<PAGE>
Annual Report
November 30, 1996
Treasury Money Market Portfolio
Money Market Portfolio
Tax-Exempt Money Market Portfolio
U.S. Government Securities Portfolio
Short-Intermediate Municipal Portfolio
Government & Corporate Bond Portfolio
National Municipal Bond Portfolio
Missouri Tax-Exempt Bond Portfolio
Balanced Portfolio
Growth & Income Equity Portfolio
International Equity Portfolio
Small Cap Equity Portfolio
[LOGO OF THE ARCH FUNDS APPEARS HERE]
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 12
months ended November 30, 1996. During the period, the ARCH family of mutual
funds saw its assets increase to $2.6 billion.
The ARCH Asset Adviser program has been very successful and continues to
offer investors an opportunity to invest in a diversified portfolio of ARCH
funds with professional guidance. Effective December 1, 1996, The ARCH
Emerging Growth Portfolio changed its name to The ARCH Small Cap Equity
Portfolio. This name more closely reflects the Portfolio's investment
strategy. The ARCH National Municipal Bond Portfolio commenced operations on
November 18, 1996, and ended the year with over $311 million in net assets.
The 12 months ended November 30, 1996, delivered further gains for stock
market investors, with the S&P 500 rising approximately 28%. Bonds also posted
strong results, with a total return of 6.07% for the Lehman Brothers Aggregate
Bond Index.
Such gains have encouraged complacency among some investors. After all, the
Dow Jones Industrial Average has climbed more or less steadily from around
1,000 in 1982 to break through the 6,000 mark during the recent period. But
it's important to remember that stock prices can fall as well as rise. Thus,
you should be sure that you understand and have confidence in your investment
manager's style and your individual fund portfolio. Otherwise, you will not be
able to ride out potential market dips--and you will risk selling at the
bottom of a market decline.
You will find discussions of each portfolio of The ARCH Fund, Inc. in the
pages that follow. Those reports will help you to understand your investments,
their recent performance and their current prospects. If you'd like more
information about any of the portfolios, please call the ARCH Shareholder
Servicing Center at 1-800-452-ARCH.
MESSAGE FROM YOUR INVESTMENT ADVISER, MISSISSIPPI VALLEY ADVISERS INC.
Our forecast calls for the economy to slow gradually during the coming year,
with its annual rate of growth declining from 2.7% in 1996 to an estimated
2.0% in 1997. But it is worth noting that some forecasters expect growth to
continue at a stronger pace--which could force the Federal Reserve to raise
interest rates. If that occurs, the financial markets will likely suffer.
Given that risk, it's important to review the reasons why we think slower
economic growth is likely. Those reasons include the following:
. Consumer-loan delinquency rates at commercial banks continue to rise.
. Americans' personal savings rate generally has been 4.5% to 5%, making it
difficult for consumer expenditures to increase faster than real
disposable income.
. A sustained period of strong consumer spending has left little pent-up
consumer demand to fuel purchases of autos, houses and other consumer
goods.
. Exports aren't likely to recover sharply, since the economies of our
major trading partners are not robust.
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>
ELEMENTS FUELING MODEST GROWTH
While economic growth will be limited by the foregoing factors, we do not
expect a recession to occur in 1997 or 1998.
Consumer confidence remains high, supported by healthy employment and income
growth. Civilian employment rose 2.1% during the first half of 1996, and real
personal disposable income climbed at a 1.8% annual rate.
The stock market's strong performance also has added to household net worth.
Inflation remains low, and the unemployment rate has held steady since 1994.
And, after two decades of decline, real hourly earnings have been climbing
over the last year or so.
The bottom line: We are forecasting modest economic growth at around a 2.0%
annual rate in 1997 and 2.2% in 1998. Inflation is likely to climb 2.5% to
3.5% annually during the period, with corporate earnings growing 5% to 8%
through 1997.
FINANCIAL MARKETS
Such a slow-growth, low-inflation environment generally is good news for
financial assets. But investors should bear in mind that stock market values
are scarce; thus, it is more important than ever to be selective in your
investments. We continue to find some opportunities in selected industries,
and we will manage the funds to take advantage of them.
Meanwhile, it is important for investors to look to both long-term goals and
short-term needs when planning fund investments. Money earmarked for the
distant future may be most appropriate for stock and bond funds. But most
investors should keep some cash in a money market fund or other stable
instrument to cover emergencies or other needs in the near future.
THE ARCH MONEY MARKET PORTFOLIO+
Q. What is the Portfolio's objective?
A. The ARCH Money Market Portfolio seeks current income with liquidity and
stability of principal. The Portfolio's net assets on November 30, 1996, were
approximately $824 million.
Q. What were the conditions in the money markets during the twelve months
ended November 30, 1996?
A. Short-term interest rates were at their highest early in the 12-month
period. They trended lower with a .25% cut in the Federal Funds rate on
December 19, 1995, and a second .25% cut on January 31, 1996. For the rest of
the period, rates remained in a relatively narrow range. The 30-day rate for
the Fund varied by only .11% during this period.
Q. How did you manage the Portfolio to capitalize on those conditions?
A. Since rates were relatively stagnant during most of the period, the
Portfolio took advantage of market aberrations as they arose to extend its
maturity. The periods that provided the best opportunities to invest in
longer-maturity securities with higher yields typically came near the end of
each quarter. Often, issuers are eager to balance their books at the end of a
quarter or a year, so they sell new securities with high yields to attract
investors.
- ------
+ 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 Net Asset Value of $1.00 per
share.
-2-
<PAGE>
Q. What types of securities constituted the largest holding of the Portfolio
during the period?
A. First-tier commercial paper, which has the highest credit quality in the
commercial sector, constituted the Portfolio's largest holding, at 70.90%* of
assets. Such high-quality issues were readily available at good yields, one
reason being that firms issued a relatively large amount of commercial paper
during the period and were forced to offer attractive yields to compete for
buyers. Floating-rate notes comprised the second largest holding, at 10.05%*
of the Portfolio's assets. Such notes offer some additional yield without
adding much risk.
Q. What is the Portfolio's strategy going forward?
A. The Portfolio will continue to make most of its investments in the
commercial-paper market, which currently offers the best combination of
availability and high yields. We also will look to add some floating-rate
issues, which could enhance the Portfolio's yield. It seems unlikely that the
Federal Reserve will raise or lower rates soon, so the Portfolio will maintain
a neutral maturity for now.
THE 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 exempt from state income tax, consistent with liquidity and security of
principal. The Portfolio's total assets stood at $139 million on November 30,
1996.
Q. How did you manage the Portfolio during the recent period?
A. The Portfolio's holdings mainly consisted of Treasury bills, which
generally provided a yield advantage over short-coupon Treasury notes.
Q. How did you manage the maturity of the Portfolio?
A. The Portfolio must maintain an average maturity of less than 60 days to
keep its AAA m-g credit rating by Standard & Poor's. It targeted an average
maturity of 45 to 55 days for most of the period. The exception was the July
to September period, when we shortened the average maturity to meet a large
redemption. We will likely maintain an average maturity of 50 to 55 days going
forward, because we see the best values there.
THE ARCH TAX-EXEMPT MONEY MARKET PORTFOLIO+++
Q. What were the conditions in the tax-exempt money markets during the
twelve months ended November 30, 1996?
A. Yields on tax-exempt money market notes hit new lows compared to yields
on taxable Treasury bills. One reason was strong demand for tax-exempt issues
from fund managers, trusts and corporations, which drove the issues' prices up
and the yields down. In addition, relatively few issues came to market because
short-term rates were a bit high. Typically, municipalities issue more
securities when short-term rates are low because they don't have to pay as
much interest to investors. Finally, commercial paper offerings became
increasingly unattractive as their prices rose and their yields declined.
- ------
* Portfolio composition is subject to change.
+ 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 Net Asset Value of $1.00 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.
-3-
<PAGE>
Q. How did you manage the Portfolio in that environment?
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 strict credit quality standards.
During the recent period, we held a sizable percentage of the Portfolio in
daily and weekly variable rate securities. They provided the best yields on a
risk-adjusted basis. They also offered liquidity--the ability to buy and sell
quickly. That is useful during periods when the stock market rallies, because
some investors want to sell their shares in the Portfolio to buy stocks.
Q. How did the average maturity of the Portfolio vary during the period?
A. The Portfolio's average maturity at the start of the period was around 49
days. It fell to 27 days at the end of the period. We increased our investment
in shorter-term securities that offered better yields with lower maturity risk
than long-term issues.
The Portfolio's maturity at any given time also reflects seasonable shifts
in the marketplace. For example, around tax time we see lots of redemptions
because people are drawing money to pay their bills. We need to maintain a
relatively liquid position to meet their needs during that time.
Q. What is the Portfolio's strategy likely to be going forward?
A. We will continue to maintain a relatively short average maturity until
interest rates climb to more attractive levels. In our view, tax-exempt money
market securities will not compete well with taxable money market issues until
the markets shift. In particular, short-term taxable rates must decline enough
to lose their advantage over taxable-equivalent yields on tax-exempt
securities. When that happens, we'll be prepared to make changes in the
Portfolio to capture opportunities that may arise.
-4-
<PAGE>
THE ARCH SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
Value of a $10,000 Investment
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Municipal Bond
Investor A (No Load) Investor A (Load)* Index-3 year
<S> <C> <C> <C>
7/95 10,000 9,747 10,000
11/95 10,080 9,825 10,220
11/96 10,485 10,220 10,713
</TABLE>
* Reflects 2.50% sales charge.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Aggregate Total Return
as of 11/30/96
- -----------------------------------------------------------
Since
Inception
1 Year (7/10/95)
- -----------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 4.02% 3.46%
- -----------------------------------------------------------
Investor A * 1.41% 1.57%
- -----------------------------------------------------------
</TABLE>
Value of a $10,000 Investment
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Municipal Bond
Trust (No Load) Index-3 year
<S> <C> <C>
7/95 10,000 10,000
11/95 10,213 10,220
11/96 10,636 10,713
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Aggregate Total Return
as of 11/30/96
- -----------------------------------------------------------
Since
Inception
1 Year (7/10/95)
- -----------------------------------------------------------
<S> <C> <C>
Trust 4.15% 4.52%
- -----------------------------------------------------------
</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. What were the conditions in the municipal bond market during the 12 months
ended November 30, 1996?
A. Municipal bonds outperformed taxable issues during the year. Rates for
municipal bonds with maturities of three-to-five years didn't change much
during the period, however.
Q. How did you manage the Portfolio in that environment?
A. The Portfolio seeks as high a level of current income exempt from federal
income tax, as is consistent with capital preservation. Its average maturity
generally remains between two and five years.
During the recent twelve-month period, we structured the Portfolio
defensively to guard against the risk that interest rates could increase. Many
observers were concerned that the Federal Reserve might raise interest rates,
causing longer-term issues to suffer price declines. The Portfolio's maturity
fell from 5.1 to 4.0 years during the period.
Q. What was the average credit rating of the Portfolio's holdings?
A. The average credit rating of the Portfolio's holdings for the 12 months
was AA2. Yields on lower-quality issues were not generous enough to justify
their additional credit risk.
Q. How will you manage the Portfolio in the months ahead?
A. The relatively stable supply of municipal bonds should help support prices
in that market, and longer-term issues could benefit the most. Thus, we will
maintain an average maturity of around 4.5 years. We'll also continue to hold
issues of especially high credit quality because that is the nature of the
Portfolio.
-5-
<PAGE>
THE ARCH NATIONAL MUNICIPAL BOND PORTFOLIO
Q. How will you manage this new Portfolio?
A. The Fund was launched on November 18, 1996, and invests in high-quality
municipal securities in various municipalities across the country. It will
maintain an average credit quality of around AA1 under present conditions. One
reason for this is that the municipal market generally has not paid much in
additional yield to investors who take on the added risk in lower-quality
issues. The Portfolio's average maturity initially will be approximately ten
years. However, that will change as market conditions warrant. The Portfolio's
income may be subject to certain state and local taxes and, depending on an
investor's tax status, the federal alternative minimum tax.
THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Value of a $10,000 Investment
- ------------------------------------------------------------------------------------------------------
Investor A Investor A CDSC CDSC Lehman Brother
(No Load) (Load) (No Load) (Load) Municipal Bond Index
<S> <C> <C> <C> <C> <C>
7/88 10,000 9,551 10,000 9,500 10,000
11/88 10,523 10,050 10,523 10,023 10,341
11/89 11,622 11,100 11,622 11,222 11,480
11/90 12,320 11,767 12,320 12,020 12,363
11/91 13,493 12,887 13,493 13,193 13,632
11/92 14,833 14,166 14,760 14,560 14,999
11/93 16,393 15,657 16,313 16,213 16,662
11/94 15,387 14,696 15,312 15,312 15,787
11/95 18,221 17,403 18,007 18,007 18,770
11/96 19,024 18,170 18,634 18,634 19,874
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charges.
** Reflects applicable contigent deferred sales charge.
(Maximum 5.00%)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return
as of 11/30/96
- --------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (7/15/88)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 4.41% 7.11% 7.97%
- --------------------------------------------------------------------------------
Investor A* -0.26% 6.13% 7.38%
- --------------------------------------------------------------------------------
Investor B (No CDSC) 3.48% 6.67% 7.70%
- --------------------------------------------------------------------------------
Investor B (CDSC)** -1.50% 6.51% 7.70%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Value of a $10,000 Investment
- ----------------------------------------------------------------------
Lehman Brother
Trust Municipal Bond Index
<S> <C> <C>
7/88 10,000 10,000
11/88 10,523 10,341
11/89 11,622 11,480
11/90 12,353 12,363
11/91 13,546 13,632
11/92 14,915 14,999
11/93 16,517 16,662
11/94 15,535 15,787
11/95 18,430 18,770
11/96 19,281 19,874
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------
Average Annual Total Return
as of 11/30/96
- --------------------------------------------------
Since
Inception
1 Year 5 Year (7/15/88)
- --------------------------------------------------
<S> <C> <C> <C>
Trust 4.62% 7.32% 8.14%
- --------------------------------------------------
</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 (CDSC) 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 were the conditions in the Missouri municipal bond market during the
12 months ended November 30, 1996?
A. The supply of municipal issues in the Missouri market was limited. Issues
that did come to market were rather small and relatively illiquid. Rates on
intermediate- and long-term issues were stable, however.
-6-
<PAGE>
Q. How did you manage the Portfolio in that environment?
A. The Portfolio's average maturity at the end of the period was around 11
years, roughly unchanged from 12 months earlier. We found the best values among
issues that mature in 13 to 15 years. We also maintained a high-quality
portfolio with an average credit rating of AA2. Lower-quality issues didn't
offer enough extra yield to justify their additional credit risk.
Q. What's the outlook for the Missouri municipal bond market?
A. We've seen the number of new issues decline over the last few years, so we
expect more of the same. The reason is that rates are considered high, and
municipalities don't want to pay high interest rates on their bonds. That lack
of supply should help support prices for existing bonds.
Q. What will your strategy be in this environment?
A. We'll slightly increase the Portfolio's maturity to lock in yields. We
also will maintain the Portfolio's high credit quality, aiming to offer
shareholders the best returns we can without taking undue risk.
The ARCH International Equity Portfolio
[GRAPH APPEAR HERE]
Value of a $10,000 Investment
<TABLE>
<CAPTION>
Investor B Investor B
Investor A No Load Investor A Load CDSC NO CDSC Morgan Stanley
<S> <C> <C> <C> <C> <C>
4/94 10000 9551 10000 10000 10000
11/94 9900 9456 9405 9900 10370
11/95 10780 10296 10330 10730 11189
11/96 12072 11530 11622 11922 12543
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
<TABLE>
<CAPTION>
- -------------------------------------------------------
Average Annual Total Return
as of 11/30/96
- -------------------------------------------------------
Since
Inception
1 Year (4/4/94)
- -------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 11.99% 7.33%
- -------------------------------------------------------
Investor A* 6.92% 5.49%
- -------------------------------------------------------
Investor B (No CDSC) 11.11% 6.82%
- -------------------------------------------------------
Investor B (CDSC)** 6.11% 5.81%
- -------------------------------------------------------
</TABLE>
[GRAPH APPEAR HERE]
Value of a $10,000 Investment
<TABLE>
<CAPTION> Europe, Australia & Far East
Trust No Load Instituion No Morgan Stanley Index
<S> <C> <C> <C>
4/94 10000 10000 10000
11/94 9920 9900 10370
11/95 10810 10770 11189
11/96 12142 12052 12543
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
as of 11/30/96
- -------------------------------------------------------
Since
Inception
1 Year (4/4/94)
- -------------------------------------------------------
<S> <C> <C>
Trust 12.33% 7.56%
- -------------------------------------------------------
Institutional 11.91% 7.26%
- -------------------------------------------------------
</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 service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
-7-
<PAGE>
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.
Q. What were conditions like for global equity investors during the twelve-
month period ended November 30, 1996?
A. The past 12-month period was favorable for international investors, with
most major markets showing strong results. Japan has been a notable exception,
losing 4.4% on a U.S. dollar basis. The weaker yen and the sporadic and
unstable nature of Japan's economic recovery caused that poor performance.
Results in many of the emerging markets, most typically in Asia, also were
disappointing.
Q. How did the Portfolio's holdings in various markets affect returns?
A. The Portfolio maintained a relatively low investment in Japan compared to
our benchmark, the Morgan Stanley EAFE Index. We made a relatively high
investment in other Pacific markets such as Hong Kong and Singapore. Both
decisions boosted the Portfolio's performance. The Portfolio benefited further
from overweighting in Italy and Spain.
We held a relatively low percentage of the Portfolio's investments in the
United Kingdom, which staged a strong market rally. But our individual stock
picks in the U.K. outperformed that market by 23% to 30%. Overall, the
Portfolio was up 11.99% (Investor A net asset value) over the last 12 months.
Q. What other moves did the Portfolio make to enhance returns?
A. We broadened sector exposure within Japan, keeping the Portfolio broadly
diversified during this unstable period. Our disciplined approach to finding
quality growth companies selling at attractive valuations led to a portfolio
with several common themes, particularly in Europe. For example, industries
requiring a highly educated workforce, such as pharmaceuticals and
electronics, enjoy a relative cost advantage in Europe, where highly educated
workers are more readily available than elsewhere.
Q. What is the Portfolio's strategy and outlook going forward?
A. We continue to carefully monitor developments in Japan, where we are
unlikely to increase the Portfolio's stake until a stronger economic recovery
takes shape. In Europe, a combination of low interest rates and the start of a
genuine economic recovery has boosted stock prices. We also anticipate
maintaining the Portfolio's exposure to emerging markets.
-8-
<PAGE>
THE ARCH GROWTH & INCOME EQUITY PORTFOLIO
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Value of a $10,000 Investment
- ----------------------------------------------------------------
Investor A Investor A Investor B Investor B S&P 500
(No Load) (Load)* (CDSC)** (No CDSC) Index
<S> <C> <C> <C> <C> <C>
6/88 10,000 9,551 10,000 10,000 10,000
11/88 10,346 9,882 9,846 10,346 10,620
11/89 13,151 12,561 12,751 13,151 13,912
11/90 12,973 12,390 12,673 12,973 13,439
11/91 15,228 14,545 14,928 15,228 16,167
11/92 18,364 17,539 18,164 18,364 19,142
11/93 20,135 19,267 20,035 20,135 21,075
11/94 20,176 19,305 20,176 20,176 21,307
11/95 26,622 25,473 26,472 26,472 29,188
11/96 32,743 31,274 32,371 32,371 37,366
- ----------------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Average Annual Total Return
as of 11/30/96
- ----------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- ----------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 22.99% 16.55% 14.97%
- ----------------------------------------------------------------
Investor A* 17.44% 15.48% 14.35%
- ----------------------------------------------------------------
Investor B (No CDSC) 22.29% 16.28% 14.81%
- ----------------------------------------------------------------
Investor B (CDSC)** 17.29% 16.17% 14.81%
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------
Value of a $10,000 Investment
- ----------------------------------------------
S&P 500
Trust Institutional Index
- ----------------------------------------------
<S> <C> <C> <C>
6/88 10,000 10,000 10,000
11/88 10,345 10,346 10,620
11/89 13,150 13,151 13,912
11/90 12,971 12,973 13,439
11/91 15,227 15,228 16,167
11/92 18,362 18,364 19,142
11/93 20,134 20,135 21,075
11/94 20,206 20,173 21,307
11/95 26,727 26,604 29,188
11/96 32,994 32,745 37,366
- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------
Average Annual Total Return
as of 11/30/96
- ------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- ------------------------------------------------
<S> <C> <C> <C>
Trust 23.45% 16.73% 15.07%
- ------------------------------------------------
Institutional 23.08% 16.55% 14.97%
- ------------------------------------------------
</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 (CDSC) 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 service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What market conditions influenced the Portfolio's performance and strategy
during the twelve months ended November 30, 1996?
A. The market's strongest performers were the larger capitalization stocks
that make up the major stock market indices, which continued to post record
highs. The Dow Jones Industrial Average, dominated by large, mature companies,
outperformed the S&P 500 by 3.5 percentage points and beat the broader Russell
2000 Index by 12 percentage points.
Q. What was your general strategy in that environment?
A. The Portfolio remained well diversified, leaning toward stocks of
companies with predictable earnings growth. As of November 30, 1996, the
Portfolio was most heavily weighted in the consumer growth sector (23.6%) and
the interest rate sensitive sector (19.1%).*
Q. How did the Portfolio change during the period?
A. Major changes in the Portfolio during this period were these: The consumer
growth sector rose from 19.5% to 23.6% of the Portfolio; consumer cyclical
stocks fell from 5.9% to 1.4%; and technologies rose from 7.4% to 9.6% of the
Portfolio's investments.
- ------
* Portfolio composition is subject to change.
-9-
<PAGE>
Q. What is the Portfolio's strategy going forward?
A. We feel that economic growth will slow through 1997, since growth in
consumer spending is not likely to be sustained at its current rate. We also
expect capital spending and exports to slow down. Such a scenario should make
it more difficult for companies to post strong earnings gains but also should
help keep inflation in check and nudge interest rates lower. Specific areas of
the stock market that look attractive are health care, technology, energy and
financial services. Thus, we will maintain significant investments in those
sectors.
THE ARCH BALANCED PORTFOLIO
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Value of a $10,000 Investment
- -----------------------------------------------------------------------------------------------------------
Investor A Investor A Investor B Investor B S&P 500 Lehman Bros. Aggre.
(No Load) (Load)* (Cdsc)** (No Cdsc) Index Bond Index
<S> <C> <C> <C> <C> <C> <C>
4/93 $10,000 $9,551 $10,000 $10,000 $10,000 $10,000
11/93 $10,386 $9,920 $10,174 $10,674 $10,421 $10,529
11/94 $10,188 $9,730 $9,950 $10,335 $10,536 $10,207
11/95 $12,719 $12,148 $12,506 $12,806 $14,433 $12,007
11/96 $14,640 $13,983 $14,134 $14,434 $18,477 $12,736
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return
as of 11/30/96
- --------------------------------------------------------------------------------
Since
Inception
1 Year (4/1/93)
- --------------------------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 15.10% 10.94%
- --------------------------------------------------------------------------------
Investor A* 9.92% 9.56%
- --------------------------------------------------------------------------------
Investor B (No CDSC) 14.35% 10.51%
- --------------------------------------------------------------------------------
Investor B (CDSC)** 9.35% 9.88%
- --------------------------------------------------------------------------------
</TABLE>
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Value of a $10,000 Investment
- ----------------------------------------------------------------------------------
Trust S&P 500 Lehman Bros. Aggre.
(No Load) Institutional Index Bond Index
<S> <C> <C> <C> <C>
4/93 $10,000 $10,000 $10,000 $10,000
11/93 $10,387 $10,386 $10,421 $10,529
11/94 $10,199 $10,179 $10,536 $10,207
11/95 $12,744 $12,690 $14,433 $12,007
11/96 $14,727 $14,601 $18,477 $12,736
- ----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return
as of 11/30/96
- --------------------------------------------------------------------------------
Since
Inception
1 Year (4/1/93)
- --------------------------------------------------------------------------------
<S> <C> <C>
Trust 15.56% 11.12%
- --------------------------------------------------------------------------------
Institutional 15.08% 10.86%
- --------------------------------------------------------------------------------
</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 (CDSC) 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 service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What market conditions influenced the Portfolio's performance and strategy
during the twelve months ended November 30, 1996?
A. The Portfolio is designed for investors who want to participate in a
combination of the stock and fixed-income markets, and its performance is
influenced by trends in both. During the recent period, the major stock market
indices rose sharply, with the biggest gains recorded by large-company stocks.
-10-
<PAGE>
In the fixed-income market, shorter-maturity fixed-income securities
outperformed longer-term issues. Inflation fears pushed yields higher at
various times throughout the period, causing long-term bonds to lose ground.
In addition, foreign investors made large purchases of short-term fixed-income
issues, driving their prices higher.
Q. What was your strategy in that environment?
A. The Portfolio typically holds roughly 50% to 60% of its assets in stocks
with the rest in bonds. During the recent period, the Portfolio invested about
55% of its portfolio in stocks, with around 40% in bonds and 5% in cash
reserves.
Q. What types of stocks did you favor?
A. The Portfolio's stock investments are similar to those in the ARCH Growth
& Income Equity Portfolio. They include shares of firms with solid earnings
prospects, especially those whose business cycle is not strictly related to the
economy's growth rate. Consumer growth stocks of firms in businesses such as
health care and the specialty retail industry were well represented. Financial
service companies and manufacturers of consumer staples such as food and
beverages also were significant holdings for the Portfolio.
Q. What about the fixed-income sector?
A. Those investments are similar to the portfolio of the ARCH Government &
Corporate Bond Portfolio, high-quality Treasury and U.S. Government agency
securities with intermediate maturities.
Q. What is the Portfolio's strategy going forward?
A. The Investment Adviser's investment management committee will monitor the
financial markets and make any necessary adjustments in the Portfolio's
allocations among stocks, bonds and cash. But such changes aren't likely to
vary greatly from the Portfolio's neutral position of 55% stocks and 45% bonds,
over the short term.*
THE ARCH SMALL CAP EQUITY PORTFOLIO+
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Value of a $10,000 Investment
- ----------------------------------------------------------------------------------------------------------
Investor A Investor A Investor B Investor B Russell 2000
(No Load) (Load)* (CDSC)** (No CDSC) Index
<S> <C> <C> <C> <C> <C>
5/92 10,000 9,551 10,000 10,000 10,000
11/92 11,255 10,750 10,750 11,255 11,032
11/93 13,478 12,873 13,078 13,478 13,128
11/94 14,473 13,823 14,172 14,472 12,981
11/95 17,579 16,790 17,187 17,487 16,680
11/96 19,049 18,193 18,622 18,822 19,434
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
<TABLE>
<CAPTION>
- ----------------------------------------------------
Average Annual Total Return
as of 11/30/96
- ----------------------------------------------------
Since
Inception
1 Year (5/6/92)
- ----------------------------------------------------
<S> <C> <C>
Investor A (No Load) 8.36% 15.12%
- ----------------------------------------------------
Investor A* 3.51% 13.97%
- ----------------------------------------------------
Investor B (No CDSC) 7.63% 14.82%
- ----------------------------------------------------
Investor B (CDSC)** 2.68% 14.56%
- ----------------------------------------------------
</TABLE>
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Value of a $10,000 Investment
- -----------------------------------------------------------------------
Trust Institutional Russell 2000
No Load No Load Index
<S> <C> <C> <C>
5/92 10,000 10,000 10,000
11/92 11,255 11,255 11,032
11/93 13,478 13,478 13,128
11/94 14,497 14,436 12,981
11/95 17,642 17,531 16,680
11/96 19,181 19,002 19,434
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------
Average Annual Total Return
as of 11/30/96
- ----------------------------------------------------
Since
Inception
1 Year (5/6/92)
- ----------------------------------------------------
<S> <C> <C>
Trust 8.72% 15.30%
- ----------------------------------------------------
Institutional 8.39% 15.09%
- ----------------------------------------------------
</TABLE>
- ------
* Portfolio composition is subject to change.
+ Formerly The ARCH Emerging Growth Portfolio.
-11-
<PAGE>
The ARCH Small Cap Equity 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 (CDSC) 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 service 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.
Q. What market conditions influenced the Portfolio's performance and
strategy during the twelve months ended November 30, 1996?
A. The stock market performed well, but the gains mostly came from the
largest capitalization stocks. The S&P 500 climbed 28%, but the full Russell
2000 Index of small company stocks was up only 16.5%. Moreover, high-flying
"momentum" stocks were the strongest performers during the first half of the
year.
Our approach is to buy a broadly diversified portfolio of emerging company
stocks that are trading at attractive valuations--not the ideal strategy for
such an environment. But value stocks did better late in the year, and our
relative performance improved.
Q. Can you discuss your general strategy in more detail?
A. The Investment Adviser's strategy is to emphasize individual stock
selection as we seek out the best relative values within a broadly diversified
portfolio. We believe stocks with the best future earnings and cash flow
relative to their current prices will provide the best total returns.
A key component of our relative value style of investing is to look beyond
near-term earnings problems. Thus, our results tend to lag during periods when
investors are bidding up prices of stocks that have high earnings momentum. We
generally use such periods to buy neglected stocks. During 1996, we found such
opportunities among stocks of companies like Lunar Corporation, a medical
device company, Cytec Industries, a diversified specialty chemical
manufacturer, and J&L Steel, a stainless-steel manufacturing company.*
Q. How did the Portfolio's holdings change during the period?
A. We made some modest shifts in industry weightings to buy shares that
looked especially attractive at their current prices. But we generally don't
make dramatic shifts in the Portfolio. Instead, we prefer to buy stocks at
good prices and be patient.
- ------
* Portfolio composition is subject to change.
-12-
<PAGE>
Q. What is the Portfolio's strategy going forward?
A. The same as always, really. We will continue to seek the best relative
values within the small-company universe. We will look for opportunities within
emerging-growth industries as well as specialized segments of more mature
industries. We also will consider for purchase small companies with unique
features including high-asset values and cash flows, or other factors that
increase the potential for above-average capital appreciation.
THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
- --------------------------------------------------------------------------------
Value of a $10,000 Investment
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Investor A Investor A Investor B Investor B Lehman Brothers Aggregate
(No Load) (Load)* (CDSC)** (No CDSC) Bond Index
<S> <C> <C> <C> <C> <C>
6/88 10,000 9,551 10,000 10,000 10,000
11/88 10,266 9,805 9,770 10,266 10,265
11/89 11,476 10,960 11,076 11,476 11,738
11/90 12,045 11,504 11,754 12,045 12,627
11/91 13,586 12,976 13,286 13,586 14,447
11/92 14,647 13,989 14,447 14,647 15,727
11/93 16,145 15,367 16,045 16,145 17,441
11/94 15,609 14,857 15,609 15,609 16,907
11/95 18,104 17,232 17,994 17,994 19,889
11/96 18,920 18,070 18,675 18,675 21,096
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Aggregate Total Return
as of 11/30/96
- -------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/15/88)
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 4.51% 6.85% 7.82%
- -------------------------------------------------------------------------
Investor A * -0.23% 5.86% 7.24%
- -------------------------------------------------------------------------
Investor B (No CDSD) 3.79% 6.57% 7.65%
- -------------------------------------------------------------------------
Investor B (CDSC) ** -1.12% 6.41% 7.65%
- -------------------------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
- --------------------------------------------------------------------------------
Value of a $10,000 Investment
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers Aggregate
Trust Institutional Bond Index
<S> <C> <C> <C>
6/88 10,000 10,000 10,000
11/88 10,266 10,266 10,265
11/89 11,476 11,476 11,738
11/90 12,045 12,045 12,627
11/91 13,616 13,586 14,447
11/92 14,724 14,647 15,727
11/93 16,278 16,145 17,441
11/94 15,785 15,609 16,907
11/95 18,359 18,104 19,889
11/96 19,244 18,920 21,096
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Aggregate Total Return
as of 11/30/96
- -------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/15/88)
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Trust 4.82% 7.16% 8.04%
- -------------------------------------------------------------------------
Institutional 4.51% 6.85% 7.82%
- -------------------------------------------------------------------------
</TABLE>
The ARCH Government & Corporate Bond Portfolio is measured against 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 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 (CDSC) 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 service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What were the conditions in the taxable bond market during the 12 months
ended November 30, 1996?
A. The bond market has been volatile. The ten-year Treasury bond started the
period yielding 5.70%. That yield rose to 7.10% around mid-year, then fell to
6.10%. Investors worried that the Federal Reserve would raise short-term
interest rates around the middle of the summer, because the economy had grown
so quickly in the first quarter. Then the Fed didn't do anything, and the fear
receded--so bond prices started to rise again. We started to see another rally
toward the end of the 12-month period.
-13-
<PAGE>
Q. How did you structure the Portfolio to address those conditions?
A. We invested about 75% of the Portfolio in Treasuries, with the rest in
mortgage-backed securities. Corporate bonds seemed very expensive to us, with
yields only about 12 one-hundredths of a percentage point higher than Treasury
yields--and they have much more credit risk than Treasury or agency debt. Thus,
we used mortgage-backed issues instead of corporates to enhance the Portfolio's
yield.
The Portfolio's average maturity rose from 8.6 years to 10.8 years during the
period. We increased the maturity to take advantage of higher interest rates.
We implemented the change by selling some of our shorter Treasuries and buying
five- to ten-year mortgages. Such securities recently provided 0.75 to 1.25
percentage points of extra yield over Treasuries of comparable maturities. In
fact, we increased our Portfolio's mortgage-backed exposure from 26% to 35%,
currently*.
Q. How did you manage credit risk in the Portfolio?
A. We currently have an average quality rating of AAA, the same rating that
we had at the beginning of the year. The Portfolio's holdings currently are
comprised almost entirely of United States Treasury and agency- guaranteed
mortgage debt. The Portfolio holds almost no corporate issues because we
believe that the small current yield advantage of corporates over Treasuries
does not justify corporate debt's additional credit risk.
Q. Where are you finding the best values in the bond market?
A. Mortgage-backed securities clearly offer the most value in our securities
universe. Our intent is to continue to increase the Portfolio's mortgage
exposure from the current 35% to the 40% to 45% level. Corporates will remain
on our watch list, and we will increase the Portfolio's corporate exposure when
their yields improve relative to yields on Treasury issues.*
Q. What is your outlook for the bond market and the Portfolio?
A. We're neutral on the market right now. We don't see anything fundamental
about the economy that would cause rates to rise or fall in the immediate
future. But we will pay close attention to the psychology of the market, which
can be a very different matter. People's expectations have a large effect on
the bond market, and we'll pay close attention to changes in those
expectations. That way, we'll be prepared to make changes in the Portfolio to
reflect such psychological factors.
The ARCH U.S. Government Securities Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Value of a $10,000 Investment
- -----------------------------------------------------------------------------------------------------------------------
Investor A Investor A Investor B Investor B Lehman Intermediate
(No Load) (Load) (CDSC) (NO CDSC) Government Bond Index
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6/88 10,000 9,551 10,000 10,000 10,000
11/88 10,305 9,842 9,808 10,305 10,374
11/89 11,339 10,830 10,939 11,339 11,666
11/90 12,435 11,877 12,135 12,435 12,644
11/91 13,972 13,345 13,672 13,972 14,281
11/92 14,978 14,306 14,778 14,978 15,442
11/93 16,480 15,699 16,380 16,480 16,849
11/94 15,962 15,205 15,962 15,962 16,512
11/95 18,302 17,434 18,012 18,012 18,833
11/96 19,138 18,279 18,705 18,705 19,899
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Reutrn
as of 11/30/96
- --------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 4.57% 6.49% 7.93%
- --------------------------------------------------------------------------------
Investor A* -0.13% 5.52% 7.35%
- --------------------------------------------------------------------------------
Investor B (No CDSC) 3.85% 6.01% 7.64%
- --------------------------------------------------------------------------------
Investor B (CDSC)** -1.07% 5.85% 7.64%
- --------------------------------------------------------------------------------
</TABLE>
*Reflects 4.50% sales charge.
**Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Label A B C
Trust No Load Institutional No Lehman Intermediate
Government Bond Index
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
6/88 10,000 10,000 10,000
11/88 10,305 10,305 10,374
11/89 11,339 11,339 11,666
11/90 12,435 12,435 12,644
11/91 14,004 13,972 14,281
11/92 15,056 14,978 15,442
11/93 16,616 16,480 16,849
11/94 16,142 15,910 16,512
11/95 18,564 18,247 18,833
11/96 19,469 19,077 19,899
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return
as of 11/30/96
- --------------------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust 4.88% 6.81% 8.15%
- --------------------------------------------------------------------------------
Institutional 4.55% 6.43% 7.89%
- --------------------------------------------------------------------------------
</TABLE>
* Portfolio composition is subject to change.
-14-
<PAGE>
The ARCH U.S. Government Securities Portfolio is measured against the
unmanaged Lehman Brothers 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 (CDSC) 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 service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What were the conditions in the Treasury market during the 12 months
ended November 30, 1996?
A. The Treasury market, along with the bond market in general, has been
extremely volatile for the past year. Yields on the five-year Treasury rose
from 5.5% at the end of November 1995 to a high of 6.85% on June 12, 1996. The
yield then fell to 5.82% at the end of the period.
Q. How did you structure the Portfolio to address those conditions?
A. The Portfolio started the period with a 4-year average maturity and ended
the period with a 5.4-year average maturity--about the same as the Lehman
Brothers Intermediate Government Bond Index.
Q. What changes did you make in the Portfolio's holdings?
A. We increased our holdings of mortgage-backed securities from 34% to
around 40%, currently, because they offered attractive yields. Falling
interest rates caused investors to worry that mortgage prepayments would rise
and make mortgage-backed securities less attractive. Thus, prices of the
securities fell, creating an opportunity for us to buy them cheaply.*
Q. How do you manage credit risk in the Portfolio?
A. The Portfolio is comprised entirely of Treasury and U.S. government
agency-guaranteed mortgage and other debt, so the credit quality is extremely
high--and it will remain high due to the nature of the Portfolio.
Q. What is your outlook and strategy going forward?
A. As market conditions permit, we intend to continue to add to our
mortgage-backed exposure, which might climb to 45% of the Portfolio. These
agency securities still represent the best value available today.
- ------
* Portfolio composition is subject to change.
-15-
<PAGE>
TABLE OF CONTENTS
Independent Auditors Report
Page 17
Statements of Assets and Liabilities
Page 18
Statements of Operations
Page 26
Statements of Changes in Net Assets
Page 30
Schedules of Portfolio Investments
Page 36
Notes to Financial Statements
Page 71
Financial Highlights
Page 89
-16-
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors of
The ARCH Fund, Inc.:
We have audited the accompanying statements of assets and liabilities of
The ARCH Fund, Inc.--Money Market Portfolio, Treasury Money Market Portfolio,
Tax-Exempt Money Market Portfolio, Growth & Income Equity Portfolio, Small Cap
Equity Portfolio (formerly Emerging Growth Portfolio), International Equity
Portfolio, Balanced Portfolio, Government & Corporate Bond Portfolio, U.S.
Government Securities Portfolio, Short-Intermediate Municipal Portfolio,
Missouri Tax-Exempt Bond Portfolio, and National Municipal Bond Portfolio,
including the schedules of portfolio investments, as of November 30, 1996, and
the related statements of operations, statements of changes in net assets and
the financial highlights for each of the periods indicated herein. These
financial statements and the financial highlights are the responsibility of The
ARCH Fund, Inc.'s management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
November 30, 1996, by examination and other appropriate audit procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned portfolios comprising The ARCH Fund, Inc. at November
30, 1996, the results of their operations, the changes in their net assets and
the financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
January 22, 1997
-17-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
November 30, 1996
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
----------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $845,516,579; $139,866,134 and $113,556,641,
respectively) ......................................................... $ 845,516,579 $ 139,866,134 $ 113,556,641
Cash ..................................................................... 21 908 --
Interest and dividends receivable ........................................ 2,790,092 1,349 533,391
Prepaid expenses and other assets ........................................ 2,352 2,064 121
--------------- --------------- ---------------
Total Assets ................................................... 848,309,044 139,870,455 114,090,153
--------------- --------------- ---------------
LIABILITIES:
Cash overdraft ........................................................... -- -- 21,762
Dividends payable ........................................................ 3,413,503 487,181 288,947
Payable to brokers for investments purchased ............................. 20,000,000 -- --
Accrued expenses and other payables:
Investment advisory fees ............................................ 213,889 32,958 33,574
Administration fees ................................................. 34,307 5,331 3,162
Distribution and services fees ...................................... 94,056 11,106 7,127
Accounting and custodian fees ....................................... 10,502 1,870 2,107
Other ............................................................... 150,228 44,049 23,495
--------------- --------------- ---------------
Total Liabilities .............................................. 23,916,485 582,495 380,174
--------------- --------------- ---------------
NET ASSETS:
Capital .................................................................. 824,391,646 139,273,374 113,697,819
Undistributed net investment 7,451 5,719 12,160
income.........................................................
Accumulated undistributed net realized gains (losses) from investment
transactions .......................................................... (6,538) 8,867 --
=============== =============== ===============
Net Assets ..................................................... $ 824,392,559 $ 139,287,960 $ 113,709,979
=============== =============== ===============
</TABLE>
-18-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
November 30, 1996
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net Assets
Investor A Shares ................................................... $ 91,165,514 $ 7,667,179 $ 17,984,105
Investor B Shares ................................................... 40,930 -- --
Trust Shares ........................................................ 717,265,464 131,321,975 95,725,874
Institutional Shares ................................................ 15,920,651 298,806 --
--------------- --------------- ---------------
Total .......................................................... $ 824,392,559 $ 139,287,960 $ 113,709,979
=============== =============== ===============
Outstanding shares of common stock
Investor A Shares ................................................... 91,165,477 7,666,856 17,984,067
Investor B Shares ................................................... 40,931 -- --
Trust Shares ........................................................ 717,264,622 131,310,132 95,725,841
Institutional Shares ................................................ 15,920,616 298,802 --
--------------- --------------- ---------------
Total .......................................................... 824,391,646 139,275,790 113,709,908
=============== =============== ===============
Net asset value
Investor A Shares(a)................................................. $ 1.00 $ 1.00 $ 1.00
Investor B Shares(a)................................................. 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.
See notes to financial statements
-19-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
November 30, 1996
<TABLE>
<CAPTION>
Growth & Small Cap International
Income Equity Equity Equity
Portfolio Portfolio(a) Portfolio
-------------- -------------- -------------
ASSETS:
<S> <C> <C> <C>
Investments, at value (Cost $361,437,050; $204,903,389; and $53,902,910,
respectively) ............................................................. $466,947,587 $216,552,529 $60,972,938
Cash ......................................................................... 578 950 10
Foreign currency (Cost $205,464).............................................. -- -- 204,372
Interest and dividends receivable ............................................ 784,273 136,461 59,350
Receivable from brokers for investments sold ................................. -- -- 605,984
Receivable for portfolio shares issued ....................................... 36,365 24,633 8,574
Reclaim receivable ........................................................... -- -- 48,426
Unamortized organization costs ............................................... -- 2,781 12,879
Prepaid expenses and other assets ............................................ -- 7,478 3,962
------------ ------------ -----------
Total Assets ....................................................... 467,768,803 216,724,832 61,916,495
------------ ------------ -----------
LIABILITIES:
Payable to brokers for investments purchased ................................. 4,518,189 -- 594,605
Payable for portfolio shares redeemed ........................................ 10,885 570 1,481
Accrued expenses and other payables:
Investment advisory fees ................................................ 203,484 132,737 35,011
Administration fees ..................................................... 12,559 5,851 2,518
Distribution and services fees .......................................... 29,088 11,572 3,857
Accounting and custodian fees ........................................... 11,727 5,715 24,891
Other ................................................................... 83,792 30,851 4,072
------------ ------------ -----------
Total Liabilities .................................................. 4,869,724 187,296 666,435
------------ ------------ -----------
NET ASSETS:
Capital ...................................................................... 321,702,631 191,482,861 52,505,446
Undistributed net investment income .......................................... 857,888 161,024 119,518
Net unrealized appreciation from investments ................................. 105,510,537 11,649,140 8,230,324
Net unrealized depreciation from translation of assets and liabilities in
foreign currencies ........................................................ -- -- (1,160,982)
Accumulated undistributed net realized gains (losses) from investment
transactions .............................................................. 34,828,023 13,244,511 (216,958)
Accumulated undistributed net realized gains from foreign currency
transactions .............................................................. -- -- 1,772,712
------------ ------------ -----------
Net Assets ......................................................... $462,899,079 $216,537,536 $61,250,060
============= ============= ===========
</TABLE>
Continued
-20-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
November 30, 1996
<TABLE>
<CAPTION>
Growth & Small Cap International
Income Equity Equity Equity
Portfolio Portfolio(a) Portfolio
----------------- --------------- ---------------
<S> <C> <C> <C>
Net Assets
Investor A Shares ....................................................... $ 38,229,131 $ 13,888,657 $ 2,573,264
Investor B Shares ....................................................... 3,536,720 1,272,317 436,500
Trust Shares ............................................................ 348,183,263 171,295,263 52,180,813
Institutional Shares .................................................... 72,949,965 30,081,299 6,059,483
--------------- --------------- --------------
Total .............................................................. $ 462,899,079 $ 216,537,536 $ 61,250,060
============== ============== =============
Outstanding shares of common stock
Investor A Shares ....................................................... 2,047,651 1,036,243 213,589
Investor B Shares ....................................................... 190,397 96,074 36,691
Trust Shares ............................................................ 18,610,126 12,702,144 4,305,174
Institutional Shares .................................................... 3,907,610 2,252,184 503,707
--------------- --------------- --------------
Total .............................................................. 24,755,784 16,086,645 5,059,161
============== ============== =============
Net asset value
Investor A Shares--redemption price per share ............................ $ 18.67 $ 13.40 $ 12.05
Investor B Shares--offering price per share *............................. 18.58 13.24 11.90
Trust Shares--offering and redemption price per share .................... 18.71 13.49 12.12
Institutional Shares--offering and redemption price per share ............ 18.67 13.36 12.03
============== ============== =============
Maximum Sales Charge: Investor A Shares ....................................... 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 $ 19.55 $ 14.03 $ 12.62
============== ============== =============
</TABLE>
- ------------
(a) Formerly Emerging Growth Portfolio.
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-21-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
November 30, 1996
<TABLE>
<CAPTION>
Government & U.S. Government
Balanced Corporate Bond Securities
Portfolio Portfolio Portfolio
------------- ------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $107,233,813; $156,326,416; and
$68,860,209, respectively) ....................................... $125,526,146 $160,448,070 $69,511,112
Cash ................................................................ 18,033 349,656 --
Interest and dividends receivable ................................... 761,175 1,858,877 691,871
Unamortized organization costs ...................................... 7,009 -- --
Prepaid expenses and other assets ................................... 14,046 978 2,460
------------ ------------ -----------
Total Assets .............................................. 126,326,409 162,657,581 70,205,443
LIABILITIES:
Cash overdraft ...................................................... -- -- 98
Dividends payable ................................................... -- 815,178 339,617
Payable for portfolio shares redeemed ............................... 259 1,435 --
Accrued expenses and other payables:
Investment advisory fees ....................................... 76,359 59,282 25,606
Administration fees ............................................ 3,427 4,412 1,904
Distribution and services fees ................................. 15,660 5,249 2,597
Accounting and custodian fees .................................. 3,894 5,141 2,266
Other .......................................................... 25,641 25,983 9,695
------------ ------------ -----------
Total Liabilities ......................................... 125,240 916,680 381,783
NET ASSETS:
Capital ............................................................. 100,403,539 158,972,815 69,317,216
Undistributed net investment income ................................. 808,152 2,351 218,765
Net unrealized appreciation from investments ........................ 18,292,333 4,121,654 650,903
Accumulated undistributed net realized gains (losses) from
investment transactions .......................................... 6,697,145 (1,355,919) (363,224)
------------ ------------ -----------
Net Assets ................................................ $126,201,169 $161,740,901 $69,823,660
============ ============ ===========
</TABLE>
Continued
-22-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
November 30, 1996
<TABLE>
<CAPTION>
Government & U.S. Government
Balanced Corporate Bond Securities
Portfolio Portfolio Portfolio
--------------- ------------------- --------------------
<S> <C> <C> <C>
Net Assets
Investor A Shares .............................................. $ 9,328,488 $ 4,914,677 $ 7,153,141
Investor B Shares .............................................. 321,203 510,871 359,274
Trust Shares ................................................... 61,820,867 141,440,065 60,079,499
Institutional Shares ........................................... 54,730,611 14,875,288 2,231,746
-------------- -------------- -------------
Total ..................................................... $ 126,201,169 $ 161,740,901 $ 69,823,660
============== ============== =============
Outstanding shares of common stock
Investor A Shares .............................................. 741,573 475,410 670,520
Investor B Shares .............................................. 25,723 49,403 33,698
Trust Shares ................................................... 4,915,712 13,681,482 5,631,203
Institutional Shares ........................................... 4,363,483 1,438,805 209,842
-------------- -------------- -------------
Total ..................................................... 10,046,491 15,645,100 6,545,263
============== ============== =============
Net asset value
Investor A Shares redemption price per share ................... $ 12.58 $ 10.34 $ 10.67
Investor B Shares offering price per share *.................... 12.49 10.34 10.66
Trust Shares offering and redemption price per share ........... 12.58 10.34 10.67
Institutional Shares offering and redemption price per share ... 12.54 10.34 10.64
============== ============== =============
Maximum Sales Charge: Investor A Shares ............................. 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 $ 13.17 $ 10.83 $ 11.17
============== ============== =============
</TABLE>
- ------------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-23-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
November 30, 1996
<TABLE>
<CAPTION>
Short- Missouri National
Intermediate Tax-Exempt Municipal
Municipal Bond Bond
Portfolio Portfolio Portfolio
--------------- -------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $29,002,171; $78,138,683; $289,710,990,
respectively) ............................................................ $29,209,650 $80,835,189 $305,292,225
Cash ........................................................................ 652 -- 22
Interest and dividends receivable ........................................... 386,034 1,237,491 6,337,858
Unamortized organization costs .............................................. 8,382 -- --
Prepaid expenses and other assets ........................................... 16,107 1,704 --
----------- ----------- ------------
Total Assets ...................................................... 29,620,825 82,074,384 311,630,105
----------- ----------- ------------
LIABILITIES:
Dividends payable ........................................................... 93,298 303,019 1,199,780
Accrued expenses and other payables:
Investment advisory fees ............................................... -- 28,891 --
Administration fees .................................................... 795 2,207 7,011
Distribution and services fees ......................................... 11 4,662 --
Accounting and custodian fees .......................................... 572 2,737 525
Other .................................................................. 3,064 9,143 8,146
----------- ----------- ------------
Total Liabilities ................................................. 97,740 350,659 1,215,462
----------- ----------- ------------
NET ASSETS:
Capital ..................................................................... 29,315,606 79,145,761 294,718,075
Undistributed net investment income.......................................... -- -- 8
Net unrealized appreciation from investments ................................ 207,479 2,696,506 15,581,235
Accumulated undistributed net realized gains (losses) from investment
transactions ............................................................. -- (118,542) 115,325
=========== =========== ============
Net Assets ........................................................ $29,523,085 $81,723,725 $310,414,643
=========== =========== ============
</TABLE>
Continued
-24-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
November 30, 1996
<TABLE>
<CAPTION>
Short- Missouri National
Intermediate Tax-Exempt Municipal
Municipal Bond Bond
Portfolio Portfolio Portfolio
-------------- -------------- ------------
Net Assets
<S> <C> <C> <C>
Investor A Shares....................................................... $ 51,425 $ 25,143,671 $ 1,005
Investor B Shares....................................................... -- 674,863 1,005
Trust Shares............................................................ 29,471,660 55,905,191 310,412,633
------------- ------------- --------------
Total ............................................................. $ 29,523,085 $ 81,723,725 $ 310,414,643
============= ============= ==============
Outstanding shares of common stock
Investor A Shares ...................................................... 5,103 2,151,158 100
Investor B Shares ...................................................... -- 57,799 100
Trust Shares ........................................................... 2,926,403 4,782,605 30,901,906
------------- ------------- --------------
Total ............................................................. 2,931,506 6,991,562 30,902,106
============= ============= ==============
Net asset value
Investor A Shares--redemption price per share............................ $ 10.08 $ 11.69 $ 10.05
Investor B Shares--offering price per share *............................ -- 11.68 10.05
Trust Shares--offering and redemption price per share.................... 10.07 11.69 10.05
============= ============= ==============
Maximum Sales Charge: Investor A Shares ...................................... 2.50% 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 $ 10.34 $ 12.24 $ 10.52
============= ============= ==============
</TABLE>
- ------------
* Redemption price of Investor B Shares varies based on length of time held.
See note to financial statements
-25-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the year ended November 30, 1996
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
----------------- ---------------- ----------------
<S> <C> <C> <C>
Investment Income:
Interest income ........................................ $46,863,199 $12,925,790 $3,382,932
----------- ----------- ----------
Total Income 46,863,199 12,925,790 3,382,932
----------- ----------- ----------
Expenses:
Investment advisory fees ............................... 3,415,218 1,001,477 382,160
Administration fees .................................... 1,707,609 500,739 95,540
Distribution and services fees--Investor A Shares ....... 179,676 12,304 23,950
Distribution and services fees--Investor B Shares ....... 295 -- --
Administrative services fees--Trust Shares .............. 614,938 170,407 21,891
Administrative services fees--Institutional Shares ...... 49,568 1,103 --
Custodian and accounting fees .......................... 114,683 31,973 16,631
Legal and audit fees ................................... 131,316 41,974 1,304
Organization costs ..................................... -- 7,102 --
Directors' fees and expenses ........................... 29,174 9,122 3,826
Transfer agent fees .................................... 233,092 74,879 24,320
Registration and filing fees ........................... 66,570 9,264 2,206
Printing costs ......................................... 106,694 51,550 2,529
Other .................................................. 16,837 5,178 2,594
Expenses voluntarily reduced ........................... (1,280,058) (375,444) (47,714)
----------- ----------- ----------
Total Expenses ............................... 5,385,612 1,541,628 529,237
----------- ----------- ----------
Net Investment Income .................................. 41,477,587 11,384,162 2,853,695
----------- ----------- ----------
Realized Gains (Losses) from Investment Transactions:
Net realized gains from investment transactions ........ 234 11,653 --
----------- ----------- ----------
Net realized gains from investment transactions ........ 234 11,653 --
----------- ----------- ----------
Change in net assets resulting from operations ......... $41,477,821 $11,395,815 $2,853,695
=========== =========== ==========
</TABLE>
- ----------
See notes to financial statements
-26-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the year ended November 30, 1996
<TABLE>
<CAPTION>
Growth & Small Cap International
Income Equity Equity Equity
Portfolio Portfolio (a) Portfolio
----------------- -------------- ---------------
<S> <C> <C> <C>
Investment Income:
Interest income ..................................................... $ 1,162,795 $ 725,369 $ 152,459
Dividend income ..................................................... 7,947,551 1,503,495 779,575
Income from securities lending ...................................... 33,677 113,625 --
Foreign tax withholding ............................................. (3,528) -- (51,706)
------------ ------------- ------------
Total Income .............................................. 9,140,495 2,342,489 880,328
------------ ------------- ------------
Expenses:
Investment advisory fees ............................................ 2,231,228 1,556,817 534,508
Administration fees ................................................. 811,356 415,168 106,902
Distribution and services fees--Investor A Shares ................... 93,863 41,415 6,210
Distribution and services fees--Investor B Shares ................... 22,511 10,185 2,752
Administrative services fees--Institutional Shares .................. 159,761 69,178 11,788
Custodian and accounting fees ....................................... 125,368 65,868 92,235
Legal and audit fees ................................................ 62,682 33,598 8,738
Organization costs .................................................. -- 6,880 5,490
Directors' fees and expenses ........................................ 13,957 6,932 1,792
Transfer agent fees ................................................. 115,631 58,430 12,616
Registration and filing fees ........................................ 37,959 26,850 10,467
Printing costs ...................................................... 47,063 23,004 4,852
Other ............................................................... 6,241 3,526 795
Expenses voluntarily reduced ........................................ (405,859) (207,666) (167,644)
------------ ------------- ------------
Total Expenses ............................................ 3,321,761 2,110,185 631,501
------------ ------------- ------------
Net Investment Income ............................................... 5,818,734 232,304 248,827
------------ ------------- ------------
Realized/Unrealized Gains (Losses) from Investments and
Foreign Currency:
Net realized gains (losses) from investment transactions ............ 36,039,992 13,981,122 (931,659)
Net realized gains from foreign currency transactions ............... -- -- 3,133,420
Change in unrealized appreciation from investments .................. 45,449,749 3,579,525 4,679,792
Change in unrealized appreciation (depreciation) from translation of
assets and liabilities in foreign currencies ..................... -- -- (1,058,982)
------------ ------------- ------------
Net realized/unrealized gains from investments and foreign
currency ......................................................... 81,489,741 17,560,647 5,822,571
------------ ------------- ------------
Change in net assets resulting from operations ...................... $ 87,308,475 $ 17,792,951 $ 6,071,398
============ ============= ============
</TABLE>
- ------------
(a) Formerly Emerging Growth Portfolio
See notes to financial statements
-27-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the year ended November 30, 1996
<TABLE>
<CAPTION>
Government & U.S. Government
Balanced Corporate Bond Securities
Portfolio Portfolio Portfolio
------------- --------------- ---------------
<S> <C> <C> <C>
Investment Income:
Interest income ................................................... $ 3,560,594 $10,425,354 $4,152,872
Dividend income ................................................... 1,542,941 32,006 38,485
Income from securities lending .................................... 29,797 60,038 27,498
Foreign tax withholding ........................................... (659) -- --
----------- ----------- ----------
Total Income ............................................ 5,132,673 10,517,398 4,218,855
----------- ----------- ----------
Expenses:
Investment advisory fees .......................................... 950,916 674,595 280,649
Administration fees ............................................... 253,573 299,782 124,733
Distribution and services fees--Investor A Shares ................. 26,566 16,108 22,956
Distribution and services fees--Investor B Shares ................. 2,149 3,500 2,489
Administrative services fees--Institutional Shares ................ 134,453 35,473 4,412
Custodian and accounting fees ..................................... 48,883 55,782 25,457
Legal and audit fees .............................................. 19,604 21,864 9,914
Organization costs ................................................ 5,124 -- --
Directors' fees and expenses ...................................... 4,402 5,450 2,202
Transfer agent fees ............................................... 31,850 44,144 17,245
Registration and filing fees ...................................... 21,994 8,400 9,013
Printing costs .................................................... 12,746 17,638 6,990
Other ............................................................. 3,932 2,849 1,063
Expenses voluntarily reduced ...................................... (126,784) (149,916) (62,398)
----------- ----------- ----------
Total Expenses .......................................... 1,389,408 1,035,669 444,725
----------- ----------- ----------
Net Investment Income ............................................. 3,743,265 9,481,729 3,774,130
----------- ----------- ----------
Realized/Unrealized Gains (Losses) from Investments:
Net realized gains (losses) from investment transactions .......... 7,057,146 1,012,372 (408,957)
Change in unrealized appreciation (depreciation) from investments . 7,234,948 (2,852,662) (197,452)
----------- ----------- ----------
Net realized/unrealized gains (losses) from investments ........... 14,292,094 (1,840,290) (606,409)
----------- ----------- ----------
Change in net assets resulting from operations .................... $18,035,359 $ 7,641,439 $3,167,721
=========== =========== ==========
</TABLE>
- ------------
See notes to financial statements
-28-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the year ended November 30, 1996
<TABLE>
<CAPTION>
Short- Missouri National
Intermediate Tax-Exempt Municipal
Municipal Bond Bond
Portfolio Portfolio Portfolio (a)
------------- ------------- ------------
<S> <C> <C> <C>
Investment Income:
Interest income ............................................................. $1,145,219 $3,995,518 $ 748,864
Dividend income ............................................................. 32,365 83,249 2,806
---------- ---------- ----------
Total Income ..................................................... 1,177,584 4,078,767 751,670
---------- ---------- ----------
Expenses:
Investment advisory fees .................................................... 147,763 327,773 70,255
Administration fees ......................................................... 53,732 145,677 25,546
Distribution and services fees-Investor A Shares ............................ 114 73,842 3
Distribution and services fees-Investor B Shares ............................ - 6,318 -
Custodian and accounting fees ............................................... 14,335 32,839 525
Legal and audit fees ........................................................ 6,944 4,714 750
Organization costs .......................................................... 10,536 - 450
Directors' fees and expenses ................................................ 1,086 2,728 -
Transfer agent fees ......................................................... 6,560 22,044 4,200
Registration and filing fees ................................................ 7,844 1,210 -
Printing costs .............................................................. 8,786 8,355 2,700
Other ....................................................................... 438 621 45
Expenses voluntarily reduced ................................................ (174,660) (97,451) (88,792)
---------- ---------- ----------
Total Expenses .................................................... 83,478 528,670 15,682
---------- ---------- ----------
Net Investment Income ....................................................... 1,094,106 3,550,097 735,988
---------- ---------- ----------
Realized/Unrealized Gains (Losses) from Investments:
Net realized gains from investment transactions ............................. - 70,177 115,325
Change in unrealized appreciation (depreciation) from investments ........... (16,660) (87,057) 1,278,075
---------- ---------- ----------
Net realized/unrealized gains (losses) from investments ..................... (16,660) (16,880) 1,393,400
---------- ---------- ----------
Change in net assets resulting from operations .............................. $1,077,446 $3,533,217 $2,129,388
========== ========== ==========
</TABLE>
- ------------
(a) For the period from November 18, 1996 (commencement of operations) through
November 30, 1996.
See notes to financial statements
-29-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Money Market Treasury Money
Portfolio Market Portfolio
----------------------------------- ----------------------------------
Year Year Year Year
ended ended ended ended
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ............................ $ 41,477,587 $ 33,761,482 $ 11,384,162 $ 11,520,298
Net realized gains (losses) from investment
transactions ................................... 234 (6,772) 11,653 10,481
---------------- ----------------- ----------------- ---------------
Change in net assets resulting from operations ...... 41,477,821 33,754,710 11,395,815 11,530,779
---------------- ----------------- ----------------- ---------------
Distributions to Investor A shareholders:
From net investment income ....................... (3,378,057) (2,861,060) (214,227) (132,984)
From net realized gains .......................... (21) - (132) -
In excess of net realized gains................... (368) - - -
Distributions to Investor B shareholders:
From net investment income ....................... (1,099) - - -
Distributions to Trust shareholders:
From net investment income ....................... (37,166,284) (30,299,854) (11,150,554) (11,386,621)
From net realized gains .......................... (205) - (11,519) -
In excess of net realized gains................... (4,060) - (527) -
Distributions to Institutional shareholders:
From net investment income ....................... (932,147) (600,568) (19,381) (693)
From net realized gains .......................... (8) - (2) -
In excess of net realized gains................... (71) - - -
---------------- ----------------- ----------------- ---------------
Change in net assets from shareholder distributions.. (41,482,320) (33,761,482) (11,396,342) (11,520,298)
---------------- ----------------- ----------------- ---------------
Capital Transactions:
Proceeds from shares issued ...................... 2,299,943,459 1,902,144,644 919,067,677 839,832,064
Dividends reinvested ............................. 14,874,622 11,376,917 3,510,783 3,013,118
Cost of shares redeemed .......................... (2,266,756,713) (1,740,810,431) (1,038,874,963) (831,082,824)
---------------- ----------------- ----------------- ---------------
Change in net assets from share transactions ........ 48,061,368 172,711,130 (116,296,503) 11,762,358
---------------- ----------------- ----------------- ---------------
Change in net assets ................................ 48,056,869 172,704,358 (116,297,030) 11,772,839
Net Assets:
Beginning of period .............................. 776,335,690 603,631,332 255,584,990 243,812,151
---------------- ----------------- ----------------- ---------------
End of period .................................... $ 824,392,559 $ 776,335,690 $ 139,287,960 $ 255,584,990
================ ================= ================= ===============
Share Transactions:
Issued ........................................... 2,299,943,459 1,902,144,644 919,067,677 839,832,064
Reinvested ....................................... 14,874,622 11,376,917 3,510,783 3,013,118
Redeemed ......................................... (2,266,756,713) (1,740,810,431) (1,038,874,963) (831,082,824)
---------------- ----------------- ----------------- ---------------
Change in shares .................................... 48,061,368 172,711,130 (116,296,503) 11,762,358
================ ================= ================= ===============
</TABLE>
- ------------
See notes to financial statements
-30-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Tax-Exempt Growth & Income
Money Market Portfolio Equity Portfolio
-------------------------------------------------- ---------------------------------
Year Six months Year Year Year
ended ended ended ended ended
November 30, November 30, May 31, November 30, November 30,
1996 1995 1995 1996 1995
----------------- ----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ................ $ 2,853,695 $ 1,425,002 $ 3,002,806 $ 5,818,734 $ 5,821,152
Net realized gains (losses) from
investment transactions ............ - 4,193 (102) 36,039,992 19,924,501
Net change in unrealized appreciation
from investments ................... - - - 45,449,749 61,722,240
--------------- ---------------- ---------------- --------------- ----------------
Change in net assets resulting from
operations ........................... 2,853,695 1,429,195 3,002,704 87,308,475 87,467,893
--------------- ---------------- ---------------- --------------- ----------------
Distributions to Investor A shareholders:
From net investment income ........... (265,973) (81,409) (174,372) (375,855) (333,955)
In excess of net investment income ... - - - (1,697) (4,006)
From net realized gains .............. - - - (1,443,632) (202,448)
In excess of net capital gains ....... (250) - -
Distributions to Investor B shareholders:
From net investment income ........... (11,083) (2,563)
In excess of net investment income ... (2,688) (31)
From net realized gains .............. (49,605) -
Distributions to Trust shareholders:
From net investment income ........... (2,587,722) (1,343,593) (2,828,434) (4,795,604) (5,053,238)
In excess of net investment income ... - - - (49,002) (60,612)
From net realized gains .............. - - - (16,436,950) (2,589,698)
In excess of net capital gains ....... (3,631) - -
Distributions to Institutional
shareholders:
From net investment income ........... (636,192) (431,396)
In excess of net investment income ... (1,490) (5,175)
From net realized gains .............. (2,330,241) (241,715)
--------------- ---------------- ---------------- --------------- ---------------
Change in net assets from shareholder
distributions ........................ (2,857,576) (1,425,002) (3,002,806) (26,134,039) (8,924,837)
--------------- ---------------- ---------------- --------------- ---------------
Capital Transactions:
Proceeds from shares issued .......... 213,251,311 108,021,357 258,130,980 92,320,506 52,046,659
Dividends reinvested ................. 562,557 216,746 412,936 22,057,938 7,546,386
Cost of shares redeemed .............. (183,534,633) (115,269,717) (289,306,657) (65,290,328) (61,695,190)
--------------- ---------------- ---------------- --------------- ---------------
Change in net assets from share
transactions ......................... 30,279,235 (7,031,614) (30,762,741) 49,088,116 (2,102,145)
--------------- ---------------- ---------------- --------------- ---------------
Change in net assets .................... 30,275,354 (7,027,421) (30,762,843) 110,262,552 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 ........................ $ 113,709,979 $ 83,434,625 $ 90,462,046 $ 462,899,079 $ 352,636,527
=============== ================ ================ =============== ===============
Share Transactions:
Issued ............................... 213,251,311 108,021,357 258,130,980 5,578,024 3,553,184
Reinvested ........................... 562,557 216,746 412,936 1,403,626 558,779
Redeemed ............................. (183,534,633) (115,269,717) (289,306,657) (3,843,934) (4,212,791)
--------------- ---------------- ---------------- --------------- ---------------
Change in shares ........................ 30,279,235 (7,031,614) (30,762,741) 3,137,716 (100,828)
=============== ================ ================ =============== ===============
</TABLE>
- ---------------
See notes to financial statements
-31-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Small Cap Equity Portfolio(a) International Equity Portfolio
------------------------------- ------------------------------
Year Year Year Year
ended ended ended ended
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ..................................... $ 232,304 $ 163,419 $ 248,827 $ 114,721
Net realized gains (losses) from investment transactions .. 13,981,122 13,478,311 (931,659) 905,432
Net realized gains (losses) from foreign currency
transactions ............................................ 3,133,420 (1,899,048)
Net change in unrealized appreciation from investments .... 3,579,525 8,231,506 4,679,792 4,500,515
Change in unrealized depreciation from translation of
assets and liabilities in foreign currencies ............ (1,058,982) (595,181)
-------------- -------------- ------------- -------------
Change in net assets resulting from operations ............... 17,792,951 21,873,236 6,071,398 3,026,439
-------------- -------------- ------------- -------------
Distributions to Investor A shareholders:
In excess of net investment income ........................ (6,160) - - -
From net realized gains ................................... (1,177,710) (831,483) - (261)
Tax return of capital ..................................... - - - (1,179)
Distributions to Investor B shareholders:
From net realized gains ................................... (51,148) - - -
Distributions to Trust shareholders:
From net investment income ................................ (214,557) - - -
From net realized gains ................................... (11,321,459) (5,902,352) - (7,793)
Tax return of capital ..................................... - - - (35,169)
Distributions to Institutional shareholders:
In excess of net investment income ........................ (13,982) - - -
From net realized gains ................................... (1,397,709) (432,261) - (71)
Tax return of capital ..................................... - - - (318)
-------------- -------------- ------------- -------------
Change in net assets from shareholder distributions .......... (14,182,725) (7,166,096) - (44,791)
-------------- -------------- ------------- -------------
Capital Transactions:
Proceeds from shares issued ............................... 79,498,432 70,516,196 23,675,008 16,109,115
Dividends reinvested ...................................... 12,406,113 5,971,760 - 28,077
Cost of shares redeemed ................................... (51,937,381) (12,457,399) (8,420,843) (3,928,946)
-------------- -------------- ------------- -------------
Change in net assets from share transactions ................. 39,967,164 64,030,557 15,254,165 12,208,246
-------------- -------------- ------------- -------------
Change in net assets ......................................... 43,577,390 78,737,697 21,325,563 15,189,894
Net Assets:
Beginning of period ....................................... 172,960,146 94,222,449 39,924,497 24,734,603
-------------- -------------- ------------- -------------
End of period ............................................. $ 216,537,536 $ 172,960,146 $ 61,250,060 $ 39,924,497
============== ============== ============= =============
Share Transactions:
Issued .................................................... 6,245,178 5,411,069 2,083,892 1,588,686
Reinvested ................................................ 1,012,913 549,194 - 2,857
Redeemed .................................................. (4,004,332) (975,925) (724,654) (386,418)
-------------- -------------- ------------- -------------
Change in shares ............................................. 3,253,759 4,984,338 1,359,238 1,205,125
============== ============== ============= =============
</TABLE>
- ------------
(a) Formerly Emerging Growth Portfolio.
