............... (0.40) 0.80 (1.00) 0.47 0.13
------------ -------------- -------------- -------------- ------------
Total from Investment Activities.... (0.07) 3.00 (0.39) 1.06 0.75
------------ -------------- -------------- -------------- ------------
Distributions
Net investment income.................... (0.33) (0.63) (0.61) (0.59) (0.62)
Net realized gains....................... (0.03) -- -- (0.07) (0.01)
In excess of net investment income....... -- -- (0.18) -- --
In excess of net realized gains.......... -- -- (0.18) -- --
------------ -------------- -------------- -------------- ------------
Total Distributions................. (0.36) (0.63) (0.79) (0.66) (0.63)
------------ -------------- -------------- -------------- ------------
Net Asset Value, End of Period.............. $10.42 $10.85 $10.05 $11.20 $10.80
============ ============== ============== ============== ============
Total Return (excludes sales charges)....... (0.45)%(b) 14.66% (3.14)% 10.03% 7.20%
Ratios/Supplementary Data:
Net Assets at end of period (000)........ $7,433 $8,179 $9,631 9,567 $7,499
Ratio of expenses to average net assets.. 0.97%(c) 0.97% 0.96% 0.97% 0.95%
Ratio of net investment income to
average net assets...................... 5.94%(c) 6.05% 5.98% 5.25% 5.72%
Ratio of expenses to average net assets*. 1.07%(c) 1.07% 1.06% 1.08% 1.09%
Ratio of net investment income to
average net assets*..................... 5.84%(c) 5.95% 5.88% 5.14% 5.58%
Portfolio turnover....................... 35.71% 93.76% 50.00% 24.00% 74.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-96-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
March 1, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
------------ -------------
Investor B Investor B
Shares Shares
------------ -------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period.............. $10.84 $10.34
-------- --------
Investment Activities
Net investment income........................... 0.29 0.31
Net realized and unrealized gains
(losses) from investments..................... (0.36) 0.50
-------- --------
Total from Investment Activities.............. (0.07) 0.81
-------- --------
Distributions
Net investment income........................... (0.29) (0.31)
Net realized gains.............................. (0.03) --
-------- --------
Total Distributions........................... (0.32) (0.31)
-------- --------
Net Asset Value, End of Period.................... $10.45 $10.84
======== ========
Total Return (excludes sales charge).............. (0.80)%(d) 12.85%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)............... $ 261 $ 41
Ratio of expenses to average net
assets........................................ 1.66%(c) 1.68%(c)
Ratio of net investment income to
average net assets............................ 5.19%(c) 5.37%(c)
Ratio of expenses to average net
assets*....................................... 1.76%(c) 1.78%(c)
Ratio of net investment income to
average net assets*........................... 5.08%(c) 5.27%(c)
Portfolio turnover.............................. 35.71% 93.76%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations. On September 27, 1994, the Portfolio
redesignated the Investor Shares as "Investor A" Shares and authorized the
issuance of a series of shares designated as "Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from March
1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-97-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -----------------------------------------
May 31, 1996 1995 1994 1993 1992
------------ -------- -------- -------- --------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------------ -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................................... $ 10.85 $ 10.05 $ 11.20 $ 10.80 $ 10.68
-------- -------- -------- -------- --------
Investment Activities
Net investment income................................................ 0.34 0.67 0.66 0.62 0.66
Net realized and unrealized gains (losses) from
investments........................................................ (0.38) 0.80 (0.97) 0.47 0.13
-------- -------- -------- -------- --------
Total from Investment Activities................................. (0.04) 1.47 (0.31) 1.09 0.79
-------- -------- -------- -------- --------
Distributions
Net investment income................................................ (0.34) (0.67) (0.66) (0.62) (0.66)
Net realized gains................................................... (0.03) -- -- (0.07) (0.01)
In excess of net realized gains...................................... -- -- (0.18) -- --
-------- -------- -------- -------- --------
Total Distributions.............................................. (0.37) (0.67) (0.84) (0.69) (0.67)
-------- -------- -------- -------- --------
Net Asset Value, End of Period......................................... $ 10.44 $ 10.85 $ 10.05 $ 11.20 $ 10.80
========= ======== ======== ========= ========
