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Semi-Annual Report
May 31, 1997
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Money Market Portfolio
Treasury Money Market Portfolio
Tax-Exempt Money Market Portfolio
Growth & Income Equity Portfolio
Small Cap Equity Portfolio
International Equity Portfolio
Equity Income Portfolio
Equity Index Portfolio
Balanced Portfolio
Government & Corporate Bond Portfolio
U.S. Government Securities Portfolio
Short-Intermediate Municipal Portfolio
Missouri Tax-Exempt Bond Portfolio [LOGO OF THE ARCH FUNDS
APPEARS HERE]
National Municipal Bond Portfolio
Intermediate Corporate Bond Portfolio
Bond Index Portfolio
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THE ARCH FUND, INC.
MESSAGE FROM YOUR CHAIRMAN
Dear Shareholders,
We are pleased to present this report for The ARCH Fund, Inc. for the six
months ended May 31, 1997. During the period, the ARCH family of mutual funds
saw its assets increase to more than $3 billion.
We continually seek to bring to our shareholders new products that offer
exposure to various segments of the financial markets. To that end, we
introduced four new portfolios during the period: an Intermediate Corporate
Bond Portfolio, a Bond Index Portfolio, an Equity Income Portfolio and an
Equity Index Portfolio. You will find information on these new funds in this
report.
If you are a customer of the ARCH Asset Adviser program, you are aware that
your investment adviser, Mississippi Valley Advisors Inc., rebalanced and
reallocated its model portfolios during the recent period. We are committed to
constantly monitoring the financial markets and to allocating your assets
properly, depending on your risk tolerance and objectives.
PORTFOLIO REVIEW AND OUTLOOK
In the following interview with John H. Blixen, President of Mississippi
Valley Advisors Inc. (MVA), the Fund's investment adviser, you will find a
detailed discussion of the performance of each Portfolio of The ARCH Fund,
Inc. The portfolio-specific reports describe factors that contributed to the
Portfolios' returns for the period ended May 31, 1997. To fully understand the
performance of your investment in The ARCH Mutual Funds, I urge you to read
this report closely.
MESSAGE FROM YOUR INVESTMENT ADVISER, MISSISSIPPI VALLEY ADVISORS INC.
AN ECONOMY THAT FAVORED STOCKS
The recent six-month period was marked by excellent results from the
economy--growth in earnings, good job creation and relatively low inflation.
Consumer spending rose sharply as well. The financial markets did fluctuate
with changes in interest rates that reflected inflationary concerns, yet the
level of inflation remained relatively low. The combination of economic growth
and low inflation provided especially good conditions for the stock market.
Investors continued to favor stocks of large domestic companies that operate
in the U.S. and international markets. As a result, stocks of those firms have
outperformed the market as a whole, and account for much of the rise in market
indices such as the Standard and Poor's 500. We believe those stocks are
becoming fully valued relative to stocks of other companies. The broader
market should eventually catch up, which could benefit our diversified stock
portfolios.
The bond markets recently have provided returns which are on average more
than 3 percentage points higher than the rate of inflation, and bond yields
remain well in excess of the inflation rate. Bonds appear to offer good value
under most economic forecasts, which call for continued low inflation.
LOOKING AHEAD
The economy appears likely to grow at a 2.5% to 3% annual rate during 1997,
which is higher than many economists had expected. We estimate that corporate
profits will grow at a 5% to 10% annual pace through 1997. The inflation rate
is still very low at around 2.0% to 3.0%.
There is some risk, however, that rapid economic growth will lead to higher
inflation. In fact, the Federal Reserve may raise interest rates unless
economic growth slows to a more moderate pace. Moreover, stocks are relatively
expensive. In fact, stocks that make up the S&P 500 recently traded at an
average price/earnings ratio of 20--that is, their prices on average were
equal to 20 times the underlying firms' annual earnings. These are
historically high valuations.
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.
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Investors should consider assembling fund portfolios that take into account
some additional risk in the stock market. But such portfolios also should be
structured to benefit from pockets of value. For example, it is possible that
undervalued stocks of small and mid-sized companies will make up some of the
ground they have lost to stocks of the larger companies that have accounted
for most of the gains in market indices.
In this environment, we have adjusted our stock fund portfolios to include
more stocks of mid-sized or smaller companies. We also have sought out stocks
of companies in industries where good values are still available--such as
retail, automotive parts, financial services and transportation.
Our bond funds have taken a relatively neutral stance with respect to
maturities, reflecting the potential for volatility among longer term issues
as investors fret about the potential for higher inflation and interest rates.
We are finding value in areas such as government-guaranteed mortgage-backed
securities.
A LONG-TERM COMMITMENT
As always, we encourage investors to properly diversify their assets among
various types of investments, including stocks and bonds. And remember that
regardless of the financial markets' behavior during the next few months,
investing requires patience and a commitment to a long-term approach. Over
long periods, investors tend to profit more from exposure to stocks and bonds
than to other types of assets. Moreover, an appropriate mix of stocks, bonds
and reserves in short-term funds has the potential to deliver a good overall
return without exposing investors to excessive risk.
One other timely point: Investors in higher tax brackets may want to
consider bond funds that are exempt from federal and state income taxes. Their
after-tax yields recently have been relatively attractive for shareholders
whose tax situation is appropriate.
You will find a discussion of each portfolio of The ARCH Fund, Inc. in the
pages that follow. Those reports will help you to understand your investments,
their recent performances and their current prospects. If you would like more
information about any of the portfolios, please call your investment
representative or the ARCH Shareholder Servicing Center at 1-800-452-ARCH.
THE ARCH MONEY MARKET PORTFOLIO+
Q. What is the objective of this Portfolio?
A. The ARCH Money Market Portfolio seeks current income with liquidity and
stability of principal. The Portfolio's net assets on May 31, 1997 were
approximately $916 million.
Q. What were the conditions in the money markets during the six months ended
May 31, 1997?
A. Short-term interest rates were relatively stable during the period. Rates
declined somewhat in February when it was obvious to investors that the
Federal Reserve would leave the Federal funds rate alone. However, the Fed
raised short-term rates on March 25, 1997.
Q. What was your management strategy in that environment?
A. We kept the average maturity of the Portfolio between 35 and 40 days from
the beginning of the period until the end of March, when two things happened:
The Fed raised short-term rates, and the first quarter of 1997 ended. At the
end of each quarter, many issuers want to clean up their books and offer new
securities with high yields as incentives to investors. At that point, we
extended the Portfolio's average maturity to around 45 to 50 days in order to
pick up extra yield.
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+ An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the portfolio will be able to
maintain a stable net asset value of $1.00 per share.
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Q. How did the composition of the Portfolio change during the period?
A. Commercial paper issued by various companies remained the Portfolio's
largest holding. A large number of high-quality issues with attractive yields
were available. We did add to our holdings of bank certificates of deposit and
bank notes, whose yields have become competitive relative to those of
commercial paper.*
Q. How will you manage the Portfolio during the next several months?
A. We will continue to look for opportunities to extend the Portfolio's
average maturity at the end of each quarter and at the end of the calendar
year, when issuers tend to offer securities with attractive yields. The
Portfolio will target an average maturity in the 45-50 day area.
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 stability of
principal. The Portfolio's net assets were around $169 million on May 31,
1997.
Q. How did you manage the Portfolio during the six months ended May 31,
1997?
A. We maintained a relatively neutral average maturity during the first half
of the period, in the mid- to upper- 40-day range. However, we extended the
average maturity to around the upper 50-day area later in the period. At the
end of the period, the Portfolio's average maturity stood at 56 days. We also
maintained a laddered approach, which helped to accommodate the Portfolio's
large cash flows.
Q. What types of Treasury securities did you hold?
A. Treasury Notes constituted 52% of the Portfolio's assets at the end of
the period, a larger-than-average percentage. We focused on notes when
Treasury Bills became extremely expensive relative to Treasury Notes, which
happened because investors moved cash into short-term securities in
anticipation of the Fed's decision to raise rates. Treasury Bills accounted
for 48% of assets at the end of the period.*
Q. What is your strategy going forward?
A. Looking ahead, we will continue to structure the Portfolio with a
laddered maturity. We will maintain an average maturity in the mid- to upper-
50-day range, provided shorter maturity securities remain expensive.
THE ARCH TAX-EXEMPT MONEY MARKET PORTFOLIO++
Q. How did the tax-exempt money markets perform during the six months ended
May 31, 1997?
A. Yields on tax-exempt money market securities continued to decline
relative to yields on short-term taxable securities such as Treasury bills.
There was little reason for issuers of short-term tax-exempt paper to offer
attractive rates, because a great deal of money was coming into the tax-exempt
money market area.
Q. How did you structure the Portfolio to address those conditions?
A. The ARCH Tax-Exempt Money Market Portfolio seeks as high a level of
current 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.
The Portfolio consisted primarily of daily and weekly variable rate
securities during the recent period.* We held these issues for two reasons:
They offered the best yields available; and they offer liquidity. We can sell
those
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*Portfolio composition is subject to change.
+ An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the portfolio will be able to
maintain a stable net asset value of $1.00 per share.
++Investors may be subject to certain state and local taxes and, depending
upon an investor's tax status, the federal alternative minimum tax. An
investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the portfolio will be able to
maintain a stable net asset value of $1.00 per share.
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issues quickly when short-term notes come out offering more attractive yields.
Often, issuers will issue securities with attractive yields to fund a specific
project, even if interest rates are a bit high, and we wanted to be in a
position to purchase those securities when such opportunities arose.
Q. How did you manage the average maturity of the Portfolio during the
period?
A. The average maturity of the Portfolio was as long as 34 days and fell to
as short as 23 days during the period. Daily securities were more readily
available than longer term issues throughout the period.
Q. What is the Portfolio's strategy going forward?
A. We will attempt to enhance our positions in tax-exempt commercial paper
and notes as new issues become available. We will also look to extend the
Portfolio's average maturity if tax-exempt note yields become more attractive
relative to Treasury Bill yields. We don't see much reason to make significant
changes in the portfolio's strategy as long as the economy continues to grow
at a slow, steady pace.
THE ARCH SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO+
Q. How did the municipal bond market perform during the six months ended May
31, 1997?
A. Municipal bonds with relatively long maturities outperformed long-term
taxable Treasuries during the period. This Portfolio has an average maturity
of between three and five years. The longer-term issues within those
parameters performed better than securities with shorter maturities, partly
because of the relatively low supply of shorter term issues.
Generally speaking, there is always a limited supply of municipal issues
relative to Treasuries out there. That's one reason why municipals have
outperformed taxable bonds.
Q. How did you position the Portfolio during the period?
A. At the beginning of the period, the Portfolio's average maturity stood at
around four years. By the end of the period, the average maturity had dropped
to around 3.8 years as the issues in the Portfolio aged.
Q. How did you manage credit risk during the period?
A. We maintained a relatively high credit rating of AA2. Investors continued
to favor higher quality issues, as yields on lower quality securities have not
been high enough to justify their additional credit risk.
Q. What is your outlook for the municipal market and the Portfolio going
forward?
A. The municipal market should continue to strengthen as concerns over tax
reform subside. There probably will not be any major moves in interest rates,
and supply should remain low. In that environment, we intend to extend the
Portfolio's average maturity somewhat. We also will continue to hold issues
with high credit quality.
THE ARCH NATIONAL MUNICIPAL BOND PORTFOLIO+
Q. What were the conditions in the municipal bond market during the six
months ended May 31, 1997?
A. Demand for municipal bonds continued to be strong during the period.
Municipal bonds with relatively long maturities outperformed similar taxable
Treasury bonds.
Q. How did you manage the Portfolio in that environment?
A. We purchased bonds that mature in around 15 to 18 years to extend the
Portfolio's average maturity. At the end of the period, the Portfolio's
average maturity was around eight years.
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+ Investors may be subject to certain state and local taxes and, depending on
an investor's tax status, the federal alternative minimum tax.
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Q. What was the average credit rating of the Portfolio's holdings?
A. The Portfolio's overall policy is to maintain a high credit quality.
Lower quality issues did not offer enough extra yield to investors to justify
taking on the bonds' additional credit risk. The average credit rating at the
end of the period was AA1.
Q. What is your strategy regarding the Portfolio during the months ahead?
A. We will look to enhance shareholders' total return by continuing to
extend the Portfolio's average maturity. We expect to increase the average
maturity to around 12 years during the coming months. Meanwhile, we will
maintain the Portfolio's high credit rating and focus on finding high-quality
issues at attractive prices.
THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO+
Q. What was the environment like in the Missouri municipal bond market
during the six months ended May 31, 1997?
A. The Missouri market was strong during the recent period. There was a
relatively low supply of large Missouri issues, and demand for those issues
was strong. That made it challenging to purchase bonds at attractive prices
during the period.
Q. What was your management strategy in that environment?
A. The Portfolio's average maturity at the end of the period was around
10.75 years, down from approximately 11.5 to 12 years near the beginning of
the period. Typically, the Portfolio maintains a slightly lower average
maturity than other Missouri municipal funds. Moreover, the Portfolio's assets
grew by around 12% during the past six months. Since the supply of municipal
bonds was low, that extra cash buildup caused the Portfolio's average maturity
to decrease.
Q. What types of securities did you favor during the period?
A. We found attractive values primarily among general obligation bonds and
revenue bonds maturing in 15 to 18 years. We also favored larger issues with
very high credit quality: The Portfolio carried an average credit rating of
AA1 during the period. Smaller, lower quality issues did not offer investors
enough extra yield to justify their additional credit risk.
Q. What is your outlook for the Missouri municipal bond market?
A. The supply of new issues should continue to remain low, which should help
support prices. Municipalities are reluctant to issue a lot of new bonds when
they feel interest rates are high. There would need to be a significant
decrease in interest rates for issuers to issue new bonds in large quantities,
and we do not think that will happen as long as the economy continues to grow
at a slow, steady pace.
Q. How will you manage the Portfolio going forward?
A. We expect to increase the Portfolio's average maturity as we put the new
cash to work. We also will continue to favor securities with high credit
quality. These types of issues give shareholders the potential for competitive
returns without taking additional risk.
THE ARCH INTERNATIONAL EQUITY PORTFOLIO+++
Q. How did the global equity markets perform during the six-month period
ended May 31, 1997?
A. The Morgan Stanley Europe, Australia and Far East Index (EAFE), an
unmanaged index that is generally representative of the performance of
international stocks, gained 4.2% during the period, but many European
countries posted double-digit positive returns. In particular, Spain's stock
market gained 24%, and Switzerland's market rose 20%. Emerging markets in
Latin America also turned in solid performances, especially during the first
three months of the period. However, markets in the Pacific Basin
underperformed due mainly to banking and other financial problems.
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+ Investors may be subject to certain state and local taxes and, depending
upon an investor's tax status, the federal alternative minimum tax.
++ International investing involves additional risk and volatility.
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Q. How did you manage the Portfolio in that environment?
A. We focused on careful stock selection, targeting shares of large, well-
established firms with steadily increasing growth rates that were trading at
reasonable prices. We prefer companies whose growth rates are higher than
their price-to-earnings ratios. We avoid outrageously high-priced multiples.
Firms also must have strong management to be included in the Portfolio.
Q. Where did you find those types of companies during the recent period?
A. We were rewarded by our careful stock selection in Japan, where we held
companies with strong exports such as Canon, Honda and Sony, totaling 3.0% of
the Portfolio. We also looked for companies in Europe that are restructuring.
Many European conglomerates are becoming aware that they must alter their
businesses to be more competitive with emerging economies in Eastern Europe,
where there is a surplus of cheap, skilled labor.
We also increased our exposure to Latin American markets from 2.5% of total
assets to 4.1%. The region is becoming more stable than it has been in the
past. We found some opportunity in the luxury goods market, which should
continue to strengthen as worldwide wealth continues to increase. One of our
holdings in that sector, Gucci (0.7%), has tremendous brand-name recognition
and will open more new stores going forward.++
Q. What other changes did you make in the Portfolio?
A. We reduced our exposure to Hong Kong and Malaysia and added to our
position in Australia, which is currently a more stable market than other
Pacific Basin markets.
Q. How will you manage the Portfolio going forward?
A. We are pleased with our current holdings in Japan, which currently
account for 24% of the Portfolio's assets. We may add to the stocks we own
there. We are somewhat concerned about the progress of creating a single
currency in continental Europe, and we will select our stocks there carefully
during the next few months.++
Regardless of how foreign financial markets perform in the months ahead, we
will continue to carefully select shares of large, solid firms that we believe
will be successful over the long term.
THE ARCH GROWTH & INCOME EQUITY PORTFOLIO
Q. What was the overall environment in the stock market during the six
months ended May 31, 1997?
A. Except for a brief market correction in March, the stock market has
continued to set record highs. But those gains are almost all focused in a
relatively small group of stocks--those with the largest market
capitalizations.
However, during the period we began to see these gains broaden out a bit to
include some of the medium-sized and smaller capitalization stocks, as
investors began to focus more on stocks' fundamentals rather than stock price
momentum.
Q. How did you manage the Portfolio during the period?
A. We are relative-value investors, and as such we employ bottom-up stock
selection. This is the same strategy we've used for the past 15 years.
Recently, we've been buying shares of consumer cyclical companies such as J.C.
Penney. We also added to our holdings of Echlin. We felt these stocks were
undervalued versus the market.
Our Portfolio is broadly diversified across eight market sectors: 21% in
consumer growth; 16% in interest-rate sensitive stocks such as banks and
financial institutions; 14% in consumer staples; 13% in technology stocks; 12%
in industrial cyclicals; 10% in energy; 8% in consumer cyclical markets such
as airlines, automobiles and retail/general merchandise; and 6% in capital
goods.++
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++ Portfolio composition is subject to change.
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The best performing stocks or market sectors during the recent period were
technology, pharmaceuticals and consumer non-durables. The worst performing
sectors were electrical utilities, petroleum companies and telecommunications.
Q. What changes did you make to the Portfolio during the period?
A. During the March market correction, we took advantage of lower stock
prices to add to some of our existing holdings. For example, in the technology
sector we added to our positions in Oracle (2.1%) and Computer Associates
(2.0%).*
We also sold a few stocks, such as H.J. Heinz, when their prices moved high
enough to reach our price targets. We then used that money to invest in stocks
with more attractive valuations or to add to our existing positions.
Q. What is your outlook for the stock market and the Portfolio going
forward?
A. We can't attempt to guess what's going to happen in the financial
markets. We're not market timers. But we expect that economic growth probably
will slow through 1997 to a more sustainable rate. Corporate profits will
continue to move higher, while inflation should stay in check.
If the trend we have seen continues, more investors will begin to focus on
company fundamentals and invest in medium-sized and smaller companies that
make up almost three quarters of the S&P 500. That should cause those shares
to perform better and should benefit the Portfolio.