See notes to financial statements
-32-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Government & Corporate Bond
Balanced Portfolio Portfolio
--------------------------------- ---------------------------------
Year Year Year Year
ended ended ended ended
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income .................................... $ 3,743,265 $ 3,284,357 $ 9,481,729 $ 9,249,020
Net realized gains (losses) from investment transactions . 7,057,146 4,625,170 1,012,372 (1,171,676)
Net change in unrealized appreciation (depreciation) from
investments ............................................ 7,234,948 14,959,325 (2,852,662) 14,042,027
--------------- --------------- --------------- ----------------
Change in net assets resulting from operations .............. 18,035,359 22,868,852 7,641,439 22,119,371
--------------- --------------- --------------- ----------------
Distributions to Investor A shareholders:
From net investment income ............................... (235,477) (224,231) (325,323) (309,012)
From net realized gains .................................. (306,345) - (10,112) -
Distributions to Investor B shareholders:
From net investment income ............................... (4,068) (225) (18,810) (1,688)
From net realized gains .................................. (1,338) - (207) -
Distributions to Trust shareholders:
From net investment income ............................... (2,248,807) (2,182,251) (8,420,741) (8,521,373)
From net realized gains .................................. (2,656,748) - (232,344) -
Distributions to Institutional shareholders:
From net investment income ............................... (1,181,916) (790,342) (716,855) (416,947)
From net realized gains .................................. (1,351,994) - (17,276) -
--------------- --------------- --------------- ----------------
Change in net assets from shareholder distributions ......... (7,986,693) (3,197,049) (9,741,668) (9,249,020)
--------------- --------------- --------------- ----------------
Capital Transactions:
Proceeds from shares issued .............................. 25,923,740 26,225,962 42,646,634 22,004,332
Dividends reinvested ..................................... 7,792,122 3,130,438 5,921,069 6,496,071
Cost of shares redeemed .................................. (35,443,035) (26,478,191) (27,482,599) (42,323,482)
--------------- --------------- --------------- ----------------
Change in net assets from share transactions ................ (1,727,173) 2,878,209 21,085,104 (13,823,079)
--------------- --------------- --------------- ----------------
Change in net assets ........................................ 8,321,493 22,550,012 18,984,875 (952,728)
Net Assets:
Beginning of period ...................................... 117,879,676 95,329,664 142,756,026 143,708,754
--------------- --------------- --------------- ----------------
End of period ............................................ $ 126,201,169 $ 117,879,676 $ 161,740,901 $ 142,756,026
=============== =============== =============== ================
Share Transactions:
Issued ................................................... 2,238,696 2,500,588 4,197,687 2,156,859
Reinvested ............................................... 684,060 299,781 580,294 646,557
Redeemed ................................................. (3,006,390) (2,584,883) (2,689,747) (4,153,696)
--------------- --------------- --------------- ----------------
Change in shares ............................................ (83,634) 215,486 2,088,234 (1,350,280)
=============== =============== =============== ================
</TABLE>
See notes to financial statements
-33-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
U.S. Government Short-Intermediate
Securities Portfolio Municipal Portfolio
------------------------------ ----------------------------
Year Year Year July 10,
ended ended ended 1995 to
November 30, November 30, November 30, November 30,
1996 1995 1996 1995 (a)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ......................................... $ 3,774,130 $ 2,914,916 $ 1,094,106 $ 264,700
Net realized gains (losses) from investment transactions ...... (408,957) 588,948 - -
Net change in unrealized appreciation (depreciation) from
investments ................................................. (197,452) 2,891,528 (16,660) 224,139
-------------- -------------- -------------- --------------
Change in net assets resulting from operations ................... 3,167,721 6,395,392 1,077,446 488,839
-------------- -------------- -------------- --------------
Distributions to Investor A shareholders:
From net investment income .................................... (445,187) (543,517) (1,458) -
In excess of net realized gains ............................... (27,732) - - -
Distributions to Investor B shareholders:
From net investment income .................................... (12,608) (603) - -
In excess of net realized gains ............................... (165) - - -
Distributions to Trust shareholders:
From net investment income .................................... (3,231,786) (2,346,666) (1,092,648) (264,700)
In excess of net realized gains ............................... (154,647) - - -
Distributions to Institutional shareholders:
From net investment income .................................... (84,549) (24,130) - -
In excess of net realized gains ............................... (2,281) - - -
-------------- -------------- -------------- --------------
Change in net assets from shareholder distributions .............. (3,958,955) (2,914,916) (1,094,106) (264,700)
-------------- -------------- -------------- --------------
Capital Transactions:
Proceeds from shares issued ................................... 20,374,470 12,388,111 9,484,969 23,945,082
Dividends reinvested .......................................... 2,512,482 2,029,261 64,963 9,378
Cost of shares redeemed ....................................... (6,672,311) (6,345,525) (3,763,873) (424,913)
-------------- -------------- -------------- --------------
Change in net assets from share transactions ..................... 16,214,641 8,071,847 5,786,059 23,529,547
-------------- -------------- -------------- --------------
Change in net assets ............................................. 15,423,407 11,552,323 5,769,399 23,753,686
Net Assets:
Beginning of period ........................................... 54,400,253 42,847,930 23,753,686 -
-------------- -------------- -------------- --------------
End of period ................................................. $ 69,823,660 $ 54,400,253 $ 29,523,085 $ 23,753,686
============== ============== ============== ==============
Share Transactions:
Issued ........................................................ 1,922,232 1,156,552 944,068 2,399,958
Reinvested .................................................... 236,847 193,708 6,499 938
Redeemed ...................................................... (627,360) (599,690) (377,354) (42,604)
-------------- -------------- -------------- --------------
Change in shares ................................................. 1,531,719 750,570 573,213 2,358,292
============== ============== ============== ==============
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements
-34-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
National
Missouri Tax-Exempt Municipal Bond
Bond Portfolio Portfolio
------------------------------------------------- -------------------
Year Six months Year November 18,
ended ended ended 1996 to
November 30, November 30, May 31, November 30,
1996 1995 1995 1996(a)
---------------- ---------------- -------------- -------------------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ............................... $ 3,550,097 $ 1,654,275 $ 3,690,016 $ 735,988
Net realized gains (losses) from investment
transactions ...................................... 70,177 1,611 (190,330) 115,325
Net change in unrealized appreciation (depreciation)
from investments .................................. (87,057) 1,343,976 2,083,405 1,278,075
------------ ------------ ------------ -------------
Change in net assets resulting from operations ......... 3,533,217 2,999,862 5,583,091 2,129,388
------------ ------------ ------------ -------------
Distributions to Investor A shareholders:
From net investment income .......................... (1,169,732) (565,623) (1,301,629) (4)
From net realized gains ............................. - - (19,180) -
Distributions to Investor B shareholders:
From net investment income .......................... (25,005) (5,588) (593) (3)
Distributions to Trust shareholders:
From net investment income .......................... (2,355,360) (1,083,064) (2,387,794) (735,973)
From net realized gains ............................. - - (31,970) -
------------ ------------ ------------ -------------
Change in net assets from shareholder distributions .... (3,550,097) (1,654,275) (3,741,166) (735,980)
------------ ------------ ------------ -------------
Capital Transactions:
Proceeds from shares issued ......................... 18,205,943 8,449,317 13,215,405 314,008,996
Dividends reinvested ................................ 1,325,915 610,700 1,366,231 -
Cost of shares redeemed ............................. (10,722,765) (6,221,755) (23,338,004) (4,987,761)
------------ ------------ ------------ -------------
Change in net assets from share transactions ........... 8,809,093 2,838,262 (8,756,368) 309,021,235
------------ ------------ ------------ -------------
Change in net assets ................................... 8,792,213 4,183,849 (6,914,443) 310,414,643
Net Assets:
Beginning of period ................................. 72,931,512 68,747,663 75,662,106 -
------------ ------------ ------------ -------------
End of period ....................................... $81,723,725 $72,931,512 $68,747,663 $310,414,643
============ ============ ============ =============
Share Transactions:
Issued .............................................. 1,584,195 735,228 1,199,549 31,400,289
Reinvested .......................................... 114,877 53,264 124,846 -
Redeemed ............................................ (921,381) (540,692) (2,158,695) (498,183)
------------ ------------ ------------ -------------
Change in shares ....................................... 777,691 247,800 (834,300) 30,902,106
============ ============ ============ =============
</TABLE>
- ------------
(a) Period from commencement of operations.
See notes to financial statements
-35-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ------------- ------------------------------- ---------------
<S> <C> <C>
Certificates of Deposit (6.1%):
25,000,000 Bayerische Landesbank Co.,
5.43%, 6/9/97.............. $ 25,001,862
25,000,000 Fifth Third Bank, 5.36%,
1/30/97.................... 25,000,000
---------------
Total Certificates of Deposit 50,001,862
---------------
Commercial Paper (70.9%):
Automotive (2.4%):
20,000,000 Daimler-Benz, 5.27%, 12/2/96.. 19,997,072
---------------
Beverages (1.8%):
14,823,000 PepsiCo, 5.25%, 12/6/96....... 14,812,192
---------------
Chemicals (1.8%):
15,000,000 Air Products & Chemicals,
Inc., 5.28%, 3/19/97....... 14,762,400
---------------
Computers (2.2%):
18,500,000 Texas Instruments, 5.32%,
12/2/96.................... 18,497,266
---------------
Conglomerates (4.8%):
40,000,000 J.P. Morgan, 5.26%,
12/2/96.................... 39,994,155
---------------
Consumer Goods & Services (1.2%):
10,000,000 May Department Stores, 5.26%,
12/2/96.................... 9,998,539
---------------
Electrical & Electronic (9.8%):
20,000,000 CSC Enterprises, 5.30%,
12/2/96.................... 19,997,056
7,342,000 CSC Enterprises, 5.33%,
12/4/96.................... 7,338,739
25,800,000 Duracell International, Inc.,
5.25%, 12/2/96............. 25,796,238
10,000,000 Intel Corp., 5.24%, 12/9/96... 9,988,356
17,750,000 Texas Instruments, 5.36%,
1/15/97.................... 17,631,075
---------------
80,751,464
---------------
Entertainment (1.8%):
15,000,000 Walt Disney, 5.25%, 12/9/96...
14,982,500
---------------
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ------------- ------------------------------- ---------------
<S> <C> <C>
Commercial Paper, continued:
Finance (15.4%):
40,000,000 Dillards Investment, 5.27%,
12/20/96................... $ 39,888,744
8,000,000 General Electric Capital
Services, 5.55%, 12/16/96.. 7,981,500
6,000,000 General Electric Capital
Services, 5.30%*, 4/28/97.. 5,869,267
16,000,000 Hershey's, 5.80%, 12/2/96.... 15,997,422
20,000,000 Morgan Stanley, 5.31%,
2/14/97.................... 19,778,750
13,515,000 Motorola Credit, 5.24%,
12/19/96................... 13,479,591
23,796,000 Transamerica Corp., 5.27%,
12/5/96.................... 23,782,066
--------------
126,777,340
--------------
Grain Mill Products (1.5%):
12,189,000 General Mills, 5.35%, 12/2/96. 12,186,985
--------------
Greeting Cards (2.3%):
19,000,000 American Greetings Corp.,
5.27%, 12/20/96............. 18,947,154
--------------
Insurance (3.8%):
6,000,000 Aetna Services, Inc., 5.35%,
12/4/96..................... 5,997,325
20,000,000 Aetna Services, Inc., 5.28%,
12/18/96.................... 19,950,133
5,000,000 Aetna Services, Inc., 5.30%,
12/18/96.................... 4,987,486
--------------
30,934,944
--------------
Leasing (3.6%):
16,900,000 International Lease Finance,
5.55%, 1/15/97.............. 16,782,756
13,000,000 Puerto Hampshire Corp.,
5.50%, 12/2/96.............. 12,998,014
--------------
29,780,770
--------------
Oil & Gas Exploration Production & Services (4.6%):
15,000,000 Petrofina, 5.30%, 12/5/96..... 14,991,167
23,000,000 Texaco, 5.23%, 12/31/96....... 22,899,758
--------------
37,890,925
--------------
</TABLE>
Continued
-36-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ------------- ------------------------------- ---------------
<S> <C> <C>
Commercial Paper, continued:
Photography (2.2%):
18,000,000 Xerox Corp., 5.32%,
12/13/96..................... $ 17,968,080
---------------
Printing & Publishing (4.4%):
14,180,000 Mcgraw-Hill, 5.33%, 12/31/96.... 14,117,017
22,000,000 Mcgraw-Hill, 5.30%, 2/3/97...... 21,792,711
---------------
35,909,728
---------------
Telecommunications (4.7%):
23,000,000 Ameritech Corp., 5.24%,
12/31/96..................... 22,899,567
15,705,000 Southwestern Bell, 5.35%,
12/31/96..................... 15,634,982
---------------
38,534,549
---------------
Transportation & Shipping (2.7%):
22,225,000 Matson Navigation, 5.31%,
1/15/97...................... 22,077,482
---------------
Total Commercial Paper 584,803,545
---------------
Corporate Bonds (7.6%):
Banking (1.8%):
15,000,000 Huntington Bank, 5.36%*,
12/2/96...................... 14,999,978
---------------
Financial Services (4.8%):
20,000,000 CIT Group Holdings, 5.30%*,
12/23/96..................... 19,998,803
20,000,000 Merrill Lynch, 5.56%*, 10/1/97
20,000,000
---------------
39,998,803
---------------
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ------------- ------------------------------- ---------------
<S> <C> <C>
Corporate Bonds, continued:
Industrial Goods & Services (1.0%):
8,000,000 EI DuPont Nemour, 5.80%,
12/12/96..................... $ 7,999,963
---------------
Total Corporate Bonds 62,998,744
---------------
Medium Term Note (2.4%):
Finance (2.4%):
20,000,000 Bear Stearns Co., 5.41%*,
10/14/97..................... 20,000,000
---------------
Total Medium Term Note 20,000,000
---------------
U.S. Government Agencies (11.9%):
Federal Farm Credit Bank:
20,000,000 5.22%, 3/3/97 .................. 20,000,000
20,000,000 5.85%, 8/1/97 .................. 20,012,614
Federal Home Loan Mortgage Corp.:
15,000,000 7.88%, 12/20/96 ................ 15,017,584
Federal National Mortgage Association:
33,500,000 5.40%, 12/6/96 ................. 33,474,875
Student Loan Marketing Assoc.:
10,000,000 5.35%*, 12/20/96 ............... 10,000,000
---------------
Total U.S. Government Agencies 98,505,073
---------------
U.S. Treasury Notes (3.5%):
29,156,000 7.50%, 12/31/96................. 29,207,355
---------------
Total U.S. Treasury Notes 29,207,355
---------------
Total (Cost-$845,516,579)(a) $ 845,516,579
===============
</TABLE>
- ------------
Percentages indicated are based on net assets of $824,392,559.
* 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 in the Schedule of Portfolio Investments is the
rate in effect at November 30, 1996.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements
-37-
<PAGE>
THE ARCH FUND, INC.
Treasury Money Market Fund
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ------------- ------------------------------- --------------
<S> <C> <C>
U.S. Treasury Bills (100.4%):
16,408,000 12/12/96...................... $ 16,383,108
51,801,000 12/19/96...................... 51,668,324
18,834,000 1/9/97........................ 18,732,299
2,014,000 1/23/97....................... 1,999,204
14,101,000 2/6/97........................ 13,969,782
4,147,000 2/27/97....................... 4,096,416
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ------------- ------------------------------- ----------------
<S> <C> <C>
U.S. Treasury Bills, continued:
7,859,000 3/6/97........................ $ 7,754,273
25,655,000 3/20/97....................... 25,262,728
---------------
Total U.S. Treasury Bills 139,866,134
---------------
Total (Cost--$139,866,134)(a) $ 139,866,134
===============
</TABLE>
- -----------
Percentages indicated are based on net assets of $139,287,960.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements
-38-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Amortized
Amount Description Cost
- ---------- --------------------------------- ---------------
<S> <C> <C>
Municipal Bond (99.9%):
Alabama (4.4%):
4,000,000 Parrish Alabama Industrial
Development Board, 4.10%*,
6/1/15 ...................... $ 4,000,000
1,000,000 Phenix County Alabama, 4.00%*,
12/1/15 ..................... 1,000,000
---------------
5,000,000
---------------
Arizona (2.2%):
975,000 Chandler, 3.55%*, 12/1/02 ...... 975,000
1,500,000 Maricopa County Arizona,
4.00%*, 12/1/08 ............. 1,500,000
---------------
2,475,000
---------------
Delaware (2.6%):
3,000,000 Delaware St. Ciba-Geigy,
4.15%*, 3/1/26 .............. 3,000,000
---------------
Florida (1.4%):
1,500,000 Florida State Board of
Education, 7.63%, 6/1/09,
Prerefunded @ 102, 6/1/97.... 1,558,511
---------------
Georgia (11.6%):
5,000,000 Burke County, Development
Authority Pollution Control,
4.10%*, 9/1/26 .............. 5,000,000
3,200,000 Georgia Gas Authority, 3.70%,
2/12/97** ................... 3,200,000
5,000,000 Monroe County, 4.10%*,
7/1/25 ...................... 5,000,000
---------------
13,200,000
---------------
Illinois (4.4%):
1,000,000 Chicago, O'Hare International
Airport, 4.10%*, 12/1/17 .... 1,000,000
4,000,000 Chicago, O'Hare International
Airport, 4.10%*, 12/1/17 .... 4,000,000
---------------
5,000,000
---------------
Iowa (4.2%):
2,100,000 Iowa Finance Authority Cedar
River, 4.15%*, 6/1/24 ....... 2,100,000
2,700,000 Iowa Finance Authority Cedar
River, 4.15%*, 5/1/25 ....... 2,700,000
---------------
4,800,000
---------------
Kentucky (3.5%):
4,000,000 Daviess County Kentucky Solid
Waste Scott Paper Co.,
4.20%*, 12/1/23 ............. 4,000,000
---------------
Lousiana (9.4%):
3,300,000 Calcasieu Parish, 4.10%*,
2/1/16 ...................... 3,300,000
1,000,000 East Baton Rouge Parish
Pollution Control, 4.00%*,
3/1/22 ...................... 1,000,000
1,900,000 Louisiana Public Facilities,
3.60%*, 9/1/15 .............. 1,900,000
500,000 West Feliciana Parish Louisiana
Pollution Control Rev.,
4.05%*, 4/1/16 .............. 500,000
4,000,000 West Felincia Parish, Gulf
States Utilities, 4.05%*,
12/1/15 ..................... 4,000,000
---------------
10,700,000
---------------
Minnesota (4.8%):
3,000,000 Becker Northern States Power,
3.55%, 2/11/97** ............ 3,000,000
2,450,000 Minneapolis PCR, 3.70%*,
3/1/11....................... 2,450,000
---------------
5,450,000
---------------
Mississippi (2.1%):
2,400,000 Perry County PCR, 4.00%*,
3/1/02 ...................... 2,400,000
---------------
Missouri (11.7%):
3,000,000 Missouri Health & Educational
Facilities Authority,
3.55%*, 12/1/19 ............. 3,000,000
2,800,000 Missouri Health & Educational
Facilities Authority,
3.55%*, 12/1/15 ............. 2,800,000
</TABLE>
Continued
-39-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Amortized
Amount Description Cost
- --------- --------------------------------- ------------
<S> <C> <C>
Municipal Bond, continued:
Missouri (11.7%):
2,000,000 Missouri Health & Educational
Facilities Authority, 3.60%*,
6/1/06.......................... $ 2,000,000
3,500,000 Missouri State Environmental
Improvement, 3.65%,
6/1/97**........................ 3,500,000
1,000,000 Missouri State Health &
Educational Facs Revenue,
3.60%*, 9/1/10.................. 1,000,000
1,000,000 Monsanto County, 3.65%*,
6/1/23.......................... 1,000,000
------------
13,300,000
------------
Montana (3.4%):
2,200,000 Forsyth Montana PCR Series B,
3.60%*, 6/1/13.................. 2,200,000
1,600,000 Forsyth PCR, 3.70%*, 6/1/13...... 1,600,000
------------
3,800,000
------------
New Mexico (3.0%):
3,400,000 Farmington PCR, 4.00%*,
9/1/24.......................... 3,400,000
------------
North Carolina (4.3%):
4,900,000 North Carolina Medical Care
Commission Hospital Revenue
Series A, 4.05%*, 10/1/20....... 4,900,000
------------
Tennessee (2.3%):
2,650,000 Bradley County, 4.10%*,
11/1/17......................... 2,650,000
------------
Texas (17.0%):
1,700,000 Angelina & Neches River
Authority, 4.10%*, 5/1/14....... 1,700,000
2,000,000 Angelina & Neches River
Authority, 4.10%*, 5/1/14....... 2,000,000
4,500,000 Harris County Health Care Fac.,
4.10%*, 12/1/25................. 4,500,000
3,000,000 Houston Texas, 4.50%,
6/30/97......................... 3,009,992
3,900,000 North Central Health, 4.20%*,
10/1/15......................... 3,900,000
2,200,000 Port Corpus Christi, Nueces
County Marine Trem, 3.35%*,
9/1/14.......................... 2,200,000
2,000,000 Texas State - Tax and Revenue
Anticipation Notes, 4.75%,
8/29/97......................... 2,011,138
------------
19,321,130
------------
Utah (1.8%):
2,000,000 Salt Lake City Utah Pollution
Control, 4.10%, 8/1/07**........ 2,000,000
------------
Washington (5.8%):
4,000,000 King County Washington, 3.60%*,
2/13/97......................... 4,000,000
2,600,000 Washington St. Hlth, 4.00%*,
10/1/05......................... 2,600,000
------------
6,600,000
------------
Total Municipal Bond 113,554,641
------------
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--$113,556,641)(a) $113,556,641
============
</TABLE>
- --------------
Percentages indicated are based on net assets of $113,709,979.
* 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 in the Schedule of Portfolio Investments is the
rate in effect at November 30, 1996.
** Put and demand features exist allowing the fund to require the repurchase
of the investment within variable time periods ranging from daily, weekly,
monthly or semi-annually. Maturity date reflects the next put date.
(a) Cost for federal income tax and financial reporting purposes are the same.
PCR--Pollution Control Revenue
See notes to financial statements
-40-
<PAGE>
THE ARCH FUND, INC.
Growth and Income Equity Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------- --------------
<S> <C> <C>
Commercial Paper (2.9%):
Telecommunications (2.9%):
13,365,000 Ameritech Corp., 5.88%,
12/2/96.................... $ 13,362,816
--------------
Total Commercial Paper 13,362,816
--------------
Common Stocks (96.9%):
Airlines (1.4%):
257,000 Southwest Airlines............ 6,360,750
--------------
Banking (2.3%):
114,600 Chase Manhattan Corp. ........ 10,829,700
--------------
Banking & Financial Services (2.3%):
155,000 Crestar Financial Corp. ...... 10,791,875
--------------
Beverages (1.9%):
288,000 PepsiCo, Inc. ................ 8,604,000
--------------
Business Services (1.7%):
200,000 First Data Corp.(c)........... 7,975,000
--------------
Chemicals (5.7%):
235,000 Millipore Corp. .............. 9,605,625
170,000 Morton International, Inc. ... 6,863,750
200,000 Praxair, Inc. ................ 9,725,000
--------------
26,194,375
--------------
Containers & Packaging (2.1%):
138,552 Avery Dennison................ 9,785,235
--------------
Electrical Equipment (4.5%):
111,000 General Electric Co. ......... 11,544,000
116,914 Grainger W.W., Inc. .......... 9,294,663
--------------
20,838,663
--------------
Financial Services (6.7%):
200,000 First USA, Inc.(c)............ 6,575,000
250,000 Green Tree Financial Corp. ... 10,468,750
176,935 PMI Group.(c)................. 10,262,230
132,000 United Companies Financial
Corp.(c)................... 3,943,500
-------------
31,249,480
--------------
Food Processing (5.9%):
255,000 H. J. Heinz Co.(c)............ 9,658,125
320,000 IBP, Inc. .................... 7,920,000
250,000 Sara Lee Corp. ............... 9,812,500
--------------
27,390,625
--------------
Health Care--General (2.2%):
88,058 Bristol Myers Squibb Co.(c)... 10,016,598
--------------
Informational Services (1.1%):
155,000 Analog Devices, Inc.(b)(c).... 4,979,375
--------------
Machinery & Equipment (1.6%):
415,000 McDermott International, Inc.. 7,366,250
--------------
Manufacturing-Consumer Goods (4.9%):
185,000 Crown Cork & Seal Co., Inc.... 9,805,000
280,000 Newell Co. ................... 8,680,000
185,157 Whitman Corp. ................ 4,258,611
--------------
22,743,611
--------------
Medical Equipment & Supplies (2.1%):
156,000 Allergan...................... 5,011,500
177,000 CR Bard....................... 4,956,000
--------------
9,967,500
--------------
Medical-Hospital Services (1.8%):
213,000 Columbia/HCA Healthcare Corp.
8,520,000
--------------
Oil & Gas Equipment/Services (3.8%):
321,300 Dresser Industries, Inc.(c)... 10,522,575
160,000 Tidewater, Inc. .............. 7,000,000
--------------
17,522,575
--------------
Oil & Gas Exploration Production & Services (5.9%):
175,000 Murphy Oil Corp. ............. 8,925,000
254,000 Ultramar Corp. ............... 8,064,500
459,100 Union Texas Petroleum
Holdings, Inc. ............ 10,214,975
-------------
27,204,475
--------------
Pharmaceuticals (13.1%):
160,000 Abbott Laboratories........... 8,920,000
140,000 American Home Products Corp. .
8,995,000
160,000 Eli Lilly & Co. .............. 12,239,999
100,000 Pfizer, Inc. ................. 8,962,500
166,678 Schering Plough Corp. ........ 11,875,807
140,000 Smithkline Beecham PLC,
ADR. ...................... 9,642,500
--------------
60,635,806
--------------
</TABLE>
Continued
-41-
<PAGE>
THE ARCH FUND, INC.
Growth and Income Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ----------- ------------------------------- --------------
<S> <C> <C>
Common Stocks, continued:
Railroads (1.9%):
100,000 Burlington Northern Santa Fe $ 8,987,500
---------------
Retail Stores (3.6%):
162,000 Home Depot, Inc............... 8,444,250
321,363 Wal-Mart Stores, Inc.......... 8,194,757
---------------
16,639,007
---------------
Retail Stores - Grocery (1.0%):
128,500 Albertson's Inc............... 4,481,438
---------------
Technology (6.5%):
208,000 Automatic Data Processing,
Inc........................ 8,918,000
70,000 Microsoft(b).................. 10,981,250
186,500 Motorola, Inc................. 10,327,438
---------------
30,226,688
---------------
Tobacco (1.8%):
80,000 Philip Morris Cos., Inc....... 8,250,000
---------------
Utilities - Electric (3.8%):
227,800 Central & South West Corp..... 6,093,650
202,000 Cinergy Corp.(c).............. 6,767,000
140,500 Western Resources, Inc.(c).... 4,443,313
---------------
17,303,963
---------------
Utilities - Oil & Gas (2.2%):
250,000 Vastar Resources.............. 10,031,250
---------------
Utilities - Telecommunications (3.3%):
178,000 AT&T Corp..................... 6,986,500
186,000 GTE Corp...................... 8,346,750
---------------
15,333,250
---------------
Wholesale Distribution (1.8%):
239,935 Sysco Corp.................... 8,187,782
---------------
Total Common Stocks 448,416,771
---------------
Investment Companies (1.1%):
5,168,000 Cash Assets Trust Money
Market Fund................ 5,168,000
---------------
Total Investment Companies 5,168,000
---------------
Total (Cost--$361,437,050)(a) $ 466,947,587
===============
</TABLE>
- ------------
Percentages indicated are based on net assets of $462,899,079.
(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 $1,286,000. Cost for federal income tax purposes differs
from value by net unrealized appreciation of securities as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation ........................ $108,084,975
Unrealized depreciation ........................ (3,860,240)
------------
Net unrealized appreciation .................... $104,224,735
============
</TABLE>
(b) Represents non-income producing securities.
(c) A portion of this security was loaned as of November 30, 1996.
ADR--American Depository Receipt
See notes to financial statements
-42-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio*
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------- ---------------
<S> <C> <C>
Commercial Paper (1.7%):
Telecommunications (1.7%):
3,593,000 Ameritech Corp., 5.88%,
12/2/96......................... $ 3,592,413
--------------
Total Commercial Paper 3,592,413
--------------
Common Stocks (97.9%):
Airlines (0.8%):
114,800 Skywest, Inc.(c)................. 1,650,250
--------------
Banking (6.3%):
50,000 First Commerce Corp.(c).......... 1,968,750
40,000 First Financial Corp............. 1,195,000
120,000 Signet Banking Corp.............. 3,630,000
50,000 Standard Federated Bank.......... 2,818,750
100,000 Union Planters Corp.(c).......... 4,137,500
--------------
13,750,000
--------------
Beverages - Foreign (3.0%):
137,823 Canadaigua Wine, Inc.,
Class A(b).................... 3,721,221
75,000 Mondavi Robert Corp.
Class A(b)(c)................. 2,737,500
--------------
6,458,721
--------------
Broadcasting (1.0%):
70,000 Evergreen Media Corp.(b)(c)...... 1,732,500
75,000 Paxson Communications Corp.(b)... 515,625
--------------
2,248,125
--------------
Chemicals (3.2%):
75,000 Cytec Industries, Inc.(b)........ 2,775,000
198,000 Hanna (M.A.) Co.................. 4,182,750
--------------
6,957,750
--------------
Coal (0.5%):
56,250 Zeigler Coal Holding Co.......... 1,033,594
--------------
Commercial Services (2.3%):
100,000 NFO Research, Inc.(b)............ 2,200,000
100,000 Unitog Co........................ 2,712,500
--------------
4,912,500
--------------
Computer Software (0.8%):
100,000 Active Voice Corp.(b)............ 1,150,000
125,000 Bitstream, Inc.(b)(c)............ 578,125
--------------
1,728,125
--------------
Computers (6.7%):
93,474 Komag, Inc.(b)(c)................ 3,014,537
139,800 Norand Corp.(b)(c)............... 2,341,650
155,000 Quantum Corp.(b)(c).............. 4,146,250
191,088 Zebra Technologies 4,920,515
Corp.(b)(c)...................
--------------
14,422,952
--------------
Consumer Goods & Services (2.0%):
115,000 Department 56, Inc.(b)........... 2,673,750
55,024 Talbots, Inc.(c)................. 1,588,818
--------------
4,262,568
--------------
Containers (1.2%):
105,000 Ball Corp........................ 2,572,500
--------------
Cosmetics (1.2%):
125,000 Research Medical, Inc.(b)(c)..... 2,578,125
--------------
Electrical Equipment (2.3%):
120,000 Hubbell, Inc., Class B(c)........ 5,039,999
--------------
Financial Services (12.3%):
100,000 Advanta Corp., Class B(c)........ 4,200,000
48,600 Charter One Financial, Inc....... 2,114,100
145,000 Cityscape Financial 3,770,000
Corp.(b)(c)...................
60,000 Finova Group, Inc.(c)............ 3,960,000
34,000 GMAC Investment Corp............. 2,592,500
107,000 Resource Bancshares Mortgage
Group, Inc.(c)................ 1,618,375
91,000 Southern Pacific Funding
Corp.(b)(c)................... 2,889,250
118,600 Union Acceptance Corp.(b)........ 2,312,700
108,400 United Companies Financial
Corp.(c)...................... 3,238,450
--------------
26,695,375
--------------
Food Processing (1.8%):
150,000 Hormel Foods Corp. 3,900,000
--------------
Food Products (1.0%):
172,500 Performance Food Group(b)........ 2,080,781
--------------
Hospital Supply & Management (0.6%):
222,000 OrthoLogic Corp.(b)(c)........... 1,359,750
--------------
</TABLE>
Continued
-43-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio*
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------- ---------------
<S> <C>
Common Stocks, continued:
Industrial Goods & Services (0.6%):
99,300 Polymer Group, Inc.(b).......... $ 1,278,488
--------------
Informational Services (2.0%):
102,000 SunGard Data Systems,
Inc.(b)(c)................... 4,284,000
--------------
Insurance (2.4%):
82,100 American States Financial
Corp......................... 2,247,488
80,000 NAC Re
Corp.(c)..................... 2,920,000
--------------
5,167,488
--------------
Machinery & Equipment (0.6%):
24,000 Tecumseh Products Co.
Class A(c)................... 1,404,000
--------------
Manufacturing-Capital Goods (1.0%):
40,000 Aptaragroup, Inc................ 1,380,000
40,000 Holophane Corp.(b).............. 760,000
--------------
2,140,000
--------------
Manufacturing-Consumer Goods (0.6%):
50,000 Libbey, Inc.(c)................. 1,343,750
--------------
Manufacturing-Miscellaneous (0.8%):
75,000 Lydall, Inc.(b)................. 1,706,250
--------------
Medical Equipment & Supplies (9.2%):
135,000 Allergan, Inc................... 4,336,875
85,000 Dentsply International, Inc..... 3,952,500
93,000 Fisher Scientfic Intl.(c)....... 4,254,750
77,000 Lunar Corp.(b).................. 2,387,000
125,000 Nellcor Puritan Bennett, 2,593,750
Inc.(b)(c)...................
150,000 Penederm, Inc.(b)............... 1,350,000
60,100 ResMed, Inc.(b)................. 1,126,875
--------------
20,001,750
--------------
Medical Services (6.2%):
100,000 Apria Healthcare Group, Inc.(b). 1,800,000
280,000 Beverly Enterprises, Inc.(b)(c). 3,710,000
66,000 Emeritus Corp.(b)............... 907,500
60,000 Horizon/CMS Healthcare Corp.(b). 645,000
95,000 Living Centers of America(b).... 2,410,625
60,000 Sterling House Corp.(b)......... 510,000
285,032 Sun Health Care Group,
Inc.(b)(c)................... 3,562,900
--------------
13,546,025
--------------
Common Stocks, continued:
Medical--Hospital Management & Services (0.7%):
150,000 American Oncology Resources,
Inc.(b)(c)................... $ 1,462,500
--------------
Miscellaneous (1.7%):
65,000 Interim Services, Inc.(b)....... 2,551,250
75,000 Western Staff Services, Inc.(b). 1,040,625
--------------
3,591,875
--------------
Office/Business Equipment & Supplies (0.6%):
118,000 Nu-Kote Holding, Inc.