Total Return........................................................... (0.30)%(a) 15.00% (2.85)% 10.36% 7.52%
Ratios/Supplementary Data:
Net Assets at end of period (000).................................... $ 53,139 $ 45,513 $ 33,166 $ 35,121 $ 31,106
Ratio of expenses to average net assets.............................. 0.67%(b) 0.67% 0.66% 0.67% 0.65%
Ratio of net investment income to average net
assets............................................................. 6.23%(b) 6.36% 6.25% 5.57% 6.02%
Ratio of expenses to average net assets*............................. 0.77%(b) 0.77% 1.06% 0.91% 0.79%
Ratio of net investment income to average net
assets *........................................................... 6.13%(b) 6.26% 5.85% 5.33% 5.88%
Portfolio turnover................................................... 35.71% 93.76% 50.00% 24.00% 74.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements
-98-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ------------------------------------------------
May 31, 1996 1995 1994 (a) 1993 1992
------------ ------------- ------------- -------- --------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
------------- ------------- ------------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....... $10.82 $10.02 $11.20 $10.80 $10.68
------ ------ ------ ------ ------
Investment Activities
Net investment income.................... 0.32 0.63 0.61 0.59 0.62
Net realized and unrealized gains
(losses) from investments................ (0.34) 0.80 (1.00) 0.47 0.13
------ ------ ------ ------ ------
Total from Investment Activities....... (0.02) 1.43 (0.39) 1.06 0.75
------ ------ ------ ------ ------
Distributions
Net investment income.................... (0.32) (0.63) (0.61) (0.59) (0.62)
Net realized gains....................... (0.03) -- -- (0.07) (0.01)
In excess of net realized gains.......... -- -- (0.18) -- --
------ ------ ------ ------ ------
Total Distributions.................... (0.35) (0.63) (0.79) (0.66) (0.63)
------ ------ ------ ------ ------
Net Asset Value, End of Period............. $10.45 $10.82 $10.02 $11.20 $10.80
====== ====== ====== ====== ======
Total Return............................... (0.47)%(b) 14.69% (3.46)% 10.03% 7.20%
Ratios/Supplementary Data:
Net Assets at end of period (000)........ $ 1,676 $ 667 $ 51 $ 9,567 $7,499
Ratio of expenses to average net assets.. 0.96%(c) 0.97% 0.95% 0.97% 0.95%
Ratio of net investment income to average 5.88%(c) 5.91% 6.54% 5.25% 5.72%
net assets..............................
Ratio of expenses to average net assets*. 1.06%(c) 1.07% 1.16% 1.08% 1.09%
Ratio of net investment income to average
net assets*............................. 5.78%(c) 5.81% 6.33% 5.14% 5.58%
Portfolio turnover....................... 35.71% 93.76% 50.00% 24.00% 74.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on June 7, 1994, the Portfolio
issued a new series of shares designated as "Institutional" Shares. The
financial highlights presented for periods prior to June 7, 1994 represent
financial highlights applicable to the Investor Shares.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-99-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Six Months Ended Year Ended May 31,
Ended November 30, ---------------------------------------------------
May 31, 1996 1995 (d) 1995 (a) 1994 1993 1992
------------ ------------- ----------------------------------------------------
Investor A Investor A Investor A Investor Investor Investor
Shares Shares Shares Shares Shares Shares
------------- -------------- ------------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $11.74 $11.52 $11.13 $11.54 $10.97 $10.62
--------- -------- -------- ------- -------- --------
Investment Activities
Net investment income....................... 0.28 0.27 0.55 0.55 0.58 0.63
Net realized and unrealized gains
(losses) from investments.................. (0.41) 0.22 0.40 (0.37) 0.64 0.43
--------- -------- -------- ------- -------- --------
Total from Investment Activities........ (0.13) 0.49 0.95 0.18 1.22 1.06
--------- -------- -------- ------- -------- --------
Distributions
Net investment income........................ (0.28) (0.27) (0.55) (0.55) (0.58) (0.63)
Net realized gains........................... -- -- (0.01) (0.04) (0.07) (0.08)
--------- -------- -------- ------- -------- --------
Total Distributions....................... (0.28) (0.27) (0.56) (0.59) (0.65) (0.71)
--------- -------- -------- ------- -------- --------
Net Asset Value, End of Period................. $ 11.33 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
========= ======== ======== ======== ========== =========
Total Return (excludes sales charges)......... (1.16)%(b) 4.32%(b) 8.91% 1.53% 11.47% 10.24%
Ratios/Supplementary Data:
Net Assets at end of period (000)............ $24,021 $24,726 $24,318 $27,919 $23,223 $12,635
Ratio of expenses to
average net assets....................... 0.85%(c) 0.95%(c) 0.84% 0.65% 0.63% 0.85%
Ratio of net investment
income to average net assets............. 4.78%(c) 4.64%(c) 5.02% 4.75% 5.11% 5.75%