THE ARCH EQUITY INCOME FUND
Q. What is the Portfolio's objective?
A. The Portfolio, which first opened to investors on March 10, 1997, seeks
to provide an above-average level of income consistent with long-term capital
appreciation. We emphasize a value approach to investing, looking at
fundamentals such as price-to-earnings ratios, cash flow and book value. We
generally invest in shares of large, high quality companies, as our benchmark
is the Russell 1000 Value Index, an unmanaged index that tracks the 1000
largest companies by market capitalization.
Q. How will the Portfolio attempt to add value to the Index?
A. The Portfolio generally will attempt to add value through individual
stock selection rather than by making large bets on particular sectors of the
market. We will keep cash within a range of 0-10% of the total portfolio.
Recently, the Portfolio included investments across the following industry
groups: banking (24%), medical (14%), financial services (10%), chemicals
(7%), utilities (6%) and electrical equipment (5%).*
Q. What type of investor should consider this Portfolio?
A. This is a relatively conservative investment. It may be suitable for
investors looking for a portfolio that seeks to generate a combination of
income and capital gains by investing in reasonably valued stocks of good
quality companies.
THE ARCH BALANCED PORTFOLIO
Q. What were the conditions that affected the Portfolio's performance during
the six months ended May 31, 1997?
A. The Portfolio and its performance was affected by conditions in both the
stock and fixed-income markets. Stocks continued to post strong gains during
the recent period, and the biggest gains continued to come from shares of
domestic large-company stocks. In the fixed-income markets, prices of longer-
term bonds declined during most of the period as concerns about rising
inflation caused interest rates to increase.
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* Portfolio composition is subject to change.
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Q. How did you manage the Portfolio to address those conditions?
A. The Portfolio as a rule invests about 50% to 60% of its assets in stocks
with the remainder in bonds. The strength of the stock market caused us to
reduce the Portfolio's equity stake to around 55% of assets by the end of the
period on the grounds that share prices were becoming more fully valued.
Q. In what types of stocks did you find the best opportunities?
A. The Portfolio's equity portion is managed along the same lines as the
ARCH Growth & Income Equity Portfolio. That means we favor undervalued shares
of companies with strong earnings growth potential. During the recent period,
the Portfolio held stocks in the consumer growth sector, banks and other
financial service firms and the technology industry. Industrial cyclicals and
energy and utility companies were also represented.
Q. What types of bonds did the Portfolio hold?
A. The Portfolio's fixed-income holdings are similar to those in the ARCH
Government & Corporate Bond Portfolio: intermediate-term, high-quality
Treasury and U.S. Government agency issues.
We try to model the fixed-income portion of the Portfolio on the Lehman
Brothers Aggregate Bond Index, which is an unmanaged index comprised of the
Lehman Bros. Government/Corporate Bond Index and two Lehman Bros. asset-backed
securities indices. We remained relatively neutral to the Index in terms of
duration and average maturity, with the intention of trying to guard
investors' principal.
Q. How will you manage the Portfolio going forward?
A. We are not likely to alter the Portfolio's mix of 55% stocks, 37% bonds
and 8% cash equivalents during the next few months. However, the Investment
Adviser's investment management committee will continually observe the
financial markets and make any necessary changes to the Portfolio's asset
allocation that will benefit shareholders.
THE ARCH SMALL CAP EQUITY PORTFOLIO+
Q. What was the environment like for small-company stocks during the six
months ended May 31, 1997?
A. During the first five months of this period, small-company stocks
severely underperformed shares of larger companies. Small-company stocks
typically underperform during periods of economic uncertainty. In this case,
investors were concerned about the economy and the likelihood that the Federal
Reserve would raise interest rates, and that caused small stocks to lag the
rest of the market. There also were earnings disappointments among small-
company stocks, further contributing to their poor performance.
Q. Any signs of a turnaround in the small-company sector?
A. Yes. These stocks lagged behind the rest of the market so much that in
May investors began to recognize that the shares of smaller firms offered
relatively good value. The Portfolio's diversified holdings benefited from
this broadening of the market.
Q. How did you manage the Portfolio during the past six months?
A. We believe that periods of market weakness are good opportunities for our
disciplined relative-value stock selection style. Since many stocks were so
out of favor for most of the period, we found a number of good companies
trading at far more reasonable prices than we'd seen in the previous year. And
we were able to find good values across all market sectors and industries. For
example, we purchased shares of National Data Corp. (1.8% of portfolio), a
data processing services company, and Blyth Industries (1.3%), which produces
and markets household products.
During the past six months we also slightly increased our weighting in
industrial cyclical stocks. The general impression among investors is that the
economy is slowing down, and this has created some good values in such stocks.
We saw this as an opportunity to buy shares of companies whose prices have
suffered from perceived economic sensitivity, such as Minerals Technologies
(1.7%), which produces calcium carbonate for the whitening of paper products,
and OM Group (1.1%), a metals-based specialty chemical company.*
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* Portfolio composition is subject to change.
+ Investing in small capitilization stock can involve additional risk, due to
their historic volatility.
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Q. What is your outlook for the economy and the Portfolio in the months
ahead?
A. We anticipate a slowdown in the economy's growth rate. The Federal
Reserve has made it clear that it will continue to slow the rate of economic
growth if it sees evidence of inflation. That should create a nice environment
for our broadly-diversified relative-value stock selection strategy. We still
believe that small-company stocks are inexpensive relative to large-company
shares and therefore represent some of the best opportunities in the market.
THE ARCH EQUITY INDEX PORTFOLIO
Q. Tell us about this new Portfolio, which opened to investors on May 1,
1997.
A. The Portfolio is an index fund, as its name suggests. It attempts to
mirror the performance of the Standard & Poor's 500 Index, the domestic stock
market's most widely used performance benchmark. The Standard & Poor's 500
Index is an unmanaged index generally representative of the U.S. stock market.
Q. What type of investor should consider the Portfolio?
A. The Portfolio may be appropriate for investors who want to aim for
returns before deduction of operating expenses that are roughly in line with
those of the S&P 500.
Q. Will the Portfolio show precisely the same gains and losses as the Index?
A. Index funds tend to lag their benchmarks by a small margin. Funds'
expenses are one reason for that difference. Another reason: The funds
generally hold a small amount of cash unless they rebalance their portfolios
every day, and that cash can act as a slight anchor on performance when the
market is rising. Going forward, we expect that the Portfolio's performance
should be very close to that of its benchmark index.
THE ARCH BOND INDEX PORTFOLIO
Q. What is the objective of this new Portfolio, and how have you pursued
that objective?
A. This Portfolio, which opened to investors on February 17, 1997, seeks to
match the returns of the Lehman Brothers Aggregate Bond Index, an unmanaged
index comprised of the Lehman Bros. Government/Corporate Bond Index and two
Lehman Bros. asset-backed securities indices. We track the index by holding
securities in roughly the same percentage weightings as the Index across
market sectors and average maturities. For example, the Lehman Brothers
Aggregate Bond Index is made up of 44% Treasuries; our Portfolio holds 43% in
Treasuries.*
Q. What is the reason for the slight variation?
A. There are some limitations as to how closely we can mirror the Index.
When the Index changes, we have to rebalance the Portfolio. But when we
rebalance, we must do so in trading-size blocks--typically in lot sizes of
$500,000 to $1 million. Working with those large trading blocks causes slight
variations in the Portfolio's holdings versus the Index.
Q. What is the Portfolio's average credit rating?
A. The Portfolio's underlying securities have an average credit rating of
AAA, since the Lehman Brothers Aggregate Bond Index has a high exposure to
U.S. Treasury and government agency debt.
Q. What type of investor should consider this Portfolio?
A. An investor who wants broad exposure to the domestic bond market through
a single fund.
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* Portfolio composition is subject to change.
-9-
<PAGE>
THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
Q. What were the conditions in the taxable bond markets during the period
ended May 31, 1997?
A. Interest rates rose throughout the period, beginning in December when
Federal Reserve Chairman Alan Greenspan hinted that the Fed might raise rates.
The market remained uncertain about the potential for inflation to heat up
until March, when the Fed did raise rates. The yield on the 10-year U.S.
Treasury began the period at 6.06% and rose to 6.65% at the end of May.
Q. How did you manage the Portfolio in that environment?
A. The Portfolio's duration began the period at 5.32 years, but we brought
that down to 4.42 years by May 31. The Portfolio's average maturity declined
from 9.5 years in December to 7.5 years at the end of the period. We achieved
this primarily by decreasing our stake in 30-year Treasuries and buying more
issues that mature in a ten year time period, or in a period of two years or
less. We purchased these shorter maturity securities to reduce the Portfolio's
interest rate risk.
We maintained a 35% stake in mortgage-backed securities, which represents a
full weighting in that sector of the market for this Portfolio. These
securities tend to perform quite well in rising interest rate environments.*
During the period we did not have a stake in corporate issues. We felt that
those securities' slight yield advantage over Treasuries and mortgage-backed
securities did not compensate for their increased credit risk. That additional
risk posed more of a threat than usual, because we anticipated an interest
rate increase, and corporate bonds tend to be somewhat illiquid. Recently,
though, we have begun to see some value in corporate issues, and we intend to
increase the Portfolio's holdings in the corporate sector.
Q. What was the average credit quality of the Portfolio?
A. The Portfolio's underlying securities have an average credit rating of
AAA, which has not changed since the beginning of the period.
Q. What is your outlook for the bond market and the Portfolio going forward?
A. We are maintaining a conservative posture due to the near-term
uncertainties in the market. We also are waiting for clearer economic
indicators that might tell us where interest rates are headed. But we expect
to buy more corporate issues in the next several months as they become
attractive.
THE ARCH INTERMEDIATE CORPORATE BOND PORTFOLIO
Q. What is the objective of this new Portfolio?
A. This Portfolio, which opened to investors on February 17, 1997, seeks as
high a level of current income as is consistent with preservation of capital.
We pursue this goal by holding at least 65% of the Portfolio's assets in non-
convertible corporate debt.
Currently, we have 69% of the Portfolio's assets invested in corporate debt.
Mortgage-backed securities represent 23% of the Portfolio's holdings. Treasury
bonds and cash equivalents make up the remainder of the Portfolio.*
Q. What is the range of maturities in the Portfolio's holdings?
A. The average maturity of the Portfolio's holdings can range between three
and ten years. Currently, the Portfolio's average maturity stands at seven
years, where it has been since its inception in February. We are maintaining
that average maturity because it allows us to accomplish our objective of
generating the highest level of current income without taking on undue
interest rate risk. Relative yields on corporate issues were most attractive
in the seven- to ten-year range.
- ------
* Portfolio composition is subject to change.
-10-
<PAGE>
Q. What is the average credit rating of the Portfolio's holdings?
A. The current average credit rating is AA, which is fairly high for this
Portfolio. Lower-quality issues did not offer enough additional yield to
justify their purchase during the period. But as the spreads widen again
between AAA and A yields, we likely will begin to purchase some lower quality
corporate securities in pursuit of higher current income. We do not expect the
Portfolio's average credit rating to fall below A.
Q. Where did you find the best opportunities in the bond markets during the
period?
A. In the corporate markets, AA-rated bonds issued by strong industrial
names such as AT&T and General Electric provided the best returns. We
considered A-rated securities, but yields did not justify buying lower quality
issues yet.
Q. What is your outlook for the bond markets and the Portfolio?
A. We are continuing to look for value in the corporate sector. We expect
that there will be some widening of the spreads between the high-quality
industrial bonds and lower rated securities issued by banks and other
financial institutions. If that occurs, we will move into positions in these
lower rated bonds to increase the Portfolio's income.
The Portfolio is not making any interest rate bets. We believe that our
intermediate maturity structure makes us less risky than a long-term bond
portfolio. But over time, our commitment to high levels of current income has
the potential to provide an attractive total return for this type of fund.
THE ARCH U.S. GOVERNMENT SECURITIES PORTFOLIO
Q. What were the conditions in the Treasury market during the period from
December 1, 1996, through May 31, 1997?
A. Interest rates rose almost continually during the period. They began to
rise in December, when Federal Reserve Chairman Alan Greenspan hinted that the
Fed might have to raise short-term rates to head off inflation. The Fed did
indeed raise interest rates in March. The yield on the five-year Treasury rose
from 5.88% at the beginning of December to 6.49% at the end of the period.
Q. How did you manage the Portfolio in that environment?
A. We decreased the Portfolio's average duration from 2.91 to 2.64 years
during the period. The Portfolio's average maturity declined from 4.3 years to
3.8 years, mostly due to our decision to replace ten-year Treasuries with
securities that mature in two years or less.
We also maintained our relatively high 40% exposure to mortgage-backed
securities during the period, which represents a full position for the Fund.
Mortgage-backed securities tend to perform well in a rising interest rate
environment, and in fact, this sector far outperformed the other fixed-income
markets during the period.
Q. What about the Portfolio's credit quality?
A. The Portfolio's underlying securities have an average credit rating of
AAA, which remains unchanged, since we invest in high-quality Treasury and
government agency debt.
Q. What is your outlook for the Treasury market and your strategy going
forward?
A. We are looking for a clearer trend in inflation and the direction of
interest rates. That is why our duration and average maturity are neutral to
the market. The Federal Reserve has indicated that it will strike preemptively
if it sees further indications of inflation.
----------------
-11-
<PAGE>
In closing, we thank you for your continued confidence and trust in The ARCH
Mutual Funds and look forward to continuing to provide you with expert
investment management to help you meet your present and future financial
needs.
If you should require any assistance or additional information not contained
in this report, please feel free to call your Investment Representative or The
ARCH Shareholder Servicing Center at 1-800-452-ARCH.
Sincerely,
/s/ Jerry V. Woodham /s/ John H. Blixen
Jerry V. Woodham John H. Blixen
Chairman President
The ARCH Funds, Inc. Mississippi Valley Advisors Inc.
Investment Adviser
An investment in the Portfolios are neither insured nor guaranteed by the
U.S. Government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any government agency, are not obligations or guaranteed, or
endorsed by the bank, or the distributor. An investment in the Portfolios
involves investment risk, including the possible loss of principal. The Money
Market Portfolios' yields will fluctuate and there can be no assurance that
the funds will be able to maintain a stable net asset value of $1.00 per
share. The composition of the Portfolios' holdings is subject to change. This
material must be accompanied or preceded by a prospectus for The ARCH Funds.
The ARCH Mutual Funds are distributed by BISYS Fund Services.
-12-
<PAGE>
TABLE OF CONTENTS
Statements of Assets and Liabilities
Page 14
Statements of Operations
Page 24
Statements of Changes in Net Assets
Page 29
Schedules of Portfolio Investments
Page 37
Notes to Financial Statements
Page 86
Financial Highlights
Page 104
-13-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
------------------ ----------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $916,990,684; $167,752,614;
$136,294,224, respectively) ...................................... $916,990,684 $167,752,614 $136,294,224
Cash ............................................................... 353 616 --
Interest and dividends receivable .................................. 3,422,991 1,701,819 1,059,678
Prepaid expenses and other assets .................................. 8,686 12,624 2,267
----------------- ---------------- -----------------
Total Assets ............................................ 920,422,714 169,467,673 137,356,169
----------------- ---------------- -----------------
LIABILITIES:
Cash overdraft ..................................................... -- -- 6,977
Dividends payable .................................................. 3,977,977 651,834 386,950
Accrued expenses and other payables:
Investment advisory fees ..................................... 278,982 48,960 40,811
Administration fees .......................................... 10,006 1,878 1,506
Distribution and services fees ............................... 19,084 1,518 2,970
Administrative services fees ................................. 88,953 1,236 5,236
Accounting and custodian fees ................................ 29,034 5,062 5,268
Other ........................................................ 114,951 16,910 9,050
----------------- ---------------- -----------------
Total Liabilities ....................................... 4,518,987 727,398 458,768
----------------- ---------------- -----------------
NET ASSETS:
Capital ............................................................ 915,901,249 168,729,729 136,885,241
Undistributed net investment income ................................ 7,450 5,719 12,160
Accumulated undistributed net realized gains (losses) from
investment transactions .......................................... (4,972) 4,827 --
----------------- ---------------- -----------------
Net Assets .............................................. $ 915,903,727 $ 168,740,275 $ 136,897,401
================= ================ =================
</TABLE>
Continued
-14-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
------------------ ----------------- ------------------
<S> <C> <C> <C>
Net Assets
Investor A Shares ............................................ $ 86,591,150 $ 5,993,478 $ 13,385,739
Investor B Shares ............................................ 85,298 -- --
Trust Shares ................................................. 806,187,406 162,313,318 123,511,662
Institutional Shares ......................................... 23,039,873 433,479 --
----------------- ---------------- -----------------
Total ................................................... $ 915,903,727 $ 168,740,275 $ 136,897,401
================= ================ =================
Outstanding shares of common stock
Investor A Shares ............................................ 86,590,943 5,993,459 13,385,700
Investor B Shares ............................................ 85,299 -- --
Trust Shares ................................................. 806,185,199 162,305,200 123,511,629
Institutional Shares ......................................... 23,039,808 433,485 --
----------------- ---------------- -----------------
Total ................................................... 915,901,249 168,732,144 136,897,329
================= ================ =================
Net asset value
Investor A Shares(a).......................................... $ 1.00 $ 1.00 $ 1.00
Investor B Shares*............................................ 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.