Class A(b)................... 1,253,750
--------------
Oil & Gas Equipment/Services (0.6%):
41,000 Swift Energy Co.(b)(c).......... 1,296,625
--------------
Oil & Gas Exploration Production & Services (4.6%):
125,000 J. Ray McDermott, S.A.(b)....... 3,093,750
170,000 Union Texas Petroleum Holdings,
Inc.......................... 3,782,500
99,623 Weatherford Enterra, Inc.(b).... 3,038,502
--------------
9,914,752
--------------
Pharmaceuticals (1.9%):
91,000 Scherer (R.P.) Corp.(b)......... 4,163,250
--------------
Printing & Publishing (0.8%):
170,000 K-111 Communications
Corp.(b)..................... 1,700,000
--------------
Restaurants (1.2%):
55,000 Ruby Tuesday, Inc............... 886,875
174,000 Ryan's Family Steak Houses,
Inc.(b)...................... 1,218,000
65,000 Shoney's, Inc.(b)............... 536,250
--------------
2,641,125
--------------
Retail--General Merchandise (1.0%):
155,000 Oakley, Inc.(b)(c).............. 2,150,625
--------------
Retail Stores (4.3%):
70,000 Discount Auto Parts, Inc.(b).... 1,793,750
78,000 Marks Bros. Jewelers, Inc.(b)... 1,423,500
150,000 Michaels Stores, Inc.(b)(c)..... 1,500,000
123,360 Micro Warehouse, Inc.(b)........ 3,053,160
75,000 Tractor Supply Co.(b)(c)........ 1,575,000
--------------
9,345,410
--------------
Steel (0.7%):
120,716 J&L Specialty Steel, Inc........ 1,463,682
--------------
</TABLE>
Continued
-44-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio*
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------- --------------
<S> <C> <C>
Common Stocks, continued:
Telecommunications (2.3%):
175,000 Arch Communications Group,
Inc.(b)(c)................... $ 1,925,000
270,000 Mobile Telecom Tech
Corp.(b)(c).................. 3,155,625
--------------
5,080,625
--------------
Telecommunications-Services & Equipment (1.3%):
222,000 InteliData Technologies
Corp.(b)(c).................. 1,633,781
100,000 SmarTalk Teleservices, Inc.(b).. 1,250,000
--------------
2,883,781
--------------
Trucking & Leasing (2.9%):
155,000 American Freightways Corp.(b)... 1,588,750
180,000 U.S. Freightways Corp. ......... 4,668,750
--------------
6,257,500
--------------
Utilities--Electric (1.0%):
75,000 Central Louisiana Electric...... 2,118,750
--------------
Utilities--Gas (1.1%):
54,000 Tejas Gas Corp.(b).............. 2,369,250
--------------
Wholesale Distribution (0.8%):
155,000 Peak Technologies Group(b)...... 1,743,750
--------------
Total Common Stocks 211,960,116
--------------
Investment Companies (0.5%):
1,000,000 Cash Assets Trust Money Market
Fund......................... 1,000,000
--------------
Total Investment Companies 1,000,000
--------------
Total (Cost--$204,903,389)(a) $ 216,552,529
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $216,537,536.
(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 ........................................... $ 31,424,716
Unrealized depreciation ........................................... (19,775,576)
-------------
Net unrealized appreciation ....................................... $ 11,649,140
=============
</TABLE>
(b) Represents non-income producing securities.
(c) A portion of this security was loaned as of November 30, 1996.
* Formerly Emerging Growth Portfolio
See notes to financial statements
-45-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
- ----------- ---------------------------------- -------------
<S> <C> <C>
Common Stocks (96.6%):
Australia (1.0%):
Insurance (1.0%):
115,000 QBE Insurance..................... $ 602,207
-------------
Total Australia 602,207
-------------
Finland (0.7%):
Electronics (0.7%):
8,300 Nokia Preferred Free.............. 461,841
-------------
Total Finland 461,841
-------------
France (9.6%):
Banking (1.2%):
18,700 Banque Nationale de Paris......... 744,758
-------------
Building Products (1.2%):
5,000 Compagnie de Saint-Gobain......... 718,985
-------------
Construction - Domestic (1.2%):
7,800 Technip SA........................ 731,814
-------------
Energy (1.2%):
9,000 Total SA-B........................ 719,809
-------------
Insurance (2.4%):
23,200 Assurances Generales de France.... 759,616
5,750 Union des Assurances Federales.... 710,130
-------------
1,469,746
-------------
Merchandising (0.6%):
620 Carrefour......................... 382,971
-------------
Multiple Industry (0.8%):
7,100 Strafor-Facom..................... 523,395
-------------
Recreation (1.0%):
7,000 Salomon SA........................ 616,547
-------------
Total France 5,908,025
-------------
Germany (8.4%):
Business Services (0.9%):
4,150 Sap Preference.................... 570,754
-------------
Conglomerates (1.3%):
18,100 Hoechst AG........................ 792,483
-------------
Healthcare (1.8%):
880 Altana............................ 737,958
Healthcare, continued:
6,200 Gehe AG(b)........................ $ 381,171
-------------
1,119,129
-------------
Manufacturing--Engineering (1.0%):
1,400 Mannesmann AG Ordinary............ 584,280
-------------
Miscellaneous Materials (1.1%):
5,400 SGL Carbon........................ 663,975
-------------
Retail (1.1%):
15,800 Douglas Holding AG................ 656,832
-------------
Utilities (1.2%):
12,600 Veba(b)........................... 737,340
-------------
Total Germany 5,124,793
-------------
Hong Kong (6.7%):
Banking (0.8%):
100,000 Dao Heng Bank Group Ltd........... 474,650
-------------
Electric Utility (0.7%):
105,000 Great Eagle Holdings Ltd.......... 435,915
-------------
Financial Services (0.9%):
285,000 Peregrine Investment Holdings..... 527,094
28,500 Peregrine Investment Holdings
Warrants....................... 9,399
-------------
536,493
-------------
Hotels & Lodging (0.8%):
1,540,000 Regal Hotels International........ 507,889
-------------
Merchandising (0.3%):
237,000 Goldlion Holdings................. 197,704
-------------
Multiple Industry (1.5%):
319,000 First Pacific Co. Limited......... 443,513
50,000 Swire Pacific A................... 473,680
-------------
917,193
-------------
Real Estate (1.7%):
245,000 Amoy Properties Ltd............... 342,214
82,000 Cheung Kong....................... 721,158
-------------
1,063,372
-------------
Total Hong Kong 4,133,216
-------------
</TABLE>
Continued
-46-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
- ---------- ---------------------------------- -------------
<S> <C>
Common Stocks, continued:
Italy (4.7%):
Banking (1.2%):
300,000 Banca Fideuram................... $ 734,692
-------------
Energy (1.2%):
143,000 ENI.............................. 753,268
-------------
Recreation (1.1%):
37,300 Bulgari.......................... 690,640
-------------
Telecommunications (1.2%):
310,000 Telecom Italia Mobile............ 729,510
-------------
Total Italy 2,908,110
-------------
Japan (25.6%):
Appliances (1.8%):
35,000 Sharp Corp....................... 547,452
9,000 Sony Corp........................ 576,538
-------------
1,123,990
-------------
Automotive (1.4%):
28,000 Honda Motor...................... 826,713
-------------
Banking (2.5%):
47,000 Asahi Bank....................... 458,436
22,000 Bank of Tokyo, Mitsubishi........ 450,439
38,000 Mitsubishi Trust & Banking....... 611,072
-------------
1,519,947
-------------
Conglomerates (0.9%):
48,000 Sekisui Chemical Co.............. 531,459
-------------
Construction (1.5%):
13,000 Sho-bond Construction Corp....... 403,251
64,000 Toda Construction................ 489,279
-------------
892,530
-------------
Data Processing (1.3%):
38,000 Canon, Inc....................... 801,406
-------------
Defense (0.8%):
40,000 Shiseido Co., Ltd................ 481,546
-------------
Electrical & Electronic (0.5%):
5,000 TDK Corp......................... 322,496
-------------
Electronic Components (2.7%):
3,500 Keyence Corp..................... 424,429
9,000 Rohm Co.......................... 553,603
-------------
Electronic Components
43,000 Yamatake-Honeywell............... $ 699,033
-------------
1,677,065
-------------
Entertainment (1.3%):
4,000 SMC.............................. 271,353
40,000 Taiyo Yuden Co., Ltd............. 541,300
-------------
812,653
-------------
Financial Services (0.8%):
44,000 Daiwa Securities................. 475,571
-------------
Healthcare (0.8%):
12,700 Amway Japan...................... 472,065
-------------
Industrial Components (1.0%):
33,000 Bridgestone...................... 608,963
-------------
Machinery - Industrial (0.9%):
114,000 Ishikawajima-Harima Heavy
Industries Co., Ltd........... 530,931
-------------
Media (0.6%):
1,200 Nippon Television Network........ 360,633
-------------
Merchandising (2.0%):
25,000 Mycal Corp....................... 373,462
9,000 Nichiei Co....................... 631,898
4,000 Seven-Eleven Japan............... 238,664
-------------
1,244,024
-------------
Real Estate (0.8%):
40,000 Mitsubishi Estate Co. Ltd........ 506,151
-------------
Recreation (1.6%):
13,600 Nintendo......................... 962,037
-------------
Retail (0.4%):
21,000 Nippon Comsys Corp............... 262,039
-------------
Software & Computer Services (0.5%):
15,400 Meitec (9744).................... 322,074
-------------
Telecommunications (1.5%):
55 DDI Corp......................... 393,893
75 Nippon Telephone & Telegraph..... 535,149
-------------
929,042
-------------
Total Japan 15,663,335
-------------
</TABLE>
Continued
-47-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
--------- ---------------------------------- ------------
<S> <C>
Common Stocks, continued:
Malaysia (3.4%):
Aluminum (0.4%):
175,000 IOI Corporation Berhad........... $ 270,027
------------
Electric Utility (0.8%):
107,000 Malaysian Resources Corp., Bhd... 469,907
------------
Financial Services (0.9%):
85,000 Hong Leong Credit................ 524,624
------------
Real Estate (0.7%):
142,000 Hicom Holdings Bhd............... 410,125
------------
Services (Non-Financial) (0.6%):
196,000 Multi-Purpose Holdings Bhd....... 379,977
------------
Total Malaysia 2,054,660
------------
Netherlands (3.3%):
Appliances (1.0%):
12,635 Ahrend Groep Nv.................. 652,055
------------
Financial Services (0.9%):
16,000 International Nederlanden........ 560,371
------------
Healthcare (0.8%):
15,600 Gist Brocades.................... 480,328
------------
Recreation (0.6%):
7,300 Polygram......................... 351,757
------------
Total Netherlands 2,044,511
------------
Norway (0.9%):
Telecommunications (0.9%):
13,100 Nera AS.......................... 537,044
------------
Total Norway 537,044
------------
Portugal (1.1%):
Telecommunications (1.1%):
25,000 Portugal Telecom SA.............. 663,702
------------
Total Portugal 663,702
------------
Singapore (0.7%):
Banking (0.7%):
34,000 OCBC Foreign..................... 412,142
------------
Total Singapore 412,142
------------
Spain (2.8%):
Energy (1.0%):
17,100 Repsol SA........................ 633,162
------------
Insurance (0.7%):
6,000 Mapfre Vida...................... 402,162
------------
Utilities (1.1%):
16,466 Aguas D' Barcelona............... 648,468
------------
Water Utility (0.0%):
16,466 Sociedade General de Aguas de
Barcelona, SA................. 8,138
------------
Total Spain 1,691,930
------------
Sweden (3.5%):
Electronics (1.4%):
27,200 Ericsson Free.................... 838,787
------------
Insurance (1.2%):
25,100 Skandia Forsakrings AB........... 716,069
------------
Pharmaceuticals (0.9%):
14,500 Pharmacia & Upjohn, Inc.......... 558,394
------------
Total Sweden 2,113,250
------------
Switzerland (7.1%):
Banking (0.6%):
3,600 CS Holding Registered............ 383,545
------------
Electronics (1.0%):
500 Brown Boveri Series A Bearer..... 626,187
------------
Healthcare (3.2%):
700 Ares Serono...................... 654,675
90 Roche Genussshein................ 692,453
550 Sandoz SA Registered Swit........ 640,239
------------
1,987,367
------------
Insurance (1.2%):
650 Swiss Reinsurance Registered..... 710,229
------------
Utilities (1.1%):
1,600 Elektrowatt B.................... 642,543
------------
Total Switzerland 4,349,871
------------
United Kingdom (11.5%):
Banking (2.5%):
46,000 Barclays Bank PLC................ 791,103
63,600 Standard Chartered Bank.......... 721,888
------------
1,512,991
------------
</TABLE>
Continued
-48-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
- ------------ --------------------------------- -------------
<S> <C> <C>
Common Stocks, continued:
United Kingdom, continued:
Business Services (0.8%):
39,000 Reuters Holdings(b).............. $ 473,467
-------------
Commercial Services (2.3%):
233,000 Corporate Services Group PLC..... 657,738
105,800 Rentokil......................... 771,548
-------------
1,429,286
-------------
Computer Services (1.5%):
49,800 Misys PLC........................ 830,096
5,500 SEMA Group PLC................... 88,027
-------------
918,123
-------------
Electronic Components (2.1%):
109,600 Electrocomponents................ 813,071
121,000 Pace Micro Technology PLC(b)..... 484,910
-------------
1,297,981
-------------
Energy (1.2%):
63,200 British Petroleum................ 729,029
-------------
Telecommunications (1.1%):
154,000 Vodafone......................... 666,324
-------------
Total United Kingdom 7,027,201
-------------
United States (5.6%):
Beverages & Tobacco (0.8%):
10,800 Panamerican Beverages A.......... 504,900
-------------
Closed End Investment Companies (1.4%):
5,600 Genesis Chile Fund............... 224,448
8,400 India Magnum Fund(b)............. 336,336
3,100 Korea International Investment
Fund(b)....................... 293,477
-------------
854,261
-------------
Financial Services (0.4%):
6,000 Brazilian Investment Co.(b)...... 233,940
-------------
Healthcare (1.2%):
25,200 Elan-ADR(b)...................... 749,700
-------------
Multiple Industry (0.4%):
13,000 Argentinian Investor Co.......... 268,710
-------------
Retail (0.2%):
1,270 Fila Holdings ADR................ 93,980
-------------
Telecommunications (0.5%):
3,800 Telebras ADR..................... 288,800
-------------
Textile (0.7%):
6,275 Gucci Group ADR.................. 460,428
-------------
Total United States 3,454,719
-------------
Total Common Stocks 59,150,557
-------------
U.S. Government Agencies (2.0%):
Federal Home Loan Mortgage Association:
1,228,000 0.00%, 12/2/96 ................. 1,227,610
-------------
Total U.S. Government Agencies 1,227,610
-------------
Investment Companies (1.0%):
5,100 Siam Fund(b)..................... 240,771
40 Taipei Fund(b)................... 354,000
-------------
Total Investment Companies 594,771
-------------
Total (Cost--$53,902,910)(a) $ 60,972,938
=============
</TABLE>
- ------------
Percentages indicated are based on net assets of $61,250,060.
(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 $15,000 and other differences of approximately $96,000.
Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
Unrealized appreciation ............................. $8,413,795
Unrealized depreciation ............................. (1,454,387)
============
Net unrealized appreciation 6,959,408
============
(b) Represents non-income producing securities.
ADR--American Depository Receipt
See notes to financial statements
-49-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ --------------------------------- ---------------
<S> <C> <C>
Commercial Paper (2.4%):
Telecommunications (2.4%):
2,985,000 Ameritech Corp., 5.88%, 12/2/96. $ 2,984,512
---------------
Total Commercial Paper 2,984,512
---------------
Common Stocks (56.3%):
Banking (1.5%):
20,000 Chase Manhattan Corp............ 1,890,000
---------------
Banking & Financial Services (1.4%):
25,000 Crestar Financial Corp.......... 1,740,625
---------------
Beverages (0.6%):
25,250 PepsiCo, Inc.................... 754,344
---------------
Business Services (1.2%):
37,200 First Data Corp.(c)............. 1,483,350
---------------
Chemicals (3.8%):
37,800 Millipore Corp.................. 1,545,075
39,300 Morton International, Inc....... 1,586,737
35,000 Praxair, Inc.................... 1,701,875
---------------
4,833,687
---------------
Containers & Packaging (1.2%):
21,126 Avery Dennison.................. 1,492,024
---------------
Electrical Equipment (2.5%):
14,940 General Electric Co............. 1,553,760
20,800 Grainger W.W., Inc.............. 1,653,600
---------------
3,207,360
---------------
Financial Services (4.2%):
54,200 First USA, Inc.(c).............. 1,781,825
35,200 Green Tree Financial Corp....... 1,474,000
25,377 PMI Group(c).................... 1,471,866
20,000 United Companies Financial
Corp.(c)..................... 597,500
---------------
5,325,191
---------------
Food & Related (2.6%):
45,800 H. J. Heinz Co.................. 1,734,675
38,700 Sara Lee Corp................... 1,518,975
---------------
3,253,650
---------------
Food Processing (1.2%):
60,000 IBP, Inc........................ 1,485,000
---------------
Health Care--General (1.3%):
13,870 Bristol Myers Squibb Co.(c)..... 1,577,712
---------------
Informational Services (0.7%):
26,400 Analog Devices, Inc.(b)(c)...... 848,100
---------------
Machinery & Equipment (0.8%):
60,000 McDermott International, Inc.... 1,065,000
---------------
Manufacturing-Consumer Goods (2.4%):
30,000 Crown Cork & Seal Co., Inc...... 1,590,000
21,000 Newell Co....................... 651,000
34,291 Whitman Corp.................... 788,693
---------------
3,029,693
---------------
Medical Equipment & Supplies (1.0%):
20,000 Allergan........................ 642,500
23,400 CR Bard, Inc.................... 655,200
---------------
1,297,700
---------------
Medical-Hospital Services (1.1%):
35,000 Columbia/HCA Healthcare Corp.... 1,400,000
---------------
Oil & Gas Equipment/Services (2.5%):
45,000 Dresser Industries, Inc......... 1,473,750
37,700 Tidewater, Inc.................. 1,649,375
---------------
3,123,125
---------------
Oil & Gas Exploration Production & Services (3.3%):
27,800 Murphy Oil Corp................. 1,417,800
40,600 Ultramar Corp................... 1,289,050
63,400 Union Texas Petroleum
Holdings, Inc.................. 1,410,650
---------------
4,117,500
---------------
Pharmaceuticals (7.8%):
26,900 Abbott Laboratories............. 1,499,675
20,000 American Home Products Corp..... 1,285,000
23,600 Eli Lilly & Co.................. 1,805,400
19,824 Pfizer, Inc..................... 1,776,726
24,322 Schering Plough Corp............ 1,732,943
26,138 Smithkline Beecham PLC, ADR..... 1,800,255
---------------
9,899,999
---------------
</TABLE>
Continued
-50-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ --------------------------------- ---------------
<S> <C> <C>
Railroads (1.2%):
17,300 Burlington Northern Santa Fe.... $ 1,554,837
---------------
Retail Stores (2.4%):
27,300 Home Depot, Inc................. 1,423,013
60,893 Walmart Stores, Inc............. 1,552,771
---------------
2,975,784
---------------
Technology (3.1%):
16,756 Automatic Data Processing,
Inc.(c)...................... 718,413
11,300 Microsoft(b).................... 1,772,687
26,000 Motorola, Inc................... 1,439,750
---------------
3,930,850
---------------
Telecommunications (0.9%):
28,300 A T & T Corp.................... 1,110,775
---------------
Tobacco (1.5%):
18,600 Philip Morris Cos., Inc......... 1,918,125
---------------
Utilities--Electric (2.4%):
40,500 Central & South West Corp....... 1,083,375
35,300 Cinergy Corp.................... 1,182,550
26,000 Western Resources, Inc.......... 822,250
---------------
3,088,175
---------------
Utilities - Oil & Gas (1.3%):
40,000 Vastar Resources................ 1,605,000
---------------
Utilities - Telecommunications (1.3%):
35,800 GTE Corp........................ 1,606,525
---------------
Wholesale Distribution (1.1%):
40,669 Sysco Corp...................... 1,387,830
---------------
Total Common Stocks 71,001,961
---------------
Corporate Bonds (0.8%):
Oil & Exploration Products & Services (0.8%):
1,000,000 BP America, Inc., 8.88%, 12/1/97
1,030,860
---------------
Total Corporate Bonds 1,030,860
---------------
Medium Term Note (1.6%):
Finance (1.6%):
2,000,000 Federal Home Loan Bank, 5.35%,
2/7/01....................... 1,957,400
---------------
Total Medium Term Note 1,957,400
---------------
U.S. Government Agencies (12.6%):
Federal Home Loan Mortgage Corp.:
251,518 9.50%, 2/1/98 .................. $ 259,219
254,389 7.00%, 3/1/98 .................. 257,887
441,013 6.00%, 4/1/98 .................. 438,808
96,453 6.50%, 4/1/98 .................. 96,935
423,460 6.50%, 4/1/98 .................. 425,577
113,476 7.00%, 4/1/98 .................. 115,036
596,178 6.50%, 4/1/08 .................. 592,452
270,105 7.00%, 4/1/08 .................. 272,636
234,325 7.00%, 4/1/08 .................. 236,521
791,567 6.50%, 1/1/09 .................. 786,620
Government National Mortgage Assoc.:
374,829 7.00%, 7/15/09 ................. 379,863
464,626 6.50%, 10/20/10 ................ 458,818
2,129,781 6.50%, 7/15/11 ................. 2,124,456
14,514 8.50%, 6/15/17 ................. 15,168
409,223 8.00%, 7/15/22 ................. 422,138
266,839 7.00%, 11/15/22 ................ 265,505
429,604 7.00%, 11/15/22 ................ 427,456
733,892 7.50%, 3/15/23 ................. 744,901
9,957 8.50%, 3/15/23 ................. 10,405
368,679 7.50%, 4/15/23 ................. 374,210
629,944 8.50%, 8/15/24 ................. 658,292
583,971 8.50%, 9/15/24 ................. 610,250
148,334 8.50%, 9/15/24 ................. 155,009
143,513 8.50%, 1/15/25 ................. 149,970
157,103 8.50%, 2/15/25 ................. 164,173
415,792 8.50%, 3/15/25 ................. 434,503
188,924 8.50%, 4/15/25 ................. 197,425
418,327 8.00%, 8/15/25 ................. 431,529
24,743 7.50%, 9/15/25 ................. 25,114
24,281 7.50%, 10/15/25 ................ 24,646
38,007 7.50%, 10/15/25 ................ 38,577
920,424 7.50%, 10/15/25 ................ 934,231
26,478 7.50%, 10/15/25 ................ 26,875
904,115 7.50%, 10/15/25 ................ 917,676
145,357 6.50%, 1/15/26 ................. 141,404
676,759 6.50%, 1/15/26 ................. 658,358
24,797 6.50%, 3/15/26 ................. 24,123
503,527 6.50%, 4/15/26 ................. 489,836
501,599 6.50%, 4/15/26 ................. 487,961
</TABLE>
Continued
-51-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ --------------------------------- ---------------
<S> <C> <C>
U.S. Government Agencies, continued:
478,770 6.50%, 4/15/26 ................. $ 465,752
184,745 6.50%, 5/15/26 ................. 179,721
---------------
Total U.S. Government Agencies 15,920,036
---------------
U.S. Treasury Bonds (9.0%):
300,000 10.75%, 8/15/05................. 394,020
2,750,000 12.00%, 8/15/13(c)............ 4,039,339
1,500,000 7.50%, 11/15/16............... 1,677,090
1,000,000 8.13%, 5/15/21(c)............. 1,199,010
1,000,000 8.13%, 8/15/21(c)............. 1,199,760
1,200,000 8.00%, 11/15/21............... 1,422,408
1,500,000 6.25%, 8/15/23................ 1,454,415
---------------
Total U.S. Treasury Bonds 11,386,042
---------------
U.S. Treasury Notes (16.4%):
3,000,000 6.25%, 1/31/97................ $ 3,005,610
3,500,000 6.88%, 3/31/97................ 3,518,410
2,250,000 5.75%, 9/30/97(c)............. 2,257,155
2,000,000 5.00%, 2/15/99(c)............. 1,974,860
3,000,000 7.50%, 5/15/02(c)............. 3,231,000
3,000,000 6.38%, 8/15/02(c)............. 3,075,060
1,000,000 6.25%, 2/15/03................ 1,017,840
2,500,000 7.00%, 7/15/06(c)............. 2,665,400
---------------
Total U.S. Treasury Notes 20,745,335
---------------
Investment Companies (0.4%):
500,000 Cash Assets Trust Money Market
Fund......................... 500,000
---------------
Total Investment Companies 500,000
===============
Total (Cost--$107,233,813)(a) $ 125,526,146
===============
</TABLE>
- ----------
Percentages indicated are based on net assets of $126,201,169.
(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 $378,000. Cost for federal income tax purposes differs
from value by net unrealized appreciation of securities as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation ........................................... $ 18,696,122
Unrealized depreciation ........................................... (781,785)
==============
Net unrealized appreciation ....................................... $ 17,914,337
==============
</TABLE>
(b) Represents non-income producing securities.
(c) A portion of this security was loaned as of November 30, 1996.
ADR--American Depository Receipt
See notes to financial statements
-52-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------- ------------------------------- --------------
<S> <C> <C>
U.S. Government Agencies (29.9%):
Federal Home Loan Mortgage Corp.:
62,124 7.50%, 1/15/97 ............... $ 62,083
1,553,379 6.50%, 2/1/98 ................ 1,561,146
1,002,649 6.50%, 3/1/98 ................ 1,007,662
67,461 8.50%, 5/1/01 ................ 69,991
145,373 8.50%, 11/1/01 ............... 150,279
101,728 8.00%, 3/1/02 ................ 104,271
32,593 8.00%, 3/1/02 ................ 33,408
150,093 7.50%, 4/1/02 ................ 152,344
64,396 8.00%, 5/1/02 ................ 66,006
9,460 8.00%, 5/1/02 ................ 9,696
5,859 8.00%, 6/1/02 ................ 6,006
332,743 8.00%, 6/1/02 ................ 341,062
80,213 8.00%, 6/1/02 ................ 82,219
18,557 8.00%, 6/1/02 ................ 19,021
28,967 8.00%, 7/1/02 ................ 29,692
194,747 8.00%, 7/1/02 ................ 199,615
118,205 8.50%, 3/1/05 ................ 122,195
9,650 8.50%, 4/1/05 ................ 9,975
1,000,000 7.46%, 8/3/05 ................ 1,011,660
86,115 8.50%, 9/1/05 ................ 89,021
43,299 8.50%, 4/1/06 ................ 45,179
2,415,691 8.00%, 1/1/23 ................ 2,487,389
570,958 8.00%, 1/1/23 ................ 587,904
Federal National Mortgage Assoc.:
214,818 8.50%, 5/25/97 ............... 215,181
1,428,262 6.00%, 11/1/00, Pool #190070 . 1,405,938
5,000,001 7.00%, 7/1/11 ................ 5,042,151
3,283,473 8.00%, 7/1/24, Pool #190264 .. 3,377,873
Government National Mortgage Assoc.:
23,636 9.50%, 2/15/01 ............... 25,077
51,526 9.50%, 9/15/01 ............... 54,665
208,641 8.00%, 1/15/02 ............... 216,398
49,442 8.00%, 3/15/02 ............... 51,280
197,465 8.00%, 3/15/02 ............... 204,806
202,730 8.00%, 4/15/02 ............... 210,267
148,426 8.00%, 7/15/02 ............... 153,945
98,169 9.50%, 10/15/02 .............. 104,150
114,376 9.50%, 1/15/06 ............... 121,345
183,736 8.00%, 5/15/06 ............... 190,567
83,321 9.50%, 7/15/07 ............... 88,398
413,135 8.00%, 11/15/07 .............. 428,495
465,708 8.00%, 12/15/07 .............. 483,023
713,923 9.50%, 8/15/09, Pool # 400219. 757,422
202,454 9.50%, 9/15/09 ............... 214,790
892,670 9.50%, 2/15/10 ............... 947,060
47,228 8.00%, 5/15/10 ............... 48,984
180,164 6.50%, 8/15/10 ............... 179,714
208,063 8.00%, 9/15/10 ............... 215,799
275,032 8.00%, 11/15/10 .............. 285,257
1,056,917 8.00%, 11/15/10 .............. 1,096,214
333,987 8.00%, 11/15/10 .............. 346,404
435,620 6.50%, 3/15/11 ............... 434,531
124,241 6.50%, 3/15/11 ............... 123,930
377,727 6.50%, 4/15/11 ............... 376,783
116,739 6.50%, 4/15/11 ............... 116,447
496,989 6.50%, 4/15/11 ............... 495,746
674,556 6.50%, 5/15/11 ............... 672,869
489,123 6.50%, 5/15/11 ............... 487,900
84,064 6.50%, 5/15/11 ............... 83,854
628,584 6.50%, 6/15/11 ............... 627,012
115,200 6.50%, 6/15/11 ............... 114,912
322,901 6.50%, 6/15/11 ............... 322,094
790,736 6.50%, 6/15/11 ............... 788,759
362,672 6.50%, 7/15/11 ............... 361,765
430,436 6.50%, 8/15/11 ............... 429,360
2,560,196 8.50%, 4/15/17, Pool #0212112. 2,675,405
1,606,517 8.00%, 4/15/22, Pool #0320818. 1,657,218
3,791,920 7.50%, 1/15/23, Pool #0331839. 3,848,799
2,236,146 8.00%, 1/15/23, Pool #0331841. 2,306,719
1,106,039 7.50%, 4/15/23 ............... 1,122,629
1,683,515 9.00%, 3/15/25 ............... 1,786,092
4,950,002 6.50%, 6/15/26 ............... 4,815,412
--------------
Total U.S. Government Agencies 48,361,263
--------------
</TABLE>
Continued
-53-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------- ------------------------------- ------------
<S> <C> <C>
U.S. Treasury Bonds (33.8%):
5,300,000 12.75%, 11/15/10.............. $ 7,680,336
9,305,000 12.00%, 8/15/13(b)............ 13,667,649
1,375,000 9.25%, 2/15/16(b)............. 1,800,741
1,675,000 8.75%, 5/15/17(b)............. 2,109,127
2,865,000 8.88%, 8/15/17................ 3,652,245
4,150,000 8.88%, 2/15/19(b)............. 5,316,648
2,183,000 8.75%, 8/15/20................ 2,775,510
9,400,000 7.25%, 8/15/22(b)............. 10,286,138
7,600,000 6.25%, 8/15/23................ 7,369,036
------------
Total U.S. Treasury Bonds 54,657,430
------------
U.S. Treasury Notes (35.5%):
21,950,000 6.38%, 5/15/99(b)............. 22,313,712
10,800,000 6.00%, 10/15/99(b)............ 10,906,380
7,500,000 6.13%, 7/31/00(b)............. 7,590,975
11,400,000 5.63%, 2/28/01(b)............. 11,328,978
1,600,000 6.63%, 7/31/01(b)............. 1,651,104
2,400,000 6.38%, 8/15/02................ 2,460,048
1,000,000 7.88%, 11/15/04............... 1,116,480
------------
Total U.S. Treasury Notes 57,367,677
------------
Investment Companies (0.0%):
61,700 Federated Money Market Trust
Fund....................... 61,700
------------
Total Investment Companies 61,700
------------
Total (Cost--$156,326,416)(a) $160,448,070
============
</TABLE>
- ------------
Percentages indicated are based on net assets of $161,740,901.
(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 $119,000. Cost for federal income tax purposes differs
from value by net unrealized appreciation of securities as follows:
Unrealized appreciation ......................... $4,327,285
Unrealized depreciation ......................... (324,850)
----------
Net unrealized appreciation ..................... $4,002,435
==========
(b) A portion of this security was loaned as of November 30, 1996.
See notes to financial statements
-54-
<PAGE>
THE ARCH FUND, INC.
U.S. Government Securities Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------------- -------------
<S> <C>
U.S. Government Agencies (29.2%):
Federal Home Loan Mortgage Corp.:
62,124 7.50%, 1/15/97 .................. $ 62,083
271,660 7.50%, 8/1/97 ................... 277,601
505,299 6.50%, 2/1/98 ................... 507,826
395,553 9.50%, 2/1/98 ................... 407,665
569,119 6.00%, 5/1/98 ................... 566,273
21,938 9.50%, 9/1/04, Pool # 380053 .... 23,131
500,000 7.46%, 8/3/05 ................... 505,830
333,897 8.50%, 3/1/06 ................... 348,398
588,910 7.50%, 4/1/08, Pool #E4-5929 .... 602,526
495,000 7.00%, 11/1/11, Pool #E65619 .... 499,638
Federal National Mortgage Assoc.:
714,131 6.00%, 11/1/00, Pool #190070 .... 702,969
381,998 7.00%, 11/1/11, Pool #250738 .... 385,219
351,670 7.00%, 11/1/11, Pool #349630 .... 354,635
256,332 7.00%, 11/1/11, Pool #351122 .... 258,495
1,641,736 8.00%, 7/1/24, Pool #190264 ..... 1,688,936
Government National Mortgage Assoc.:
332,323 8.00%, 1/15/07 .................. 344,679
84,323 6.50%, 5/15/08 .................. 84,112
391,999 9.00%, 7/15/09 .................. 413,680
526,307 9.00%, 11/15/09 ................. 555,417
865,441 8.00%, 10/15/10 ................. 897,618
126,964 6.50%, 11/15/10 ................. 126,647
395,411 6.50%, 2/15/11 .................. 394,423
408,004 6.50%, 3/15/11 .................. 406,984
444,496 6.50%, 3/15/11 .................. 443,385
460,820 6.50%, 3/15/11 .................. 459,667
741,764 6.50%, 3/15/11 .................. 739,909
67,430 6.50%, 3/15/11 .................. 67,262
838,247 6.50%, 4/15/11 .................. 836,151
463,295 6.50%, 4/15/11 .................. 462,137
391,338 6.50%, 5/15/11 .................. 390,360
62,609 6.50%, 5/15/11 .................. 62,452
152,581 6.50%, 5/15/11 .................. 152,199
271,269 6.50%, 6/15/11 .................. 270,591
121,273 6.50%, 6/15/11 .................. 120,969
421,119 6.50%, 7/15/11 .................. 420,066
880,398 6.50%, 7/15/11 .................. 878,197
203,780 8.50%, 5/15/17, Pool #0219152.... 212,950
175,962 8.50%, 6/15/21, Pool #0307921.... 183,880
1,162,318 7.50%, 12/15/22, Pool 0347332.... 1,179,752
651,055 8.00%, 5/15/23, Pool #0352469.... 671,602
260,474 9.50%, 1/15/25 .................. 282,614
730,424 9.50%, 2/15/25, Pool #365292 .... 792,510
19,190 9.50%, 2/15/25 .................. 20,822
538,463 9.50%, 2/15/25, Pool#401796 ..... 584,232
376,090 9.50%, 3/15/25, Pool #407257 .... 408,058
278,196 9.50%, 4/15/25, Pool #386741 .... 301,843
-------------
Total U.S. Government Agencies 20,356,393
-------------
U.S. Treasury Bonds (8.6%):
1,000,000 12.75%, 11/15/10................. 1,449,120
3,100,000 12.00%, 8/15/13(b)............... 4,553,435
-------------
Total U.S. Treasury Bonds 6,002,555
-------------
U.S. Treasury Notes (61.7%):
5,200,000 5.75%, 9/30/97(b)................ 5,216,537
2,500,000 5.63%, 10/31/97(b)............... 2,505,700
2,250,000 5.00%, 1/31/98(b)................ 2,238,548
5,000,000 5.13%, 2/28/98................... 4,978,550
5,300,000 7.13%, 10/15/98(b)............... 5,447,658
3,600,000 7.00%, 4/15/99(b)................ 3,707,604
6,500,000 6.38%, 5/15/99................... 6,607,705
1,650,000 7.75%, 11/30/99(b)............... 1,741,427
2,150,000 6.88%, 3/31/00................... 2,224,089
1,000,000 8.00%, 5/15/01................... 1,085,600
1,650,000 7.50%, 5/15/02(b)................ 1,777,050
700,000 7.25%, 8/15/04(b)................ 753,690
3,000,000 6.50%, 8/15/05(b)................ 3,091,950
1,700,000 5.88%, 11/15/05(b)............... 1,680,756
-------------
Total U.S. Treasury Notes 43,056,864
-------------
</TABLE>
Continued
-55-
<PAGE>
THE ARCH FUND, INC.