Ratio of expenses to average net assets*... 1.05%(c) 1.18%(c) 1.18% 1.12% 1.18% 1.49%
Ratio of net investment income to
average net assets*...................... 4.58%(c) 4.44%(c) 4.68% 4.28% 4.56% 5.11%
Portfolio turnover......................... 1.39% 1.55% -- 20.00% 15.00% 21.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(d) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-100-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Six Months Ended March 1, 1995
Ended November 30, to May 31,
May 31, 1996 1995 (e) 1995 (a)
-------------- -------------- --------------
Investor B Investor B Investor B
Shares Shares Shares
-------------- -------------- --------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................................... $11.74 $11.52 $11.19
------ ------ ------
Investment Activities
Net investment income................................................ 0.23 0.22 0.11
Net realized and unrealized gains (losses) from investments.......... (0.41) 0.22 0.33
------ ------ ------
Total from Investment Activities................................. (0.18) 0.44 0.44
------ ------ ------
Distributions
Net investment income................................................ (0.23) (0.22) (0.11)
------ ------ ------
Net Asset Value, End of Period......................................... $11.33 $11.74 $11.52
====== ====== ======
Total Return (excludes sales charges).................................. (1.55)%(b) 3.88%(b) 8.61%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000).................................... $ 689 $ 433 $ 94
Ratio of expenses to average net assets.............................. 1.65%(d) 1.77%(d) 1.76%(d)
Ratio of net investment income to average net assets................. 4.00%(d) 3.82%(d) 4.00%(d)
Ratio of expenses to average net assets*............................. 1.74%(d) 1.87%(d) 1.88%(d)
Ratio of net investment income to average net assets *............... 3.90%(d) 3.72%(d) 3.89%(d)
Portfolio turnover................................................... 1.39% 1.55% --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated Investor shares as
"Investor A" shares and authorized the issuance of a third series of shares
designated as "Investor B" shares. These financial highlights of Investor B
shares cover the period from March 1, 1995 (commencement of operations)
through May 31, 1995.
(b) Not annualized.
(c) Represents total return for the Investor A Shares from June 1, 1994 to
February 28, 1995, plus the total return for the Investor B Shares for the
period from March 1, 1995 to May 31, 1995.
(d) Annualized.
(e) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-101-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Six Months Ended Years Ended May 31,
Ended November 30, -----------------------------------------------
May 31, 1996 1995 (c) 1995 1994 1993 1992
------------ ----------- ------ ------ ------ ------
Trust Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares Shares
----------- ----------- ------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97 $ 10.62
Period............................... ------- ------- ------- ------- ------- -------
Investment Activities
Net investment income................ 0.29 0.28 0.57 0.58 0.60 0.64
Net realized and unrealized gains
(losses) from investments.......... (0.41) 0.22 0.40 (0.37) 0.64 0.43
------ ------ ------ ------ ------ ------
Total from Investment Activities (0.12) 0.50 0.97 0.21 1.24 1.07
------- ------ ------ ------ ------ ------
Distributions
Net investment income................ (0.29) (0.28) (0.57) (0.58) (0.60) (0.64)
Net realized gains................... -- -- (0.01) (0.04) (0.07) (0.08)
------ ------ ------ ------ ------ ------
Total Distributions................ (0.29) (0.28) (0.58) (0.62) (0.67) (0.72)
------- ------ ------ ------ ------ ------
Net Asset Value, End of Period......... $ 11.33 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
======= ======= ======= ======= ======= =======
Total Return........................... (1.06)%(a) 4.41%(a) 9.12% 1.73% 11.70% 10.37%
Ratios/Supplementary Data:
Net Assets at end of period (000).... $45,437 $47,773 $44,336 $47,743 $32,777 $ 6,609
Ratio of expenses to average net
assets............................. 0.65%(b) 0.78%(b) 0.64% 0.45% 0.43% 0.73%
Ratio of net investment income to
average net assets................. 4.98%(b) 4.83%(b) 5.22% 4.96% 5.30% 5.87%
Ratio of expenses to average net
assets*............................ 0.75%(b) 0.88%(b) 1.16% 1.13% 0.98% 1.38%
Ratio of net investment income to
average net assets*................ 4.88%(b) 4.73%(b) 4.70% 4.28% 4.75% 5.22%
Portfolio turnover................... 1.39% 1.55% -- 20.00% 15.00% 21.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have
been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Upon reorganizing as a portfolio of The ARCH Fund, Inc., the Missouri
Tax-Exempt Bond Portfolio changed its fiscal year end from May 31 to
November 30.