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-15-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Growth & Small Cap International
Income Equity Equity Equity
Portfolio Portfolio Portfolio
--------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $327,491,968; $211,945,723; and
$52,661,016, respectively) ..................................... $435,726,534 $230,497,282 $63,008,772
Cash ............................................................. 658 860 1,503
Foreign currency ................................................. -- -- 1,250,829
Interest and dividends receivable ................................ 476,505 83,605 115,666
Receivable from brokers for investments sold ..................... -- 26,268 821,984
Receivable for portfolio shares issued ........................... 7,534 18,251 18,987
Reclaim receivable ............................................... -- -- 67,347
Unamortized organization costs ................................... -- -- 10,149
Prepaid expenses and other assets ................................ 4,580 12,942 3,633
------------- ------------- ------------
Total Assets ............................................. 436,215,811 230,639,208 65,298,870
------------- ------------- ------------
LIABILITIES:
Dividends payable ................................................ 414,783 -- --
Payable to brokers for investments purchased ..................... 905,107 958,403 160,132
Payable for portfolio shares redeemed ............................ 37,292 22,344 --
Accrued expenses and other payables:
Investment advisory fees ..................................... 199,348 140,324 54,455
Administration fees .......................................... 4,759 2,512 716
Distribution and services fees ............................... 14,439 4,392 1,180
Administrative services fees ................................. 20,503 8,024 1,640
Accounting and custodian fees ................................ 31,759 16,598 37,543
Other ........................................................ 58,619 19,168 5,057
------------- ------------- ------------
Total Liabilities ........................................ 1,686,609 1,171,765 260,723
------------- ------------- ------------
NET ASSETS:
Capital .......................................................... 281,220,646 201,361,605 53,964,139
Undistributed net investment income (loss) ....................... 114,100 (50,560) 119,465
Net unrealized appreciation from investments ..................... 108,234,566 18,551,559 11,507,852
Net unrealized depreciation from translation of assets and
liabilities in foreign currencies............................... -- -- (1,202,174)
Accumulated undistributed net realized gains (losses) from
investment transactions ........................................ 44,959,890 9,604,839 (1,129,337)
Accumulated undistributed net realized gains from foreign
currency transactions .......................................... -- -- 1,778,202
============= ============= ============
Net Assets ............................................... $434,529,202 $229,467,443 $65,038,147
============= ============= ============
</TABLE>
Continued
-16-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Growth & Small Cap International
Income Equity Equity Equity
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Net Assets
Investor A Shares ............................................. $ 41,436,697 $ 13,336,491 $ 2,990,598
Investor B Shares ............................................. 4,926,062 1,369,646 521,270
Trust Shares .................................................. 305,341,939 181,715,032 54,907,686
Institutional Shares .......................................... 82,824,504 33,046,274 6,618,593
------------ ------------ -----------
Total ..................................................... $434,529,202 $229,467,443 $65,038,147
============ ============ ===========
Outstanding shares of common stock
Investor A Shares ............................................. 2,192,999 985,531 240,025
Investor B Shares ............................................. 262,645 102,814 42,538
Trust Shares .................................................. 16,111,363 13,321,844 4,373,348
Institutional Shares .......................................... 4,383,240 2,450,073 532,009
------------ ------------ -----------
Total ..................................................... 22,950,247 16,860,262 5,187,920
============ ============ ===========
Net asset value
Investor A Shares--redemption price per share ................. $ 18.89 $ 13.53 $ 12.46
Investor B Shares--offering price per share *.................. 18.76 13.32 12.25
Trust Shares--offering and redemption price per share ......... 18.95 13.64 12.56
Institutional Shares--offering and redemption price per share . 18.90 13.49 12.44
============ ============ ===========
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........................................................... $ 19.78 $ 14.17 $ 13.05
============ ============ ===========
</TABLE>
- ----------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-17-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Equity Equity
Income Index Balanced
Portfolio Portfolio Portfolio
------------- --------- ----------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $82,591,906; $25,163,040; and
$101,783,519, respectively) ............................. $120,403,654 $26,641,966 $116,946,416
Cash ...................................................... 744 561 317
Interest and dividends receivable ......................... 258,487 50,482 613,327
Receivable for portfolio shares issued .................... 286 -- --
Unamortized organization costs ............................ 29,728 -- 4,461
Prepaid expenses and other assets ......................... 4,700 -- 5,181
------------ ----------- ------------
Total Assets ...................................... 120,697,599 26,693,009 117,569,702
------------ ----------- ------------
LIABILITIES:
Dividends payable ......................................... 343,615 51,316 283,642
Payable to brokers for investments purchased .............. 405,965 -- 227,332
Accrued expenses and other payables:
Investment advisory fees .............................. -- -- 73,849
Administration fees ................................... 722 292 1,280
Distribution and services fees ........................ 16 -- 2,837
Administrative services fees .......................... -- -- 15,364
Accounting and custodian fees ......................... 1,285 -- 10,488
Other ................................................. 11,829 1,133 16,857
------------ ----------- ------------
Total Liabilities ................................. 763,432 52,741 631,649
------------ ----------- ------------
NET ASSETS:
Capital ................................................... 69,527,821 25,153,010 93,712,094
Undistributed net investment income ....................... 54,487 8,372 50,164
Net unrealized appreciation from investments .............. 37,811,748 1,478,926 15,162,897
Accumulated undistributed net realized gains (losses) from
investment transactions ................................. 12,540,111 (40) 8,012,898
------------ ----------- ------------
Net Assets ........................................ $119,934,167 $26,640,268 $116,938,053
============ =========== ============
</TABLE>
Continued
-18-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Equity Equity
Income Index Balanced
Portfolio Portfolio Portfolio
------------ ----------- ------------
<S> <C> <C> <C>
Net Assets
Investor A Shares ...................................... $ 41,053 $ 2,118 $ 9,706,620
Investor B Shares ...................................... 6,860 -- 449,554
Trust Shares ........................................... 119,885,241 26,637,091 46,138,443
Institutional Shares ................................... 1,013 1,059 60,643,436
------------ ----------- ------------
Total .............................................. $119,934,167 $26,640,268 $116,938,053
============ =========== ============
Outstanding shares of common stock
Investor A Shares ...................................... 4,061 200 790,401
Investor B Shares ...................................... 678 -- 36,909
Trust Shares ........................................... 11,852,502 2,514,823 3,756,067
Institutional Shares ................................... 100 100 4,951,874
------------ ----------- ------------
Total .............................................. 11,857,341 2,515,123 9,535,251
============ =========== ============
Net asset value
Investor A Shares--redemption price per share .......... $ 10.11 $ 10.59 $ 12.28
Investor B Shares--offering price per share *........... 10.12 -- 12.18
Trust Shares--offering and redemption price per share .. 10.11 10.59 12.28
Institutional Shares--offering and redemption price per
share ................................................ 10.13 10.59 12.25
============ =========== ============
Maximum Sales Charge: Investor A Shares .................... 4.50% 2.50% 4.50%
------------ ----------- ------------
Maximum Offering Price (100%/ (100%-Maximum Sales Charge)
of net asset value adjusted to nearest cent) per share:
Investor A Shares ........................................ $ 10.59 $ 10.86 $ 12.86
============ =========== ============
</TABLE>
- ----------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-19-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Government & U.S. Short-
Corporate Government Intermediate
Bond Securities Municipal
Portfolio Portfolio Portfolio
-------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $161,041,875; $81,684,694;
$27,800,132, respectively) ..................................... $161,378,982 $81,469,209 $27,800,445
Cash ............................................................. -- 30,984 --
Interest and dividends receivable ................................ 1,573,892 885,569 414,780
Unamortized organization costs ................................... -- -- 3,104
Prepaid expenses and other assets ................................ 5,477 4,214 7,287
------------- ------------ ------------
Total Assets ............................................. 162,958,351 82,389,976 28,225,616
------------- ------------ ------------
LIABILITIES:
Cash overdraft ................................................... 68,012 -- 24,996
Dividends payable ................................................ 776,572 397,247 96,493
Payable for portfolio shares redeemed ............................ -- 10,000 --
Accrued expenses and other payables:
Investment advisory fees ..................................... 61,583 31,298 --
Administration fees .......................................... 1,770 897 307
Distribution and services fees ............................... 1,645 1,756 --
Administrative and services fees ............................. 3,941 1,684 --
Accounting and custodian fees ................................ 13,590 6,890 2,669
Other ........................................................ 19,735 4,960 2,998
------------- ------------ ------------
Total Liabilities ........................................ 946,848 454,732 127,463
------------- ------------ ------------
NET ASSETS:
Capital .......................................................... 163,944,893 82,642,077 28,097,840
Undistributed net investment income .............................. 2,351 218,765 --
Net unrealized appreciation (depreciation) from investments ...... 337,107 (215,485) 313
Accumulated undistributed net realized losses from investment
transactions ................................................... (2,272,848) (710,113) --
------------- ------------ ------------
Net Assets ............................................... $162,011,503 $81,935,244 $28,098,153
============= ============ ============
</TABLE>
Continued
-20-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Government & U.S. Short-
Corporate Government Intermediate
Bond Securities Municipal
Portfolio Portfolio Portfolio
--------------- ------------- -------------
<S> <C> <C> <C>
Net Assets
Investor A Shares ............................................ $ 4,606,807 $ 5,349,197 $ 31,280
Investor B Shares ............................................ 575,562 413,390 --
Trust Shares ................................................. 141,220,745 69,406,251 28,066,873
Institutional Shares ......................................... 15,608,389 6,766,406 --
------------- ------------ ------------
Total .................................................... $162,011,503 $81,935,244 $28,098,153
============= ============ ============
Outstanding shares of common stock
Investor A Shares ............................................ 458,760 510,176 3,126
Investor B Shares ............................................ 57,297 39,450 --
Trust Shares ................................................. 14,062,830 6,619,286 2,806,370
Institutional Shares ......................................... 1,554,202 647,489 --
------------- ------------ ------------
Total .................................................... 16,133,089 7,816,401 2,809,496
============= ============ ============
Net asset value
Investor A Shares............................................. $ 10.04 $ 10.49 $ 10.01
Investor B Shares*............................................ 10.05 10.48 --
Trust Shares.................................................. 10.04 10.49 10.00
Institutional Shares.......................................... 10.04 10.45 --
============= ============ ============
Maximum Sales Charge: Investor A Shares .......................... 4.50% 2.50% 2.50%
------------- ------------ ------------
Maximum Offering Price (100%/(100%-Maximum Sales Charge) of net
asset value adjusted to nearest cent) per share: Investor A Shares $ 10.51 $ 10.76 $ 10.27
============= ============ ============
</TABLE>
- ----------
* 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
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Missouri National Intermediate
Tax-Exempt Municipal Corporate Bond
Bond Bond Bond Index
Portfolio Portfolio Portfolio Portfolio
------------- -------------- --------------- -------------
ASSETS:
<S> <C> <C> <C> <C>
Investments, at value (Cost $88,281,124;
$331,006,272; $38,672,237; $129,101,860,
respectively) ................................. $90,319,745 $336,965,617 $38,662,154 $129,411,455
Cash ............................................ 12,518 233 -- 63,457
Interest and dividends receivable ............... 1,397,161 5,659,660 583,798 1,297,473
Receivable for portfolio shares issued .......... -- 1,204 -- 317
Unamortized organization costs .................. -- 30,849 19,705 16,947
Prepaid expenses and other assets ............... 781 55,031 1,465 1,846
----------- ------------ ----------- ------------
Total Assets ............................ 91,730,205 342,712,594 39,267,122 130,791,495
----------- ------------ ----------- ------------
LIABILITIES:
Cash overdraft .................................. -- -- 2,806 --
Dividends payable ............................... 371,957 1,496,540 225,930 762,289
Payable to brokers for investments purchased .... -- 14,730,870 -- --
Payable for portfolio shares redeemed ........... 52,816 -- -- --
Accrued expenses and other payables:
Investment advisory fees .................... 34,821 -- -- --
Administration fees ......................... 997 1,959 978 5,990
Distribution and services fees .............. 4,858 65 -- 18
Accounting and custodian fees ............... 8,405 572 484 10,426
Other ....................................... 4,656 55,331 16,308 27,152
----------- ------------ ----------- ------------
Total Liabilities ....................... 478,510 16,285,337 246,506 805,875
----------- ------------ ----------- ------------
NET ASSETS:
Capital ......................................... 89,331,647 313,384,564 38,530,580 129,202,791
Undistributed net investment income ............. -- -- -- --
Net unrealized appreciation (depreciation) from
investments ................................... 2,038,621 5,959,345 (10,083) 309,595
Accumulated undistributed net realized gains
(losses) from investment transactions ......... (118,573) 7,083,348 500,119 473,234
----------- ------------ ----------- ------------
Net Assets .............................. $91,251,695 $326,427,257 $39,020,616 $129,985,620
=========== ============ =========== ============
</TABLE>
Continued
-22-
<PAGE>
THE ARCH FUND, INC.
Statements of Assets and Liabilities, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Missouri National Intermediate
Tax-Exempt Municipal Corporate Bond
Bond Bond Bond Index
Portfolio Portfolio Portfolio Portfolio
------------ ------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net Assets
Investor A Shares ........................... $23,564,899 $ 542,574 $ 65,587 $ 45,985
Investor B Shares ........................... 924,168 1,017 -- --
Trust Shares ................................ 66,762,628 325,883,666 38,954,033 129,938,635
Institutional Shares ........................ -- -- 996 1,000
------------ ------------- ------------ -------------
Total ................................... $91,251,695 $326,427,257 $39,020,616 $129,985,620
============ ============= ============ =============
Outstanding shares of common stock
Investor A Shares ........................... 2,032,871 54,515 6,674 4,658
Investor B Shares ........................... 79,808 102 -- --
Trust Shares ................................ 5,758,913 32,725,131 3,965,484 13,180,641
Institutional Shares ........................ -- -- 101 101
------------ ------------- ------------ -------------
Total ................................... 7,871,592 32,779,748 3,972,259 13,185,400
============ ============= ============ =============
Net asset value
Investor A Shares............................ $ 11.59 $ 9.95 $ 9.83 $ 9.87
Investor B Shares*........................... 11.58 9.96 -- --
Trust Shares................................. 11.59 9.96 9.82 9.86
Institutional Shares ........................ -- -- 9.83 9.87
============ ============= ============ =============
Maximum Sales Charge: Investor A Shares ......... 4.50% 4.50% 4.50% 2.50%
------------ ------------- ------------ -------------
Maximum Offering Price (100%/(100%-Maximum Sales
Charge) of net asset value adjusted to nearest
cent) per share: Investor A Shares............. $ 12.14 $ 10.42 $ 10.29 $ 10.12
============ ============= ============ =============
</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 Operations
For the six months ended May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Treasury Tax-Exempt
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
-------------- -------------- --------------
<S> <C> <C> <C>
Investment Income:
Interest income .......................................... $ 24,578,819 $ 3,761,283 $ 2,421,275
------------ ------------ ------------
Total Income 24,578,819 3,761,283 2,421,275
------------ ------------ ------------
Expenses:
Investment advisory fees ................................. 1,779,205 289,552 275,948
Administration fees ...................................... 889,609 144,777 68,986
Distribution and services fees--Investor A Shares ........ 111,132 8,339 20,820
Distribution and services fees--Investor B Shares ........ 298 -- --
Administrative services fees--Trust Shares ............... 500,868 58,882 36,047
Administrative services fees--Institutional Shares ....... 26,871 395 --
Custodian and accounting fees ............................ 60,778 10,124 10,632
Legal and audit fees ..................................... 51,759 4,528 5,707
Organization costs ....................................... -- 105 --
Directors' fees and expenses ............................. 10,770 1,284 1,618
Transfer agent fees ...................................... 118,135 14,999 16,624
Registration and filing fees ............................. 29,030 6,196 7,965
Printing costs ........................................... 34,169 14,801 4,286
Other .................................................... 9,218 1,531 566
Expenses voluntarily reduced ............................. (667,201) (108,581) (34,494)
------------ ------------ ------------
Total Expenses ................................... 2,954,641 446,932 414,705
Net Investment Income .................................... 21,624,178 3,314,351 2,006,570
------------ ------------ ------------
Realized/Unrealized Gains (Losses) from Investment
Transactions:
Net realized gains from investment transactions .......... 1,566 4,470 --
------------ ------------ ------------
Net realized/unrealized gains from investment transactions 1,566 4,470 --
------------ ------------ ------------
Change in net assets resulting from operations ........... $ 21,625,744 $ 3,318,821 $ 2,006,570
============ ============ ============
</TABLE>
- ----------
See notes to financial statements
-24-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the six months ended May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Growth & Small Cap International
Income Equity Equity Equity
Portfolio Portfolio Portfolio
-------------- ------------ -------------
<S> <C> <C> <C>
Investment Income:
Interest income ........................................... $ 246,420 $ 199,624 $ 554,342
Dividend income ........................................... 3,280,983 757,863 --
Income from securities lending ............................ 16,208 61,243 --
Foreign tax withholding ................................... -- -- (57,113)
------------ ------------ -----------
Total Income ...................................... 3,543,611 1,018,730 497,229
------------ ------------ -----------
Expenses:
Investment advisory fees .................................. 1,110,574 813,391 308,190
Administration fees ....................................... 404,002 216,906 61,638
Distribution and services fees--Investor A Shares ......... 57,737 19,777 4,019
Distribution and services fees--Investor B Shares ......... 20,438 6,380 2,320
Administrative services fees--Institutional Shares ........ 112,484 46,096 9,249
Custodian and accounting fees ............................. 62,820 35,101 53,270
Legal and audit fees ...................................... 27,995 12,977 3,852
Organization costs ........................................ -- 3,276 2,730
Directors' fees and expenses .............................. 5,779 2,740 728
Transfer agent fees ....................................... 63,452 30,908 9,626
Registration and filing fees .............................. 8,490 16,565 7,384
Printing costs ............................................ 19,229 9,789 3,119
Other ..................................................... 4,608 2,281 728
Expenses voluntarily reduced .............................. (202,004) (108,451) (81,385)
------------ ------------ -----------
Total Expenses .................................... 1,695,604 1,107,736 385,468
------------ ------------ -----------
Net Investment Income (Loss) .............................. 1,848,007 (89,006) 111,761
------------ ------------ -----------
Realized/Unrealized Gains (Losses) from Investments
and Foreign Currency:
Net realized gains from investment transactions ........... 46,332,565(a) 9,605,811 658,010
Net realized losses foreign currency transactions ......... -- -- (41,192)
Change in unrealized appreciation from investments ........ 2,724,029(a) 6,902,419 3,277,528
Change in unrealized appreciation from translation of
assets and liabilities in foreign currencies ............ -- -- 5,490
------------ ------------ -----------
Net realized/unrealized gains from investments and foreign
currency ................................................ 49,056,594 16,508,230 3,899,836
------------ ------------ -----------
Change in net assets resulting from operations ............ $50,904,601 $16,419,224 $4,011,597
============ ============ ===========
</TABLE>
- ----------
(a) Includes appreciation from acquired common trust fund.
See notes to financial statements
-25-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Equity Equity
Income Index Balanced
Portfolio Portfolio Portfolio
---------------- --------------- --------------
For the period For the For the six
February 26, period May 1, months
1997 through 1997 through ended May
May 31, 1997(a) May 31, 1997(a) 31, 1997
---------------- --------------- --------------
<S> <C> <C> <C>
Investment Income:
Interest income .......................................... $ 117,179 $ 15,437 $ 1,721,412
Dividend income .......................................... 573,307 51,352 518,151
Income from securities lending ........................... 1,616 -- 15,201
----------- ---------- -----------
Total Income ..................................... 692,102 66,789 2,254,764
----------- ---------- -----------
Expenses:
Investment advisory fees ................................. 197,973 6,451 423,995
Administration fees ...................................... 52,793 4,301 113,066
Distribution and services fees--Investor A Shares ........ 16 -- 13,822
Distribution and services fees--Investor B Shares ........ 17 -- 1,834
Administrative services fees--Institutional Shares ....... 1 -- 84,210
Custodian and accounting fees ............................ 1,692 -- 22,400
Legal and audit fees ..................................... 3,572 -- 7,028
Organization costs ....................................... 752 -- 2,548
Directors' fees and expenses ............................. 658 -- 1,613
Transfer agent fees ...................................... 11,656 -- 16,208
Registration and filing fees ............................. 6,486 -- 12,363
Printing costs ........................................... 2,350 -- 4,814
Other .................................................... 470 4,950 587
Expenses voluntarily reduced ............................. (236,248) (8,601) (56,532)
----------- ---------- -----------
Total Expenses ................................... 42,188 7,101 647,956
----------- ---------- -----------
Net Investment Income .................................... 649,914 59,688 1,606,808
----------- ---------- -----------
Realized/Unrealized Gains (Losses) from Investments
and Foreign Currency:
Net realized gains (losses) from investment transactions . 12,540,111(b) (40) 8,427,666(b)
Change in unrealized appreciation (depreciation) from
investments ............................................ 37,811,748(b) 1,478,926 (3,129,436)(b)
----------- ---------- -----------
Net realized/unrealized gains from investments ........... 50,351,859 1,478,886 5,298,230
----------- ---------- -----------
Change in net assets resulting from operations ........... $51,001,773 $1,538,574 $ 6,905,038
=========== ========== ===========
</TABLE>
- ----------
(a) Period from commencement of operations.