U.S. Government Securities Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------------- -------------
<S> <C> <C>
Investment Companies (0.1%):
95,300 Federated U.S. Treasury
Obligation Fund............... $ 95,300
-------------
Total Investment Companies 95,300
-------------
Total (Cost $68,860,209)(a) $ 69,511,112
=============
</TABLE>
- -----------
Percentages indicated are based on net assets of $69,823,660.
(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 $38,000. Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities as follows:
Unrealized appreciation .......................... $ 868,537
Unrealized depreciation .......................... (255,602)
----------
Net unrealized appreciation ...................... $ 612,935
==========
(b) A portion of this security was loaned as of November 30, 1996.
See notes to financial statements
-56-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ ---------------------------------- --------------
<S> <C> <C>
Municipal Bonds (96.4%):
Alabama (3.4%):
1,000,000 Alabama State GO, 4.40%,
12/1/00........................ $ 1,006,250
--------------
Alaska (1.0%):
300,000 Anchorage, 5.40%, 8/1/98 ........ 306,750
--------------
Colorado (3.9%):
390,000 Aurora-Colorado Springs, 5.40%,
6/1/98 ....................... 398,775
720,000 El Paso County Colorado School
District No. 020, 5.15%,
12/15/99 ..................... 739,800
--------------
1,138,575
--------------
Hawaii (5.4%):
1,000,000 Hawaii State, 4.10%, 11/1/01 .... 981,250
600,000 Hawaii State Highway Revenue 611,250
- OID, 4.80%, 7/1/03 ......... --------------
1,592,500
--------------
Illinois (11.3%):
700,000 Chicago, O'Hare International
Airport, 4.10%*, 12/1/17 ..... 700,000
500,000 Chicago, Water Revenue, 4.70%,
12/1/99 ...................... 507,500
500,000 Dupage County, 5.90%, 11/1/01 ... 536,250
400,000 Illinois State GO, 5.25%,
4/1/01....................... 413,500
400,000 Illinois State GO Refunding,
5.60%, 10/1/99 ............... 415,000
750,000 Toll Highway Authority, 4.75%,
1/1/02 ....................... 755,625
--------------
3,327,875
--------------
Indiana (1.7%):
500,000 Muncie, School Board, 4.95%,
1/15/02 ...................... 507,500
--------------
Iowa (1.5%):
425,000 Ottumwa County, 5.10%, 6/1/01 ... 440,937
--------------
Kentucky (1.3%):
380,000 Kenton County, Water Revenue,
5.60%, 2/1/99 ................ 391,400
--------------
Maine (2.8%):
800,000 Maine Municipal Bond Refunding,
4.90%, 11/1/02 ............... 820,000
--------------
Maryland (3.1%):
400,000 Department of Transportation,
4.10%, 12/15/00 .............. 400,000
500,000 Washington, Suburban Sanitation
District, 5.00%, 6/1/00 ...... 513,750
--------------
913,750
--------------
Michigan (5.7%):
400,000 Chelsea, 5.25%, 5/1/01 .......... 415,500
800,000 Kent City, Building Authority
GO, 4.50%, 12/1/01 ........... 808,000
450,000 Oakland County, Building
Authority, 4.75%, 4/1/00 ..... 457,312
--------------
1,680,812
--------------
Minnesota (3.0%):
365,000 Duluth, 4.65%, 2/1/02 ........... 370,475
500,000 Minnesota State, 5.50%, 8/1/98 .. 513,750
--------------
884,225
--------------
Mississippi (3.4%):
500,000 Mississippi State Capital
Improvement, 5.00%, 8/1/99 ... 513,125
500,000 Perry County, PCR, 4.00%*,
3/1/02 ....................... 500,000
--------------
1,013,125
--------------
Missouri (1.1%):
320,000 Jefferson County, School
District, 4.70%, 3/1/01 ...... 326,000
--------------
Nevada (4.8%):
900,000 Sparks GO, 4.80%, 3/1/04 ........ 909,000
</TABLE>
Continued
-57-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ ---------------------------------- --------------
<S> <C> <C>
Municipal Bonds, continued:
Nevada, continued:
500,000 Washoe County, 5.30%, 8/1/00 $ 518,750
--------------
1,427,750
--------------
New Mexico (3.6%):
345,000 Albuquerque, 4.40%, 7/1/00 ...... 347,156
700,000 New Mexico State Capital
Projects GO, 4.60%, 8/1/00 ... 710,500
--------------
1,057,656
--------------
New York (1.8%):
500,000 New York Power Authority, 5.85%,
1/1/00 ....................... 522,500
--------------
Pennsylvania (3.1%):
500,000 Bucks County, 5.60%, 3/1/98 ..... 510,000
400,000 Delaware County, 4.35%, 10/1/00 . 404,500
--------------
914,500
--------------
Rhode Island (3.1%):
900,000 Commonwealth Construction
Capital Development, 4.60%,
11/1/03 ...................... 901,125
--------------
South Carolina (2.9%):
400,000 Charleston S.C. GO, 4.50%,
2/1/00 ....................... 404,500
450,000 Charleston School District,
4.40%, 2/1/98 ................ 452,813
--------------
857,313
--------------
South Dakota (2.2%):
640,000 South Dakota Building Authority,
Finance Bonds, 5.00%, 9/1/02 . 652,000
--------------
Texas (7.3%):
450,000 Dallas, Water & Sewer Revenue,
4.60%, 4/1/01 ................ 454,500
800,000 Houston, Series C, 5.50%, 4/1/01 837,000
Texas, continued:
400,000 San Antonio GO, 4.88%, 8/1/99 409,000
450,000 Tarrant Water Control, 5.60%,
3/1/00 ....................... 468,563
--------------
2,169,063
--------------
Utah (5.6%):
675,000 Box Elder School District,
4.80%, 6/15/01 ............... 693,563
560,000 North Davis County Sewer
District, 5.70%, 3/1/02 ...... 592,900
350,000 North Davis County Sewer
District, GO, 5.70%, 3/1/03 .. 372,312
--------------
1,658,775
--------------
Vermont (0.9%):
270,000 Vermont Municipal Bond, 4.50%,
12/1/01 ...................... 272,363
--------------
Virginia (2.8%):
400,000 Virginia Beach GO, 4.20%,
7/15/98 ...................... 401,000
400,000 Virginia Public Building
Refunding, 5.70%, 8/1/00 ..... 419,500
--------------
820,500
--------------
Washington (7.2%):
500,000 Clark County, 4.60%, 1/1/01 ..... 503,750
500,000 Grant County Public Utilities
District, 4.80%, 1/1/04 ...... 503,750
600,000 Seattle, 4.80%, 5/1/02 .......... 608,250
250,000 Seattle Water System Refunding
Bonds, 4.70%, 12/1/00 ........ 254,687
250,000 Washington State Refunding
Bonds, Series R-92C, 5.75%,
9/1/02 ....................... 267,188
--------------
2,137,625
--------------
Wisconsin (2.5%):
325,000 Brown County, 4.80%, 11/1/01 .... 331,906
</TABLE>
Continued
-58-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ ---------------------------------- -----------
<S> <C> <C>
Municipal Bonds, continued:
Wisconsin (2.5%):
380,000 Milwaukee County, Refunding
Bonds, Series A, 5.25%,
9/1/00 ....................... $ 391,875
-----------
723,781
-----------
Total Municipal Bonds 28,464,650
-----------
Investment Companies (2.5%):
548,000 Federated Tax-Free Trust Mutual
Fund.......................... $ 548,000
197,000 Nuveen Tax Exempt Money Market
Fund.......................... 197,000
-----------
Total Investment Companies 745,000
-----------
Total (Cost--$29,002,171)(a) $29,209,650
===========
</TABLE>
- ------------
Percentages indicated are based on net assets of $29,523,085.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ........................ $244,939
Unrealized depreciation ........................ (37,460)
========
Net unrealized appreciation .................... $207,479
========
* 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 in the Schedule of Portfolio Investments is the
rate in effect at November 30, 1996.
GO--General Obligation.
OID--Original Issue Discount.
PCR--Pollution Control Revenue.
See notes to financial statements
-59-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ ---------------------------------------------------------------------------------------------------- --------------
<S> <C> <C>
Municipal Bonds (92.3%):
Missouri (88.0%):
300,000 Christian County School District R-6, 7.05%, 3/1/11 ............................................... $ 327,375
1,255,000 Columbia GO, 5.50%, 10/1/03 ....................................................................... 1,339,712
1,000,000 Columbia Water & Electrical Revenue, 6.13%, 10/1/12 ............................................... 1,052,500
750,000 Franklin County Union Reorganized School District Series 1993, 5.75%, 3/1/13 ...................... 768,750
1,000,000 Hazelwood School District Series 1994, 5.85%, 3/1/09 .............................................. 1,041,250
1,000,000 Jefferson City, School District, 6.70%, 3/1/11 .................................................... 1,156,250
150,000 Kansas City Municipal Assistance Corp., 7.15%, 4/15/04 ............................................ 166,875
2,415,000 Kansas City School District Building, 5.15%, 2/1/08 ............................................... 2,439,150
1,000,000 Kansas City School District Building Series D, 5.00%, 2/1/14, Insured by FGIC ..................... 958,750
1,000,000 Kansas City School District Series 1993 C, 5.38%, 7/1/05, Insured by FGIC.......................... 1,041,250
1,000,000 Kansas City Sewer Revenue, 7.25%, 4/1/03, Prerefunded 4/1/99 @ 100................................. 1,071,250
700,000 Lincoln County IDR, 7.50%, 5/1/05 ................................................................. 752,500
1,500,000 Mehlville School District 09, 6.00%, 2/15/13 ...................................................... 1,586,250
1,500,000 Missouri Board Public Buildings, 6.40%, 12/1/09 ................................................... 1,606,875
2,000,000 Missouri Building, Series A, 5.40%, 8/1/09 ........................................................ 2,065,000
1,000,000 Missouri Environmental Resources Authority, 6.45%, 7/1/08 ......................................... 1,100,000
720,000 Missouri Environmental Resources Authority, 7.00%, 10/1/10 ........................................ 789,300
1,100,000 Missouri Environmental Resources Authority, 6.88%, 6/1/14 ......................................... 1,207,250
500,000 Missouri Environmental Resources Authority, 6.55%, 7/1/14 ......................................... 542,500
1,250,000 Missouri Environmental Resources Authority, 5.63%, 7/1/16 ......................................... 1,279,687
200,000 Missouri Environmental Resources Authority, 7.40%, 5/1/20 ......................................... 219,250
100,000 Missouri Environmental Resources Authority, 7.40%, 5/1/20 ......................................... 109,875
1,000,000 Missouri GO, 5.25%, 8/1/08 ........................................................................ 1,018,750
1,000,000 Missouri GO, 5.13%, 8/1/09 ........................................................................ 1,007,500
1,400,000 Missouri Health & Educational Facilities Authority, 4.20%*, 12/1/05 ............................... 1,400,000
800,000 Missouri Health & Educational Facilities Authority, 7.75%, 6/1/07 ................................. 829,864
600,000 Missouri Health & Educational Facilities Authority, 6.63%, 11/1/09 ................................ 672,000
500,000 Missouri Health & Educational Facilities Authority, 7.13%, 12/15/12, Prerefunded 12/15/00 @ 102.... 563,125
2,000,000 Missouri Health & Educational Facilities Authority, 5.10%, 11/15/13 ............................... 1,942,500
1,000,000 Missouri Health & Educational Facilities Authority, 5.38%, 2/15/14 ................................ 1,001,250
750,000 Missouri Health & Educational Facilities Authority, 6.25%, 6/1/15 ................................. 794,063
2,000,000 Missouri Health & Educational Facilities Authority, 6.25%, 6/1/16 ................................. 2,117,500
2,500,000 Missouri Health & Educational Facilities Authority, 5.25%, 5/15/21 ................................ 2,418,750
1,200,000 Missouri Health & Educational Facilities Authority Child Mercy, 5.63%, 5/15/12 .................... 1,215,000
2,300,000 Missouri Health & Educational Facilities Revenue, 3.60%*, 9/1/10 .................................. 2,300,000
1,000,000 Missouri Higher Education Loan Authority, 5.75%, 2/15/02 .......................................... 1,040,000
500,000 Missouri Housing Development, 7.00%, 9/1/10 ....................................................... 534,375
495,000 Missouri Housing Development, 6.90%, 7/1/18 ....................................................... 519,750
1,000,000 Missouri Housing Development, 6.60%, 7/1/24 ....................................................... 1,042,500
1,000,000 Missouri Sewer, 5.75%, 3/1/01 ..................................................................... 1,053,750
</TABLE>
Continued
-60-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ -------------------------------------------------------------------------------------------------- -------------
<S> <C> <C>
Municipal Bonds, continued:
Missouri, continued:
750,000 Missouri Southern State College, 5.25%, 12/1/12 .................................................. $ 738,750
200,000 Missouri Water PCR, 7.13%, 12/1/10 ............................................................... 220,750
1,000,000 Missouri Water PCR, 5.75%, 8/1/12 ................................................................ 1,030,000
1,000,000 Missouri Western State College, 5.40%, 10/1/16 ................................................... 1,002,500
570,000 O'Fallon GO, 5.75%, 3/1/10 ....................................................................... 582,113
600,000 Phelps County Hospital Revenue, 8.20%, 3/1/05, Prerefunded 3/1/00 @ 102........................... 682,500
1,000,000 Sikeston Electric Revenue, 5.00%, 6/1/22 ......................................................... 941,250
1,000,000 Sikeston Electric Revenue, 6.25%, 6/1/22, Prerefunded 6/1/02 @ 102................................ 1,110,000
500,000 Southeast Missouri Correctional Facilities, 5.75%, 10/15/08 ...................................... 515,625
500,000 Southeast Missouri Correctional Facilities, 5.75%, 10/15/16 ...................................... 504,375
2,000,000 Springfield School District R-12, 5.25%, 3/1/11 .................................................. 1,980,000
400,000 Springfield School District R-12 Series A, 6.75%, 3/1/11 ......................................... 438,500
2,000,000 Springfield Water Works Revenue, 5.60%, 5/1/23 ................................................... 2,022,500
500,000 St. Charles County GO, 5.70%, 2/15/05 ............................................................ 526,875
1,000,000 St. Charles County GO, 6.00%, 2/15/09 ............................................................ 1,035,000
500,000 St. Charles County Public Facilities, 6.38%, 3/15/07 ............................................. 538,750
750,000 St. Louis County Paltonville R-3 School District, 6.25%, 2/1/10 .................................. 814,687
1,000,000 St. Louis County Rockwood School District R-6, 5.00%, 2/1/04 ..................................... 1,018,750
2,500,000 St. Louis County Series B, 5.50%, 2/1/13 ......................................................... 2,521,875
800,000 St. Louis County, IDR, 7.38%, 2/1/14 ............................................................. 810,000
400,000 St. Louis IDR, 6.65%, 5/1/16 ..................................................................... 455,000
500,000 St. Louis Water Revenue, 6.00%, 7/1/14 ........................................................... 529,375
1,740,000 St. Peters GO, 5.80%, 1/1/09 ..................................................................... 1,809,600
1,065,000 St. Peters GO, 5.85%, 1/1/13 ..................................................................... 1,090,294
1,400,000 University of Missouri Industrial Development, 5.95%, 12/20/25 ................................... 1,414,000
925,000 University of Missouri Revenue Bonds, 6.50%, 11/1/11 ............................................. 1,002,469
2,000,000 University of Missouri Revenue Bonds, 5.50%, 11/1/23 ............................................. 2,012,500
400,000 Webster Groves, 6.60%, 2/1/10 .................................................................... 456,500
--------------
71,896,814
--------------
Puerto Rico (4.3%):
500,000 Commonwealth, 6.45%, 7/1/17 ...................................................................... 539,375
1,000,000 Commonwealth GO Series A, 6.00%, 7/1/06 .......................................................... 1,060,000
2,000,000 Public Buildings Authority, 5.50%, 7/1/21 ........................................................ 1,950,000
--------------
3,549,375
--------------
Total Municipal Bonds 75,446,189
--------------
</TABLE>
Continued
-61-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ ------------------------------------------------------------------------------------------------ --------------
<S> <C> <C>
Investment Companies (6.6%):
2,364,000 Federated Tax-Free Trust Fund...................................................................... $ 2,364,000
3,025,000 Nuveen Tax Exempt Money Market Fund................................................................ 3,025,000
-------------
Total Investment Companies 5,389,000
-------------
Total (Cost-$78,138,683)(a) $ 80,835,189
=============
</TABLE>
- ------------
Percentages indicated are based on net assets of $81,723,725.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ................ $ 2,797,984
Unrealized depreciation ................ (101,478)
------------
Net unrealized appreciation ............ $ 2,696,506
============
* 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 in the Schedule of Portfolio
Investments is the rate in effect at November 30, 1996.
FGIC--Financial Guaranty Insurance Corp.
GO--General Obligation
IDR--Industrial Development Revenue
PCR--Pollution Control Revenue
See notes to financial statements
-62-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------------------------------------------------------------------------------- --------------
<S> <C> <C>
Municipal Bonds (97.8%):
Alabama (2.7%):
2,000,000 Birmingham, Series A, 5.70%, 6/1/13 ................................................................. $ 2,052,500
3,000,000 Birmingham, Series A, 5.90%, 6/1/18 ................................................................. 3,060,000
1,000,000 Huntville, 6.75%, 4/1/06 ............................................................................ 1,092,500
1,000,000 Huntville, 6.75%, 2/1/10 ............................................................................ 1,088,750
1,000,000 Tuscaloosa, 6.88%, 7/1/11 ........................................................................... 1,082,500
--------------
8,376,250
--------------
Alaska (0.3%):
1,000,000 State Housing Finance Corp., Series A, 5.70%, 12/1/11 ............................................... 1,017,500
--------------
Arizona (4.6%):
1,000,000 Chandler Street & Highway User Revenue, 7.00%, 7/1/08 ............................................... 1,102,500
1,000,000 Mohave County Unified School District No. 1, Series A, 5.90%, 7/1/15 ................................ 1,047,500
1,000,000 Phoenix, 6.80%, 7/1/08 .............................................................................. 1,085,000
1,000,000 Pima County University School District, Series D, 6.10%, 7/1/10 ..................................... 1,060,000
6,400,000 Salt River Project Agricultural Impact, Series C, 6.20%, 1/1/12 ..................................... 6,728,000
1,000,000 Salt River Project Agriculture Impact, 6.00%, 1/1/13 ................................................ 1,037,500
1,000,000 State Transportation Board Excise Tax, Series B, 5.75%, 7/1/05 ...................................... 1,081,250
1,000,000 State Transportation Board Highway Revenue, Series A, 6.50%, 7/1/11 ................................. 1,105,000
--------------
14,246,750
--------------
California (2.9%):
1,000,000 California State, 6.00%, 9/1/09 ..................................................................... 1,100,000
1,000,000 Los Angeles Department of Water & Power, 5.70%, 9/1/10 .............................................. 1,026,250
1,000,000 Los Angeles Department of Water & Power, 6.88%, 1/15/11 ............................................. 1,098,750
1,000,000 Los Angeles Department of Water & Power, 6.10%, 7/1/11 .............................................. 1,060,000
1,500,000 San Francisco City And County, Series D, 6.20%, 6/15/08 ............................................. 1,584,375
2,000,000 Southern California Public Power Authority, Series A, 5.00%, 7/1/15 ................................. 1,890,000
1,000,000 State Public Works Board Lease Revenue, Series A, 7.00%, 9/1/09 ..................................... 1,116,250
--------------
8,875,625
--------------
Colorado (0.8%):
1,000,000 Fort Collins, Series C, 6.00%, 12/1/09 .............................................................. 1,051,250
1,000,000 Jefferson County School District No. R001, 5.90%, 12/15/05 .......................................... 1,071,250
500,000 Summit County School District No. RE1, 9.80%, 12/1/97 ............................................... 530,435
--------------
2,652,935
--------------
Connecticut (1.4%):
3,000,000 Connecticut State, Series A, 5.80%, 3/15/07 ......................................................... 3,165,000
1,000,000 Connecticut State, Series A, 6.50%, 3/15/10 ......................................................... 1,111,250
--------------
4,276,250
--------------
Delaware (0.7%):
2,000,000 Wilmington, 6.75%, 5/15/10 .......................................................................... 2,187,500
--------------
</TABLE>
Continued
-63-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Municipal Bonds, continued:
Florida (3.4%):
2,000,000 Brevard County, 6.00%, 9/1/11 ....................................................................... $ 2,100,000
1,000,000 Jacksonville Electrical Authority Revenue, 6.90%, 10/1/07 ........................................... 1,107,500
1,000,000 Jacksonville Transportation, 7.00%, 7/1/13 .......................................................... 1,036,040
1,000,000 Pollution Control, Series Y, 6.50%, 7/1/11 .......................................................... 1,076,250
1,000,000 State Board of Education Capital Outlay Pub. Ed., 6.13%, 6/1/10 ..................................... 1,057,500
1,000,000 State Board of Education Capital Outlay Pub. Ed., Series A, 5.88%, 6/1/16 ........................... 1,032,500
1,000,000 State Board of Education Capital Outlay Pub. Ed., Series A, 6.75%, 6/1/09 ........................... 1,107,500
1,300,000 State Board of Education Capital Outlay Refunded, Series A, 6.10%, 6/1/00 ........................... 1,379,625
700,000 State Board of Education Capital Outlay Unrefunded, Series A, 6.10%, 6/1/00 ......................... 720,944
---------------
10,617,859
---------------
Georgia (0.7%):
1,000,000 Atlanta, Series A, 6.10%, 12/1/19 ................................................................... 1,056,250
1,000,000 Georgia State, Series B, 6.30%, 3/1/09 .............................................................. 1,130,000
---------------
2,186,250
---------------
Guam (0.3%):
1,000,000 Government Water System Revenue, 7.00%, 7/1/09 ...................................................... 1,083,750
---------------
Hawaii (0.7%):
1,000,000 Hawaii State, Series BR, 7.00%, 6/1/09 .............................................................. 1,091,250
1,000,000 Hawaii State, Series BT, 6.13%, 2/1/10 .............................................................. 1,077,500
---------------
2,168,750
---------------
Illinois (9.8%):
1,000,000 Arlington Heights, Series B, 5.88%, 12/1/12 ......................................................... 1,028,750
3,000,000 Chicago, 6.00%, 1/1/11 .............................................................................. 3,187,500
1,000,000 Chicago Metropolitan Water Reclamation, 5.40%, 12/1/06 .............................................. 1,050,000
1,000,000 Chicago Metropolitan Water Reclamation, 5.50%, 12/1/08 .............................................. 1,047,500
1,000,000 Chicago Metropolitan Water Reclamation, 6.30%, 12/1/09 .............................................. 1,087,500
2,000,000 Cook County, 5.90%, 11/15/16 ........................................................................ 2,072,500
1,000,000 Edwardsville Waterworks, 6.00%, 2/1/17 .............................................................. 1,055,000
1,000,000 Evanston, 6.13%, 12/1/11 ............................................................................ 1,055,000
1,000,000 Illinois State, 6.00%, 10/1/01 ...................................................................... 1,070,000
1,000,000 Illinois State, 6.80%, 4/1/06 ....................................................................... 1,026,840
1,000,000 Illinois State, 5.88%, 6/1/09 ....................................................................... 1,042,500
1,000,000 Illinois State, 6.25%, 10/1/11 ...................................................................... 1,071,250
1,000,000 Illinois State, 5.75%, 4/1/12, Insured by MBIA....................................................... 1,025,000
3,000,000 Illinois State, 5.88%, 8/1/12 ....................................................................... 3,116,250
2,000,000 Illinois State, 5.63%, 7/1/13 ....................................................................... 2,035,000
2,000,000 Illinois State, 5.50%, 8/1/14, Insured by MBIA....................................................... 2,005,000
1,000,000 Illinois State, 5.75%, 7/1/16 ....................................................................... 1,018,750
1,000,000 Kane County Public Building, Series B, 6.40%, 12/1/03 ............................................... 1,045,000
</TABLE>
Continued
-64-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Municipal Bonds, continued:
Illinois, continued:
1,000,000 Lake County Water & Sewer Systems, Series A, 6.70%, 12/1/06 ......................................... $ 1,105,000
1,000,000 Lake County Water & Sewer Systems, Series A, 5.50%, 12/1/09 ......................................... 1,015,000
1,000,000 Springfield, 6.30%, 12/1/13 ......................................................................... 1,058,750
1,000,000 Springfield, 7.00%, 12/1/11 ......................................................................... 1,095,000
--------------
30,313,090
--------------
Indiana (5.5%):
5,000,000 Goshen-Chandler School Building, 5.75%, 1/15/10 ..................................................... 5,125,000
3,000,000 Hammond Multi-School Building Corp., 5.80%, 1/15/15 ................................................. 3,060,000
5,000,000 Hammond Multi-School Building Corp., 5.85%, 1/15/20 ................................................. 5,100,000
1,000,000 Indianapolis Local Public Improvements, Series C, 6.50%, 2/1/08 ..................................... 1,072,500
1,000,000 Transportation Finance Authority, Series A, 5.75%, 6/1/12 ........................................... 1,048,750
1,500,000 Whitko Middle School Building Corp., 5.88%, 7/15/12 ................................................. 1,558,125
--------------
16,964,375
--------------
Kansas (0.7%):
1,000,000 Douglas County School District No. 497, Series A, 6.00%, 9/1/11 ..................................... 1,071,250
500,000 Johnson County School District No. 233, 6.10%, 3/1/99 ............................................... 502,350
500,000 Shawnee County, 9.60%, 9/1/00 ....................................................................... 590,625
--------------
2,164,225
--------------
Kentucky (0.2%):
70,000 State Turnpike Authority Economic Development, 7.25%, 5/15/10 ....................................... 77,613
430,000 State Turnpike Authority Economic Development, 7.25%, 5/15/10 ....................................... 476,762
--------------
554,375
--------------
Michigan (1.4%):
335,000 Gratiot County Economic Development, 9.25%, 10/1/00 ................................................. 335,020
1,000,000 Greenville Public Schools, 5.75%, 5/1/11 ............................................................ 1,038,750
1,000,000 Johannesburg-Lewistown Area Schools, 5.00%, 5/1/13 .................................................. 963,750
2,000,000 Redford School District, 5.95%, 5/1/15 .............................................................. 2,097,500
--------------
4,435,020
--------------
Minnesota (2.1%):
1,000,000 Metropolitan Council, 6.88%, 12/1/04 ................................................................ 1,070,000
1,000,000 Metropolitan Council, Series D, 6.75%, 9/1/09 ....................................................... 1,067,500
1,000,000 Minneapolis Special School District, Series A, 5.70%, 2/1/09 ........................................ 1,048,750
1,000,000 Northern Municipal Power Agency, Series A, 5.90%, 1/1/08 ............................................ 1,055,000
2,000,000 Northern Municipal Power Agency, Series A, 7.25%, 1/1/16 ............................................ 2,142,500
--------------
6,383,750
--------------
Mississippi (0.3%):
1,000,000 Mississippi State, 6.20%, 2/1/08 .................................................................... 1,086,250
--------------
</TABLE>
Continued
-65-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
<TABLE>
<CAPTION>
Schedule of Portfolio Investments, Continued
November 30, 1996
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Municipal Bonds, continued:
Missouri (10.4%):
250,000 Blue Springs Waterworks & Sewer Revenue, 6.10%, 9/1/98 .............................................. $ 254,460
300,000 Blue Springs Waterworks & Sewer Revenue, 6.20%, 9/1/99 .............................................. 305,460
1,000,000 Clay County, 7.60%, 7/1/98 .......................................................................... 1,020,380
1,000,000 Independence Electrical Utility Revenue, 7.10%, 6/1/04, Prerefunded 12/1/98 @ 100.................... 1,053,750
730,000 Jackson County Reorganized School District No. 4, 6.65%, 3/1/03, Prerefunded 3/1/99 @ 100............ 771,063
1,000,000 Kansas City, 6.50%, 3/1/06 .......................................................................... 1,066,250
650,000 Kansas City Water Revenue, Series A, 7.00%, 12/1/08 ................................................. 656,500
1,000,000 Kansas City Water Revenue, Series B, 6.70%, 12/1/06, Prerefunded 12/1/97 @ 101....................... 1,041,580
250,000 Metropolitan St. Louis Sewer District, 9.00%, 2/1/97 ................................................ 252,225
2,000,000 Springfield Missouri School District R12, Series A, 6.75%, 3/1/11 ................................... 2,192,500
1,000,000 Springfield School District No R12, 6.38%, 3/1/12 ................................................... 1,055,000
1,000,000 St. Charles County Francis Howell School, 6.70%, 3/1/07 ............................................. 1,093,750
1,000,000 St. Louis County, 6.30%, 2/1/00 ..................................................................... 1,046,250
1,000,000 St. Louis County, 7.20%, 2/1/05 ..................................................................... 1,108,750
500,000 St. Louis County Industrial Development, 8.00%, 10/1/12 ............................................. 505,330
1,000,000 State Enviromental Improvement & Energy, 5.88%, 1/1/15 .............................................. 1,017,500
1,000,000 State Environmental Resources Authority, 7.00%, 10/1/10 ............................................. 1,096,250
365,000 State Health & Education Facilities, 6.00%, 5/15/04, Prerefunded 5/15/03 @ 101....................... 399,219
635,000 State Health & Education Facilities, 6.00%, 5/15/04 ................................................. 692,943
900,000 State Health & Education Facilities, 7.25%, 7/1/15 .................................................. 920,610
2,200,000 State Health & Education Facilities, 7.75%, 6/1/05, Prerefunded 6/1/98 @ 102......................... 2,367,750
1,000,000 State Health & Education Facilities, Series A, 6.75%, 5/15/12 ....................................... 1,152,500
1,000,000 State Health & Education Facilities, Series AA, 6.25%, 6/1/07 ....................................... 1,080,000
1,500,000 State Health & Education Facilities, Series B, 7.00%, 6/1/05 ........................................ 1,668,750
3,000,000 State Health & Education Facilities, Series D, 7.00%, 12/1/09 ....................................... 3,292,500
1,000,000 State Health & Educational Facilities, 7.13%, 12/15/12, Prerefunded 12/15/00 @ 102................... 1,126,250
1,200,000 State Health & Educational Facilities, 7.75%, 6/1/07 ................................................ 1,244,796
2,500,000 State Water Pollution Control Service, 7.13%, 12/1/10 ............................................... 2,759,375
---------------
32,241,691
---------------
Nebraska (0.7%):
1,000,000 Omaha Public Power District Electric Revenue, Series B, 6.00%, 2/1/07 ............................... 1,097,500
1,000,000 Public Power District Revenue, Series A, 5.50%, 1/1/13 .............................................. 1,008,750
---------------
2,106,250
---------------
Nevada (1.8%):
3,000,000 Nevada State, 6.50%, 12/1/12 ........................................................................ 3,296,250
1,000,000 Nevada State Universal Systems Projects, 6.50%, 8/1/08 .............................................. 1,096,250
1,000,000 Nevada State, Series A, 6.50%, 5/1/08 ............................................................... 1,091,250
---------------
5,483,750
---------------
</TABLE>
Continued
-66-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Municipal Bonds, continued:
New Hampshire (1.7%):
1,000,000 Concord, 6.15%, 10/15/10 ............................................................................ $ 1,077,500
1,000,000 State Capital Improvements, Series B, 6.45%, 11/1/08 ................................................ 1,106,250
3,000,000 State Turnpike System Revenue, 6.00%, 4/1/13 ........................................................ 3,090,000
---------------
5,273,750
---------------
New Jersey (1.0%):
1,000,000 New Jersey State, 7.25%, 4/15/08 .................................................................... 1,085,000
2,000,000 New Jersey State, Series D, 5.90%, 2/15/08 .......................................................... 2,137,500
---------------
3,222,500
---------------
New York (0.7%):
2,100,000 State Power Authority, Series V, 7.88%, 1/1/07 ...................................................... 2,210,985
---------------
North Carolina (1.0%):
2,000,000 Eastern Municipal Power Agency, Series B, 6.00%, 1/1/13 ............................................. 2,057,500
1,000,000 Municipal Power Agency No. 1, 5.75%, 1/1/15 ......................................................... 1,016,250
---------------
3,073,750
---------------
Ohio (1.4%):
1,000,000 Columbus Sewer Improvement No. 27-E-U, 6.30%, 2/15/12 ............................................... 1,070,000
2,000,000 Columbus Waterworks Enlargement No. 44, 6.00%, 5/1/13 ............................................... 2,115,000
1,000,000 Hamilton City Electric, Series A, 6.00%, 10/15/12 ................................................... 1,057,500
---------------
4,242,500
---------------
Oklahoma (0.5%):
500,000 Oklahoma City New Public Housing, 5.75%, 5/1/98 ..................................................... 513,750
1,000,000 Tulsa, 6.25%, 6/1/11 ................................................................................ 1,065,000
---------------
1,578,750
---------------
Oregon (0.3%):
1,000,000 State Veteran Welfare, Series 74A, 7.60%, 3/1/01 .................................................... 1,027,860
---------------
Pennsylvania (2.2%):
1,000,000 Allegheny County Series C-40, 5.90%, 5/1/07 ......................................................... 1,068,750
1,500,000 Burrell School District, 5.65%, 11/15/16 ............................................................ 1,533,750
1,000,000 Easttown Township, 5.65%, 8/1/17 .................................................................... 1,016,250
1,000,000 State Higher Education Facilities, Series A, 5.88%, 1/1/15 .......................................... 1,035,000
2,000,000 State Higher Education Facilities, Series B, 5.88%, 1/1/15 .......................................... 2,070,000
---------------
6,723,750
---------------
Puerto Rico (0.1%):
200,000 Industrial Medical & Enviromental, 3.41%*, 3/1/23 ................................................... 200,690
---------------
Tennessee (2.0%):
1,000,000 Memphis Water Revenue, Series A, 6.00%, 1/1/12 ...................................................... 1,055,000
</TABLE>
Continued
-67-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Municipal Bonds, continued:
Tennessee, continued:
1,000,000 Metropolitan Government Nashville & Davidson County, 5.75%, 1/1/15 .................................. $ 1,017,500
1,000,000 Metropolitan Government Nashville & Davidson County, 6.13%, 5/15/19 ................................. 1,051,250
2,000,000 Shelby County, Series A, 6.25%, 12/1/09 ............................................................. 2,180,000
1,000,000 Shelby County, Series B, 5.88%, 3/1/12 .............................................................. 1,033,750
---------------
6,337,500
---------------
Texas (11.7%):
230,000 Austin, 6.25%, 9/1/06 ............................................................................... 244,088
400,000 Austin, 6.25%, 9/1/06 ............................................................................... 432,000
3,000,000 Austin Independent School District, 5.75%, 8/1/15 ................................................... 3,093,750
1,000,000 Austin Public Improvement, 6.13%, 9/1/10 ............................................................ 1,051,250
1,000,000 Austin Utility Systems Revenue, 6.25%, 11/15/07 ..................................................... 1,081,250
4,000,000 Austin Utility Systems Revenue, Series A, 6.00%, 11/15/05 ........................................... 4,310,000
1,000,000 Brazos River Authority Special Facilities, 7.00%, 8/15/11 ........................................... 1,100,000
1,000,000 Dallas Waterworks & Sewer, Series A, 6.00%, 10/1/10 ................................................. 1,026,250
1,000,000 Fort Worth Water & Sewer Revenue, Series B, 6.50%, 12/15/06 ......................................... 1,075,000
1,000,000 Friendship Independent School District, 6.90%, 2/15/10 .............................................. 1,078,750
1,000,000 Harris County, 7.00%, 10/1/07 ....................................................................... 1,126,250
1,000,000 Harris County, Series B, 5.80%, 10/1/04 ............................................................. 1,058,750
1,000,000 Houston Independent School District, 6.75%, 8/15/08 ................................................. 1,101,250
1,000,000 Houston Water & Sewer Systems Revenue, Series B, 6.75%, 12/1/08 ..................................... 1,110,000
715,000 Houston, Series C, 6.25%, 3/1/12 .................................................................... 750,750
1,000,000 Humble Independent School District, 6.25%, 2/1/07 ................................................... 1,085,000
1,000,000 Manor Independent School District, 5.70%, 8/1/10 .................................................... 1,038,750
1,000,000 Royse City Independent School District, 5.50%, 2/15/15 .............................................. 1,012,500
1,050,000 San Antonio, 6.00%, 8/1/09 .......................................................................... 1,069,687
1,000,000 San Antonio Electric & Gas, 5.75%, 2/1/11 ........................................................... 1,022,500
2,000,000 San Antonio Electric & Gas Revenue, 6.50%, 2/1/12 ................................................... 2,085,000
480,000 Spring Branch Independent School District, 6.38%, 2/1/07 ............................................ 522,000
520,000 Spring Branch Independent School District, 6.38%, 2/1/07 ............................................ 555,100
480,000 Spring Branch Independent School District, 6.38%, 2/1/09 ............................................ 522,000
520,000 Spring Branch Independent School District, 6.38%, 2/1/09 ............................................ 551,200
3,000,000 State Public Finance Authority, Series A, 5.95%, 10/1/15 ........................................... 3,127,500
1,000,000 State Public Finance Authority, Series A, 5.70%, 10/1/07 ............................................ 1,046,250
1,000,000 University Texas Permenant University Fund, Series A, 6.25%, 7/1/13 ................................. 1,047,500
2,000,000 Water Development Board Revenue, Series A, 5.75%, 7/15/15 ........................................... 2,045,000
---------------
36,369,325
---------------
Utah (3.0%):
1,000,000 Davis County School District, 6.65%, 6/1/04 ......................................................... 1,102,500
1,000,000 Davis County School District, 7.00%, 6/1/04 ......................................................... 1,088,750
</TABLE>
Continued
-68-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Municipal Bonds, continued:
Utah, continued:
1,000,000 Intermountain Power Agency, Utah Power Supply, 7.20%, 7/1/19 ........................................ $ 1,036,580
4,000,000 Intermountain Power Agency, Utah Power Supply, Series B, 6.00%, 7/1/12 .............................. 4,160,000
1,000,000 Intermountain Power Agency, Utah Power Supply, Series B, 6.00%, 7/1/15 .............................. 1,000,260
1,000,000 Intermountain Power Agency, Utah Power Supply, Series B, 7.00%, 7/1/15 .............................. 1,033,420
---------------
9,421,510
---------------
Virginia (4.1%):
1,000,000 Newport News, Series A, 6.13%, 6/1/10 ............................................................... 1,065,000
2,000,000 Richmond Public Improvement, Series B, 6.25%, 1/15/18 ............................................... 2,100,000
2,000,000 State Housing Development Authority, 6.40%, 7/1/17 .................................................. 2,067,500
1,200,000 State Housing Development Authority, Series B, Sub-Series B2, 6.70%, 1/1/14 ......................... 1,284,000
2,000,000 State Housing, Series C, Sub-Series C2, 5.60%, 1/1/15 ............................................... 1,975,000
1,000,000 State Public School Authority, 5.90%, 7/15/11 ....................................................... 1,051,250
1,000,000 State Public School Authority, Series A, 7.13%, 1/1/10 .............................................. 1,054,410
2,000,000 State Public School Authority, Series A, 6.25%, 1/1/11 .............................................. 2,082,500
---------------
12,679,660
---------------
Washington (12.5%):
1,000,000 Grant County Public Utility, Series F, 5.70%, 1/1/15 ................................................ 1,016,250
1,000,000 King County Library System, 6.05%, 12/1/07 .......................................................... 1,088,750
1,500,000 King County School District No. 415, 5.75%, 6/1/11 .................................................. 1,558,125
2,000,000 King County School District No. 415, 5.88%, 6/1/16 .................................................. 2,060,000
1,000,000 King County, Series A, 6.00%, 12/1/09 ............................................................... 1,056,250
1,000,000 Seattle Municipal Light & Power Revenue, 6.20%, 7/1/06 .............................................. 1,096,250
1,000,000 Seattle Municipal Light & Power Revenue, 6.25%, 7/1/07 .............................................. 1,092,500
1,000,000 Snohomish County Public Utility District 001, 6.45%, 1/1/06 ......................................... 1,116,250
2,000,000 Snohomish County Public Utility District 001, 6.50%, 1/1/12 ......................................... 2,152,500
3,000,000 Snohomish County Public Utility District 001, 6.00%, 1/1/13 ......................................... 3,123,750
1,000,000 Snohomish County Public Utility District 001, Series A, 6.90%, 1/1/06 ............................... 1,096,250
1,000,000 Snohomish County School District No. 2, 6.20%, 12/1/12 .............................................. 1,072,500
1,000,000 Snohomish County School District No. 2, Series A, 6.80%, 12/1/03 .................................... 1,100,000
1,000,000 Spokane, 6.13%, 1/1/09 .............................................................................. 1,048,750
3,000,000 Spokane Regular Solid Waste Management, 5.50%, 12/1/10 .............................................. 3,041,250
4,000,000 State Public Power Supply Systems, 5.50%, 7/1/15 .................................................... 3,935,000
1,000,000 State Public Power Supply Systems, Series A, Project II, 7.38%, 7/1/12,
Prerefunded 7/1/00 @ 102.......................................................................... 1,120,000
1,000,000 State Public Power Supply Systems, Series B, Project III, 7.25%, 7/1/15 ............................. 1,103,750
500,000 State Public Power Supply Systems, Series C, Project I, 7.75%, 7/1/08 ............................... 566,250
3,000,000 State Public Power Supply Systems, Series C, Project I, 5.60%, 7/1/14 ............................... 2,992,500
1,000,000 Tacoma Electrical System, 6.13%, 1/1/11 ............................................................. 1,066,250
1,000,000 Tacoma Electrical System, 6.25%, 1/1/15 ............................................................. 1,057,500
</TABLE>
Continued
-69-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1996
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Municipal Bonds, continued:
Washington, continued:
2,000,000 Washington State, Series B, 6.38%, 8/1/10 ........................................................... $ 2,135,000
1,000,000 Washington State, Series DD-14 & Series B, 5.75%, 9/1/07 ............................................ 1,051,250
1,000,000 Washington State, Series R 92A, 6.25%, 9/1/09 ....................................................... 1,051,250
-------------
38,798,125
-------------
Wisconsin (4.2%):
1,000,000 Dane County, Series A, 5.65%, 3/1/12 ................................................................ 1,023,750
1,000,000 Green Bay Area Public School District, Series A, 5.50%, 4/1/12 ...................................... 1,011,250
3,000,000 Kenosha, Series B, 5.85%, 12/1/11 ................................................................... 3,108,750
3,000,000 Milwaukee County, Series A, 6.00%, 9/1/09 ........................................................... 3,120,000
280,000 Wisconsin State, 7.10%, 5/1/00 ...................................................................... 292,250
1,220,000 Wisconsin State, 7.10%, 5/1/00 ...................................................................... 1,273,375
1,000,000 Wisconsin State, Series A, 6.30%, 5/1/10 ............................................................ 1,087,500
1,000,000 Wisconsin State, Series G, 6.75%, 5/1/09 ............................................................ 1,068,750
1,000,000 Wisconsin State, Series G, 6.75%, 5/1/11 ............................................................ 1,068,750
-------------
13,054,375
-------------
Total Municipal Bonds 303,637,225
-------------
Investment Companies (0.5%):
1,540,000 Federated Tax-Free Trust Mutual Fund................................................................. 1,540,000
115,000 Nuveen Tax-Exempt Money Market Fund.................................................................. 115,000
-------------
Total Investment Companies 1,655,000
-------------
Total (Cost--$289,710,990)(a) $305,292,225
=============
</TABLE>
- ------------
Percentages indicated are based on net assets of $310,414,643.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ........................ $15,584,013
Unrealized depreciation ........................ (2,778)
============
Net unrealized appreciation .................... $15,581,235
============
* 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 in the Schedule of Portfolio Investments is the
rate in effect at November 30, 1996.