See notes to financial statements
-102-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
July 10, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
------------ -------------
Investor A Investor A
Shares Shares
------------ -------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period................................... $10.08 $10.00
------ ------
Investment Activities
Net investment income ............................................... 0.21 --
Net realized and unrealized gains (losses) from investments ......... (0.19) 0.08
------ ------
Total from Investment Activities ................................ 0.02 0.08
------ ------
Distributions
Net investment income ............................................... (0.21) --
------ ------
Net Asset Value, End of Period......................................... $ 9.89 $10.08
====== ======
Total Return (excludes sales charges).................................. (0.15)%(b) 0.80%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ..................................... $ 49 $ -- (c)
Ratio of expenses to average net assets ............................... 0.53%(d) 0.00%(d)
Ratio of net investment income to average net assets .................. 3.90%(d) 0.00%(d)
Ratio of expenses to average net assets*............................... 1.24%(d) 0.00%(d)
Ratio of net investment income to average net assets*.................. 3.19%(d) 0.00%(d)
Portfolio turnover .................................................... 2.38% 0.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Only one Investor A Share, worth $10.08, was outstanding as of November 30,
1995.
(d) Annualized.
See notes to financial statements
-103-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
July 10, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
------------ -------------
Trust Trust
Shares Shares
------------ -------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period................................................... $ 10.07 $ 10.00
-------- --------
Investment Activities
Net investment income................................................................ 0.21 0.14
Net realized and unrealized gains (losses) from investments.......................... (0.19) 0.07
-------- --------
Total from Investment Activities.................................................. 0.02 0.21
-------- --------
Distributions
Net investment income................................................................ (0.21) (0.14)
-------- --------
Net Asset Value, End of Period......................................................... $ 9.88 $ 10.07
======== ========
Total Return........................................................................... (0.14)%(b) 2.15%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000).................................................... $ 27,178 $ 23,754
Ratio of expenses to average net assets.............................................. 0.29%(c) 0.47%(c)
Ratio of net investment income to average net assets................................. 4.10%(c) 3.81%(c)
Ratio of expenses to average net assets*............................................. 0.94%(c) 1.12%(c)
Ratio of net investment income to average net assets *............................... 3.45%(c) 3.16%(c)
Portfolio turnover................................................................... 2.38% 0.00%
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-104-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Year April 4, 1994
Six Months Ended to
Ended November 30, November 30,
May 31, 1996 1995 1995 (a)(b)(c)
------------ ------------- --------------
Investor A Investor A Investor A
Shares Shares Shares
------------ ------------- --------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period...................... $ 10.76 $ 9.90 $ 10.00
-------- -------- --------
Investment Activities
Net investment income (loss)............................ 0.01 0.02 (0.01)
Net realized and unrealized gains (losses) from
investments and foreign currency...................... 0.85 0.86 (0.09)
-------- -------- --------
Total from Investment Activities................... 0.86 0.88 (0.10)
-------- -------- --------
Distributions
Net realized gains..................................... -- (0.01) --
Tax return of capital.................................. -- (0.01) --
-------- -------- --------
Total Distributions................................ -- (0.02) --
-------- -------- --------
Net Asset Value, End of Period........................... $ 11.62 $ 10.76 $ 9.90
======== ======== ========
Total Return (excludes sales charges).................... 7.99 %(d) 8.89 % (1.00)%(d)
Ratios/Supplementary Data:
Net Assets at end of period (000)...................... $ 2,092 $ 1,568 $ 791
Ratio of expenses to average net assets................ 1.46 %(e) 1.45 % 1.55 %(e)
Ratio of net investment income (loss) to average
net asset............................................ 0.22 %(e) 0.07 % (0.39)%(e)
Ratio of expenses to average net assets*............... 1.76 %(e) 1.76 % 1.89 %(e)
Ratio of net investment loss to average net assets *... (0.08)%(e) (0.24)% (0.73)%(e)
Portfolio turnover..................................... 40.80 % 62.78 21.00 %
Average commission rate paid (f)....................... $ 0.0363 -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) On April 4, 1994, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on May 2, 1994, the Portfolio
issued a new series of shares which were designated as "Investor" Shares.
The financial highlights presented for April 4, 1994 to May 2, 1994
represent financial highlights applicable to the Trust Shares.
(c) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(d) Not annualized.
(e) Annualized.