(b) Includes appreciation from acquired common trust fund.
See notes to financial statements
-26-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
For the six months ended May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Government & U.S. Short-
Corporate Government Intermediate
Bond Securities Municipal
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Investment Income:
Interest income ...................................................... $ 5,233,026 $ 2,447,560 $ 624,361
Dividend income ...................................................... 47,134 33,323 5,235
Income from securities lending........................................ 23,886 11,067 --
------------ ------------ ----------
Total Income 5,304,046 2,491,950 629,596
------------ ------------ ----------
Expenses:
Investment advisory fees ............................................. 362,485 170,374 78,657
Administration fees .................................................. 161,118 75,722 28,603
Distribution and services fees--Investor A Shares .................... 6,916 9,496 115
Distribution and services fees--Investor B Shares .................... 2,653 1,979 --
Administrative services fees--Institutional Shares ................... 22,785 5,545 --
Custodian and accounting fees ........................................ 29,158 14,823 8,810
Legal and audit fees ................................................. 9,663 4,009 4,889
Organization costs ................................................... -- -- 5,278
Directors' fees and expenses ......................................... 1,967 915 369
Transfer agent fees .................................................. 22,112 10,232 4,520
Registration and filing fees ......................................... 7,774 8,020 8,108
Printing costs ....................................................... 6,610 2,993 4,720
Other ................................................................ 1,660 736 359
Expenses voluntarily reduced ......................................... (80,558) (37,860) (92,959)
------------ ------------ ----------
Total Expenses ............................................... 554,343 266,984 51,469
Net Investment Income ................................................ 4,749,703 2,224,966 578,127
------------ ------------ ----------
Realized/Unrealized Gains (Losses) from Investments:
Net realized losses from investment transactions ..................... (916,929) (346,889) --
Change in unrealized depreciation from investments ................... (3,784,547) (866,388) (207,166)
------------ ------------ ----------
Net realized/unrealized losses from investments ...................... (4,701,476) (1,213,277) (207,166)
------------ ------------ ----------
Change in net assets resulting from operations ....................... $ 48,227 $ 1,011,689 $ 370,961
============ ============ ==========
</TABLE>
- ----------
See notes to financial statements
-27-
<PAGE>
THE ARCH FUND, INC.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Missouri National Intermediate
Tax-Exempt Municipal Corporate Bond
Bond Bond Bond Index
Portfolio Portfolio Portfolio Portfolio
--------------- --------------- ---------------- ----------------
For the six For the six For the period For the period
months months February 10, February 10,
ended ended 1997 through 1997 through
May 31, 1997 May 31, 1997 May 31, 1997(a) May 31, 1997(a)
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income ........................ $2,316,695, $ 8,949,939 $1,598,288 $6,130,657
Dividends income ....................... 72,104 70,682 13,580 22,913
Income from securities lending.......... -- -- 872 5,623
---------- ----------- ---------- ----------
Total Income ................... 2,388,799 9,020,621 1,612,740 6,159,193
---------- ----------- ---------- ----------
Expenses:
Investment advisory fees ............... 196,309 863,303 59,488 110,238
Administration fees .................... 87,249 156,963 21,632 73,493
Distribution and services fees--Investor
A Shares ............................. 24,550 407 2 28
Distribution and services fees--Investor
B Shares ............................. 3,665 5 -- --
Administrative services
fees--Institutional Shares ........... -- -- -- 1
Custodian and accounting fees .......... 18,363 5,131 1,998 12,245
Legal and audit fees ................... 5,087 19,366 2,886 8,103
Organization costs ..................... -- 3,159 888 1,554
Directors' fees and expenses ........... 895 4,956 444 1,332
Transfer agent fees .................... 10,374 27,773 14,097 6,216
Registration and filing fees ........... 6,230 39,648 5,772 10,212
Printing costs ......................... 4,642 16,491 1,665 7,215
Other .................................. 909 3,186 333 888
Expenses voluntarily reduced ........... (43,624) (934,038) (75,171) (146,984)
---------- ----------- ---------- ----------
Total Expenses ................. 314,649 206,350 34,034 84,541
---------- ----------- ---------- ----------
Net Investment Income .................. 2,074,150 8,814,271 1,578,706 6,074,652
---------- ----------- ---------- ----------
Realized/Unrealized Gains (Losses) from
Investments:
Net realized gains (losses) from
investment transactions .............. (31) 6,968,023 500,119(b) 473,234(b)
Change in unrealized appreciation
(depreciation) from investments ...... (657,885) (9,621,890) (10,083)(b) 309,595(b)
---------- ----------- ---------- ----------
Net realized/unrealized gains (losses)
from investments ..................... (657,916) (2,653,867) 490,036 782,829
---------- ----------- ---------- ----------
Change in net assets resulting from
operations ........................... $1,416,234 $ 6,160,404 $2,068,742 $6,857,481
========== =========== ========== ==========
</TABLE>
- ----------
(a) Period from commencement of operations.
(b) Includes appreciation from acquired common trust fund.
See notes to financial statements
-28-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Money Market Treasury Money
Portfolio Market Portfolio
-------------------------------- ------------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1997 1996 1997 1996
---------------- -------------- -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ..................... $ 21,624,178 $ 41,477,587 $ 3,314,351 $ 11,384,162
Net realized gains from investment
transactions ............................ 1,566 234 4,470 11,653
--------------- --------------- ------------- --------------
Change in net assets resulting from
operations ................................ 21,625,744 41,477,821 3,318,821 11,395,815
--------------- --------------- ------------- --------------
Distributions to Investor A shareholders:
From net investment income ................ (2,112,220) (3,378,057) (147,485) (214,227)
From net realized gains ................... -- (21) (164) (132)
In excess of net realized gains ........... -- (368) (305) --
Distributions to Investor B shareholders:
From net investment income ................ (1,199) (1,099) -- --
Distributions to Trust shareholders:
From net investment income ................ (18,999,566) (37,166,284) (3,159,879) (11,150,554)
From net realized gains ................... -- (205) (4,297) (11,519)
In excess of net realized gains ........... -- (4,060) (3,725) (527)
Distributions to Institutional shareholders:
From net investment income ................ (511,194) (932,147) (6,987) (19,381)
From net realized gains ................... -- (8) (9) (2)
In excess of net realized gains ........... -- (71) (10) --
--------------- --------------- ------------- --------------
Change in net assets from shareholder
distributions ............................. (21,624,179) (41,482,320) (3,322,861) (11,396,342)
--------------- --------------- ------------- --------------
Capital Transactions:
Proceeds from shares issued ............... 1,901,814,199 2,299,943,459 393,340,381 919,067,677
Dividends reinvested ...................... 9,259,808 14,874,622 1,515,553 3,510,783
Cost of shares redeemed ................... (1,819,564,404) (2,266,756,713) (365,399,579) (1,038,874,963)
--------------- --------------- ------------- --------------
Change in net assets from share transactions. 91,509,603 48,061,368 29,456,355 (116,296,503)
--------------- --------------- ------------- --------------
Change in net assets ........................ 91,511,168 48,056,869 29,452,315 (116,297,030)
Net Assets:
Beginning of period ....................... 824,392,559 776,335,690 139,287,960 255,584,990
--------------- --------------- ------------- --------------
End of period ............................. $ 915,903,727 $ 824,392,559 $ 168,740,275 $ 139,287,960
=============== =============== ============= ==============
Share Transactions:
Issued .................................... 1,901,814,199 2,299,943,459 393,340,381 919,067,677
Reinvested ................................ 9,259,808 14,874,622 1,515,552 3,510,783
Redeemed .................................. (1,819,564,404) (2,266,756,713) (365,399,579) (1,038,874,963)
--------------- --------------- ------------- --------------
Change in shares ............................ 91,509,603 48,061,368 29,456,354 (116,296,503)
=============== =============== ============= ==============
</TABLE>
- ----------
See notes to financial statements
-29-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Tax-Exempt Growth & Income
Money Market Portfolio Equity Portfolio
----------------------------- ------------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1997 1996 1997 1996
------------- -------------- -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income .......................... $ 2,006,570 $ 2,853,695 $ 1,848,007 $ 5,818,734
Net realized gains from investment transactions. -- -- 46,332,565 36,039,992
Net change in unrealized appreciation from
investments .................................. -- -- 2,724,029 45,449,749
-------------- -------------- -------------- -------------
Change in net assets resulting from operations ... 2,006,570 2,853,695 50,904,601 87,308,475
-------------- -------------- -------------- -------------
Distributions to Investor A shareholders:
From net investment income ..................... (226,878) (265,973) (136,487) (375,855)
In excess of net investment income ............. -- -- (92,554) (1,697)
From net realized gains ........................ -- -- (2,994,418) (1,443,632)
In excess of net capital gains ................. -- (250) -- --
Distributions to Investor B shareholders:
From net investment income ..................... -- (133) (11,083)
In excess of net investment income ............. -- -- (16,391) (2,688)
From net realized gains ........................ -- -- (278,354) (49,605)
Distributions to Trust shareholders:
From net investment income ..................... (1,779,692) (2,587,722) (1,446,100) (4,795,604)
In excess of net investment income ............. -- -- (453,380) (49,002)
From net realized gains ........................ -- -- (27,212,591) (16,436,950)
In excess of net capital gains ................. -- (3,631) -- --
Distributions to Institutional shareholders:
From net investment income ..................... -- -- (265,287) (636,192)
In excess of net investment income ............. -- -- (181,463) (1,490)
From net realized gains ........................ -- -- (5,715,335) (2,330,241)
Change in net assets from shareholder -------------- -------------- -------------- -------------
distributions .................................. (2,006,570) (2,857,576) (38,792,493) (26,134,039)
-------------- -------------- -------------- -------------
Capital Transactions:
Proceeds from shares issued .................... 179,401,045 213,251,311 62,886,888 92,320,506
Dividends reinvested ........................... 418,092 562,557 31,469,288 22,057,938
Cost of shares redeemed ........................ (156,631,715) (183,534,633) (134,838,161) (65,290,328)
-------------- -------------- -------------- -------------
Change in net assets from share transactions ..... 23,187,422 30,279,235 (40,481,985) 49,088,116
-------------- -------------- -------------- -------------
Change in net assets ............................. 23,187,422 30,275,354 (28,369,877) 110,262,552
Net Assets:
Beginning of period ............................ 113,709,979 83,434,625 462,899,079 352,636,527
-------------- -------------- -------------- -------------
End of period .................................. $ 136,897,401 $ 113,709,979 $ 434,529,202 $462,899,079
============== ============== ============== =============
Share Transactions:
Issued ......................................... 179,401,044 213,251,311 4,183,282 5,578,024
Reinvested ..................................... 418,092 562,557 1,844,154 1,403,626
Redeemed ....................................... (156,631,715) (183,534,633) (7,832,973) (3,843,934)
-------------- -------------- -------------- -------------
Change in shares ................................. 23,187,421 30,279,235 (1,805,537) 3,137,716
============== ============== ============== =============
</TABLE>
- ----------
See notes to financial statements
-30-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
International Equity
Small Cap Equity Portfolio Portfolio
-------------------------------------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1997 1996 1997 1996
------------- ------------- ----------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income (loss) ....................... $ (89,006) $ 232,304 $ 111,761 $ 248,827
Net realized gains (losses) from investment 9,605,811 13,981,122 658,010 (931,659)
transactions .....................................
Net realized gains (losses) from foreign currency
transactions ..................................... -- -- (41,192) 3,133,420
Net change in unrealized appreciation from 6,902,419 3,579,525 3,277,528 4,679,792
investments ......................................
Change in unrealized appreciation (depreciation)
from translation of assets and liabilities in -- -- 5,490 (1,058,982)
foreign currencies ...............................
------------- ------------- ------------ ------------
Change in net assets resulting from operations ....... 16,419,224 17,792,951 4,011,597 6,071,398
------------- ------------- ------------ ------------
Distributions to Investor A shareholders:
From net investment income ......................... (4,444) -- (1,852) --
In excess of net investment income ................. -- (6,160) (2,626) --
From net realized gains ............................ (588,881) (1,177,710) (30,593) --
In excess of net realized gains .................... (259,564) -- (36,429) --
Distributions to Investor B shareholders:
In excess of net investment income ................. -- -- (605) --
From net realized gains ............................ (56,137) (51,148) (5,208) --
In excess of net realized gains .................... (22,558) -- (6,173) --
Distributions to Trust shareholders:
From net investment income ......................... (115,260) (214,557) (96,137) --
In excess of net investment income ................. -- -- -- --
From net realized gains ............................ (7,603,156) (11,321,459) (557,039) --
In excess of net realized gains .................... (2,870,871) -- (778,674) --
Distributions to Institutional shareholders:
From net investment income ......................... (2,874) -- (3,668) --
In excess of net investment income ................. -- (13,982) (6,926) --
From net realized gains ............................ (1,357,637) (1,397,709) (65,170) --
In excess of net realized gains .................... (486,679) -- (91,103) --
------------- ------------- ------------ ------------
Change in net assets from shareholder distributions .. (13,368,061) (14,182,725) (1,682,203) --
------------- ------------- ------------ ------------
Capital Transactions:
Proceeds from shares issued ........................ 15,359,563 79,498,432 6,183,952 23,675,008
Dividends reinvested ............................... 11,915,591 12,406,113 987,073 --
Cost of shares redeemed ............................ (17,396,410) (51,937,381) (5,712,332) (8,420,843)
------------- ------------- ------------ ------------
Change in net assets from share transactions ......... 9,878,744 39,967,164 1,458,693 15,254,165
------------- ------------- ------------ ------------
Change in net assets ................................. 12,929,907 43,577,390 3,788,087 21,325,563
Net Assets:
Beginning of period ................................ 216,537,536 172,960,146 61,250,060 39,924,497
------------- ------------- ------------ ------------
End of period ...................................... $229,467,443 $216,537,536 $65,038,147 $61,250,060
============= ============= ============ ============
Share Transactions:
Issued ............................................. 1,203,641 6,245,178 527,913 2,083,892
Reinvested ......................................... 936,659 1,012,913 84,952 --
Redeemed ........................................... (1,366,683) (4,004,332) (484,106) (724,654)
------------- ------------- ------------ ------------
Change in shares ..................................... 773,617 3,253,759 128,759 1,359,238
============= ============= ============ ============
</TABLE>
See notes to financial statements
-31-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Equity Equity
Income Index
Portfolio Portfolio
-------------- --------------
February 26,
1997 to May 1,
May 31, 1997 to May
1997 (a) 31, 1997 (a)
-------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C>
From Investment Activities:
Operations:
Net investment income ............................................... $ 649,914 $ 59,688
Net realized gains (losses) from investment transactions ............ 12,540,111 (40)
Net change in unrealized appreciation from investments .............. 37,811,748 1,478,926
------------ -----------
Change in net assets resulting from operations ........................ 51,001,773 1,538,574
------------ -----------
Distributions to Investor A shareholders:
From net investment income .......................................... (169) (3)
Distributions to Investor B shareholders:
From net investment income .......................................... (15) --
Distributions to Trust shareholders:
From net investment income .......................................... (595,238) (51,311)
Distributions to Institutional shareholders:
From net investment income .......................................... (5) (2)
------------ -----------
Change in net assets from shareholder distributions ................... (595,427) (51,316)
------------ -----------
Capital Transactions:
Proceeds from shares issued ......................................... 73,467,423 25,153,010
Dividends reinvested ................................................ 5,365 --
Cost of shares redeemed ............................................. (3,944,967) --
------------ -----------
Change in net assets from share transactions .......................... 69,527,821 25,153,010
------------ -----------
Change in net assets .................................................. 119,934,167 26,640,268
Net Assets:
Beginning of period ................................................. -- --
------------ -----------
End of period ....................................................... $119,934,167 $26,640,268
============ ===========
Share Transactions:
Issued .............................................................. 12,269,630 2,515,123
Reinvested .......................................................... 563 --
Redeemed ............................................................ (412,852) --
------------ -----------
Change in shares ...................................................... 11,857,341 2,515,123
============ ===========
</TABLE>
- ----------
(a) Period from commencement of operations.
See notes to financial statements
-32-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Government & Corporate
Balanced Portfolio Bond Portfolio
----------------------------- ----------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1997 1996 1997 1996
-------------- -------------- ------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ............................ $ 1,606,808 $ 3,743,265 $ 4,749,703 $ 9,481,729
Net realized gains (losses) from investment 8,427,666 7,057,146 (916,929) 1,012,372
transactions ...................................