MBIA--Municipal Bond Insurance Agency
See notes to financial statements
-70-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements
November 30, 1996
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 November 30, 1996, the Fund is
authorized to offer the following investment portfolios: Money Market,
Treasury Money Market, Tax-Exempt Money Market, Growth & Income Equity,
Small Cap Equity (formerly Emerging Growth), International Equity,
Balanced, Government & Corporate Bond, U.S. Government Securities,
Short-Intermediate Municipal, Missouri Tax-Exempt Bond, National Municipal
Bond, Kansas Tax-Exempt Bond, Equity Income and Short-Intermediate
Corporate 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, Equity
Income and Short-Intermediate Corporate Bond Portfolios have not yet
commenced operations.
The Portfolios' investment objectives are as follows. Money Market seeks
current income with liquidity and stability of principal. Treasury Money
Market seeks a high level of current income exempt from state income tax
consistent with liquidity and security of principal. Tax-Exempt Money
Market seeks a high level of current interest income exempt from federal
income tax as is consistent with liquidity and stability of principal.
Growth & Income Equity seeks long-term capital growth, with income a
secondary consideration. Small Cap Equity seeks capital appreciation.
International Equity seeks capital growth consistent with reasonable
investment risk. Balanced seeks to maximize total return through a
combination of growth of capital and current income consistent with the
preservation of capital. Government & Corporate Bond seeks the highest
level of current income that is consistent with conservation of capital.
U.S. Government Securities seeks a high rate of current income that is
consistent with relative stability of principal. Short-Intermediate
Municipal seeks as high a level of current income, exempt from regular
federal income tax, as is consistent with preservation of capital.
Missouri Tax-Exempt Bond seeks as high a level of interest income exempt
from federal income tax as is consistent with conservation of capital.
National Municipal Bond seeks as high a level of interest income exempt
from federal income tax as is consistent with conservation of capital.
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, Small Cap Equity, International
Equity, Balanced, Government & Corporate Bond, U.S. Government Securities,
Short-Intermediate Municipal, Missouri Tax-Exempt Bond, and National
Municipal Bond Portfolios (collectively, "the variable net
Continued
-71-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
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 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 the 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
Continued
-72-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
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 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 Portfolio 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, Small Cap Equity,
International, Balanced, Government & Corporate Bond, U.S. Government
Securities, Short-Intermediate Municipal and National Municipal Bond
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 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
Continued
-73-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
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. At November 30, 1996, the Portfolios had securities
with the following market values on loan:
<TABLE>
<CAPTION>
Market Value of Loaned
Portfolio Securities
---------- ----------------------
<S> <C>
Growth & Income Portfolio......................... $52,714
Small Cap Equity Portfolio........................ 40,666
Balanced Portfolio................................ 20,811
Government & Corporate Bond Portfolio............. 38,595
U.S. Government Securities Portfolio.............. 14,491
</TABLE>
The loaned securities were fully collateralized by cash and U.S.
Government securities.
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,
Short-Intermediate Municipal, Missouri Tax-Exempt Bond and National
Municipal Bond 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, Small Cap Equity,
Balanced and International Equity Portfolios declare and pay dividends
from net investment income quarterly. However, commencing January 1, 1997,
the Growth & Income and Balanced Portfolios will declare and pay dividends
from net investment income monthly. 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.
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.
Permanent book and tax basis differences have been reclassified among the
components of net assets.
Federal income taxes:
It is the policy of each Portfolio 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
Continued
-74-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
commenced operations: December 2, 1991, for the Treasury Money Market
Portfolio; May 1, 1992, for the Small Cap Equity Portfolio; April 1, 1993,
for the Balanced Portfolio; April 4, 1994, for the International Equity
Portfolio; July 10, 1995, for the Short-Intermediate Municipal Portfolio;
and November 18, 1996 for the National Municipal Bond Portfolio. As of
November 30, 1996, 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.
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, National Municipal
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 Shares of the Money Market Portfolio
and 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>
One or less......................................... 5.0%
More than 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, and up to and including six................... 1.0%
More than six....................................... None
</TABLE>
Investor B Shares of the Money Market Portfolio are available for purchase
only by those investors participating in the ARCH Asset Adviser Program or
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
Continued
-75-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
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 November 30, 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 November 30,
1996, the Fund's shares were classified as follows:
<TABLE>
<CAPTION>
Represent Interests In:
--------------------------------------------------------
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 Investor B
Class A--Special Series 3 Shares............ 50,000 Money Market Institutional
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 Investor B
Class C--Special Series 3 Shares............ 50,000 Growth & Income Equity Institutional
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 Investor B
Class D--Special Series 3 Shares............ 50,000 Government & Corporate Bond Institutional
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 Investor B
Class E--Special Series 3 Shares............ 50,000 U.S. Government Securities Institutional
Class F Shares............................. 5,000 Small Cap Equity Investor A
Class F--Special Series 1 Shares............ 15,000 Small Cap Equity Trust
Class F--Special Series 2 Shares............ 20,000 Small Cap Equity Investor B
Class F--Special Series 3 Shares............ 50,000 Small Cap Equity Institutional
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 Investor B
Class G--Special Series 3 Shares............ 50,000 Balanced Institutional
</TABLE>
Continued
-76-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
<TABLE>
<CAPTION>
Represent Interests In:
------------------------------------------------------------
Class Shares (000) Portfolio Class
------------------------------------------- ---------------- ------------------------------------------ -----------------
<S> <C> <C> <C>
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 Investor B
Class H--Special Series 3 Shares........... 50,000 International Equity Institutional
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
Class M Shares............................ 25,000 Equity Income Investor A
Class M--Special Series 1 Shares........... 50,000 Equity Income Trust
Class M--Special Series 2 Shares........... 25,000 Equity Income Investor B
Class M--Special Series 3 Shares........... 25,000 Equity Income Institutional
Class N Shares............................ 25,000 National Municipal Bond Investor A
Class N--Special Series 1 Shares........... 50,000 National Municipal Bond Trust
Class N--Special Series 2 Shares........... 25,000 National Municipal Bond Investor B
Class O Shares............................ 25,000 Short-Intermediate Corporate Bond Investor A
Class O--Special Series 1 Shares........... 50,000 Short-Intermediate Corporate Bond Trust
Class O--Special Series 2 Shares........... 25,000 Short-Intermediate Corporate Bond Investor B
Unclassified............................... 1,455,000
</TABLE>
Each Portfolio share represents an equal, proportionate interest in the
Portfolio with respect to other shares outstanding, irrespective of
series.
Continued
-77-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
4. Capital Share Transactions
Transactions in portfolio shares of the Fund were as follows:
<TABLE>
<CAPTION>
Money Market Treasury Money
Portfolio Market Portfolio
------------------------------------- -----------------------------------
Year Year Year Year
ended ended ended ended
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
------------------ -------------- --------------- ------------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ....................... $ 104,686,425 $ 112,310,285 $ 14,064,613 $ 6,460,977
Dividends reinvested .............................. 3,310,910 2,767,393 198,801 128,151
Cost of shares redeemed ........................... (81,696,699) (98,595,971) (9,372,706) (5,526,091)
---------------- ---------------- ---------------- ----------------
Change in net assets from Investor A share
transactions .................................... $ 26,300,636 $ 16,481,707 $ 4,890,708 $ 1,063,037
================ ================ ================ ================
Investor B Shares (a):
Proceeds from shares issued ....................... $ 64,563 --
Dividends reinvested .............................. 954 --
Cost of shares redeemed ........................... (24,585) --
---------------- ----------------
Change in net assets from Investor B share
transactions .................................... $ 40,932 --
================ ================
Trust Shares:
Proceeds from shares issued ....................... $ 2,117,336,443 $ 1,743,384,071 $ 899,191,996 $ 833,331,145
Dividends reinvested .............................. 11,554,554 8,609,524 3,311,570 2,884,381
Cost of shares redeemed ........................... (2,109,752,319) (1,598,808,463) (1,023,961,242) (825,544,533)
---------------- ---------------- ---------------- ----------------
Change in net assets from Trust share
transactions .................................... $ 19,138,678 $ 153,185,132 $ (121,457,676) $ 10,670,993
================ ================ ================ ================
Institutional Shares:
Proceeds from shares issued ....................... $ 77,856,028 $ 46,450,288 $ 5,811,068 $ 39,942
Dividends reinvested .............................. 8,204 412 586
Cost of shares redeemed ........................... (75,283,110) (43,405,997) (5,541,015) (12,200)
---------------- ---------------- ---------------- ----------------
Change in net assets from Institutional share
transactions .................................... $ 2,581,122 $ 3,044,291 $ 270,465 $ 28,328
================ ================ ================ ================
SHARE TRANSACTIONS:
Investor A Shares:
Issued ............................................ 104,686,425 112,310,285 14,064,613 6,460,977
Reinvested ........................................ 3,310,910 2,767,393 198,801 128,151
Redeemed .......................................... (81,696,699) (98,595,971) (9,372,706) (5,526,091)
---------------- ---------------- ---------------- ----------------
Change in Investor A Shares ....................... 26,300,636 16,481,707 4,890,708 1,063,037
================ ================ ================ ================
Investor B Shares (a):
Issued ............................................ 64,563 --
Reinvested ........................................ 954 --
Redeemed .......................................... (24,585) --
---------------- ----------------
Change in Investor B Shares ....................... 40,932 --
================ ================
Trust Shares:
Issued ............................................ 2,117,336,443 1,743,384,071 899,191,996 833,331,145
Reinvested ........................................ 11,554,554 8,609,524 3,311,570 2,884,381
Redeemed .......................................... (2,109,752,319) (1,598,808,463) (1,023,961,242) (825,544,533)
---------------- ---------------- ---------------- ----------------
Change in Trust Shares ............................ 19,138,678 153,185,132 (121,457,676) 10,670,993
================ ================ ================ ================
Institutional Shares:
Issued .......................................... 77,856,028 46,450,288 5,811,068 39,942
Reinvested ...................................... 8,204 -- 412 586
Redeemed ........................................ (75,283,110) (43,405,997) (5,541,015) (12,200)
---------------- ---------------- ---------------- ----------------
Change in Institutional Shares .................. 2,581,122 3,044,291 270,465 28,328
================== ================ ================== =================
</TABLE>
(a) Investor B Shares commenced operations January 26, 1996.
Continued
-78-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
<TABLE>
<CAPTION>
Tax-Exempt Money Growth & Income
Market Portfolio Equity Portfolio
---------------------------------------------------- ---------------------------------
Year Six months Year Year Year
ended ended ended ended ended
November 30, November 30, May 31, November 30, November 30,
1996 1995 1995 1996 1995
---------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued............ $ 27,071,489 $ 2,077,331 $ 7,203,987 $ 9,870,808 $ 4,047,263
Dividends reinvested................... 235,312 83,299 173,129 1,806,750 533,478
Cost of shares redeemed................ (14,725,931) (1,895,782) (10,869,665) (3,418,441) (3,003,314)
---------------- ---------------- ---------------- ---------------- ---------------
Change in net assets from Investor A
share transactions................... $ 12,580,870 $ 264,848 $ (3,492,549) $ 8,259,117 $ 1,577,427
================ ================ ================ ================ ===============
Investor B Shares (a):
Proceeds from shares issued............ $ 2,406,329 $ 739,310
Dividends reinvested................... 62,055 2,484
Cost of shares redeemed................ (141,771) (27,250)
---------------- ---------------
Change in net assets from Investor B
share transactions................... $ 2,326,613 $ 714,544
================ ===============
Trust Shares:
Proceeds from shares issued............ $ 186,179,822 $ 105,944,026 $ 250,926,993 $ 55,386,626 $ 33,387,661
Dividends reinvested................... 327,245 133,447 239,807 17,221,218 6,332,138
Cost of shares redeemed................ (168,808,702) (113,373,935) (278,436,992) (57,945,665) (55,583,498)
---------------- ---------------- ---------------- ---------------- ---------------
Change in net assets from Trust share
transactions......................... $ 17,698,365 $ (7,296,462) $ (27,270,192) $ 14,662,179 $ (15,863,699)
================ ================ ================ ================ ===============
Institutional Shares:
Proceeds from shares issued............ $ 24,656,743 $ 13,872,425
Dividends reinvested................... 2,967,915 678,286
Cost of shares redeemed................ (3,784,451) (3,081,128)
---------------- ---------------
Change in net assets from Institutional
share transactions................... $ 23,840,207 $ 11,469,583
================ ===============
SHARE TRANSACTIONS:
Investor A Shares:
Issued................................. 27,071,489 2,077,331 7,203,987 598,426 274,340
Reinvested............................. 235,312 83,299 173,129 115,115 39,596
Redeemed............................... (14,725,931) (1,895,782) (10,869,665) (204,520) (219,461)
---------------- ---------------- ---------------- ---------------- ---------------
Change in Investor A Shares............ 12,580,870 264,848 (3,492,549) 509,021 94,475
================ ================ ================ ================ ===============
Investor B Shares (a):
Issued................................. 146,675 49,645
Reinvested............................. 3,961 162
Redeemed............................... (8,326) (1,719)
---------------- ---------------
Change in Investor B Shares............ 142,310 48,088
================ ===============
Trust Shares:
Issued................................. 186,179,822 105,944,026 250,926,993 3,359,483 2,315,536
Reinvested............................. 327,245 133,447 239,807 1,095,493 468,940
Redeemed............................... (168,808,702) (113,373,935) (278,436,992) (3,405,972) (3,773,562)
---------------- ---------------- ---------------- ---------------- ---------------
Change in Trust Shares................. 17,698,365 (7,296,462) (27,270,192) 1,049,004 (989,086)
================ ================ ================ ================ ===============
Institutional Shares:
Issued................................. 1,473,440 913,663
Reinvested............................. 189,057 50,081
Redeemed............................... (225,116) (218,049)
---------------- ---------------
Change in Institutional Shares......... 1,437,381 745,695
================ ===============
</TABLE>
(a)Investor B Shares commenced operations March 1, 1995.
Continued
-79-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
<TABLE>
<CAPTION>
Small Cap Equity International Equity
Portfolio (a) Portfolio
---------------------------------- --------------------------------
Year Year Year Year
ended ended ended ended
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
----------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued................. $ 8,330,915 $ 2,716,088 $ 1,165,994 $ 821,313
Dividends reinvested........................ 1,175,137 828,227 -- 1,748
Cost of shares redeemed..................... (10,568,422) (1,041,887) (393,881) (153,976)
------------ ------------ ------------ ----------
Change in net assets from Investor A share
transactions.............................. $ (1,062,370) $ 2,502,428 $ 772,113 $ 669,085
============= ============ ============ ==========
Investor B Shares (b):
Proceeds from shares issued................. $ 668,648 $ 605,912 $ 314,369 $ 99,602
Dividends reinvested........................ 51,148 -- -- --
Cost of shares redeemed..................... (82,619) (5,173) (7,784) (5)
------------ ------------ ------------ ----------
Change in net assets from Investor B share
transactions.............................. $ 637,177 $ 600,739 $ 306,585 $ 99,597
============= ============ ============ ==========
Trust Shares:
Proceeds from shares issued................. $ 57,112,437 $ 56,170,238 $18,402,546 $ 13,203,803
Dividends reinvested........................ 9,768,137 4,711,272 -- 25,940
Cost of shares redeemed..................... (38,246,394) (10,894,683) (7,672,403) (3,599,335)
------------ ------------ ------------ ----------
Change in net assets from Trust share
transactions.............................. $ 28,634,180 $ 49,986,827 $ 10,730,143 $ 9,630,408
============= ============ ============ ==========
Institutional Shares:
Proceeds from shares issued................. $ 13,386,432 $ 11,023,958 $ 3,792,099 $ 1,984,397
Dividends reinvested........................ 1,411,691 432,261 -- 389
Cost of shares redeemed..................... (3,039,946) (515,656) (346,775) (175,630)
------------ ------------ ------------ ----------
Change in net assets from Institutional share
transactions.............................. $ 11,758,177 $ 10,940,563 $ 3,445,324 $ 1,809,156
============= ============ ============ ==========
SHARE TRANSACTIONS:
Investor A Shares:
Issued...................................... 652,412 218,241 103,191 81,235
Reinvested.................................. 96,278 76,260 -- 148
Redeemed.................................... (832,375) (83,578) (35,253) (15,655)
------------ ------------ ------------ ----------
Change in Investor A Shares................. (83,685) 210,923 67,938 65,728
============= ============ ============ ==========
Investor B Shares (b):
Issued...................................... 53,222 45,495 27,867 9,497
Reinvested.................................. 4,217 -- -- --
Redeemed.................................... (6,486) (374) (672) (1)
------------ ------------ ------------ ----------
Change in Investor B Shares................. 50,953 45,121 27,195 9,496
============= ============ ============ ==========
Trust Shares:
Issued...................................... 4,475,488 4,303,611 1,619,798 1,300,301
Reinvested.................................. 796,399 433,021 -- 2,669
Redeemed.................................... (2,922,899) (852,124) (658,505) (354,075)
------------ ------------ ------------ ----------
Change in Trust Shares...................... 2,348,988 3,884,508 961,293 948,895
============= ============ ============ ==========
Institutional Shares:
Issued...................................... 1,064,056 843,722 333,036 197,653
Reinvested.................................. 116,019 39,913 -- 40
Redeemed.................................... (242,572) (39,849) (30,224) (16,687)
------------ ------------ ------------ ----------
Change in Institutional Shares.............. 937,503 843,786 302,812 181,006
============= ============ ============ ==========
</TABLE>
(a) Formerly Emerging Growth Portfolio
(b) Investor B Shares commenced operations March 1, 1995.
Continued
-80-
<PAGE>
THE ARCH FUND, INC.
Note to Financial Statements, Continued
November 30, 1996
<TABLE>
<CAPTION>
Balanced Government & Corporate
Portfolio Bond Portfolio
---------------------------------- -------------------------------
Year Year Year Year
ended ended ended ended
November 30, November 30, November 30, November 30,
1996 1995 1996 1995
--------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued............................. $ 1,279,888 $ 725,604 $ 1,081,992 $ 532,904
Dividends reinvested.................................... 540,237 220,854 288,701 259,920
Cost of shares redeemed................................. (1,566,057) (1,372,493) (1,822,047) (911,926)
------------ ------------ ------------ ------------
Change in net assets from Investor A share
transactions.......................................... $ 254,068 $ (426,035) $ (451,354) $ (119,102)
============ ============ ============ ============
Investor B Shares (a):
Proceeds from shares issued............................. $ 255,917 $ 33,778 $ 431,722 $ 136,699
Dividends reinvested.................................... 5,128 225 12,973 1,155
Cost of shares redeemed................................. (2,897) -- (42,309) (33,852)
------------ ------------ ------------ ------------
Change in net assets from Investor B share
transactions.......................................... $ 258,148 $ 34,003 $ 402,386 $ 104,002
============ ============ ============ ============
Trust Shares:
Proceeds from shares issued............................. $ 8,437,415 $ 12,537,321 $ 33,574,691 17,932,992
Dividends reinvested.................................... 4,712,847 2,119,017 4,910,841 5,831,411
Cost of shares redeemed................................. (29,178,365) (20,150,860) (22,962,197) (40,412,534)
------------ ------------ ------------ ------------
Change in net assets from Trust share transactions...... $(16,028,103) $ (5,494,522) $ 15,523,335 (16,648,131)
============ ============ ============ ============
Institutional Shares:
Proceeds from shares issued............................. $ 15,950,520 $ 12,929,259 $ 7,558,229 $ 3,401,735
Dividends reinvested.................................... 2,533,910 790,342 708,554 403,585
Cost of shares redeemed................................. (4,695,716) (4,954,838) (2,656,046) (965,170)
------------ ------------ ------------ ------------
Change in net assets from Institutional share
transactions........................................... $ 13,788,714 $ 8,764,763 $ 5,610,737 $ 2,840,150
============ ============ =========== ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued.................................................. 111,445 68,078 105,753 51,880
Reinvested.............................................. 47,412 21,139 28,274 25,848
Redeemed................................................ (134,124) (134,533) (180,569) (91,838)
------------ ------------ ----------- ------------
Change in Investor A Shares............................. 24,733 (45,316) (46,542) (14,110)
============ ============ =========== ============
Investor B Shares (a):
Issued.................................................. 22,386 3,119 42,182 13,279
Reinvested.............................................. 447 20 1,284 112
Redeemed................................................ (249) -- (4,176) (3,279)
------------ ------------ ----------- ------------
Change in Investor B Shares............................. 22,584 3,139 39,290 10,112
============ ============ =========== ============
Trust Shares:
Issued.................................................. 732,718 1,216,163 3,312,003 1,760,564
Reinvested.............................................. 413,590 203,146 481,194 580,575
Redeemed................................................ (2,470,952) (1,964,748) (2,242,645) (3,962,515)
------------ ------------ ----------- ------------
Change in Trust Shares.................................. (1,324,644) (545,439) 1,550,552 (1,621,376)
============ ============ =========== ============
Institutional Shares:
Issued.................................................. 1,372,147 1,213,228 737,749 331,136
Reinvested.............................................. 222,611 75,476 69,542 40,022
Redeemed................................................ (401,065) (485,602) (262,357) (96,064)
------------ ------------ ----------- ------------
Change in Institutional Shares.......................... 1,193,693 803,102 544,934 275,094
============ ============ =========== ============
</TABLE>
(a) Investor B Shares commenced operations March 1, 1995.
Continued
-81-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1995
<TABLE>
<CAPTION>
U.S. Government Short-Intermediate
Securities Portfolio Municipal Portfolio
--------------------------------- ---------------------------------
Year Year Year July 10, 1995
ended ended ended to
November 30, November 30, November 30, November 30,
1996 1995 1996 1995 (a)
---------------- ---------------- ---------------- ----------------
CAPITAL TRANSACTIONS:
<S> <C> <C> <C> <C>
Investor A Shares:
Proceeds from shares issued................................ $ 322,833 $ 262,858 $ 50,234 $ 10
Dividends reinvested....................................... 467,398 485,224 1,301 --
Cost of shares redeemed.................................... (1,672,421) (2,896,079) -- --
----------- ------------- --------- ---------
Change in net assets from Investor A share transactions.... $ (882,190) $ (2,147,997) $ 51,535 $ 10
=========== ============= ========= =========
Investor B Shares (b):
Proceeds from shares issued................................ $ 316,733 $ 43,386
Dividends reinvested....................................... 11,390 436
Cost of shares redeemed.................................... (8,781) (2,869)
----------- -------------
Change in net assets from Investor B share transactions.... $ 319,342 $ 40,953
=========== =============
Trust Shares:
Proceeds from shares issued................................ $ 17,936,354 $ 11,497,995 $ 9,434,735 $ 23,945,072
Dividends reinvested....................................... 1,953,246 1,522,604 63,662 9,378
Cost of shares redeemed.................................... (4,671,823) (3,434,036) (3,763,873) (424,913)
------------ ------------- ------------ -------------
Change in net assets from Trust share transactions......... $ 15,217,777 $ 9,586,563 $ 5,734,524 $ 23,529,537
============= ============= ============ =============
Institutional Shares:
Proceeds from shares issued................................ $ 1,798,550 $ 583,872
Dividends reinvested....................................... 80,448 20,997
Cost of shares redeemed.................................... (319,286) (12,541)
------------ -------------
Change in net assets from Institutional share transactions. $ 1,559,712 $ 592,328
============ ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued..................................................... 30,791 24,838 4,971 1
Reinvested................................................. 43,886 46,390 131 --
Redeemed................................................... (157,854) (275,695) -- --
----------- ------------- --------- ----------
Change in Investor A Shares................................ (83,177) (204,467) 5,102 1
=========== ============= ========= ==========
Investor B Shares (b):
Issued..................................................... 29,636 4,044
Reinvested................................................. 1,081 41
Redeemed................................................... (835) (268)
----------- -------------
Change in Investor B Shares................................ 29,882 3,817
=========== =============
Trust Shares:
Issued..................................................... 1,690,682 1,071,870 939,097 2,399,957
Reinvested................................................. 184,241 145,303 6,368 938
Redeemed................................................... (438,058) (322,555) (377,354) (42,604)
----------- ------------- --------- ----------
Change in Trust Shares..................................... 1,436,865 894,618 568,111 2,358,291
=========== ============= ========= ==========
Institutional Shares:
Issued..................................................... 171,123 55,800
Reinvested................................................. 7,639 1,974
Redeemed................................................... (30,613) (1,172)
----------- -------------
Change in Institutional Shares............................. 148,149 56,602
=========== =============
</TABLE>
(a) Period from commencement of operations.
(b) Investor B Shares commenced operations March 1, 1995.
Continued
-82-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
<TABLE>
<CAPTION>
Missouri Tax-Exempt National Municipal
Bond Portfolio Bond Portfolio
-------------------------------------------------- --------------------
Year Six months Year November 18,
ended ended ended 1996 to
November 30, November 30, May 31, November 30,
1996 1995 1995 1996(a)
--------------- ---------------- ----------------- --------------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued...................... $ 2,404,280 $ 1,156,729 $ 2,418,111 $ 1,000
Dividends reinvested............................. 884,429 425,016 1,012,362 --
Cost of shares redeemed.......................... (2,791,258) (1,628,286) (7,808,196) --
------------ ------------ ------------ ------------
Change in net assets from Investor A share
transactions................................... $ 497,451 $ (46,541) $ (4,377,723) $ 1,000
============ ============ ============ ============
Investor B Shares (b):
Proceeds from shares............................. $ 284,623 $ 329,022 $ 92,022 $ 1,000
Dividends reinvested............................. 9,017 1,975 170 --
Cost of shares redeemed.......................... (52,123) (1,803) -- --
------------ ------------ ------------ ------------
Change in net assets from Investor B share
transactions................................... $ 241,517 $ 329,194 $ 92,192 $ 1,000
============ ============ ============ ============
Trust Shares:
Proceeds from shares issued...................... $ 15,517,040 $ 6,963,566 $ 10,705,272 $314,006,996
Dividends reinvested............................. 432,469 183,709 353,699 --
Cost of shares redeemed.......................... (7,879,384) (4,591,666) (15,529,808) (4,987,761)
------------ ------------ ------------ ------------
Change in net assets from Trust share
transactions................................... $ 8,070,125 $ 2,555,609 $ (4,470,837) $309,019,235
============ ============ ============ ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued........................................... 210,587 101,135 220,783 100
Reinvested....................................... 76,641 37,072 92,504 --
Redeemed......................................... (242,599) (141,933) (712,361) --
------------ ------------ ------------ ------------
Change in Investor A Shares...................... 44,629 (3,726) (399,074) 100
============ ============ ============ ============
Investor B Shares (b):
Issued........................................... 24,662 28,689 8,170 100
Reinvested....................................... 784 172 15 --
Redeemed......................................... (4,537) (156) -- --
------------ ------------ ------------ ------------
Change in Investor B Shares...................... 20,909 28,705 8,185 100
============ ============ ============ ============
Trust Shares:
Issued........................................... 1,348,946 605,404 970,596 31,400,089
Reinvested....................................... 37,452 16,020 32,327 --
Redeemed......................................... (674,245) (398,603) (1,446,334) (498,183)
------------ ------------ ------------ ------------
Change in Trust Shares........................... 712,153 222,821 (443,411) 30,901,906
============ ============ ============ ============
</TABLE>
(a) Period from commencement of operations.