(f) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-105-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
March 1, 1995
Six Months to
Ended November 30,
May 31, 1996 1995 (a)
------------ ------------
Investor B Investor B
Shares Shares
------------ ------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period................... $ 10.71 $ 9.26
------- -------
Investment Activities
Net investment loss................................... (0.01) (0.03)
Net realized and unrealized gains from
investments and foreign currency..................... 0.81 1.48
------- -------
Total from Investment Activities................... 0.80 1.45
------- -------
Net Asset Value, End of Period......................... $ 11.51 $10.71
======= =======
Total Return (excludes sales charge)................... 7.47%(d) 8.38%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)..................... $ 284 $ 102
Ratio of expenses to average net assets............... 2.15%(c) 2.02%(c)
Ratio of net investment loss to average net
assets............................................... (0.33)%(c) (0.96)%(c)
Ratio of expenses to average net assets*.............. 2.46%(c) 2.44%(c)
Ratio of net investment loss to average net
assets*.............................................. (0.64)%(c) (1.38)%(c)
Portfolio turnover.................................... 40.80% 62.78%(c)
Average commission rate paid (e)...................... $0.0363 --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from March
1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-106-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Ended April 4, 1994 to
Ended November 30, November 30,
May 31, 1996 1995 1994(a)
-------------- -------------- --------------
Trust Trust Trust
Shares Shares Shares
-------------- -------------- --------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period........ $ 10.79 $ 9.92 $ 10.00
------- ------- -------
Investment Activities
Net investment income.................... 0.03 0.03 0.01
Net realized and unrealized gains
(losses) from investments and foreign
currency............................... 0.85 0.86 (0.09)
------- ------- -------
Total from Investment Activities....... 0.88 0.89 (0.08)
------- ------- -------
Distributions
Net realized gains....................... -- (0.01) --
Tax return of capital.................... -- (0.01) --
------- ------- -------
Total Distributions.................... -- (0.02) --
------- ------- -------
Net Asset Value, End of Period.............. $ 11.67 $ 10.79 $ 9.92
======= ======= =======
Total Return................................ 8.16%(b) 8.97% (0.80)%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)......... $50,607 $36,096 $23,746
Ratio of expenses to average net assets... 1.16%(c) 1.16% 1.23%(c)
Ratio of net investment income to
average net assets....................... 0.53%(c) 0.39% 0.23%(c)
Ratio of expenses to average net assets*.. 1.46%(c) 1.46% 1.95%(c)
Ratio of net investment income (loss) to
average net assets *..................... 0.23%(c) 0.09% (0.49)%(c)
Portfolio turnover........................ 40.80% 62.78% 21.00%
Average commission rate paid (d).......... $0.0363 -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-107-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Ended April 4, 1994
Ended November 30, to November 30,
May 31, 1996 1995 1994 (a)
------------- ------------- -------------
Institutional Institutional Institutional
Shares Shares Shares
------------- ------------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period....................... $ 10.75 $ 9.90 $ 10.00
------- ------- -------
Investment Activities
Net investment income (loss) 0.01 0.01 (0.01)
Net realized and unrealized
gains (losses) from
investments and foreign
currency.................. 0.84 0.86 (0.09)
------- ------- -------
Total from Investment
Activities.............. 0.85 0.87 (0.10)
------- ------- -------
Distributions
Realized net gains.......... -- (0.01) --
Total return of capital..... -- (0.01) --
Total Distributions....... -- (0.02) --
------- ------- -------
Net Asset Value, End of Period $ 11.60 $10.75 $ 9.90
======= ======= =======
Total Return.................. 7.91%(b) 8.78% (1.00)%(b)
Ratios/Supplementary Data:
Net Assets at end of period
(000)..................... $ 3,651 $2,159 $ 197
Ratio of expenses to average
net assets................ 1.46%(c) 1.44% 1.70%
Ratio of net investment
income (loss) to average
net assets................ 0.28%(c) 0.13% (0.48)%(c)
Ratio of expenses to average
net assets*............... 1.76%(c) 1.75% 2.17%
Ratio of net investment loss
to average net assets*.... (0.02)%(c) (0.18)% (0.94)%(c)
Portfolio turnover.......... 40.80% 62.78% 21.00%
Average commission rate paid
(d)....................... $0.0363 -- --
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On April 4, 1994, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on April 24, 1994, the Portfolio
issued a new series of shares which were designated as "Institutional"
Shares. The financial highlights presented for April 4, 1994 to April 24,
1994 represent financial highlights applicable to the Trust Shares.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-108-
<PAGE>
[ART WORK APPEARS HERE]
INVESTMENT ADVISER
Mississippi Valley Advisors Inc.
One Mercantile Center
Seventh & Washington Streets
St. Louis, Missouri 63101
DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219-3035
LEGAL COUNSEL
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219-3035
This report is submitted for the general information of the shareholders of The
ARCH Funds, Inc. It is not authorized for distribution to prospective investors
unless accompanied or preceded by effective prospectuses for the Funds, which
contain information concerning the Fund's investment policies and expenses as
well as other pertinent information.