Net change in unrealized appreciation
(depreciation) from investments ................ (3,129,436) 7,234,948 (3,784,547) (2,852,662)
------------- ------------- ------------- -------------
Change in net assets resulting from operations ..... 6,905,038 18,035,359 48,227 7,641,439
------------- ------------- ------------- -------------
Distributions to Investor A shareholders:
From net investment income ....................... (125,343) (235,477) (130,032) (325,323)
In excess of net investment income ............... (60,974) -- -- --
From net realized gains .......................... (528,611) (306,345) -- (10,112)
Distributions to Investor B shareholders:
From net investment income ....................... (3,706) (4,068) (13,078) (18,810)
In excess of net investment income ............... (2,342) -- -- --
From net realized gains .......................... (18,197) (1,338) -- (207)
Distributions to Trust shareholders:
From net investment income ....................... (715,595) (2,248,807) (4,178,684) (8,420,741)
In excess of net investment income ............... (311,601) -- -- --
From net realized gains .......................... (3,476,807) (2,656,748) -- (232,344)
Distributions to Institutional shareholders:
From net investment income ....................... (762,164) (1,181,916) (427,909) (716,855)
In excess of net investment income ............... (383,071) -- -- --
From net realized gains .......................... (3,088,298) (1,351,994) -- (17,276)
------------- ------------- ------------- -------------
Change in net assets from shareholder distributions (9,476,709) (7,986,693) (4,749,703) (9,741,668)
------------- ------------- ------------- -------------
Capital Transactions:
Proceeds from shares issued ...................... 12,557,161 25,923,740 16,107,613 42,646,634
Dividends reinvested ............................. 8,974,699 7,792,122 2,725,738 5,921,069
Cost of shares redeemed .......................... (28,223,305) (35,443,035) (13,861,273) (27,482,599)
------------- ------------- ------------- -------------
Change in net assets from share transactions ....... (6,691,445) (1,727,173) 4,972,078 21,085,104
------------- ------------- ------------- -------------
Change in net assets ............................... (9,263,116) 8,321,493 270,602 18,984,875
Net Assets:
Beginning of period .............................. 126,201,169 117,879,676 161,740,901 142,756,026
------------- ------------- ------------- -------------
End of period .................................... $116,938,053 $126,201,169 $162,011,503 $161,740,901
============= ============= ============= =============
Share Transactions:
Issued ........................................... 1,118,561 2,238,696 1,595,365 4,197,687
Reinvested ....................................... 763,204 684,060 269,405 580,294
Redeemed ......................................... (2,393,005) (3,006,390) (1,376,781) (2,689,747)
------------- ------------- ------------- -------------
Change in shares ................................... (511,240) (83,634) 487,989 2,088,234
============= ============= ============= =============
</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
-------------------------- ---------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1997 1996 1997 1996
----------- -------------- ------------ --------------
(Unaudited) (Unaudited)
From Investment Activities:
<S> <C> <C> <C> <C>
Operations:
Net investment income ................................ $ 2,224,966 $ 3,774,130 $ 578,127 $ 1,094,106
Net realized losses from investment transactions ..... (346,889) (408,957) -- --
Net change in unrealized depreciation from
investments ........................................ (866,388) (197,452) (207,166) (16,660)
------------- ------------ ------------ ------------
Change in net assets resulting from operations ......... 1,011,689 3,167,721 370,961 1,077,446
------------- ------------ ------------ ------------
Distributions to Investor A shareholders:
From net investment income ........................... (178,036) (445,187) (1,732) (1,458)
In excess of net realized gains ...................... -- (27,732) -- --
Distributions to Investor B shareholders:
From net investment income ........................... (9,753) (12,608) -- --
In excess of net realized gains ...................... -- (165) -- --
Distributions to Trust shareholders:
From net investment income ........................... (1,933,086) (3,231,786) (576,395) (1,092,648)
In excess of net realized gains ...................... -- (154,647) -- --
Distributions to Institutional shareholders:
From net investment income ........................... (104,091) (84,549) -- --
In excess of net realized gains ...................... -- (2,281) -- --
------------- ------------ ------------ ------------
Change in net assets from shareholder distributions .... (2,224,966) (3,958,955) (578,127) (1,094,106)
------------- ------------ ------------ ------------
Capital Transactions:
Proceeds from shares issued .......................... 23,706,894 20,374,470 2,571,434 9,484,969
Dividends reinvested ................................. 1,273,060 2,512,482 23,128 64,963
Cost of shares redeemed .............................. (11,655,093) (6,672,311) (3,812,328) (3,763,873)
------------- ------------ ------------ ------------
Change in net assets from share transactions ........... 13,324,861 16,214,641 (1,217,766) 5,786,059
------------- ------------ ------------ ------------
Change in net assets ................................... 12,111,584 15,423,407 (1,424,932) 5,769,399
Net Assets:
Beginning of period .................................. 69,823,660 54,400,253 29,523,085 23,753,686
------------- ------------ ------------ ------------
End of period ........................................ $ 81,935,244 $69,823,660 $28,098,153 $29,523,085
============= ============ ============ ============
Share Transactions:
Issued ............................................... 2,261,608 1,922,232 256,755 944,068
Reinvested ........................................... 120,844 236,847 2,310 6,499
Redeemed ............................................. (1,111,314) (627,360) (381,075) (377,354)
------------- ------------ ------------ ------------
Change in shares ....................................... 1,271,138 1,531,719 (122,010) 573,213
============= ============ ============ ============
</TABLE>
- ----------
See notes to financial statements
-34-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Missouri Tax-Exempt National Municipal Bond
Bond Portfolio Portfolio
--------------------------- ----------------------------
Six months Year Six months November 18,
ended ended ended 1996 to
May 31, November 30, May 31, May 31,
1997 1996 1997 1997(a)
------------ -------------- ----------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income ............................. $ 2,074,150 $ 3,550,097 $ 8,814,271 $ 735,988
Net realized gains (losses) from investment
transactions .................................... (31) 70,177 6,968,023 115,325
Net change in unrealized appreciation
(depreciation) from investments ................. (657,885) (87,057) (9,621,890) 1,278,075
------------ ------------ ------------- -------------
Change in net assets resulting from operations ...... 1,416,234 3,533,217 6,160,404 2,129,388
------------ ------------ ------------- -------------
Distributions to Investor A shareholders:
From net investment income ........................ (566,200) (1,169,732) (8,290) (4)
Distributions to Investor B shareholders:
From net investment income ........................ (14,039) (25,005) (23) (3)
Distributions to Trust shareholders:
From net investment income ........................ (1,493,911) (2,355,360) (8,805,958) (735,973)
In excess of net investment income ................ -- -- (8) --
------------ ------------ ------------- -------------
Change in net assets from shareholder distributions . (2,074,150) (3,550,097) (8,814,279) (735,980)
------------ ------------ ------------- -------------
Capital Transactions:
Proceeds from shares issued ....................... 15,310,657 18,205,943 25,495,073 314,008,996
Dividends reinvested .............................. 599,480 1,325,915 3,312 --
Cost of shares redeemed ........................... (5,724,251) (10,722,765) (6,831,896) (4,987,761)
------------ ------------ ------------- -------------
Change in net assets from share transactions ........ 10,185,886 8,809,093 18,666,489 309,021,235
------------ ------------ ------------- -------------
Change in net assets ................................ 9,527,970 8,792,213 16,012,614 310,414,643
Net Assets:
Beginning of period ............................... 81,723,725 72,931,512 310,414,643 --
------------ ------------ ------------- -------------
End of period ..................................... $91,251,695 $81,723,725 $326,427,257 $310,414,643
============ ============ ============= =============
Share Transactions:
Issued ............................................ 1,323,928 1,584,195 2,568,534 31,400,289
Reinvested ........................................ 51,830 114,877 336 --
Redeemed .......................................... (495,728) (921,381) (691,228) (498,183)
------------ ------------ ------------- -------------
Change in shares .................................... 880,030 777,691 1,877,642 30,902,106
============ ============ ============= =============
</TABLE>
- ----------
(a) Period from commencement of operations.
See notes to financial statements
-35-
<PAGE>
THE ARCH FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Intermediate
Corporate Bond Index
Bond Portfolio Portfolio
-------------- -------------
February 10, February 10,
1997 to 1997 to
May 31, May 31,
1997 (a) 1997 (a)
------------- -------------
(Unaudited) (Unaudited)
From Investment Activities:
<S> <C> <C>
Operations:
Net investment income ................................... $ 1,578,706 $ 6,074,652
Net realized gains from investment transactions ......... 500,119 473,234
Net change in unrealized appreciation (depreciation) from
investments ........................................... (10,083) 309,595
------------- -------------
Change in net assets resulting from operations ............ 2,068,742 6,857,481
------------- -------------
Distributions to Investor A shareholders:
From net investment income .............................. (66) (667)
Distributions to Trust shareholders:
From net investment income .............................. (1,578,599) (6,073,938)
Distributions to Institutional shareholders:
From net investment income .............................. (41) (47)
------------- -------------
Change in net assets from shareholder distributions ....... (1,578,706) (6,074,652)
------------- -------------
Capital Transactions:
Proceeds from shares issued ............................. 40,096,078 130,428,207
Dividends reinvested .................................... 24,420 16,182
Cost of shares redeemed ................................. (1,589,918) (1,241,598)
------------- -------------
Change in net assets from share transactions .............. 38,530,580 129,202,791
------------- -------------
Change in net assets ...................................... 39,020,616 129,985,620
Net Assets:
Beginning of period ..................................... -- --
------------- -------------
End of period ........................................... $39,020,616 $129,985,620
============= =============
Share Transactions:
Issued .................................................. 4,131,468 13,310,090
Reinvested .............................................. 2,497 1,650
Redeemed ................................................ (161,706) (126,340)
------------- -------------
Change in shares .......................................... 3,972,259 13,185,400
============= =============
</TABLE>
- ----------
(a) Period from commencement of operations.
See notes to financial statements
-36-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ----------- -------------------------- -------------
<S> <C> <C>
Certificates of Deposit (13.8%):
25,000,000 Bayerische Landesbank
Co., 5.43%, 6/9/97..... $ 25,000,078
12,000,000 Morgan Guaranty, 5.71%,
1/6/98................. 11,998,212
15,000,000 Old Kent Bank & Trust,
5.42%, 6/30/97......... 15,000,000
25,000,000 Rabobank Yankee Cd,
5.76%, 9/24/97......... 25,001,552
30,000,000 U.S. Bancorp, 5.53%,
6/30/97................ 30,000,000
20,000,000 Wachovia Bank, 5.62%,
6/30/97................ 20,000,000
-------------
Total Certificates of Deposit 126,999,842
-------------
Commercial Paper (71.0%):
Aircraft Engines (2.1%):
19,010,000 AlliedSignal, 5.59%*,
6/18/97................ 18,959,998
-------------
Automotive (1.6%):
15,000,000 General Motors
Acceptance Corp.,
5.95%*, 11/10/97...... 14,609,850
-------------
Beverages (2.6%):
25,000,000 Anheuser-Busch Cos.,
Inc., 5.87%*, 12/17/97. 24,221,965
-------------
Brokerage (0.4%):
4,071,000 Merrill Lynch & Co.,
Inc., 5.51%*, 6/3/97... 4,069,756
-------------
Conglomerates (3.9%):
35,500,000 Philip Morris Cos.,
Inc., 5.67%*, 6/2/97... 35,494,409
-------------
Electric Utility (2.7%):
25,000,000 Virginia Electric &
Power Co., 5.59%*,
7/9/97................. 24,853,674
-------------
Electrical & Electronic (10.7%):
13,000,000 CSC Enterprises, 5.69%*,
6/6/97................. 12,989,744
15,000,000 CSC Enterprises, 5.56%*,
6/18/97................ 14,960,758
13,537,000 CSC Enterprises, 5.57%*,
6/18/97................ 13,501,522
17,054,000 General Electric
Capital, 5.61%*,
6/10/97................ 17,030,124
40,000,000 Texas Instruments, Inc.,
5.61%*, 6/4/97......... 39,981,333
-------------
98,463,481
-------------
Financial Services (16.6%):
20,000,000 ABN-AMBRO, 5.55%*,
9/5/97................. 19,712,000
21,000,000 Aes Barbers Point, Inc.,
5.54%*, 6/26/97........ 20,919,500
30,000,000 Dean Witter Discover,
5.59%*, 6/18/97........ 29,921,375
15,000,000 Morgan Stanley, 5.58%*,
6/18/97................ 14,960,688
25,000,000 Morgan Stanley, 5.55%*,
6/23/97................ 24,915,667
41,446,000 Xerox Credit, 5.60%,
6/2/97................. 41,439,554
-------------
151,868,784
-------------
Food Products (0.9%):
7,900,000 H.J. Heinz, 5.50%*,
6/20/97................ 7,877,693
-------------
Insurance (3.8%):
25,000,000 Aetna Services, Inc.,
5.58%*, 6/27/97........ 24,899,792
10,000,000 Aetna Services, Inc.,
5.58%*, 6/30/97........ 9,955,292
-------------
34,855,084
-------------
Leasing (4.4%):
40,000,000 PHH Corp., 5.51%*, 6/5/97 39,975,556
-------------
Office Equipment & Services (2.1%):
20,000,000 Pitney Bowes, 5.74%*,
8/27/97................ 19,729,333
-------------
Oil & Gas Exploration Production
& Services (4.0%):
10,000,000 PetroFina, 5.51%*, 6/2/97 9,998,472
27,022,000 PetroFina, 5.65%*, 6/2/97 27,017,759
-------------
37,016,231
-------------
Printing & Publishing (2.2%):
20,000,000 McGraw-Hill, 5.54%*,
8/6/97................. 19,801,267
-------------
</TABLE>
Continued
-37-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ----------- -------------------------- -------------
<S> <C> <C>
Commercial Paper, continued:
Retail Stores (4.4%):
40,000,000 Sears Roebuck Acceptance
Corp., 5.53%*, 6/4/97.. $ 39,981,601
------------
Telecommunications (7.0%):
25,000,000 Ameritech Corp., 5.62%*,
6/26/97................ 24,903,819
39,146,000 Bell Communication
Research, 5.65%, 6/2/97 39,139,856
------------
64,043,675
------------
Transportation & Shipping (1.6%):
14,744,000 Matson Navigation Co.,
Inc., 5.58%*, 6/18/97.. 14,705,358
------------
Total Commercial Paper 650,527,715
------------
Corporate Bonds (2.2%):
Financial Services (2.2%):
20,000,000 Merrill Lynch, 5.70%**,
10/1/97................ 20,000,000
------------
Total Corporate Bonds 20,000,000
------------
Medium Term Note (4.4%):
Finance (4.4%):
20,000,000 Bear Stearns Co.,
5.72%**, 10/14/97...... 20,000,000
20,000,000 Fannie Mae, 5.71%,
3/18/98................ 19,981,726
------------
39,981,726
------------
Total Medium Term Note 39,981,726
------------
U.S. Government Agencies (8.7%):
Federal Farm Credit Bank:
20,000,000 5.85%, 8/1/97............ 20,003,167
Federal Home Loan Bank:
20,000,000 5.35%**, 12/10/97........ 19,995,938
14,450,000 5.88%, 3/18/98........... 14,413,339
Federal National Mortgage Assoc.:
25,060,000 5.68%, 10/7/97........... 25,068,957
------------
Total U.S. Government Agencies 79,481,401
------------
Total (Cost--$916,990,684)(a) $916,990,684
============
</TABLE>
- ----------
Percentages indicated are based on net assets of $915,903,727.
* Effective yield at date of purchase.
** Variable rate securities having liquidity sources through bank letters of
credit and/or liquidity agreements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of Market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at May 31, 1997.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements
-38-
<PAGE>
THE ARCH FUND, INC.
Treasury Money Market Fund
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ----------- -------------------------- -------------
<S> <C> <C>
U.S. Treasury Bills (47.8%):
3,422,000 6/5/97.................... $ 3,420,071
5,842,000 6/12/97................... 5,833,671
4,519,000 6/19/97................... 4,507,452
28,416,000 7/10/97................... 28,272,009
21,056,000 7/24/97................... 20,903,170
2,442,000 8/7/97.................... 2,420,185
15,545,000 8/21/97................... 15,360,255
------------
Total U.S. Treasury Bills 80,716,813
------------
U.S. Treasury Notes (51.6%):
30,560,000 5.63%, 6/30/97............ 30,566,004
29,405,000 5.88%, 7/31/97............ 29,423,043
15,000,000 6.50%, 8/15/97............ 15,034,631
12,000,000 5.75%, 9/30/97............ 12,012,123
------------
Total U.S. Treasury Notes 87,035,801
------------
Total (Cost--$167,752,614)(a) $167,752,614
============
</TABLE>
- ----------
Percentages indicated are based on net assets of $168,740,275.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements
-39-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Amortized
Amount Description Cost
- ---------- ---------------------------- -------------
<S> <C> <C>
Commercial Paper (5.6%):
Texas (2.7%):
3,600,000 Houston Texas Series,
3.35%, 6/18/97............ $ 3,600,000
------------
Washington (2.9%):
4,000,000 King County Washington,
3.45%, 6/18/97............ 4,000,000
------------
Total Commercial Paper 7,600,000
------------
Municipal Bond (94.0%):
Alabama (2.9%):
4,000,000 Parrish Alabama Industrial
Development Board,
4.05%*, 6/1/15............ 4,000,000
------------
Arizona (2.8%):
975,000 Chandler, 4.00%*,
12/1/02.................. 975,000
2,900,000 Maricopa County Arizona,
Pollution Control,
4.05%, 6/2/97**........... 2,900,000
------------
3,875,000
------------
Delaware (4.4%):
6,000,000 Delaware St. Ciba-Geigy,
4.05%*, 3/1/26............ 6,000,001
------------
Florida (1.1%):
1,500,000 Florida State Board of
Education, 7.63%,
6/1/09 , Prerefunded @
102 6/1/97................ 1,530,000
Georgia (8.4%): ------------
5,500,000 Burke County, Development
Authority Pollution
Control, 4.05%*,
9/1/26.................... 5,500,000
6,000,000 Monroe County, 4.05%*,
7/1/25.................... 6,000,000
------------
11,500,000
------------
Illinois (9.1%):
1,000,000 Chicago, O'Hare
International Airport,
4.05%*, 12/1/17........... 1,000,000
5,000,000 Chicago, O'Hare
International Airport,
4.05%*, 12/1/17........... 5,000,000
900,000 Illinois Development
Finance Authority Series
A, 4.00%, 6/2/97**........ 900,000
5,540,000 Illinois Development
Finance Authority Series
D, 4.00%, 6/2/97**........ 5,540,000
------------
12,440,000
------------
Iowa (7.8%):
3,500,000 Iowa Finance Authority
Cedar River, 4.05%*,
6/1/24.................... 3,500,000
2,700,000 Iowa Finance Authority
Cedar River, 4.05%*,
5/1/25.................... 2,700,000
4,500,000 Iowa School Series, 4.25%,
1/30/98................... 4,517,316
------------
10,717,316
------------
Kentucky (3.4%):
700,000 Daviess County Kentucky,
4.15%*, 6/2/97............ 700,000
4,000,000 Daviess County Kentucky
Solid Waste Scott Paper
Co., 4.15%*, 12/1/23...... 4,000,000
------------
4,700,000
------------
Louisiana (6.4%):
1,200,000 Calcasieu Parish, 4.00%*,
2/1/16.................... 1,200,000
1,900,000 Louisiana Public
Facilities, 4.05%*,
9/1/15.................... 1,900,000
500,000 West Feliciana Parish
Louisiana Pollution
Control Rev., 4.05%*,
4/1/16.................... 500,000
5,200,000 West Felincia Parish, Gulf
States Utilities,
4.05%*, 12/1/15........... 5,200,000
------------
8,800,000
------------
Minnesota (4.7%):
4,000,000 Becker Northern States
Power, 3.45%,
8/20/97**................. 4,000,000
</TABLE>
Continued
-40-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Amortized
Amount Description Cost
- ---------- ---------------------------- -------------
<S> <C> <C>
Municipal Bond, continued:
Minnesota, continued:
2,450,000 Minneapolis PCR, 4.00%*,
3/1/11.................... $ 2,450,000
------------
6,450,000
------------
Missouri (9.7%):
2,000,000 Missouri Health &
Educational Facilities
Authority, 4.00%*,
6/1/06.................... 2,000,000
2,700,000 Missouri Health &
Educational Facilities
Authority, 3.85%*,
12/1/15................... 2,700,000
3,000,000 Missouri Health &
Educational Facilities
Authority, 3.85%*,
12/1/19................... 3,000,000
3,500,000 Missouri State
Environmental
Improvement, 3.95%,
6/1/98**.................. 3,500,000
1,000,000 Missouri State Health &
Educational Facilities
Revenue, 3.90%*,
9/1/10.................... 1,000,000
1,000,000 Monsanto County, 4.00%*,
6/1/23.................... 1,000,000
------------
13,200,000
------------
Montana (2.8%):
2,200,000 Forsyth Montana PCR Series
B, 3.90%*, 6/1/13......... 2,200,000
1,600,000 Forsyth PCR, 4.00%*, 6/1/13. 1,600,000
------------
3,800,000
------------
New York (2.2%):
3,000,000 Suffolk County N.Y.,
4.50%, 9/11/97............ 3,004,833
------------
North Carolina (2.3%):
3,100,000 North Carolina Medical
Care Commission Hospital
Revenue Series A,
4.05%*, 10/1/20........... 3,100,000
------------
Oregon (1.1%):
1,500,000 Oregon State Series 73 G,
3.85%, 6/4/97**........... 1,500,000
------------
Pennsylvania (0.3%):
400,000 Penn State Higher
Education, 4.05%,
6/2/97**.................. 400,000
------------
Tennessee (4.4%):
6,000,000 Bradley County, 4.00%*,
11/1/17................... 6,000,000
------------
Texas (15.3%):
6,000,000 Harris County Health Care
Facilities, 4.15%*,
12/1/25................... 6,000,000
3,000,000 Houston Texas, 4.50%,
6/30/97................... 3,001,373
3,900,000 North Central Health,
4.15%*, 10/1/15........... 3,900,000
2,200,000 Port Corpus Christi,
Nueces County Marine
Trem, 3.90%*, 9/1/14...... 2,200,000
4,000,000 Texas State - Tax &
Revenue Anticipation
Notes, 4.75%, 8/29/97..... 4,009,519
1,825,000 Trinity River Authority
Texas, 7.00%, 2/1/98...... 1,864,182
------------
20,975,074
------------
Utah (4.4%):
6,000,000 Salt Lake City Utah
Pollution Control,
4.15%, 8/1/07**........... 6,000,000
------------
Washington (0.5%):
700,000 Washington St. Health Care
Facilities, 4.00%,
6/2/97**.................. 700,000
------------
Total Municipal Bond 128,692,224
------------
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--$136,294,224)(a) $136,294,224
============
</TABLE>
Continued
-41-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
Percentages indicated are based on net assets of $136,897,401.