(b) Investor B Shares commenced operations March 1, 1995 for the Missouri
Tax-Exempt Bond Portfolio.
Continued
-83-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
5. Purchases and Sales of Investment Securities
Purchases and sales of securities (excluding short-term securities) during
the period ended November 30, 1996 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Purchases Sales
----------- ---------
<S> <C> <C>
Growth & Income Equity.................. $279,992 $243,447
Small Cap Equity........................ 161,781 127,632
International Equity.................... 50,715 38,136
Balanced................................ 94,490 97,708
Government & Corporate Bond............. 221,456 211,542
U.S. Government Securities.............. 54,984 30,252
Short-Intermediate Municipal............ 4,595 --
Missouri Tax-Exempt Bond................ 3,983 2,526
National Municipal Bond*................ -- 4,162
</TABLE>
* For the period from November 18, 1996 (commencement of operations)
through November 30, 1996.
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 each Portfolio.
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 Fund's 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 year ended November 30, 1996,
BISYS received approximately $532,040 from commissions earned on sales of
Investor A Shares and redemptions of Investor B Shares of which BISYS
re-allowed $114,124 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 Portfolio'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.
Continued
-84-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
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 1940 Act. Under the Plan, a Portfolio may 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 year ended
November 30, 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% $628,005 $652,053 $112,571 $ 2,112 $233,092
Treasury Money Market
Portfolio.......................... 0.40% 179,300 196,144 31,459 514 74,879
Tax-Exempt Money Market
Portfolio.......................... 0.40% 47,714 -- 15,401 1,230 24,320
Growth & Income Equity
Portfolio............................. 0.55% -- 405,859 123,116 2,252 115,631
Small Cap Equity Portfolio............ 0.75% -- 207,666 62,896 2,972 58,430
International Equity Portfolio........ 1.00% 140,840 26,804 92,169 66 12,616
Balanced Portfolio.................... 0.75% -- 126,784 40,193 8,690 31,850
Government & Corporate
Bond Portfolio.................... 0.45% -- 149,916 45,242 10,540 44,144
U.S. Government Securities
Portfolio.......................... 0.45% -- 62,398 20,641 4,816 17,245
Short-Intermediate Municipal
Portfolio.......................... 0.55% 147,782 26,878 8,495 5,840 6,560
Missouri Tax-Exempt Bond
Portfolio.......................... 0.45% -- 72,846 22,427 10,412 22,044
National Municipal Bond
Portfolio.......................... 0.55% 70,262 18,530 165 360 4,200
</TABLE>
Additionally, the distributor voluntarily reduced distribution and
services fees in the amount of $24,605 for the Investor A Shares of the
Missouri Tax-Exempt Bond Portfolio.
Continued
-85-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
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.
8. Acquisition of Mercantile Common Fund
On November 18, 1996, the National Municipal Bond Portfolio issued Trust
Shares to acquire all of the assets and liabilities, including
distributions payable of $463,800, of the Mercantile Common Trust Fund M
of Mercantile Bank of St. Louis National Association. The following is a
summary of shares issued, net assets acquired, net asset value per share
and unrealized appreciation as of the date acquired:
<TABLE>
<S> <C>
Shares (000)................................. 313,331
Net assets (000)............................. $313,315
Net asset value.............................. $ 10.00
Unrealized appreciation (000)................ $ 14,302
</TABLE>
9. Federal Income Tax Information (Unaudited)
The following table presents capital gain dividend distributions from
long-term capital gains for the following portfolios for the year ended
November 30, 1996:
<TABLE>
<CAPTION>
Portfolio Amount
------------- -----------
<S> <C>
Growth & Income Equity Portfolio.................... $16,288,042
Small Cap Equity Portfolio.......................... 6,759,451
Balanced Portfolio.................................. 3,625,218
U.S. Government Securities Portfolio................ 146,826
</TABLE>
As of November 30, 1996, for Federal income tax purposes, the following
portfolios have capital loss carryforwards available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
Portfolio Amount Expires
------------- ----------- -------------
<S> <C> <C>
Government & Corporate Bond Portfolio................ $ 65,133 2002
Government & Corporate Bond Portfolio................ 1,171,567 2003
U.S. Government Securities Portfolio................. 325,257 2004
Missouri Tax-Exempt Bond Portfolio................... 188,537 2003
</TABLE>
For the taxable year ended November 30, 1996, the following percentages of
the income dividends paid by the following Portfolios qualify for the
dividends received deduction available to corporations:
<TABLE>
<S> <C>
Growth & Income Equity Portfolio.................... 69.34%
Small Cap Equity Portfolio.......................... 10.67%
Balanced Portfolio.................................. 35.47%
</TABLE>
Continued
-86-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
The Fund designates the following exempt-interest dividends for the period
ended November 30, 1996:
<TABLE>
<CAPTION>
Tax-Exempt Money Short-Intermediate Missouri Tax-Exempt National Municipal
Market Portfolio Municipal Portfolio Bond Portfolio Bond Portfolio*
------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Exempt-interest dividends:
Investor A Shares............ $265,973 $1,458 $1,169,732 $4
Investor B Shares............ -- -- $25,005 --
Trust Shares................. $2,587,723 $1,092,648 $2,355,360 $1,199,672
Exempt-interest dividends per share:
Investor A Shares............ $0.028 $0.395 $0.548 $0.022
Investor B Shares............ -- -- $0.454 $0.019
Trust Shares................. $0.030 $0.407 $0.571 $0.024
</TABLE>
* For the period from November 18, 1996 (commencement of operations) through
November 30, 1996.
Continued
-87-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
November 30, 1996
The percentage break-down of exempt-interest income by state for the
period ended November 30, 1996 is as follows:
<TABLE>
<CAPTION>
Short-
Tax-Exempt Intermediate Missouri Tax- National
Money Market Municipal Exempt Bond Municipal
Portfolio Portfolio Portfolio Bond Portfolio
---------------------- ---------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Alabama......................... 1.73% 2.76% -- 1.81%
Alaska.......................... -- 1.12% -- 0.36%
Arizona......................... 1.92% -- -- 5.22%
California...................... 0.68% -- -- 4.09%
Colorado........................ 0.77% 1.61% -- 1.08%
Connecticut..................... -- -- -- 1.51%
Delaware........................ 0.66% -- -- 0.83%
Florida......................... 4.12% -- -- 4.00%
Georgia......................... 7.55% -- -- 0.78%
Guam............................ -- -- -- 0.45%
Hawaii.......................... -- 3.08% -- 0.81%
Idaho........................... -- -- -- --
Illinois........................ 7.95% 10.96% -- 8.12%
Indiana......................... 0.13% 2.16% -- 2.78%
Iowa............................ 1.38% 1.77% -- --
Kansas.......................... -- -- -- 0.90%
Kentucky........................ 1.49% 1.51% -- 0.23%
Louisiana....................... 8.21% -- -- --
Maine........................... -- 3.37% -- --
Maryland........................ -- 3.39% -- --
Michigan........................ 3.23% 6.64% -- 1.19%
Minnesota....................... 5.75% 3.35% -- 2.37%
Mississippi..................... 1.43% 1.95% -- 0.39%
Missouri........................ 16.59% 1.31% 94.79% 13.14%
Montana......................... 3.92% -- -- --
Nebraska........................ -- -- -- 0.55%
Nevada.......................... -- 5.80% -- 2.07%
New Hampshire................... -- -- -- 1.95%
New Jersey...................... -- -- -- 1.02%
New Mexico...................... 0.28% 4.11% -- --
New York........................ -- 2.04% -- 1.05%
North Carolina.................. 4.43% -- -- 1.26%
Ohio............................ -- -- -- 1.52%
Oklahoma........................ -- -- -- 0.60%
Oregon.......................... -- -- -- 0.49%
Pennsylvania.................... 3.39% 3.37% -- 1.68%
Puerto Rico..................... -- -- 5.21% 0.04%
Rhode Island.................... -- 3.61% -- --
South Carolina.................. 0.02% 3.14% -- --
South Dakota.................... -- 2.81% -- --
Tennessee....................... 2.70% -- -- 2.27%
Texas........................... 18.37% 8.62% -- 11.17%
Utah............................ 0.38% 5.93% -- 3.86%
Vermont......................... -- 1.08% -- --
Virginia........................ 1.98% 2.96% -- 4.33%
Washington...................... 0.94% 8.72% -- 11.48%
Wisconsin....................... -- 2.83% -- 4.60%
====================== ====================== ===================== ======================
100.00% 100.00% 100.00% 100.00%
====================== ====================== ===================== ======================
</TABLE>
Continued
-88-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Investor A Shares
<TABLE>
<CAPTION>
Financial Highlights
Years Ended November 30,
-----------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
------------- ------------ ------------ ---------- ----------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------- ------------ ------------ ---------- ----------
<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 ............................. 0.047 0.052 0.033 0.025 0.032
-------- --------- -------- --------- ----------
Total from Investment Activities .............. 0.047 0.052 0.033 0.025 0.032
-------- --------- -------- --------- ----------
Distributions
Net investment income ............................. (0.047) (0.052) (0.033) (0.025) (0.032)
-------- --------- -------- --------- ----------
Total Distributions ........................... (0.047) (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 ......................................... 4.81% 5.33% 3.37% 2.52% 3.21%
Ratios/Supplementary Data:
Net Assets at end of period (000) ................. $ 91,166 $ 64,865 $ 48,384 $ 46,920 $ 52,224
Ratio of expenses to average net assets ........... 0.78% 0.77% 0.78% 0.79% 0.80%
Ratio of net investment income to average net
assets .......................................... 4.70% 5.20% 3.35% 2.50% 3.21%
Ratio of expenses to average net assets* .......... 0.93% 0.92% 0.93% 0.93% 0.94%
Ratio of net investment income to average net
assets* ......................................... 4.55% 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.
See notes to financial statements
-89-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Investor B Shares
<TABLE>
<CAPTION>
Financial Highlights
January 26, 1996
to
November 30, 1996 (a)
--------------------------
Investor B
Shares
--------------------------
<S> <C>
Net Asset Value, Beginning of Period ............................................................. $ 1.00
--------
Investment Activities
Net investment income ......................................................................... 0.033
--------
Total from Investment Activities .......................................................... 0.033
--------
Distributions
Net investment income ......................................................................... (0.033)
--------
Total Distributions ....................................................................... (0.033)
--------
Net Asset Value, End of Period ................................................................... $ 1.00
========
Total Return (excludes sales charge) ............................................................. 3.35%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................................. $ 41
Ratio of expenses to average net assets ....................................................... 1.47%(c)
Ratio of net investment income to average net assets .......................................... 3.73%(c)
Ratio of expenses to average net assets* ...................................................... 1.68%(c)
Ratio of net investment income to average net assets* ......................................... 3.52%(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
-90-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ----------- ----------- ----------- -----------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
---------- ----------- ----------- ----------- -----------
<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 ....................... 0.049 0.054 0.035 0.026 0.034
---------- ----------- ----------- ----------- -----------
Total from Investment Activities ........ 0.049 0.054 0.035 0.026 0.034
---------- ----------- ----------- ----------- -----------
Distributions
Net investment income ....................... (0.049) (0.054) (0.035) (0.026) (0.034)
---------- ----------- ----------- ----------- -----------
Total Distributions ..................... (0.049) (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 ................................... 4.99% 5.52% 3.55% 2.72% 3.44%
Ratios/Supplementary Data:
Net Assets at end of period (000) ........... $ 717,265 $ 698,131 $ 544,952 $ 621,717 $ 574,941
Ratio of expenses to average net assets ..... 0.61% 0.59% 0.61% 0.59% 0.57%
Ratio of net investment income to average
net assets ................................ 4.88% 5.38% 3.45% 2.70% 3.44%
Ratio of expenses to average net assets* .... 0.76% 0.74% 0.93% 0.80% 0.71%
Ratio of net investment income to average
net assets* ............................... 4.73% 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.
See notes to financial statements
-91-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
-----------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
-------------- -------------- -------------- ---------- ----------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
-------------- -------------- -------------- ---------- ----------
<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 ............................. 0.047 0.052 0.033 0.025 0.032
--------- ---------- --------- --------- ----------
Total from Investment Activities .............. 0.047 0.052 0.033 0.025 0.032
--------- ---------- --------- --------- ----------
Distributions
Net investment income ............................. (0.047) (0.052) (0.033) (0.025) (0.032)
--------- ---------- --------- --------- ----------
Total Distributions ........................... (0.047) (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 ......................................... 4.81% 5.33% 3.34% 2.52% 3.21%
Ratios/Supplementary Data:
Net Assets at end of period (000) ................. $ 15,921 $ 13,340 $ 10,295 $ 46,920 $ 52,224
Ratio of expenses to average net assets ........... 0.78% 0.77% 0.78% 0.79% 0.80%
Ratio of net investment income to average net
assets........................................... 4.70% 5.20% 3.48% 2.50% 3.21%
Ratio of expenses to average net assets* .......... 0.93% 0.92% 0.95% 0.93% 0.94%
Ratio of net investment income to average net
assets* ......................................... 4.55% 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) 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.
See notes to financial statements
-92-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
December 2, 1991
Years Ended November 30, to
------------------------------------------------------- November 30,
1996 1995 1994(a) 1993 1992 (b)(c)
------------- ------------- ------------- ---------- ---------------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------- ------------- ------------- ---------- ---------------
<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 ............................... 0.044 0.048 0.031 0.024 0.017
--------- --------- --------- --------- ---------
Total from Investment Activities ................ 0.044 0.048 0.031 0.024 0.017
--------- --------- --------- --------- ---------
Distributions
Net investment income ............................... (0.044) (0.048) (0.031) (0.024) (0.017)
--------- --------- --------- --------- ---------
Total Distributions ............................. (0.044) (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 ........................................... 4.46% 4.93% 3.16% 2.43% 1.79%(d)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................... $ 7,667 $ 2,776 $ 1,713 $ 1,411 $ 3,257
Ratio of expenses to average net assets ............. 0.81% 0.78% 0.71% 0.64% 0.58%(e)
Ratio of net investment income to average net
assets............................................. 4.35% 4.84% 3.14% 2.41% 2.88%(e)
Ratio of expenses to average net assets* ............ 0.96% 0.93% 0.94% 0.97% 1.02%(e)
Ratio of net investment income to average net
assets* ........................................... 4.20% 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
-93-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
December 2, 1991
Years Ended November 30, to
---------------------------------------------------------- November 30,
1996 1995 1994 1993 1992 (a)(b)
---------- ----------- ---------- ----------- -----------------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
---------- ----------- ---------- ----------- -----------------
<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 ........................ 0.045 0.050 0.033 0.026 0.034
---------- ----------- ---------- ---------- -----------
Total from Investment Activities ......... 0.045 0.050 0.033 0.026 0.034
---------- ----------- ---------- ---------- -----------
Distributions
Net investment income ........................ (0.045) (0.050) (0.033) (0.026) (0.034)
---------- ----------- ---------- ---------- -----------
Total Distributions ...................... (0.045) (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 .................................... 4.64% 5.12% 3.38% 2.67% 3.16%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............ $ 131,322 $ 252,780 $ 242,099 $ 256,503 $ 229,288
Ratio of expenses to average net assets ...... 0.61% 0.60% 0.49% 0.41% 0.28%(d)
Ratio of net investment income to average net
assets ..................................... 4.55% 5.01% 3.26% 2.64% 3.35%(d)
Ratio of expenses to average net assets* ..... 0.76% 0.75% 0.94% 0.85% 0.72%(d)
Ratio of net investment income to average net
assets* .................................... 4.40% 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
-94-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Year January 26, 1995
Ended to
November 30, 1996 November 30, 1995
(a)
------------------ --------------------
Institutional Institutional
Shares Shares
------------------ --------------------
<S> <C> <C>
Net Asset Value, Beginning of Period ............................................... $ 1.00 $ 1.00
--------- ---------
Investment Activities
Net investment income ........................................................... 0.044 0.042
--------- ---------
Total from Investment Activities ............................................ 0.044 0.042
--------- ---------
Distributions
Net investment income ........................................................... (0.044) (0.042)
--------- ---------
Total Distributions ......................................................... (0.044) (0.042)
--------- ---------
Net Asset Value, End of Period ..................................................... $ 1.00 $ 1.00
========= =========
Total Return ....................................................................... 4.46% 4.94%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................... $ 299 $ 28
Ratio of expenses to average net assets ......................................... 0.79% 0.92%(c)
Ratio of net investment income to average net assets ............................ 4.39% 5.76%(c)
Ratio of expenses to average net assets* ........................................ 0.94% 1.07%(c)
Ratio of net investment income to average net assets* ........................... 4.24% 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.
See notes to financial statements
-95-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Year Six Months
Ended Ended
November 30, November 30, Years Ended May 31,
1996 1995 (d) -----------------------------------------------------
-------------------------------- 1995 (a) 1994 1993 1992
Investor Investor ------------ ---------- ---------- ----------
A A Investor A Investor Investor Investor
Shares Shares Shares Shares Shares Shares
-------------------------------- ------------ ---------- ---------- ----------
<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 .............. 0.028 0.014 0.027 0.017 0.019 0.031
---------- --------- --------- --------- --------- ----------
Total from Investment
Activities ................... 0.028 0.014 0.027 0.017 0.019 0.031
---------- --------- --------- --------- --------- ----------
Distributions
Net investment income .............. (0.028) (0.014) (0.027) (0.017) (0.019) (0.031)
---------- --------- --------- --------- --------- ----------
Total Distributions ............ (0.028) (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 .......................... 2.83% 1.45%(b) 2.70% 1.73% 1.90% 3.16%
Ratios/Supplementary Data:
Net Assets at end of period (000) .. $ 17,984 $ 5,403 $ 5,138 $ 8,631 $ 6,837 $ 10,956
Ratio of expenses to average net
assets ........................... 0.75% 0.94%(c) 0.84% 0.76% 0.80% 0.87%
Ratio of net investment income to
average net assets................ 2.78% 2.87%(c) 2.63% 1.72% 1.88% 3.10%
Ratio of expenses to average net
assets* .......................... 0.80% 0.99%(c) 0.93% 0.86% 0.90% 0.97%
Ratio of net investment income to
average net assets*............... 2.73% 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
-96-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Year Six Months
Ended Ended Years Ended May 31,
November 30, November 30, -------------------------------------------------------
1996 1995 (c) 1995 1994 1993 1992
--------------- ----------------- --------- --------- --------- ---------
Trust Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares Shares
--------------- ----------------- --------- --------- --------- ---------
<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 .......... 0.030 0.016 0.029 0.020 0.021 0.034
--------- ---------- --------- ----------- ----------- -----------
Total from Investment
Activities ............... 0.030 0.016 0.029 0.020 0.021 0.034
--------- ---------- --------- ----------- ----------- -----------
Distributions
Net investment income .......... (0.030) (0.016) (0.029) (0.020) (0.021) (0.034)
--------- ---------- --------- ----------- ----------- -----------
Total Distributions ........ (0.030) (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 ...................... 3.06% 1.57%(a) 2.93% 1.97% 2.16% 3.44%
Ratios/Supplementary Data:
Net Assets at end of period
(000) ........................ $ 95,726 $ 78,031 $ 85,324 $ 112,594 $ 137,602 $ 126,079
Ratio of expenses to average
net assets ................... 0.53% 0.70%(b) 0.61% 0.52% 0.52% 0.59%
Ratio of net investment income
to average net assets ........ 3.01% 3.10%(b) 2.87% 1.95% 2.13% 3.38%
Ratio of expenses to average
net assets* .................. 0.58% 0.75%(b) 0.70% 0.86% 0.62% 0.69%
Ratio of net investment income
to average net assets* ....... 2.96% 3.05%(b) 2.78% 1.61% 2.03% 3.28%
</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 Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-97-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
----------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
---------- ---------- ---------- -------- --------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
---------- ---------- ---------- -------- --------
<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 ............................... 0.20 0.23 0.20 0.25 0.25
Net realized and unrealized gains from
investments ....................................... 3.32 3.74 (0.17) 1.06 2.24
------- ------- ------- ------- -------
Total from Investment Activities ................ 3.52 3.97 0.03 1.31 2.49
------- ------- ------- ------- -------
Distributions
Net investment income ............................... (0.20) (0.23) (0.21) (0.25) (0.26)
In excess of net investment income.................. (0.01) -- -- -- --
Net realized gains .................................. (0.94) (0.14) (0.18) (0.81) (0.07)
In excess of net realized gains ..................... -- -- (1.68) -- --
------- ------- ------- ------- -------
Total Distributions ............................. (1.15) (0.37) (2.07) (1.06) (0.33)
------- ------- ------- ------- -------
Net Asset Value, End of Period ......................... $ 18.67 $ 16.30 $ 12.70 $ 14.74 $ 14.49
========= ======== ========= ======== =======
Total Return (excludes sales charge) ................... 22.99% 31.95% 0.20% 9.65% 20.59%
Ratios/Supplementary Data:
Net Assets at end of period (000) ................... $ 38,229 $ 25,082 $ 18,343 $ 11,157 $ 6,044
Ratio of expenses to average net assets ............. 1.05% 1.05% 1.05% 0.74% 0.71%
Ratio of net investment income to average net
assets............................................. 1.20% 1.59% 1.45% 1.74% 1.94%
Ratio of expenses to average net assets* ............ 1.15% 1.15% 1.15% 0.96% 0.85%
Ratio of net investment income to average net
assets* ........................................... 1.10% 1.49% 1.35% 1.52% 1.80%
Portfolio turnover................................... 63.90% 58.50% 65.00% 41.00% 79.00%
Average commission rate paid (b)..................... $ 0.0598 -- -- -- --
</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) 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
-98-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Ended to
November 30, November 30,
1996 1995 (a)
---------------- ---------------
Investor Investor
B B
Shares Shares
---------------- ---------------
<S> <C> <C>
Net Asset Value, Beginning of Period ........................................................... $ 16.23 $ 13.43
---------- --------
Investment Activities
Net investment income ....................................................................... 0.11 0.14
Net realized and unrealized gains from investments and foreign currency ..................... 3.30 2.81
---------- --------
Total from Investment Activities ........................................................ 3.41 2.95
---------- --------
Distributions
Net investment income ....................................................................... (0.11) (0.15)
In excess of net investment income........................................................... (0.01) --
Net realized gains .......................................................................... (0.94) --
---------- --------
Total Distributions ..................................................................... (1.06) (0.15)
---------- --------
Net Asset Value, End of Period ................................................................. $ 18.58 $ 16.23
========== ========
Total Return (excludes sales charge) ........................................................... 22.29% 31.20%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................................................... $ 3,537 $ 781
Ratio of expenses to average net assets ..................................................... 1.75% 1.75%(c)
Ratio of net investment income to average net assets ........................................ 0.49% 0.87%(c)
Ratio of expenses to average net assets* .................................................... 1.85% 1.85%(c)
Ratio of net investment income to average net assets* ....................................... 0.39% 0.77%(c)
Portfolio turnover........................................................................... 63.90% 58.50%
Average commission rate paid (d)............................................................. $ 0.0598 --
</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) 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.
GROWTH & INCOME EQUITY PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- ---------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
-------- -------- -------- -------- ---------
<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 ....................... 0.24 0.27 0.22 0.25 0.24
Net realized and unrealized gains from
investments ............................... 3.34 3.74 (0.17) 1.06 2.25
-------- -------- -------- -------- --------
Total from Investment Activities ........ 3.58 4.01 0.05 1.31 2.49
-------- -------- -------- -------- --------
Distributions
Net investment income ....................... (0.24) (0.27) (0.21) (0.25) (0.26)
In excess of net investment income .......... (0.01) -- -- -- --
Net realized gains .......................... (0.94) (0.14) (0.18) (0.81) (0.07)
In excess of net realized gains ............. -- -- (1.68) -- --
-------- -------- -------- -------- --------
Total Distributions ..................... (1.19) (0.41) (2.07) (1.06) (0.33)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ................. $ 18.71 $ 16.32 $ 12.72 $ 14.74 $ 14.49
======== ======== ======== ======== ========
Total Return ................................... 23.45% 32.27% 0.36% 9.65% 20.59%
Ratios/Supplementary Data:
Net Assets at end of period (000) ........... $348,183 $286,546 $235,955 $238,771 $232,967
Ratio of expenses to average net assets ..... 0.75% 0.75% 0.75% 0.74% 0.71%
Ratio of net investment income to average
net assets ................................ 1.50% 1.89% 1.72% 1.74% 1.94%
Ratio of expenses to average net assets* .... 0.85% 0.85% 1.15% 0.96% 0.85%
Ratio of net investment income to average
net assets* ............................... 1.40% 1.79% 1.32% 1.52% 1.80%
Portfolio turnover........................... 63.90% 58.50% 65.00% 41.00% 79.00%
Average commission rate paid (a)............. $ 0.0598 -- -- -- --
</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) 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.
GROWTH & INCOME EQUITY PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
--------------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
------------- ------------- ------------- -------- --------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
------------- ------------- ------------- -------- --------
<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 ............................ 0.20 0.23 0.20 0.25 0.25
Net realized and unrealized gains from
investments .................................... 3.33 3.74 (0.17) 1.06 2.24
--------- --------- ---------- --------- --------
Total from Investment Activities ............. 3.53 3.97 0.03 1.31 2.49
--------- --------- ---------- --------- --------
Distributions
Net investment income ............................ (0.20) (0.24) (0.21) (0.25) (0.26)
In excess of net investment income ............... (0.01) -- -- -- --
Net realized gains ............................... (0.94) (0.14) (0.18) (0.81) (0.07)
In excess of net realized gains .................. -- -- (1.68) -- --
--------- --------- ---------- --------- --------
Total Distributions .......................... (1.15) (0.38) (2.07) (1.06) (0.33)
--------- --------- ---------- --------- --------
Net Asset Value, End of Period ...................... $ 18.67 $ 16.29 $ 12.70 $ 14.74 $ 14.49
========= ========= ========== ========= ========
Total Return ........................................ 23.08% 31.88% 0.19% 9.65% 20.59%
Ratios/Supplementary Data:
Net Assets at end of period (000) ................ $ 72,950 $ 40,228 $ 21,897 $ 11,157 $ 6,044
Ratio of expenses to average net assets .......... 1.05% 1.05% 1.05% 0.74% 0.71%
Ratio of net investment income to average net
assets ......................................... 1.19% 1.58% 1.41% 1.74% 1.94%
Ratio of expenses to average net assets* ......... 1.15% 1.15% 1.16% 0.96% 0.85%
Ratio of net investment income to average net
assets* ........................................ 1.09% 1.48% 1.30% 1.52% 1.80%
Portfolio turnover................................ 63.90% 58.50% 65.00% 41.00% 79.00%
Average commission rate paid (b).................. $ 0.0598 -- -- -- --
</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 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) 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
-101-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO**
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
May 6, 1992
Years Ended November 30, to
------------------------------------------------------- November 30,
1996 1995 1994 (a) 1993 1992 (b)(c)
------------ ------------ ------------ ---------- ----------------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------ ------------ ------------ ---------- ----------------
<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 ..................................... 1.03 2.36 0.89 2.14 1.13
--------- -------- -------- ------- -------
Total from Investment Activities .............. 1.02 2.36 0.86 2.17 1.15
--------- -------- -------- ------- -------
Distributions
Net investment income ............................. -- -- -- (0.05) (0.02)
In excess of net investment income ................ (0.01) -- -- -- --
Net realized gains ................................ (1.05) (0.91) (1.78) (0.21) --
In excess of net realized gains ................... -- -- (0.23) -- --
--------- -------- -------- ------- -------
Total Distributions ........................... (1.06) (0.91) (2.01) (0.26) (0.02)
--------- -------- -------- ------- -------
Net Asset Value, End of Period ....................... $ 13.40 $ 13.44 $ 11.99 $ 13.14 $ 11.23
========= ======== ======== ======= =======
Total Return (excludes sales charge) ................. 8.36% 21.47% 7.38% 19.75% 12.55%(d)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................. $ 13,889 $ 15,056 $ 10,899 $ 4,559 $ 753
Ratio of expenses to average net assets ........... 1.26% 1.26% 1.25% 0.61% 0.30%(e)
Ratio of net investment income (loss) to average
net assets ...................................... (0.13)% (0.12)% (0.44)% 0.19% 0.78%(e)
Ratio of expenses to average net assets* .......... 1.36% 1.36% 1.36% 1.23% 1.12%(e)
Ratio of net investment loss to average net
assets* ......................................... (0.23)% (0.22)% (0.55)% (0.43)% (0.04)%(e)
Portfolio turnover................................. 65.85% 83.13% 85.00% 65.00% 56.00%
Average commission rate paid (f)................... $ 0.0582 -- -- -- --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Formerly Emerging Growth Portfolio.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Period from commencement of operations.
(c) On May 6, 1992, the 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
-102-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO**
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Ended to
November 30, November 30,
1996 1995 (a)
---------------- ----------------
Investor B Investor B
Shares Shares
---------------- ----------------
<S> <C> <C>
Net Asset Value, Beginning of Period ...................................... $ 13.37 $ 11.83
---------- --------
Investment Activities
Net investment loss .................................................... (0.07) (0.03)
Net realized and unrealized gains from investments ..................... 0.99 1.57
---------- --------
Total from Investment Activities ................................... 0.92 1.54
---------- --------
Distributions
Net realized gains ..................................................... (1.05) --
---------- --------
Total Distributions ................................................ (1.05) --
---------- --------
Net Asset Value, End of Period ............................................ $ 13.24 $ 13.37
========== ========
Total Return (excludes sales charge) ...................................... 7.63% 20.83%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ...................................... $ 1,272 $ 603
Ratio of expenses to average net assets ................................ 1.96% 1.96%(c)
Ratio of net investment loss to average net assets ..................... (0.83)% (0.78)%(c)
Ratio of expenses to average net assets* ............................... 2.06% 2.06%(c)
Ratio of net investment loss to average net assets* .................... (0.93)% (0.88)%(c)
Portfolio turnover...................................................... 65.85% 83.13%
Average commission rate paid (d)........................................ $ 0.0582 --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Formerly Emerging Growth Portfolio.
(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) 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
-103-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO**
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30, May 1, 1992 to
-------------------------------------------------------- November 30,
1996 1995 1994 1993 1992 (a)
---------- ---------- ---------- ---------- -----------------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
---------- ---------- ---------- ---------- -----------------
<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)..................... 0.02 0.03 (0.01) 0.03 0.04
Net realized and unrealized gains from
investments ................................... 1.05 2.36 0.89 2.14 1.21
----------- ----------- --------- --------- ----------
Total from Investment Activities ............ 1.07 2.39 0.88 2.17 1.25
----------- ----------- --------- --------- ----------
Distributions
Net investment income ........................... (0.02) -- -- (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 ......................... (1.07) (0.91) (2.01) (0.26) (0.02)
----------- ----------- --------- --------- ----------
Net Asset Value, End of Period ..................... $ 13.49 $ 13.49 $ 12.01 $ 13.14 $ 11.23
=========== =========== ========= ========= ==========
Total Return ....................................... 8.72% 21.70% 7.56% 19.75% 12.55%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............... $ 171,295 $ 139,681 $ 77,690 $ 47,473 $ 26,829
Ratio of expenses to average net assets ......... 0.96% 0.96% 0.95% 0.61% 0.30%(c)
Ratio of net investment income (loss) to average
net assets..................................... 0.17% 0.18% (0.16)% 0.19% 0.78%(c)
Ratio of expenses to average net assets* ........ 1.06% 1.06% 1.36% 1.23% 1.12%(c)
Ratio of net investment income (loss) to average
net assets* ................................... 0.07% 0.08% (0.56)% (0.43)% (0.04)%(c)
Portfolio turnover............................... 65.85% 83.13% 85.00% 65.00% 56.00%
Average commission rate paid (d)................. $ 0.0582 -- -- -- --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Formerly Emerging Growth Portfolio.
(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
-104-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO**
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
May 6, 1992
Years Ended November 30, to
--------------------------------------------------------- November 30,
1996 1995 1994 (a) 1993 1992 (b)
-------------- -------------- -------------- ---------- -------------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
-------------- -------------- -------------- ---------- -------------
<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) (0.01) (0.03) 0.03 0.02
Net realized and unrealized gains from
investments....................................... 1.03 2.36 0.86 2.14 1.13
------- ------- ------ ------ ------
Total from Investment Activities .............. 1.02 2.35 0.83 2.17 1.15
------- ------- ------ ------ ------
Distributions
Net investment income ............................. -- -- -- (0.05) (0.02)
In excess of net investment income ................ (0.01) -- -- -- --
Net realized gains ................................ (1.05) (0.91) (1.78) (0.21) --
In excess of net realized gains ................... -- -- (0.23) -- --
------- ------- ------ ------ ------
Total Distributions ........................... (1.06) (0.91) (2.01) (0.26) (0.02)
------- ------- ------ ------ ------
Net Asset Value, End of Period ....................... $ 13.36 $ 13.40 $11.96 $13.14 $11.23
======= ======= ====== ====== ======
Total Return ......................................... 8.39% 21.43% 7.11% 19.75% 12.55%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................. $30,081 $17,620 $5,633 $4,559 $ 753
Ratio of expenses to average net assets ........... 1.26% 1.26% 1.25% 0.61% 0.30%(d)
Ratio of net investment income (loss) to average
net assets ...................................... (0.13)% (0.11)% (0.41)% 0.19% 0.78%(d)
Ratio of expenses to average net assets* .......... 1.36% 1.36% 1.37% 1.23% 1.12%(d)
Ratio of net investment loss to average net
assets* ......................................... (0.23)% (0.21)% (0.53)% (0.43)% (0.04)%(d)
Portfolio turnover................................. 65.85% 83.13% 85.00% 65.00% 56.00%
Average commission rate paid (e)................... $0.0582 -- -- -- --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Formerly Emerging Growth Portfolio.