* 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 May 31, 1997.
** 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.
See notes to financial statements
-42-
<PAGE>
THE ARCH FUND, INC.
Growth and Income Equity Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------- ------------------------------ -----------------
<S> <C> <C>
Commercial Paper (1.6%):
Insurance (1.6%):
7,010,000 Aetna Services, 5.70%*, 6/2/97. $ 7,008,890
---------------
Total Commercial Paper 7,008,890
---------------
Common Stocks (97.7%):
Airlines (1.7%):
293,000 Southwest Airlines............ 7,544,750
----------------
Automotive (0.9%):
117,600 Echlin, Inc. ................. 3,924,900
----------------
Banking (3.9%):
88,600 Chase Manhattan Corp. ........ 8,372,700
224,300 Crestar Financial Corp. ...... 8,523,400
----------------
16,896,100
----------------
Banking & Financial Services (1.8%):
220,200 Green Tree Financial Corp. ... 7,707,000
----------------
Beverages (2.2%):
261,200 PepsiCo, Inc. ................ 9,599,099
----------------
Business Services (4.0%):
177,800 Automatic Data Processing, Inc 8,734,425
220,000 First Data Corp.(b)........... 8,800,000
----------------
17,534,425
----------------
Chemicals (3.9%):
183,874 Millipore Corp. .............. 7,929,566
166,950 Praxair, Inc. ................ 8,785,744
----------------
16,715,310
----------------
Communications Equipment (1.2%):
211,000 DSC Communications Corp. ..... 5,393,688
----------------
Computer Software (5.1%):
156,700 Computer Associates
International, Inc. ...... 8,579,325
35,800 Microsoft, Inc.(b)(c)......... 4,439,200
198,050 Oracle Corp.(c)............... 9,234,081
----------------
22,252,606
----------------
Consumer Goods & Services (1.7%):
321,600 CUC International Inc.(b)..... 7,396,800
----------------
Containers & Packaging (4.1%):
236,804 Avery Dennison Corp. ......... 8,909,751
150,350 Crown Cork & Seal Co., Inc. .. 8,757,888
----------------
17,667,639
----------------
Diversified Operations (2.1%):
149,200 General Electric Co. ......... 9,007,950
----------------
Electrical & Electronic (1.3%):
202,266 Analog Devices, Inc. ......... 5,410,616
----------------
Electrical Equipment (2.0%):
106,952 Grainger (W.W.), Inc. ........ 8,582,898
----------------
Financial Services (6.9%):
221,800 First USA, Inc. .............. 10,979,099
159,335 PMI Group, Inc.(b)............ 8,743,508
47,829 Student Loan Marketing
Association............... 5,817,202
198,700 United Cos. Financial Corp.(b) 4,545,263
----------------
30,085,072
----------------
Food & Related (3.4%):
282,400 IBP, Inc. .................... 6,636,400
195,200 Sara Lee Corp. ............... 7,978,800
----------------
14,615,200
----------------
Health Care (2.2%):
129,716 Bristol-Myers Squibb Co. ..... 9,517,911
----------------
Health Care-Drugs (9.7%):
124,700 American Home Products Corp. . 9,508,374
57,550 Eli Lilly & Co. .............. 5,352,150
85,450 Pfizer, Inc. ................. 8,790,669
102,378 Schering-Plough Corp. ........ 9,290,804
102,800 SmithKline Beecham PLC, ADR... 8,995,000
----------------
41,936,997
----------------
Manufacturing-Consumer Goods (2.1%):
240,627 Newell Co. ................... 9,203,983
----------------
Medical Equipment & Supplies (2.0%):
142,550 Allergan, Inc. ............... 4,223,044
139,600 Bard (C.R.), Inc. ............ 4,467,200
----------------
8,690,244
----------------
</TABLE>
Continued
-43-
<PAGE>
THE ARCH FUND, INC.
Growth and Income Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------- -------------------------------------- -----------------
<S> <C> <C>
Common Stocks, continued:
Medical-Hospital Services (1.6%):
185,100 Columbia/HCA Healthcare Corp.(b).....
$ 6,779,288
-----------------
Metals & Mining (1.1%):
100,000 UCAR International, Inc.............. 4,800,000
-----------------
Oil & Gas Equipment/Services (8.1%):
226,000 Baker Hughes, Inc.................... 8,475,000
278,700 Dresser Industries, Inc.............. 9,545,474
200,650 Tidewater, Inc....................... 8,452,381
255,100 Vastar Resources..................... 8,832,838
-----------------
35,305,693
-----------------
Oil & Gas Exploration, Production & Services (2.0%):
435,750 Union Texas Petroleum Holdings, Inc.. 8,769,469
-----------------
Paper & Related (1.1%):
71,400 Mead Corp............................ 4,551,750
-----------------
Retail Stores (1.0%):
116,654 Consolidated Stores.................. 4,462,016
-----------------
Retail Stores - Discount (2.0%):
293,463 Wal-Mart Stores, Inc.(b)............. 8,730,524
-----------------
Retail Stores - General Merchandise (0.9%):
76,077 J.C. Penney, Inc..................... 3,917,966
-----------------
Retail Stores - Grocery (1.6%):
207,750 Albertson's Inc...................... 6,959,625
-----------------
Common Stocks, continued:
Retail Stores - Specialty (3.2%):
73,700 Home Depot, Inc...................... $ 4,643,100
196,260 Nordstrom, Inc.(b)................... 9,420,479
-----------------
14,063,579
-----------------
Technology (2.1%):
139,950 Motorola, Inc........................ 9,289,181
-----------------
Tire & Rubber (2.0%):
149,150 Goodyear Tire & Rubber Co............ 8,725,275
-----------------
Tobacco (2.1%):
211,200 Philip Morris Cos., Inc.............. 9,292,800
-----------------
Transportation & Shipping (1.8%):
96,500 Burlington Northern Santa Fe......... 8,009,500
-----------------
Utilities - Gas & Electric (3.0%):
163,800 Baltimore Gas & Electric............. 4,299,750
206,450 Central & South West Corp.(b)........ 4,387,063
130,250 Western Resources, Inc............... 4,249,406
-----------------
12,936,219
-----------------
Wholesale Distribution (1.9%):
237,235 Sysco Corp........................... 8,273,571
-----------------
Total Common Stocks 424,549,644
-----------------
Investment Companies (1.0%):
4,168,000 Cash Assets Trust Money Market Fund..
4,168,000
-----------------
Total Investment Companies 4,168,000
-----------------
Total (Cost--$327,491,968)(a) $ 435,726,534
=================
</TABLE>
- -------------
Percentages indicated are based on net assets of $434,529,202.
* Effective yield at purchase date.
(a) Represents cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ...................................................... $ 113,204,778
Unrealized depreciation ...................................................... (4,970,212)
-----------------
Net unrealized appreciation .................................................. $ 108,234,566
=================
</TABLE>
(b) A portion of this security was loaned as of May 31, 1997.
(c) Represents non-income producing securities.
See notes to financial statements
-44-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------- ------------------------------ -----------------
<S> <C> <C>
Commercial Paper (7.1%):
Insurance (4.0%):
9,270,000 Aetna Services, 5.70%*,
6/2/97.................... $ 9,268,531
----------------
Telecommunications (3.1%):
7,000,000 Bell Commerce Research,
5.65%, 6/2/97............. 6,998,900
----------------
Total Commercial Paper 16,267,431
----------------
Common Stocks (92.9%):
Banking (5.3%):
30,000 CCB Financial Corp.(c)........ 2,107,500
68,600 Charter One Financial, Inc. .. 3,215,625
50,000 First Commerce Corp.(c)....... 2,256,250
80,000 First Financial Corp. ........ 2,230,000
70,000 St. Paul Bancorp, Inc. ....... 2,222,500
----------------
12,031,875
----------------
Beverages (1.6%):
120,767 Canandaigua Wine, Inc.,
Class A(b)(c)............. 3,728,681
----------------
Broadcasting (2.1%):
59,000 Evergreen Media Corp.(b)(c)... 2,293,625
80,000 SFX Broadcasting, Inc.(b)(c).. 2,580,000
----------------
4,873,625
----------------
Building Products (0.6%):
30,000 Rayonier, Inc. ............... 1,286,250
----------------
Business Services (5.0%):
65,000 Interim Services, Inc.(b)(c).. 2,535,000
95,000 National Data Corp.(c)........ 4,168,125
87,000 SunGard Data Systems,
Inc.(b)(c)................ 3,697,500
100,000 Western Staff Services,
Inc.(b)................... 1,015,625
----------------
11,416,250
----------------
Chemicals (8.1%):
62,200 Cytec Industries, Inc.(b)(c).. 2,433,575
208,000 Hanna (M.A.) Co.(c)........... 4,810,000
140,000 International Specialty Products,
Inc.(b).................... 1,907,500
100,736 Minerals Technologies Inc.(c). 3,979,072
78,500 OM Group Inc.(c).............. 2,472,750
160,000 RPM, Inc.(c).................. 3,040,000
----------------
18,642,897
----------------
Commercial Services (1.0%):
100,000 Unitog Co. ................... 2,350,000
----------------
Computer Hardware (3.4%):
69,474 Komag, Inc.(b)(c)............. 2,006,062
191,088 Zebra Technologies Corp.(b)(c) 5,875,956
----------------
7,882,018
----------------
Computer Software (2.8%):
100,000 Active Voice Corp.(b)......... 1,200,000
73,000 Allin Communications Corp.(b). 219,000
114,850 Network General Corp.(b)...... 2,110,369
239,036 Systemsoft Corp.(c)........... 2,868,432
----------------
6,397,801
----------------
Containers (1.3%):
102,500 Ball Corp.(c)................. 2,985,313
----------------
Electrical Equipment (1.6%):
80,000 Hubbell, Inc., Class B........ 3,640,000
----------------
Financial Services (9.4%):
182,500 Aames Financial Corp.(c)...... 2,349,688
145,000 Cityscape Financial Corp.(b)(c) 2,102,500
68,000 CMAC Investment Corp.(c)...... 2,830,500
145,000 Credit Acceptance Corp.(b)(c). 2,048,125
38,000 Finova Group, Inc. ........... 2,831,000
60,000 RCSB Financial, Inc. ......... 2,456,250
107,000 Resource Bancshares Mortgage
Group, Inc. .............. 1,591,625
136,500 Southern Pacific Funding
Corp.(b)(c)............... 1,911,000
103,600 Union Acceptance Corp.(b)..... 912,975
108,400 United Cos. Financial Corp.(c) 2,479,650
----------------
21,513,313
----------------
Food & Related (2.8%):
115,000 Hormel Foods Corp. ........... 2,903,750
172,500 Performance Food Group........ 3,579,375
----------------
6,483,125
----------------
</TABLE>
Continued
-45-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------- -------------------------------------- -----------------
Common Stocks, continued:
<S> <C> <C>
Health Care-Drugs (0.4%):
84,000 ChiRex Inc.(b)....................... $ 966,000
-----------------
Insurance (1.0%):
59,100 American States Financial Corp....... 2,267,963
-----------------
Machinery & Equipment (1.7%):
115,000 Albany International Corp............ 2,616,250
24,000 Tecumseh Products Co. Class A(c)..... 1,359,000
-----------------
3,975,250
-----------------
Manufacturing - Consumer Goods (2.8%):
40,000 AptaraGroup, Inc..................... 1,775,000
67,600 Blyth Industries, Inc.(b)(c)......... 3,008,200
50,000 Libbey, Inc.......................... 1,668,750
-----------------
6,451,950
-----------------
Manufacturing-Miscellaneous (0.8%):
75,000 Lydall, Inc.(b)...................... 1,715,625
-----------------
Medical Equipment & Supplies (10.7%):
125,000 Allergan, Inc........................ 3,703,125
68,000 Dentsply International, Inc.(c)...... 3,417,000
93,000 Fisher Scientfic International....... 3,371,250
54,000 Lunar Corp.(b)....................... 1,080,000
125,000 Nellcor Puritan Bennett, Inc.(b)..... 2,671,875
222,000 OrthoLogic Corp.(b).................. 1,304,250
160,000 Penederm, Inc.(b)(c)................. 1,780,000
89,300 Polymer Group, Inc.(b)............... 1,294,850
60,100 ResMed, Inc.(b)...................... 1,262,100
88,500 Scherer (R.P.) Corp.(b).............. 4,646,250
-----------------
24,530,700
-----------------
Medical Services (9.3%):
168,000 Apria Healthcare Group, Inc.(b)...... 3,024,000
210,000 Beverly Enterprises, Inc.(b)(c)...... 2,966,250
66,000 Emeritus Corp.(b).................... 1,006,500
130,000 Horizon/CMS Healthcare Corp.(b)(c)... 2,372,500
105,000 Living Centers of America(b)(c)...... 4,003,125
90,000 Multicare Cos. Inc.(b)(c)............ 2,238,750
68,200 Sterling House Corp.(b)(c)........... 1,048,575
285,032 Sun Healthcare Group, Inc.(b)(c)..... 4,774,286
-----------------
21,433,986
-----------------
Oil & Exploration Products & Services (5.7%):
127,403 Global Industries Limited(b)......... 2,802,866
80,000 J. Ray McDermott, S.A.(b)(c)......... 2,180,000
158,000 Union Texas Petroleum Holdings, Inc.. 3,179,750
64,955 United Meridian Corp.(b)............. 2,338,380
74,623 Weatherford Enterra, Inc.(b)......... 2,546,510
-----------------
13,047,506
-----------------
Paper & Related (0.8%):
60,000 Caraustar Industries Inc............. 1,732,500
-----------------
Printing & Publishing (0.8%):
170,000 K-III Communications Corp.(b)(c)..... 1,891,250
-----------------
Restaurants (1.5%):
55,000 Ruby Tuesday, Inc.(b)................ 1,182,500
174,000 Ryan's Family Steak Houses, Inc.(b).. 1,587,750
30,000 Showbiz Pizza Time, Inc.(b).......... 675,000
-----------------
3,445,250
-----------------
Retail Stores - Specialty (3.5%):
70,000 Discount Auto Parts, Inc.(b)......... 1,303,750
145,000 Marks Bros. Jewelers, Inc.(b)........ 1,576,875
120,460 Micro Warehouse, Inc.(b)............. 2,077,935
90,000 The Sports Authority, Inc.(b)(c)..... 1,620,000
75,000 Tractor Supply Co.(b)................ 1,537,500
-----------------
8,116,060
-----------------
Steel (0.7%):
130,000 J&L Specialty Steel, Inc............. 1,657,500
-----------------
Telecommunications (1.8%):
213,900 Arch Communications Group, Inc.(b)... 1,657,725
</TABLE>
Continued
-46-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- --------------------------------------- ------------
<S> <C> <C>
Common Stocks, continued:
Telecommunications, continued:
205,000 Mobile Telecom Tech
Corp.(b)(c)........................... $ 2,498,438
------------
4,156,163
------------
Transportaton & Shipping (2.4%):
137,000 American Freightways Corp.............. 1,883,750
75,000 Simon Transportation
Services, Inc.(b)..................... 1,387,500
91,000 U.S. Freightways Corp.(c).............. 2,206,750
------------
5,478,000
------------
Utilities - Gas & Electric (2.1%):
75,000 Central Louisiana Electric............. 1,893,750
61,000 Tejas Gas Corp.(b)(c).................. 2,859,375
------------
4,753,125
------------
Wholesale Distribution (1.9%):
90,000 Barnett, Inc........................... 2,002,500
133,000 Peak Technologies Group,
Inc.(b)............................... 2,377,375
------------
4,379,875
------------
Total Common Stocks 213,229,851
------------
Investment Companies (0.4%):
1,000,000 Cash Assets Trust Money
Market Fund........................... 1,000,000
------------
Total Investment Companies 1,000,000
------------
Total (Cost--$211,945,723)(a) $230,497,282
============
</TABLE>
- -------------
Percentages indicated are based on net assets of $229,467,443.
* Effective yield at purchase date.
(a) Represents cost for federal income tax purposes differs from value by net
unrealized appreciation of securitites as follows:
<TABLE>
<S> <C>
Unrealized appreciation ...................................................... $ 33,140,602
Unrealized depreciation ...................................................... (14,589,043)
---------------
Net unrealized appreciation .................................................. $ 18,551,559
===============
</TABLE>
(b) Represents non-income producing securities.
(c) A portion of this security was loaned as of May 31, 1997
See notes to financial statements
-47-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
- --------- ------------------------------ --------------
<S> <C> <C>
Common Stocks (95.2%):
Australia (1.8%):
Diversified Operations (0.9%):
159,000 Southcorp Holdings Limited... $ 593,103
-----------
Metals & Mining (0.9%):
41,000 Broken Hill Proprietary Co,
Ltd........................ 588,595
-----------
Total Australia 1,181,698
-----------
Finland (1.6%):
Banking (0.8%):
148,000 Merita....................... 506,800
-----------
Telecommunications (0.8%):
8,400 Nokia AB-Preference(b)....... 549,464
-----------
Total Finland 1,056,264
-----------
France (10.4%):
Banking (1.2%):
19,000 Banque Nationale de Paris.... 781,238
-----------
Building Products (1.2%):
5,550 Compagnie de Saint-Gobain.... 767,743
-----------
Construction - Domestic (1.2%):
7,800 Technip SA................... 802,812
-----------
Diversified Operations (1.1%):
25,000 Lagardere S.C.A.............. 736,787
-----------
Electrical & Electronic (1.1%):
1,340 Le Carbone-Lorraine.......... 311,655
8,700 Schneider Sa................. 418,729
-----------
730,384
-----------
Health Care-Drugs (1.2%):
24,700 Rhone-Poulenc-A.............. 801,684
-----------
Insurance (1.1%):
23,200 Assurances Generales de
France..................... 706,691
-----------
Oil & Gas Exploration, Production & Services (1.0%):
6,200 Elf Aquitaine................ 620,915
-----------
Oil Companies - Integrated (1.3%):
9,000 Total SA-B................... 824,785
-----------
Total France 6,773,039
-----------
Germany (8.2%):
Automotive (2.8%):
11,400 Daimler-Benz AG.............. 878,928
1,900 Volkswagen AG Preferred...... 935,741
-----------
1,814,669
-----------
Business Services (1.2%):
4,150 SAP AG....................... 756,713
-----------
Chemicals (1.2%):
5,400 SGL Carbon AG................ 782,012
-----------
Health Care-Drugs (1.9%):
880 Altana....................... 813,133
6,200 Gehe AG...................... 439,845
-----------
1,252,978
-----------
Utilities (1.1%):
12,800 VEBA AG...................... 724,953
-----------
Total Germany 5,331,325
-----------
Hong Kong (4.9%):
Banking (0.8%):
102,000 Dao Heng Bank Group Ltd...... 522,604
-----------
Diversified Operations (1.3%):
55,000 Hutchison Whampoa Ltd........ 457,831
51,000 Swire Pacific Ltd.'A'........ 427,825
-----------
885,656
-----------
Financial Services (1.1%):
388,000 Peregrine Investment
Holdings Ltd............... 691,024
30,200 Peregrine Investment
Holdings Warrants.......... 8,380
-----------
699,404
-----------
Real Estate (1.7%):
63,000 Cheung Kong.................. 644,350
182,000 Wheelock & Co. Ltd........... 445,105
-----------
1,089,455
-----------
Total Hong Kong 3,197,119
-----------
Italy (2.2%):
Banking (0.8%):
200,000 Banca Fideuram............... 516,018
-----------
</TABLE>
Continued
-48-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
- --------- ------------------------------ --------------
<S> <C> <C>
Common Stocks, continued:
Italy, continued:
Telecommunications (1.4%):
310,000 Telecom Italia Mobile........ $ 910,687
-----------
Total Italy 1,426,705
-----------
Japan (24.3%):
Audio/Video Products (3.4%):
11,000 Sony Corp. .................. 926,028
8,000 TDK Corp. ................... 613,748
34,000 Yamaha Corp. ................ 644,812
-----------
2,184,588
-----------
Automotive (0.4%):
9,000 Honda Motor.................. 264,138
-----------
Business Services (1.0%):
9,000 Secom & Co. ................. 647,215
-----------
Chemicals (0.8%):
48,000 Sekisui Chemical Co. ........ 498,412
-----------
Computer Software (0.9%):
23,300 Meitec....................... 613,842
-----------
Construction (1.1%):
31,000 Matsushita Electric Works
Ltd. ...................... 343,173
13,000 Sho-bond Corp. .............. 372,608
-----------
715,781
-----------
Cosmetics & Toiletries (0.5%):
24,000 Shiseido Co., Ltd. .......... 350,124
-----------
Distribution/Wholesale (0.7%):
48,000 Mitsui & Co. ................ 424,268
-----------
Electrical & Electronic (6.0%):
4,070 Keyence Corp. ............... 586,767
31,000 Mitsumi Electric............. 750,193
7,000 Rohm Co. .................... 726,851
40,000 Taiyo Yuden Co., Ltd. ....... 638,462
9,000 Tokyo Electron............... 453,360
40,000 Yamatake-Honeywell........... 751,738
-----------
3,907,371
-----------
Financial Services (1.3%):
4,100 Nichiei Co. ................. 383,506
7,500 Orix Corp. .................. 450,528
-----------
834,034
-----------
Health Care-Drugs (0.2%):
8,000 Eisai Co. Ltd. .............. 160,645
-----------
Machinery - Electrical (1.0%):
7,800 SMC.......................... 635,888
-----------
Media (0.7%):
1,200 Nippon Television Network.... 478,847
-----------
Multilevel Direct Selling (0.6%):
10,700 Amway Japan Ltd. ............ 412,280
-----------
Office Automation & Equipment (1.1%):
27,000 Canon, Inc. ................. 683,515
-----------
Real Estate (0.8%):
40,000 Mitsubishi Estate Co. Ltd. .. 545,782
-----------
Recreation (1.1%):
8,800 Nintendo..................... 687,205
-----------
Rubber - Tires (0.5%):
13,000 Bridgestone.................. 293,401
-----------
Telecommunications (2.2%):
74 DDI Corp. ................... 551,841
95 Nippon Telegraph & Telephone. 904,917
-----------
1,456,758
-----------
Total Japan 15,794,094
-----------
Malaysia (2.1%):
Diversified Operations (1.5%):
241,000 Hicom Holdings Bhd........... 489,155
275,000 Multi-Purpose Holdings Bhd... 435,587
10,500 YTL Corp. Power Rights....... 15,462
-----------
940,204
-----------
Financial Services (0.6%):
86,000 Hong Leong Credit Bhd........ 414,136
-----------
Rights/Warrants (0.0%):
196,000 Rights Multi Purpose Holdings 780
-----------
Total Malaysia 1,355,120
-----------
Netherlands (8.4%):
Audio/Video (1.0%):
13,600 PolyGram NV.................. 642,151
-----------
</TABLE>
Continued
-49-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
- --------- ------------------------------ --------------
<S> <C> <C>
Common Stocks, continued:
Netherlands, continued:
Financial Services (1.5%):
21,318 Ing Groep NV................. $ 943,245
-----------
Food Products (1.2%):
40,800 Koninklijke Bols Wessanen NV. 778,236
-----------
Machinery - General Industrial (1.0%):
14,800 Stork NV..................... 655,618
-----------
Office Furnishing (1.2%):
12,635 Koninklijke Ahrend Groep NV.. 800,059
-----------
Retail General Merchandise (1.3%):
15,000 Vendex International N.V..... 842,714
-----------
Warehousing & Transportation Services (1.2%):
23,300 Koninklijke Pakhoed NV....... 789,295
-----------
Total Netherlands 5,451,318
-----------
Portugal (1.5%):
Telecommunications (1.5%):
25,300 Portugal Telecom SA.......... 972,152
-----------
Total Portugal 972,152
-----------
Spain (3.2%):
Insurance (0.6%):
6,200 Mapfre Vida.................. 419,793
-----------
Oil Companies - Integrated (1.1%):
17,100 Repsol SA.................... 716,969
-----------
Telecommunications (1.5%):
33,100 Telefonica de Espana......... 956,561
-----------
Water Utility (0.0%):
167 Aguas de Barcelona-New(b).... 6,608
-----------
Total Spain 2,099,931
-----------
Sweden (2.7%):
Insurance (1.4%):
25,400 Skandia Forsakrings AB....... 898,903
-----------
Telecommunications (1.3%):
25,100 Ericsson (L.M.).............. 883,414
-----------
Total Sweden 1,782,317
-----------
Switzerland (4.8%):
Health Care-Drugs (3.4%):
540 Ares-Serono Group............ 734,785
555 Novartis AG-Registered....... 753,234
81 Roche Holding AG-Genussshein. 720,280
-----------
2,208,299
-----------
Insurance (1.4%):
655 Swiss Reinsurance Registered. 879,692
-----------
Total Switzerland 3,087,991
-----------
United Kingdom (11.4%):
Banking (1.6%):
64,400 Standard Chartered Bank...... 1,019,422
-----------
Business Services (1.1%):
233,000 Corporate Services Group PLC. 691,909
-----------
Computer Services (1.7%):
43,800 Misys PLC.................... 976,400
6,100 SEMA Group PLC............... 126,900
-----------
1,103,300
-----------
Diversified Operations (2.6%):
50,400 GKN PLC...................... 873,671
214,000 Rentokil Initial PLC......... 824,558
-----------
1,698,229
-----------
Electrical & Electronic (1.0%):
98,400 Electrocomponents PLC........ 643,174
-----------
Financial Services (1.5%):
100,600 Lloyds TSB Group PLC......... 1,010,610
-----------
Oil Companies - Integrated (0.7%):
36,600 British Petroleum............ 433,847
-----------
Telecommunications (1.2%):
99,200 Cable Wireless............... 809,895
-----------
Total United Kingdom 7,410,386
-----------
United States (7.7%):
Closed End Investment Companies (2.3%):
18,100 Genesis Chile Fund........... 850,700
8,450 India Magnum Fund............ 401,375
3,170 Korea International
Investment Fund............ 246,943
-----------
1,499,018
-----------
</TABLE>
Continued
-50-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or Market Value
Principal Security in U.S.
Amount Description Dollars
- --------- ------------------------------ --------------
<S> <C> <C>
Common Stocks, continued:
United States, continued:
Financial Services (0.7%):
8,400 Brazilian Investment Co...... $ 454,524
-----------
Healthcare (1.5%):
23,000 Elan-ADR..................... 943,000
-----------
Multiple Industry (1.3%):
34,000 Argentinian Investor Co...... 873,800
-----------
Retail (0.4%):
6,270 Fila Holdings ADR............ 264,908
-----------
Telecommunications (0.8%):
3,800 Telebras ADR................. 514,425
-----------
Textile (0.7%):
6,275 Gucci Group ADR.............. 429,838
-----------
Total United States 4,979,513
-----------
Total Common Stocks 61,898,972
-----------
U.S. Government Agencies (1.0%):
Federal Home Loan Mortgage Assoc::
670,000 0.00%, 6/2/97* ............. 669,800
-----------
Total U.S. Government Agencies 669,800
-----------
Investment Companies (0.7%):
40 Taipei Fund.................. 440,000
-----------
Total Investment Companies 440,000
-----------
Total (Cost--$52,661,016)(a) $63,008,772
===========
</TABLE>
- ----------
Percentages indicated are based on net assets of $65,038,147.
* Represents discount Note.
(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 .......................... $11,432,774
Unrealized depreciation .......................... (1,085,018)
-----------
Net unrealized appreciation ...................... $10,347,756
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements
-51-
<PAGE>
THE ARCH FUND, INC.
Equity Income Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------- -------------------------------------- -----------------
<S> <C> <C>
Commercial Paper (2.9%):
Financial Services (2.9%):
3,506,000 Xerox Credit, 5.60%, 6/2/97............ $ 3,505,454
-----------------
Total Commercial Paper 3,505,454
-----------------
Common Stocks (94.5%):
Automotive (3.4%):
62,000 Echlin, Inc. .......................... 2,069,250
34,000 PPG Industries, Inc. .................. 1,976,250
-----------------
4,045,500
-----------------
Banking (23.8%):
48,004 Barnett Banks, Inc.(b)................. 2,526,211
42,700 Chase Manhattan Corp. ................. 4,035,149
30,200 Comerica, Inc. ........................ 1,887,500
41,000 CoreStates Financial Corp. ............ 2,167,875
65,000 Crestar Financial Corp. ............... 2,470,000
15,000 First Union Corp.(b)................... 1,288,125
40,000 KeyCorp................................ 2,175,000
26,700 Mellon Bank Corp. ..................... 2,336,250
28,900 National City Corp.(b)................. 1,488,350
42,000 Norwest Corp. ......................... 2,247,000
50,000 PNC Financial Corp. ................... 2,093,750
30,000 Union Planters Corp. .................. 1,736,250
35,000 Wachovia Corp.(b)...................... 2,130,625
-----------------
28,582,085
-----------------
Banking & Financial Services (1.5%):
52,000 Green Tree Financial Corp. ............ 1,820,000
-----------------
Chemicals (1.3%):
19,000 Dow Chemical Co.(b).................... 1,584,125
-----------------
Chemicals - Industrial Gas (0.7%):
16,200 Praxair, Inc. ......................... 852,525
-----------------
Chemicals--Specialty (0.6%):
39,000 RPM, Inc. ............................. 741,000
-----------------
Containers & Packaging (2.3%):
40,000 Avery Dennison Corp. .................. 1,505,000
22,200 Crown Cork & Seal Co., Inc. ........... 1,293,150
-----------------
2,798,150
-----------------
Diversified Operations (2.4%):
48,000 General Electric Co. .................. 2,898,000
-----------------
Electrical Equipment (2.0%):
15,970 Grainger (W.W.), Inc. ................. 1,281,593
15,000 Honeywell, Inc. ....................... 1,091,250
-----------------
2,372,843
-----------------
Financial Services (7.8%):
74,400 Fannie Mae............................. 3,245,699
19,000 First USA, Inc. ....................... 940,500
63,375 MBNA Corp. ............................ 2,146,828
26,600 PMI Group, Inc.(b)..................... 1,459,675
6,987 Student Loan Marketing Association..... 849,794
33,000 United Financial Corp.(b).............. 754,875
-----------------
9,397,371
-----------------
Food & Related (3.0%):
71,000 IBP, Inc. ............................. 1,668,500
47,400 Sara Lee Corp. ........................ 1,937,475
-----------------
3,605,975
-----------------
Health Care-Drugs (11.2%):
31,300 Abbott Laboratories.................... 1,971,900
41,300 American Home Products Corp. .......... 3,149,124
28,600 Bristol-Myers Squibb Co................ 2,098,525
34,200 Schering-Plough Corp................... 3,103,649
34,800 SmithKline Beecham PLC, ADR............ 3,045,000
-----------------
13,368,198
-----------------
Instruments - Scientific (1.2%):
32,500 Millipore Corp......................... 1,401,563
-----------------
Manufacturing-Consumer Goods (2.1%):
64,900 Newell Co. ............................ 2,482,425
-----------------
Medical Equipment & Supplies (2.1%):
39,700 Allergan, Inc.......................... 1,176,113
40,000 Bard (C.R.), Inc. ..................... 1,280,000
-----------------
2,456,113
-----------------
Oil & Exploration Products & Services (0.3%):
20,100 Union Texas Petroleum Holdings, Inc. .. 404,513
-----------------
</TABLE>
Continued
-52-
<PAGE>
THE ARCH FUND, INC.
Equity Income Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- -------------- -------------------------------------- -----------------
<S> <C> <C>
Common Stocks, continued:
Oil & Gas Equipment/Services (3.5%):
83,100 Dresser Industries, Inc. ............ $ 2,846,175
30,900 Tidewater, Inc. ..................... 1,301,663
----------------
4,147,838
----------------
Oil Companies - Integrated (3.3%):
22,600 Amoco Corp. ......................... 2,019,875
10,000 Mobil Corp. ......................... 1,398,750
2,500 Royal Dutch Petroleum Co. ........... 488,125
----------------
3,906,750
----------------
Paper Products (1.9%):
42,500 Consolidated Papers Inc. ............ 2,316,250
----------------
Retail Stores - Department (2.3%):
30,433 J.C. Penney, Inc. ................... 1,567,300
26,000 May Department Stores Co. ........... 1,225,250
----------------
2,792,550
----------------
Retail Stores - Grocery (0.8%):
27,000 Albertson's, Inc. ................... 904,500
----------------
Technology (1.4%):
25,900 Motorola, Inc. ...................... 1,719,113
----------------
Tire & Rubber (1.9%):
38,000 Goodyear Tire & Rubber Co. .......... 2,223,000
----------------
Tobacco (2.2%):
60,000 Philip Morris Co., Inc. ............. 2,640,000
----------------
Transportation & Shipping (2.4%):
16,200 Burlington Northern Santa Fe......... 1,344,600
20,000 CSX Corp.(b)......................... 1,060,000
7,500 Union Pacific Corp. ................. 508,125
----------------
2,912,725
----------------
Utilities - Gas & Electric (5.6%):
62,000 Baltimore Gas & Electric Co. ........ 1,627,500
57,000 Central & South West Corp. .......... 1,211,250
80,000 PacifiCorp. ......................... 1,590,000
36,000 Union Electric Co.(b)................ 1,318,500
30,000 Western Resources, Inc. ............. 978,750
----------------
6,726,000
----------------
Utilities - Telecommunications (3.0%):
26,000 Bell Atlantic Corp.(b)............... 1,820,000
30,000 SBC Communications, Inc. ............ 1,755,000
----------------
3,575,000
----------------
Wholesale Distribution (0.5%):
17,500 Sysco Corp. ......................... 610,313
----------------
Total Common Stocks 113,284,425
----------------
Convertible Bonds (1.7%):
Banking (0.3%):
500,000 Cityscape Financial Corp., 6.00%,
5/1/06............................ 375,625
Financial Services (0.7%):
1,000,000 Southern Pacific Funding, 6.75%,
10/15/06.......................... 881,250
Oil & Gas Exploration, Production & Services (0.7%):
37,200 Arco Lyonell Notes, 9.01%, 9/15/97... 799,800
----------------
Total Convertible Bonds 2,056,675
----------------
Real Estate Investment Trust (1.3%):
Health Care (1.1%):
60,400 Nationwide Health Properties, Inc.... 1,298,600
----------------
Office Property (0.2%):
11,000 Prentiss Properties Trust............ 258,500
----------------
Total Real Estate Investment Trust 1,557,100
----------------
Total (Cost--$82,591,906)(a) $ 120,403,654
================
</TABLE>
- -------------------------
Percentages indicated are based on net assets of $119,934,167.