(a) On May 6, 1992 the 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
-105-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30, April 4, 1994 to
------------------------------- November 30,
1996 1995 1994 (a)(b)(c)
---------------- -------------- ---------------
Investor A Investor A Investor A
Shares Shares Shares
---------------- -------------- ---------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .......................................... $ 10.76 $ 9.90 $ 10.00
-------- ------- -------
Investment Activities
Net investment income (loss)................................................ 0.02 0.02 (0.01)
Net realized and unrealized gains (losses) from investments and
foreign currency ......................................................... 1.27 0.86 (0.09)
-------- ------- -------
Total from Investment Activities ....................................... 1.29 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 ................................................ $ 12.05 $ 10.76 $ 9.90
======== ======= =======
Total Return (excludes sales charges) ......................................... 11.99% 8.89% (1.00)%(d)
Ratios/Supplementary Data:
Net Assets at end of period (000) .......................................... $ 2,573 $ 1,568 $ 791
Ratio of expenses to average net assets .................................... 1.44% 1.45% 1.55%(e)
Ratio of net investment income to average net asset......................... 0.19% 0.07% (0.39)%(e)
Ratio of expenses to average net assets* ................................... 1.75% 1.76% 1.89%(e)
Ratio of net investment loss to average net assets*......................... (0.12)% (0.24)% (0.73)%(e)
Portfolio turnover.......................................................... 77.63% 62.78% 21.00%
Average commission rate paid (f)............................................ $ 0.0251 -- --
</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
-106-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Ended to
November 30, November 30,
1996 1995(a)
-------------- --------------
Investor B Investor B
Shares Shares
-------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period......................................................... $ 10.71 $ 9.26
------- ------
Investment Activities
Net investment loss........................................................................ (0.04) (0.03)
Net realized and unrealized gains from investments and foreign currency.................... 1.23 1.48
------- ------
Total from Investment Activities....................................................... 1.19 1.45
------- ------
Distributions
------- ------
Total Distributions.................................................................... -- --
------- ------
Net Asset Value, End of Period............................................................... $ 11.90 $10.71
======= ======
Total Return (excludes sales charge)......................................................... 11.11% 8.38%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)........................................................... $ 437 $ 102
Ratio of expenses to average net assets..................................................... 2.14% 2.02%(c)
Ratio of net investment loss to average net assets.......................................... (0.50)% (0.96)%(c)
Ratio of expenses to average net assets*.................................................... 2.46% 2.44%(c)
Ratio of net investment loss to average net assets*......................................... (0.82)% (1.38)%(c)
Portfolio turnover.......................................................................... 77.63% 62.78%
Average commission rate paid(d)............................................................. $0.0251 --
</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) 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
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30, April 4, 1994 to
--------------------------------- November 30,
1996 1995 1994 (a)
--------------- ---------------- -----------------
Trust Trust Trust
Shares Shares Shares
--------------- ---------------- -----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ........................................ $ 10.79 $ 9.92 $ 10.00
------- ------- -------
Investment Activities
Net investment income .................................................... 0.06 0.03 0.01
Net realized and unrealized gains (losses) from investments and foreign
currency ............................................................... 1.27 0.86 (0.09)
------- ------- -------
Total from Investment Activities ..................................... 1.33 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 .............................................. $ 12.12 $ 10.79 $ 9.92
======= ======= =======
Total Return ................................................................ 12.33% 8.97% (0.80)%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................................ $52,181 $36,096 $23,746
Ratio of expenses to average net assets .................................. 1.14% 1.16% 1.23%(c)
Ratio of net investment income to average net assets...................... 0.51% 0.39% 0.23%(c)
Ratio of expenses to average net assets* ................................. 1.45% 1.46% 1.95%(c)
Ratio of net investment income (loss) to average net assets*.............. 0.20% 0.09% (0.49)%(c)
Portfolio turnover........................................................ 77.63% 62.78% 21.00%
Average commission rate paid (d).......................................... $0.0251 -- --
</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
-108-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30, April 4, 1994 to
----------------------------------- November 30,
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 ............................................... 1.27 0.86 (0.09)
------- ------- -------
Total from Investment Activities ............................. 1.28 0.87 (0.10)
------- ------- -------
Distributions
Realized net gains ............................................... -- (0.01) --
Tax return of capital ............................................ -- (0.01) --
------- ------- -------
Total Distributions .......................................... -- (0.02) --
------- ------- -------
Net Asset Value, End of Period ...................................... $ 12.03 $ 10.75 $ 9.90
======= ======= =======
Total Return ........................................................ 11.91% 8.78% (1.00)%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................................ $ 6,059 $2,159 $ 197
Ratio of expenses to average net assets .......................... 1.44% 1.44% 1.70%(c)
Ratio of net investment income (loss) to average net assets ...... 0.16% 0.13% (0.48)%(c)
Ratio of expenses to average net assets* ......................... 1.76% 1.75% 2.17%(c)
Ratio of net investment loss to average net assets*............... (0.16)% (0.18)% (0.94)%(c)
Portfolio turnover................................................ 77.63% 62.78% 21.00%
Average commission rate paid (d).................................. $0.0251 -- --
</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
-109-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Years Ended November 30, to
---------------------------------------- November 30,
1996 1995 1994 (a) 1993 (b)
------------ ------------ ------------ ----------------
Investor A Investor A Investor A Investor
Shares Shares Shares Shares
------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................................. $ 11.65 $ 9.61 $ 10.22 $ 10.00
--------- ------- ------- -------
Investment Activities
Net investment income ............................................. 0.32 0.32 0.28 0.23
Net realized and unrealized gains from investments ................ 1.34 2.02 (0.47) 0.15
--------- ------- ------- -------
Total from Investment Activities .............................. 1.66 2.34 (0.19) 0.38
--------- ------- ------- -------
Distributions
Net investment income ............................................. (0.31) (0.30) (0.29) (0.16)
Net realized gains ................................................ (0.42) -- -- --
In excess of net realized gains ................................... -- -- (0.13) --
--------- ------- ------- -------
Total Distributions ........................................... (0.73) (0.30) (0.42) (0.16)
--------- ------- ------- -------
Net Asset Value, End of Period ....................................... $ 12.58 $ 11.65 $ 9.61 $ 10.22
========= ======= ======= =======
Total Return (excludes sales charge) ................................. 15.10% 24.85% (1.91)% 3.86%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................................. $ 9,328 $ 8,348 $ 7,321 $ 1,978
Ratio of expenses to average net assets ........................... 1.27% 1.27% 1.27% 0.56%(d)
Ratio of net investment income to average net assets .............. 2.79% 2.98% 2.77% 3.42%(d)
Ratio of expenses to average net assets* .......................... 1.37% 1.37% 1.39% 1.21%(d)
Ratio of net investment income to average net assets* ............ 2.69% 2.88% 2.65% 2.77%(d)
Portfolio turnover ................................................ 85.16% 58.16% 49.00% 26.00%
Average commission rate paid (e)................................... $ 0.0599 -- -- --
</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) 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
-110-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1,
Ended 1995 to
November 30, November 30,
1996 1995(a)
-------------- --------------
Investor Investor
B B
Shares Shares
-------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period............................................................ $ 11.59 $10.13
------- ------
Investment Activities
Net investment income......................................................................... 0.25 0.22
Net realized and unrealized gains from investments............................................ 1.33 1.44
------- ------
Total from Investment Activities.......................................................... 1.58 1.66
------- ------
Distributions
Net investment income......................................................................... (0.26) (0.20)
Net realized gains............................................................................ (0.42) --
------- ------
Total Distributions....................................................................... (0.68) (0.20)
------- ------
Net Asset Value, End of Period.................................................................. $ 12.49 $11.59
======= ======
Total Return (excludes sales charge)............................................................ 14.35% 23.92%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000)............................................................. $ 321 $ 36
Ratio of expenses to average net assets....................................................... 1.96% 1.93%(c)
Ratio of net investment income to average net assets.......................................... 2.09% 2.28%(c)
Ratio of expenses to average net assets*...................................................... 2.06% 2.03%(c)
Ratio of net investment income to average net assets*......................................... 1.99% 2.18%(c)
Portfolio turnover............................................................................ 85.16% 58.16%
Average commission rate paid(d)............................................................... $0.0599 --
</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) 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
-111-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Years Ended November 30, to
------------------------------------------- November 30,
1996 1995 1994 1993 (a)
------------ ------------ ----------- ----------------
Trust Trust Trust Trust
Shares Shares Shares Shares
------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............................. $ 11.64 $ 9.62 $ 10.22 $ 10.00
-------- --------- -------- ---------
Investment Activities
Net investment income ......................................... 0.37 0.34 0.29 0.23
Net realized and unrealized gains from investments ............ 1.34 2.02 (0.47) 0.15
-------- --------- -------- ---------
Total from Investment Activities .......................... 1.71 2.36 (0.18) 0.38
-------- --------- -------- ---------
Distributions
Net investment income ......................................... (0.35) (0.34) (0.29) (0.16)
Net realized gains ............................................ (0.42) -- -- --
In excess of net realized gains ............................... -- -- (0.13) --
-------- --------- -------- ---------
Total Distributions ....................................... (0.77) (0.34) (0.42) (0.16)
-------- --------- -------- ---------
Net Asset Value, End of Period ................................... $ 12.58 $ 11.64 $ 9.62 $ 10.22
======== ========= ======== =========
Total Return ..................................................... 15.56% 24.97% (1.81)% 3.86%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................. $ 61,821 $ 72,669 $ 65,288 $ 69,720
Ratio of expenses to average net assets ....................... 0.97% 0.98% 0.97% 0.56%(c)
Ratio of net investment income to average net assets .......... 3.08% 3.29% 3.04% 3.42%(c)
Ratio of expenses to average net assets* ...................... 1.07% 1.08% 1.39% 1.21%(c)
Ratio of net investment income to average net assets income to
average net assets*.......................................... 2.98% 3.19% 2.63% 2.77%(c)
Portfolio turnover............................................. 85.16% 58.16% 49.00% 26.00%
Average commission rate paid (d)............................... $ 0.0599 -- -- --
</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
-112-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Years Ended November 30, to
--------------------------------------------- November 30,
1996 1995 1994(a) 1993(b)
------------- ------------- ------------- ------------
Institutional Institutional Institutional Investor
Shares Shares Shares Shares
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............................. $ 11.62 $ 9.60 $ 10.22 $10.00
------- ------- ------- ------
Investment Activities
Net investment income.......................................... 0.32 0.31 0.28 0.23
Net realized and unrealized gains from investments............. 1.34 2.02 (0.48) 0.15
------- ------- ------- ------
Total from Investment Activities........................... 1.66 2.33 (0.20) 0.38
------- ------- ------- ------
Distributions
Net investment income.......................................... (0.32) (0.31) (0.29) (0.16)
Net realized gains............................................. (0.42) -- -- --
In excess of net realized gains................................ -- -- (0.13) --
------- ------- ------- ------
Total Distributions........................................ (0.74) (0.31) (0.42) (0.16)
------- ------- ------- ------
Net Asset Value, End of Period................................... $ 12.54 $ 11.62 $ 9.60 $10.22
======= ======= ======= ======
Total Return..................................................... 15.08% 24.67% (2.00)% 3.86%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000).............................. $54,731 $36,827 $22,723 $1,978
Ratio of expenses to average net assets........................ 1.27% 1.27% 1.27% 0.56%(d)
Ratio of net investment income to average net assets........... 2.78% 2.97% 2.77% 3.42%(d)
Ratio of expenses to average net assets*....................... 1.37% 1.37% 1.40% 1.21%(d)
Ratio of net investment income income to average net assets*... 2.68% 2.87% 2.64% 2.77%(d)
Portfolio turnover............................................. 85.16% 58.16% 49.00% 26.00%
Average commission rate paid(e)................................ $0.0599 -- -- --
</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
-113-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
------------- ------------ ------------ ---------- ----------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------- ------------ ------------ ---------- ----------
<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 .................................. 0.64 0.61 0.60 0.64 0.66
Net realized and unrealized gains (losses) from
investments .......................................... (0.19) 0.89 (0.94) 0.39 0.11
------- ------ ------ ------ ------
Total from Investment Activities ................... 0.45 1.50 (0.34) 1.03 0.77
------- ------ ------ ------ ------
Distributions
Net investment income .................................. (0.64) (0.61) (0.60) (0.64) (0.66)
In excess of net investment income ..................... -- -- (0.07) -- --
------- ------ ------ ------ ------
Total Distributions ................................ (0.64) (0.61) (0.67) (0.64) (0.66)
------- ------ ------ ------ ------
Net Asset Value, End of Period ............................ $ 10.34 $10.53 $ 9.64 $10.65 $10.26
======= ====== ====== ====== ======
Total Return (excludes sales charge) ...................... 4.51% 15.98% (3.32)% 10.23% 7.81%
Ratios/Supplementary Data:
Net Assets at end of period (000) ...................... $ 4,915 $5,496 $5,167 $3,737 $2,490
Ratio of expenses to average net assets ................ 0.95% 0.95% 0.95% 0.95% 0.93%
Ratio of net investment income to average net assets.... 6.06% 6.03% 6.00% 6.00% 6.45%
Ratio of expenses to average net assets* ............... 1.05% 1.05% 1.05% 1.05% 1.06%
Ratio of net investment income to average net assets* .. 5.96% 5.93% 5.90% 5.90% 6.32%
Portfolio turnover...................................... 149.20% 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.
See notes to financial statements
-114-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Ended to
November 30, November 30,
1996 1995 (a)
------------ -------------
Investor B Investor B
Shares Shares
------------ -------------
<S> <C> <C>
Net Asset Value, Beginning of Period ............................................ $ 10.53 $ 9.92
------- ------
Investment Activities
Net investment income ........................................................ 0.57 0.38
Net realized and unrealized gains (losses) from investments .................. (0.19) 0.61
------- ------
Total from Investment Activities ......................................... 0.38 0.99
------- ------
Distributions
Net investment income ........................................................ (0.57) (0.38)
------- ------
Total Distributions ...................................................... (0.57) (0.38)
------- ------
Net Asset Value, End of Period .................................................. $ 10.34 $10.53
======= ======
Total Return (excludes sales charge) ............................................ 3.79% 15.27%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................ $ 511 $ 106
Ratio of expenses to average net assets ...................................... 1.65% 1.65%(c)
Ratio of net investment income to average net assets ......................... 5.37% 5.19%(c)
Ratio of expenses to average net assets* ..................................... 1.75% 1.75%(c)
Ratio of net investment income to average net assets* ........................ 5.27% 5.09%(c)
Portfolio turnover............................................................ 149.20% 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.
See notes to financial statements
-115-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- ----------- ----------- ----------- -----------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
--------- ----------- ----------- ----------- -----------
<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 ....................... 0.67 0.64 0.63 0.68 0.70
Net realized and unrealized gains (losses)
from investments .......................... (0.19) 0.89 (0.94) 0.39 0.11
-------- -------- -------- -------- --------
Total from Investment Activities ........ 0.48 1.53 (0.31) 1.07 0.81
-------- -------- -------- -------- --------
Distributions
Net investment income ....................... (0.67) (0.64) (0.63) (0.68) (0.70)
In excess of net realized gains ............. -- -- (0.07) -- --
-------- -------- -------- -------- --------
Total Distributions ..................... (0.67) (0.64) (0.70) (0.68) (0.70)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ................. $ 10.34 $ 10.53 $ 9.64 $ 10.65 $ 10.26
======== ======== ======== ======== ========
Total Return ................................... 4.82% 16.31% (3.03)% 10.55% 8.14%
Ratios/Supplementary Data:
Net Assets at end of period (000) ........... $141,440 $127,741 $132,577 $149,674 $135,404
Ratio of expenses to average net assets ..... 0.65% 0.65% 0.65% 0.65% 0.63%
Ratio of net investment income to average
net assets ................................ 6.36% 6.32% 6.25% 6.32% 6.73%
Ratio of expenses to average net assets* .... 0.75% 0.75% 1.05% 0.88% 0.76%
Ratio of net investment income to average
net assets* ............................... 6.26% 6.22% 5.85% 6.09% 6.60%
Portfolio turnover........................... 149.20% 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.
See notes to financial statements
-116-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
----------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
-------------- -------------- -------------- ---------- ----------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
-------------- -------------- -------------- ---------- ----------
<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 ............................... 0.64 0.61 0.60 0.64 0.66
Net realized and unrealized gains (losses) from
investments ....................................... (0.19) 0.89 (0.94) 0.39 0.11
--------- --------- -------- -------- --------
Total from Investment Activities ................ 0.45 1.50 (0.34) 1.03 0.77
--------- --------- -------- -------- --------
Distributions
Net investment income ............................... (0.64) (0.61) (0.60) (0.64) (0.66)
In excess of net realized gains ..................... -- -- (0.07) -- --
--------- --------- -------- -------- --------
Total Distributions ............................. (0.64) (0.61) (0.67) (0.64) (0.66)
--------- --------- -------- -------- --------
Net Asset Value, End of Period ......................... $ 10.34 $ 10.53 $ 9.64 $ 10.65 $ 10.26
========= ========= ======== ======== ========
Total Return ........................................... 4.51% 15.98% (3.32)% 10.23% 7.81%
Ratios/Supplementary Data:
Net Assets at end of period (000) ................... $ 14,875 $ 9,413 $ 5,965 $ 3,737 $ 2,490
Ratio of expenses to average net assets ............. 0.95% 0.95% 0.96% 0.95% 0.93%
Ratio of net investment income to average net
assets ............................................ 6.06% 6.01% 6.03% 6.00% 6.45%
Ratio of expenses to average net assets* ............ 1.05% 1.05% 1.07% 1.05% 1.06%
Ratio of net investment income to average net
assets* ........................................... 5.96% 5.91% 5.92% 5.90% 6.32%
Portfolio turnover................................... 149.20% 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 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.
See notes to financial statements
-117-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
------------ ------------ ------------ ---------- ----------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------ ------------ ------------ ---------- ----------
<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 .................................... 0.62 0.64 0.61 0.59 0.62
Net realized and unrealized gains (losses) from
investments ............................................ (0.15) 0.80 (1.00) 0.47 0.13
------- ------- ------- ------- -------
Total from Investment Activities ..................... 0.47 1.44 (0.39) 1.06 0.75
------- ------- ------- ------- -------
Distributions
Net investment income .................................... (0.62) (0.64) (0.61) (0.59) (0.62)
Net realized gains ....................................... -- -- -- (0.07) (0.01)
In excess of net realized gains .......................... (0.03) -- (0.18) -- --
------- ------- ------- ------- -------
Total Distributions .................................. (0.65) (0.64) (0.79) (0.66) (0.63)
------- ------- ------- ------- -------
Net Asset Value, End of Period .............................. $ 10.67 $ 10.85 $ 10.05 $ 11.20 $ 10.80
======= ======= ======= ======= =======
Total Return (excludes sales charges) ....................... 4.57% 14.66% (3.14)% 10.03% 7.20%
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................ $ 7,153 $ 8,179 $ 9,631 $ 9,567 $ 7,499
Ratio of expenses to average net assets .................. 0.97% 0.97% 0.96% 0.97% 0.95%
Ratio of net investment income to average net assets ..... 5.82% 6.05% 5.98% 5.25% 5.72%
Ratio of expenses to average net assets* ................. 1.07% 1.07% 1.06% 1.08% 1.09%
Ratio of net investment income to average net assets* .... 5.72% 5.95% 5.88% 5.14% 5.58%
Portfolio turnover........................................ 53.76% 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.
See notes to financial statements
-118-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Ended to
November 30, November 30,
1996 1995 (a)
----------------- ---------------
Investor B Investor B
Shares Shares
----------------- ---------------
<S> <C> <C>
Net Asset Value, Beginning of Period ............................................................ $ 10.84 $ 10.34
--------- --------
Investment Activities
Net investment income ........................................................................ 0.55 0.31
Net realized and unrealized losses from investments .......................................... (0.15) 0.50
--------- --------
Total from Investment Activities ......................................................... 0.40 0.81
--------- --------
Distributions
Net investment income ........................................................................ (0.55) (0.31)
In excess of net realized gains .............................................................. (0.03) --
--------- --------
Total Distributions ...................................................................... (0.58) (0.31)
--------- --------
Net Asset Value, End of Period .................................................................. $ 10.66 $ 10.84
========= ========
Total Return (excludes sales charge) ............................................................ 3.85% 12.85%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................................ $ 359 $ 41
Ratio of expenses to average net assets ...................................................... 1.66% 1.68%(c)
Ratio of net investment income to average net assets ......................................... 5.06% 5.37%(c)
Ratio of expenses to average net assets* ..................................................... 1.76% 1.78%(c)
Ratio of net investment income to average net assets* ........................................ 4.96% 5.27%(c)
Portfolio turnover............................................................................ 53.76% 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.
See notes to financial statements
-119-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------- ------- -------- ------- -------
<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 ............................. 0.66 0.67 0.66 0.62 0.66
Net realized and unrealized gains (losses) from
investments ..................................... (0.15) 0.80 (0.97) 0.47 0.13
------- ------- ------- ------- -------
Total from Investment Activities .............. 0.51 1.47 (0.31) 1.09 0.79
------- ------- ------- ------- -------
Distributions
Net investment income ............................. (0.66) (0.67) (0.66) (0.62) (0.66)
Net realized gains ................................ -- -- -- (0.07) (0.01)
In excess of net realized gains ................... (0.03) -- (0.18) -- --
------- ------- ------- ------- -------
Total Distributions ........................... (0.69) (0.67) (0.84) (0.69) (0.67)
------- ------- ------- ------- -------
Net Asset Value, End of Period ....................... $ 10.67 $ 10.85 $ 10.05 $ 11.20 $ 10.80
======= ======= ======= ======= =======
Total Return ......................................... 4.88% 15.00% (2.85)% 10.36% 7.52%
Ratios/Supplementary Data:
Net Assets at end of period (000) ................. $60,079 $45,513 $33,166 $35,121 $31,106
Ratio of expenses to average net assets ........... 0.67% 0.67% 0.66% 0.67% 0.65%
Ratio of net investment income to average net
assets .......................................... 6.10% 6.36% 6.25% 5.57% 6.02%
Ratio of expenses to average net assets* .......... 0.77% 0.77% 1.06% 0.91% 0.79%
Ratio of net investment income to average net
assets* ......................................... 6.00% 6.26% 5.85% 5.33% 5.88%
Portfolio turnover................................. 53.76% 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.
See notes to financial statements
-120-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Years Ended November 30,
----------------------------------------------------------------------
1996 1995 1994 (a) 1993 1992
-------------- -------------- -------------- ---------- ----------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
-------------- -------------- -------------- ---------- ----------
<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 ................................. 0.62 0.63 0.61 0.59 0.62
Net realized and unrealized gains (losses) from
investments ......................................... (0.15) 0.80 (1.00) 0.47 0.13
-------- --------- -------- -------- --------
Total from Investment Activities .................. 0.47 1.43 (0.39) 1.06 0.75
-------- --------- -------- -------- --------
Distributions
Net investment income ................................. (0.62) (0.63) (0.61) (0.59) (0.62)
Net realized gains .................................... -- -- -- (0.07) (0.01)
In excess of net realized gains ....................... (0.03) -- (0.18) -- --
-------- --------- -------- -------- --------
Total Distributions ............................... (0.65) (0.63) (0.79) (0.66) (0.63)
-------- --------- -------- -------- --------
Net Asset Value, End of Period ........................... $ 10.64 $ 10.82 $ 10.02 $ 11.20 $ 10.80
======== ========= ======== ======== ========
Total Return ............................................. 4.55% 14.69% (3.46)% 10.03% 7.20%
Ratios/Supplementary Data:
Net Assets at end of period (000) ..................... $ 2,232 $ 667 $ 51 $ 9,567 $ 7,499
Ratio of expenses to average net assets ............... 0.96% 0.97% 0.95% 0.97% 0.95%
Ratio of net investment income to average net assets .. 5.75% 5.91% 6.54% 5.25% 5.72%
Ratio of expenses to average net assets* .............. 1.06% 1.07% 1.16% 1.08% 1.09%
Ratio of net investment income to average net assets* 5.65% 5.81% 6.33% 5.14% 5.58%
Portfolio turnover..................................... 53.76% 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.
See notes to financial statements
-121-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Year July 10, 1995
Ended to
November 30, November 30,
1996 1995 (a)
---------------- ---------------
Investor A Investor A
Shares Shares
---------------- ---------------
<S> <C> <C>
Net Asset Value, Beginning of Period ............................................................ $ 10.08 $ 10.00
------- -------
Investment Activities
Net investment income ........................................................................ 0.40 --
Net realized and unrealized gains from investments ........................................... -- 0.08
------- -------
Total from Investment Activities ......................................................... 0.40 0.08
------- -------
Distributions
Net investment income ........................................................................ (0.40) --
------- -------
Total Distributions ...................................................................... (0.40) --
------- -------
Net Asset Value, End of Period .................................................................. $ 10.08 $ 10.08
======= =======
Total Return (excludes sales charges) ........................................................... 4.02% 0.80%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................................ $ 51 --(c)
Ratio of expenses to average net assets ...................................................... 0.56% 0.00%(d)
Ratio of net investment income to average net assets ......................................... 3.83% 0.00%(d)
Ratio of expenses to average net assets* ..................................................... 1.26% 0.00%(d)
Ratio of net investment income to average net assets* ........................................ 3.13% 0.00%(d)
Portfolio turnover ........................................................................... 0.00% 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
-122-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Year July 10, 1995
Ended to
November 30, November 30,
1996 1995 (a)
---------------- ----------------
Trust Trust
Shares Shares
---------------- ----------------
<S> <C> <C>
Net Asset Value, Beginning of Period ........................................................... $ 10.07 $ 10.00
--------- ---------
Investment Activities
Net investment income ....................................................................... 0.41 0.14
Net realized and unrealized gains from investments .......................................... -- 0.07
--------- ---------
Total from Investment Activities ........................................................ 0.41 0.21
--------- ---------
Distributions
Net investment income ....................................................................... (0.41) (0.14)
--------- ---------
Total Distributions ..................................................................... (0.41) (0.14)
--------- ---------
Net Asset Value, End of Period ................................................................. $ 10.07 $ 10.07
========= =========
Total Return ................................................................................... 4.15% 2.15%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................................................... $ 29,472 $ 23,754
Ratio of expenses to average net assets ..................................................... 0.31% 0.47%(c)
Ratio of net investment income to average net assets......................................... 4.07% 3.81%(c)
Ratio of expenses to average net assets* .................................................... 0.96% 1.12%(c)
Ratio of net investment income to average net assets* ....................................... 3.42% 3.16%(c)
Portfolio turnover .......................................................................... 0.00% 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
-123-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Year Six Months
Ended Ended Year Ended May 31,
November 30, November 30, -------------------------------------------------------
1996 1995 (d) 1995(a) 1994 1993 1992
-------------- ------------- ------------- ---------- ---------- ----------
Investor A Investor A Investor A Investor Investor Investor
Shares Shares Shares Shares Shares Shares
-------------- ------------- ------------- ---------- ---------- ----------
<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 ............... 0.55 0.27 0.55 0.55 0.58 0.63
Net realized and unrealized gains
(losses) from investments ......... (0.05) 0.22 0.40 (0.37) 0.64 0.43
--------- -------- --------- -------- -------- ---------
Total from Investment Activities 0.50 0.49 0.95 0.18 1.22 1.06
--------- -------- --------- -------- -------- ---------
Distributions
Net investment income ............... (0.55) (0.27) (0.55) (0.55) (0.58) (0.63)
Net realized gains .................. -- -- (0.01) (0.04) (0.07) (0.08)
--------- -------- --------- -------- -------- ---------
Total Distributions ............. (0.55) (0.27) (0.56) (0.59) (0.65) (0.71)
--------- -------- --------- -------- -------- ---------
Net Asset Value, End of Period ......... $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
========= ======== ========= ======== ======== =========
Total Return (excludes sales charges) .. 4.41% 4.32%(b) 8.91% 1.53% 11.47% 10.24%
Ratios/Supplementary Data:
Net Assets at end of period (000) ... $ 25,144 $ 24,726 $ 24,318 $ 27,919 $ 23,223 $ 12,635
Ratio of expenses to average net
assets ............................ 0.85% 0.95%(c) 0.84% 0.65% 0.63% 0.85%
Ratio of net investment income to
average net assets................. 4.75% 4.64%(c) 5.02% 4.75% 5.11% 5.75%
Ratio of expenses to average net
assets* ........................... 1.05% 1.18%(c) 1.18% 1.12% 1.18% 1.49%
Ratio of net investment income to
average net assets* ............... 4.55% 4.44%(c) 4.68% 4.28% 4.56% 5.11%
Portfolio turnover................... 3.66% 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.
(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.
See notes to financial statements
-124-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year Six Months
Ended Ended March 1, 1995
November 30, November 30, to May 31,
1996 1995 (e) 1995 (a)
---------------- ---------------- ----------------
Investor B Investor B Investor B
Shares Shares Shares
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .......................................... $ 11.74 $ 11.52 $ 11.19
------- ------- -------
Investment Activities
Net investment income ...................................................... 0.45 0.22 0.11
Net realized and unrealized losses from investments ........................ (0.06) 0.22 0.33
------- ------- -------
Total from Investment Activities ....................................... 0.39 0.44 0.44
------- ------- -------
Distributions
Net investment income ...................................................... (0.45) (0.22) (0.11)
------- ------- -------
Total Distributions .................................................... (0.45) (0.22) (0.11)
------- ------- -------
Net Asset Value, End of Period ................................................ $ 11.68 $ 11.74 $ 11.52
======= ======= =======
Total Return (excludes sales charges) ......................................... 3.48% 3.88%(b) 8.61%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000) .......................................... $ 675 $ 433 $ 94
Ratio of expenses to average net assets .................................... 1.65% 1.77%(d) 1.76%(d)
Ratio of net investment income to average net assets ....................... 3.96% 3.82%(d) 4.00%(d)
Ratio of expenses to average net assets* ................................... 1.75% 1.87%(d) 1.88%(d)
Ratio of net investment income to average net assets*....................... 3.86% 3.72%(d) 3.89%(d)
Portfolio turnover.......................................................... 3.66% 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
-125-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Year Six Months
Ended Ended Years Ended May 31,
November 30, November 30, ---------------------------------------------------
1996 1995 (c) 1995 1994 1993 1992
---------------- ---------------- ---------- ---------- --------- ---------
Trust Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares Shares
---------------- ---------------- ---------- ---------- --------- ---------
<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 ................ 0.57 0.28 0.57 0.58 0.60 0.64
Net realized and unrealized gains
(losses) from investments .......... (0.05) 0.22 0.40 (0.37) 0.64 0.43
-------- --------- -------- --------- -------- -------
Total from Investment Activities . 0.52 0.50 0.97 0.21 1.24 1.07
-------- --------- -------- --------- -------- -------
Distributions
Net investment income ................ (0.57) (0.28) (0.57) (0.58) (0.60) (0.64)
Net realized gains ................... -- -- (0.01) (0.04) (0.07) (0.08)
-------- --------- -------- --------- -------- -------
Total Distributions .............. (0.57) (0.28) (0.58) (0.62) (0.67) (0.72)
-------- --------- -------- --------- -------- -------
Net Asset Value, End of Period .......... $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
======== ========= ======== ========= ======== =======
Total Return ............................ 4.62% 4.41%(a) 9.12% 1.73% 11.70% 10.37%
Ratios/Supplementary Data:
Net Assets at end of period (000) .... $ 55,905 $ 47,773 $ 44,336 $ 47,743 $ 32,777 $ 6,609
Ratio of expenses to average net
assets ............................. 0.65% 0.78%(b) 0.64% 0.45% 0.43% 0.73%
Ratio of net investment income to
average net assets ................. 4.95% 4.83%(b) 5.22% 4.96% 5.30% 5.87%
Ratio of expenses to average net
assets* ............................ 0.75% 0.88%(b) 1.16% 1.13% 0.98% 1.38%
Ratio of net investment income to
average net assets* ................ 4.85% 4.73%(b) 4.70% 4.28% 4.75% 5.22%
Portfolio turnover.................... 3.66% 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
-126-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
November 18, 1996
to
November 30, 1996 (a)
-------------------------
Investor A
Shares
-------------------------
<S> <C>
Net Asset Value, Beginning of Period ............................................................... $ 10.00
-------
Investment Activities
Net investment income ........................................................................... 0.02
Net realized and unrealized gains from investments .............................................. 0.05
-------
Total from Investment Activities ............................................................ 0.07
-------
Distributions
Net investment income ........................................................................... (0.02)
-------
Total Distributions ......................................................................... (0.02)
-------
Net Asset Value, End of Period ..................................................................... $ 10.05
=======
Total Return (excludes sales charge) ............................................................... 0.73%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................................... $ 1
Ratio of expenses to average net assets ......................................................... 0.37%(c)
Ratio of net investment income to average net assets ............................................ 9.08%(c)
Ratio of expenses to average net assets* ........................................................ 1.07%(c)
Ratio of net investment income to average net assets* ........................................... 8.38%(c)
Portfolio turnover .............................................................................. 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
-127-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
November 18, 1996
to
November 30, 1996 (a)
-------------------------
Investor
B
Shares
-------------------------
<S> <C>
Net Asset Value, Beginning of Period .......................................................... $10.00
------
Investment Activities
Net investment income ...................................................................... 0.02
Net realized and unrealized gains from investments ......................................... 0.05
------
Total from Investment Activities ....................................................... 0.07
------
Distributions
Net investment income ...................................................................... (0.02)
------
Total Distributions .................................................................... (0.02)
------
Net Asset Value, End of Period ................................................................ $10.05
======
Total Return (excludes sales charge) .......................................................... 0.70%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) .......................................................... $ 1
Ratio of expenses to average net assets .................................................... 1.10%(c)
Ratio of net investment income to average net assets ....................................... 8.35%(c)
Ratio of expenses to average net assets* ................................................... 1.80%(c)
Ratio of net investment income to average net assets* ...................................... 7.65%(c)
Portfolio turnover ......................................................................... 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
-128-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
November 18, 1996
to
November 30, 1996 (a)
-------------------------
Trust
Shares
-------------------------
<S> <C>
Net Asset Value, Beginning of Period .......................................................... $ 10.00
---------
Investment Activities
Net investment income ...................................................................... 0.02
Net realized and unrealized gains from investments ......................................... 0.05
---------
Total from Investment Activities ....................................................... 0.07
---------
Distributions
Net investment income ...................................................................... (0.02)
---------
Total Distributions .................................................................... (0.02)
---------
Net Asset Value, End of Period ................................................................ $ 10.05
=========
Total Return (excludes sales charge) .......................................................... 0.74%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) .......................................................... $310,413
Ratio of expenses to average net assets .................................................... 0.12%(c)
Ratio of net investment income to average net assets ....................................... 5.77%(c)
Ratio of expenses to average net assets* ................................................... 0.82%(c)
Ratio of net investment income to average net assets* ...................................... 5.07%(c)
Portfolio turnover ......................................................................... 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
-129-
<PAGE>
THE ARCH FUND, INC.
Special Meeting of the Shareholders
(Unaudited)
At a Special Meeting of the Shareholders (the "Meeting") of the International
Equity Portfolio (the "Portfolio"), held October 18, 1996, shareholders of the
Portfolio voted the following proposals:
1. That the new Sub-Advisory Agreement dated as of August 29, 1996, between
Mississippi Valley Advisors Inc. and Clay Finlay Inc. (the "Agreement"), be
ratified and approved:
<TABLE>
<CAPTION>
Votes in Favor Votes Against
-------------- -------------
<S> <C>
4,417,517 7,564
</TABLE>
2. That the payment of sub-advisory fees to Clay Finlay Inc. pursuant to the
Agreement for the period from August 29, 1996 through the conclusion of the
Meeting to be ratified and approved:
<TABLE>
<CAPTION>
Votes in Favor Votes Against
-------------- -------------
<S> <C>
4,410,918 9,749
</TABLE>
-130-
<PAGE>
INVESTMENT ADVISER
Mississippi Valley Advisors Inc.
One Mercantile Center
Seventh & Washington Streets
St. Louis, Missouri 63101
DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 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, Ohio 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 Funds, investment policies and expenses as
well as other pertinent information.