(a) Represents cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ...................................................... $ 39,240,231
Unrealized depreciation ...................................................... (1,428,483)
===============
Net unrealized appreciation .................................................. $ 37,811,748
===============
</TABLE>
(b) A portion of this security was loaned as of May 31, 1997.
See notes to financial statements
-53-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ----------- ----------------------------------------- ----------------
<S> <C> <C>
Commercial Paper (0.2%):
Financial Services (0.2%):
48,000 Xerox Credit, 5.60%, 6/2/97.............. $ 47,993
----------------
Total Commercial Paper 47,993
----------------
Common Stocks (99.8%):
Aerospace (0.1%):
236 Northrop Grumman Corp.................... 20,001
----------------
Aerospace/Defense (1.6%):
1,463 Boeing Co................................ 153,980
258 General Dynamics Corp.................... 19,318
787 Lockheed Martin Corp..................... 73,683
866 McDonnell Douglas Corp................... 55,749
964 Raytheon Co.............................. 46,031
969 United Technologies Corp................. 77,883
----------------
426,644
----------------
Aircraft Engines & Engine Parts (0.3%):
1,155 AlliedSignal............................. 88,646
----------------
Airlines (0.3%):
372 AMR Corp(b).............................. 36,968
299 Delta Air Lines.......................... 28,031
592 Southwest Airlines Co.................... 15,244
262 US Airways Group, Inc.(b)................ 9,105
----------------
89,348
----------------
Aluminum (0.1%):
924 Alcan Aluminum Ltd....................... 33,149
----------------
Apparel (0.3%):
1,178 Nike, Inc................................ 67,146
----------------
Apparel/Shoes (0.2%):
314 Fruit of the Loom........................ 10,951
292 Liz Claiborne, Inc....................... 13,323
227 Reebok International Ltd................. 9,307
156 Russell Corp............................. 4,778
203 Stride Rite Corp......................... 3,096
260 VF Corp.................................. 20,313
----------------
61,768
----------------
Automotive (1.3%):
4,842 Ford Motor Co............................ 181,574
3,087 General Motors Corp...................... 176,730
----------------
358,304
----------------
Automotive Cars/Trucks (0.4%):
2,869 Chrysler Corp............................ $ 91,091
300 Navistar International Corp.............. 4,988
318 PACCAR, Inc.............................. 14,390
----------------
110,469
----------------
Automotive Parts & Equipment (0.3%):
161 Cummins Engine Co........................ 10,264
416 Dana Corp................................ 15,028
255 Echlin, Inc.............................. 8,511
738 Genuine Parts Co......................... 24,723
519 TRW, Inc................................. 27,767
----------------
86,293
----------------
Banking (8.1%):
1,745 Banc One Corp............................ 75,471
1,602 Bank of New York, Inc.................... 68,285
1,465 BankAmerica Corp......................... 171,221
625 BankBoston Corp.......................... 45,625
334 Bankers Trust New York Corp.............. 28,265
852 Barnett Banks, Inc....................... 44,837
1,792 Chase Manhattan Corp..................... 169,343
1,892 Citicorp................................. 216,397
439 Comerica, Inc............................ 27,438
913 CoreStates Financial Corp................ 48,275
432 Fifth Third Bancorp...................... 33,372
549 First Bank System, Inc................... 45,018
1,302 First Chicago Corp....................... 77,144
1,159 First Union Corp......................... 99,529
1,071 Fleet Financial Group, Inc............... 65,465
562 Great Western Financial Corp............. 27,257
431 H.F. Ahmanson & Co....................... 17,563
756 J. P. Morgan & Co., Inc.................. 81,270
921 KeyCorp.................................. 50,079
1,365 MBNA Corp................................ 46,239
529 Mellon Bank Corp......................... 46,288
623 Morgan Stanley Group, Inc................ 42,053
912 National City Corp....................... 46,968
2,998 NationsBank Corp......................... 176,506
1,512 Norwest Corp............................. 80,892
1,370 PNC Financial Corp....................... 57,369
226 Republic New York Corp................... 22,544
</TABLE>
Continued
-54-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------ -----------------
<S> <C> <C>
Common Stocks, continued:
Banking, continued:
329 State Street Corp........................ $ 14,682
911 Sun Trust Banks, Inc..................... 48,625
617 U.S. Bancorp............................. 37,868
675 Wachovia Corp............................ 41,091
378 Wells Fargo Co........................... 99,603
----------------
2,152,582
----------------
Beverages (4.1%):
155 Adolph Coors Co.......................... 3,778
2,039 Anheuser-Busch Co........................ 87,422
282 Brown-Forman Corp........................ 14,417
6,395 PepsiCo, Inc............................. 235,015
1,514 Seagram Co. Ltd.......................... 60,939
10,212 The Coca-Cola Co......................... 696,968
----------------
1,098,539
----------------
Broadcasting/Cable (0.3%):
2,712 Tele-Communications - Class A(b)......... 41,019
2,551 U.S. West Media Group(b)................. 50,701
----------------
91,720
----------------
Building Products (0.2%):
655 Masco Corp............................... 25,463
213 Owens Corning............................ 8,893
701 Sherwin-Williams Co...................... 21,030
----------------
55,386
----------------
Business Services (0.8%):
1,193 Automatic Data Processing, Inc........... 58,606
332 Ceridian Corp............................ 12,201
312 Computer Science(b)...................... 24,141
695 Dun & Bradstreet Corp.................... 18,157
1,828 First Data Corp.......................... 73,120
331 Interpublic Group Cos., Inc.............. 19,819
----------------
206,044
----------------
Capital Equipment (0.2%):
135 Giddings & Lewis, Inc.................... 2,559
1,012 Illinois Tool Works, Inc................. 50,221
----------------
52,780
----------------
Chemicals (2.6%):
456 Air Products & Chemicals, Inc............ 35,454
2,299 E. I. du Pont de Nemours & Co............ 250,303
317 Eastman Chemical Co...................... 18,862
1,361 Eastman Chemical Co...................... 112,793
587 Engelhard Corp........................... 12,694
246 Great Lakes Chemical Corp................ 12,023
418 Hercules, Inc............................ 19,594
2,402 Monsanto Co.............................. 105,688
581 Morton International Inc................. 18,737
275 Nalco Chemical Co........................ 10,209
639 Praxair, Inc............................. 33,627
261 Rohm & Haas Co........................... 22,511
408 Sigma-Aldrich Corp....................... 12,495
520 Union Carbide Corp....................... 24,310
289 W.R. Grace & Co.......................... 15,100
----------------
704,400
----------------
Commercial Services (0.2%):
870 Browning-Ferris Industries, Inc.......... 28,493
264 Ecolab, Inc.............................. 10,989
425 H & R Block.............................. 14,025
----------------
53,507
----------------
Communications Equipment (0.9%):
806 Bay Networks, Inc........................ 19,747
1,333 Comcast Corp............................. 23,161
479 DSC Communications Corp.................. 12,244
159 Harris Corp.............................. 14,091
2,606 Lucent Technologies, Inc................. 165,806
----------------
235,049
----------------
Computer Software (3.3%):
275 Adobe Systems, Inc....................... 12,272
1,483 Computer Associates International, Inc... 81,194
4,914 Microsoft, Inc.(b)....................... 609,335
1,413 Novell, Inc.(b).......................... 11,127
2,761 Oracle Corp.(b).......................... 128,731
521 Parametric Technology Corp.(b)........... 23,380
----------------
866,039
----------------
</TABLE>
Continued
-55-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------ -----------------
<S> <C> <C>
Common Stocks, continued:
Computers & Peripherals (4.6%):
719 3Com Corp.(b)............................ $ 34,872
496 Amdahl Corp.(b).......................... 4,960
509 Apple Computer, Inc.(b).................. 8,462
636 Cabletron Systems(b)..................... 27,984
2,685 Cisco Systems Inc.(b).................... 181,908
1,106 Compaq Computer Corp.(b)................. 119,725
163 Data General Corp.(b).................... 3,484
715 Dell Computer Corp.(b)................... 80,438
642 Digital Equipment Corp.(b)............... 23,032
1,004 EMC Corp/Mass(b)......................... 40,035
4,142 Hewlett-Packard Co....................... 213,312
194 Intergraph Corp.(b)...................... 1,370
4,228 International Business Machines Corp..... 365,721
1,010 Seagate Technology, Inc.(b).............. 41,031
720 Silicon Graphics, Inc.(b)................ 13,590
1,503 Sun Microsystems, Inc.................... 48,472
714 Unisys Corp.(b).......................... 4,909
----------------
1,213,305
----------------
Computers--Main & Mini (0.0%):
485 Tandem Computers, Inc.(b)................ 6,911
-----------------
Construction (0.3%):
169 Armstrong World Industries, Inc.......... 11,492
118 Centex Corp.............................. 4,705
447 Ingersol-Rand Co......................... 24,362
159 Kaufman & Broad Home Corp................ 2,385
749 PPG Industries, Inc...................... 43,536
95 Pulte Corp............................... 3,004
----------------
89,484
----------------
Consumer Goods & Services (2.2%):
385 Black & Decker........................... 13,379
211 Clorox Co................................ 26,639
1,200 Colgate-Palmolive........................ 74,400
1,620 CUC International, Inc................... 37,260
1,140 Gap, Inc................................. 39,045
158 Jostens, Inc............................. 3,891
2,775 Procter & Gamble Co...................... 382,602
612 Rubbermaid Inc........................... 17,060
----------------
594,276
----------------
Containers & Packaging (0.2%):
426 Avery Dennison Corp...................... 16,028
125 Ball Corp................................ 3,641
214 Bemis Co................................. 8,560
524 Crown Cork & Seal Co., Inc............... 30,523
405 Stone Container Corp..................... 5,569
----------------
64,321
----------------
Cosmetics & Toiletries (1.0%):
228 Alberto-Culver Co........................ 6,498
543 Avon Products, Inc....................... 34,616
2,266 Gillette Co.............................. 201,390
451 International Flavors & Fragrances....... 20,013
----------------
262,517
----------------
Diversified Operations (6.0%):
115 Aeroquip-Vickers, Inc.................... 4,988
695 American Brands, Inc.(b)................. 34,055
695 Cognizant Corp........................... 25,715
491 Coopers Industries, Inc.................. 25,041
934 Corning Glass............................ 47,050
188 Crane Co................................. 7,708
992 Dow Chemical Co.......................... 82,708
83 Eastern Enterprises...................... 2,864
315 Eaton Corp............................... 25,121
152 FMC Corp.(b)............................. 10,944
13,523 General Electric Co...................... 816,450
475 ITT Corp................................. 28,322
483 ITT Industries Inc....................... 11,954
1,707 Minnesota Mining & Manufacturing......... 156,616
185 National Service Industries Inc.......... 8,117
182 Raychem Corp............................. 13,491
697 Tenneco, Inc............................. 31,191
338 Textron, Inc............................. 40,053
681 Tyco International Ltd................... 43,244
654 Unilever NV New York Shares.............. 126,712
2,467 Westinghouse Electric Corp............... 49,957
424 Whitman Corp............................. 10,229
----------------
1,602,530
----------------
Electrical & Electronic (1.3%):
897 Amp, Inc................................. 36,889
</TABLE>
Continued
-56-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------ -----------------
Common Stocks, continued:
<S> <C> <C>
Electrical & Electronic, continued:
1,826 Emerson Electric......................... $ 98,604
204 General Signal Corp...................... 8,594
217 Grainger (W.W.), Inc..................... 17,414
2,421 Motorola, Inc............................ 160,693
238 Tandy Corp............................... 12,852
135 Tektronix, Inc........................... 7,746
217 Thomas & Betts Corp...................... 11,040
----------------
353,832
----------------
Engineering (0.1%):
343 Fluor Corp............................... 18,136
166 Foster Wheeler Corp...................... 6,433
----------------
24,569
----------------
Entertainment (0.6%):
420 Harrah's Entertainment Inc.(b)........... 7,823
219 Meredith Corp............................ 5,667
2,322 Time Warner, Inc......................... 107,973
1,445 Viacom, Inc.(b).......................... 42,898
----------------
164,361
----------------
Environmental Services (0.2%):
238 Safety-Kleen Corp........................ 3,719
1,850 Waste Management, Inc.................... 58,738
----------------
62,457
----------------
Financial Guarantee Insurances (0.1%):
177 MBIA Inc................................. 19,005
-----------------
Financial Services (3.1%):
1,935 American Express Co...................... 134,482
221 Beneficial Corp.......................... 14,199
1,313 Dean Witter Discover & Co.(b)............ 54,161
4,460 Fannie Mae............................... 194,567
2,921 Federal Home Loan Mortgage Corp.......... 96,393
234 Golden West Financial Corp............... 15,854
561 Green Tree Financial Corp................ 19,635
396 Household International.................. 38,907
673 Merrill Lynch & Co....................... 71,338
241 MGIC Investment Corp..................... 21,449
445 Salomon, Inc............................. 23,863
2,609 Travelers, Inc........................... 143,168
----------------
828,016
----------------
Food & Related (1.4%):
981 ConAgra, Inc............................. 58,983
154 Fleming Cos., Inc........................ 2,926
660 General Mills, Inc....................... 41,745
1,504 H. J. Heinz Co........................... 64,672
627 Hershey Foods............................ 35,190
861 Kellogg Co............................... 63,499
1,965 Sara Lee Corp............................ 80,319
273 SUPERVALU, Inc........................... 9,111
475 Wrigley (Wm) Jr Co....................... 28,144
----------------
384,589
----------------
Food Processing (1.0%):
2,219 Archer-Daniels Midland Co................ 44,380
1,908 Campbell Soup Co......................... 87,768
587 CPC International, Inc................... 50,482
336 Pioneer Hi-Bred International, Inc....... 23,436
555 Quaker Oats Co........................... 22,894
434 Ralston Purina Group..................... 36,999
----------------
265,959
----------------
Funeral Services (0.1%):
963 Service Corp. International.............. 33,946
-----------------
Gas Utility (0.1%):
225 Columbia Gas System, Inc................. 14,484
347 Pacific Enterprises...................... 11,364
143 People's Energy Corp..................... 5,077
----------------
30,925
----------------
Health Care (0.3%):
227 Bausch & Lomb, Inc....................... 9,137
1,286 HEALTHSOUTH Corp.(b)..................... 29,417
257 Manor Care, Inc.......................... 7,357
752 United Healthcare Corp................... 42,488
----------------
88,399
----------------
Health Care-Drugs (8.5%):
3,173 Abbott Laboratories...................... 199,898
2,608 American Home Products Corp.............. 198,859
4,091 Bristol-Myers Squibb Co.................. 300,176
2,254 Eli Lilly & Co........................... 209,621
5,439 Johnson & Johnson........................ 325,659
4,923 Merck & Co., Inc......................... 442,454
</TABLE>
Continued
-57-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------ -----------------
<S> <C> <C>
Common Stocks, continued:
Health Care-Drugs, continued:
2,633 Pfizer, Inc. ............................ $ 270,869
2,075 Pharmacia & Upjohn, Inc. ................ 71,847
1,509 Schering-Plough Corp. ................... 136,941
1,108 Warner-Lambert Co. ...................... 111,631
----------------
2,267,955
----------------
Hospital Supply & Management (0.1%):
664 Humana, Inc.(b) ......................... 15,023
-----------------
Hotels & Lodging (0.4%):
643 HFS, Inc.(b) ............................ 34,642
1,009 Hilton Hotels Corp. ..................... 28,504
523 Marriott International, Inc. ............ 30,203
----------------
93,349
----------------
Household--Major Appliances (0.1%):
409 Maytag .................................. 10,941
304 Whirlpool Corp. ......................... 15,162
----------------
26,103
----------------
Instrumentation (0.3%):
193 EG&G Inc. ............................... 3,764
518 Honeywell, Inc. ......................... 37,685
340 Johnson Controls, Inc. .................. 14,408
177 Millipore Corp. ......................... 7,633
304 Parker-Hannifin Corp. ................... 15,998
178 Perkin-Elmer Corp. ...................... 13,528
----------------
93,016
----------------
Insurance-Life/Health (0.7%):
831 American General Corp. .................. 36,772
663 Aon Corp. ............................... 32,321
744 Conseco Inc. ............................ 29,760
289 Jefferson Pilot ......................... 18,388
287 Torchmark Corp. ......................... 18,834
271 Transamerica Corp. ...................... 24,627
299 UNUM Corp. .............................. 23,658
140 USLIFE Corp. ............................ 6,825
----------------
191,185
----------------
Insurance--Multiline (2.9%):
616 Aetna Services, Inc. .................... 62,216
1,816 Allstate Corp. .......................... 133,702
1,918 American International Group, Inc. ...... 259,648
307 Cigna Corp. ............................. 53,341
336 General Re Corp. ........................ 58,884
480 Hartford Financial Services Group ....... 37,440
426 Lincoln National Corp. .................. 25,933
470 Loews Corp. ............................. 45,708
334 March & McLennan Cos., Inc. ............. 44,005
383 Providian Corp. ......................... 22,932
515 SAFECO Corp. ............................ 22,403
472 USF&G Corp. ............................. 10,148
----------------
776,360
----------------
Insurance--Property & Casualty (0.3%):
711 Chubb Corp. ............................. 43,371
339 Saint Paul Companies, Inc. .............. 24,281
----------------
67,652
----------------
Integrated Oil (1.0%):
2,031 Amoco Corp. ............................. 181,520
190 Pennzoil Co. ............................ 10,521
1,023 Unocal Corp. ............................ 43,605
1,174 USX-Marathon Group ...................... 34,927
----------------
270,573
----------------
Iron/Steel (0.3%):
712 Alleghany Teledyne, Inc. ................ 18,334
435 Armco, Inc.(b) .......................... 1,631
456 Bethlehem Steel Corp.(b) ................ 4,560
200 Inland Steel ............................ 4,925
358 Nucor Corp. ............................. 21,122
346 USX-US Steel Group, Inc. ................ 11,159
394 Worthington Industries .................. 7,289
----------------
69,020
----------------
Leisure & Tourism (0.9%):
402 Brunswick Corp. ......................... 12,261
2,757 The Walt Disney Co. ..................... 225,728
----------------
237,989
----------------
Machinery & Equipment (0.9%):
300 Case Corp. .............................. 17,700
782 Caterpillar, Inc. ....................... 76,343
163 Cincinnati Milacron, Inc. ............... 3,769
1,045 Deere & Co. ............................. 53,426
</TABLE>
Continued
-58-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------ -----------------
<S> <C> <C>
Common Stocks, continued:
Machinery & Equipment, continued:
459 Dover Corp............................... $ 26,278
201 Harnischfeger Industries, Inc............ 8,618
224 McDermott International, Inc............. 6,216
33 Nacco Industries, Inc.................... 1,679
249 Snap-on, Inc............................. 9,929
363 Stanley Works............................ 14,883
610 Thermo Electron(b)....................... 21,045
----------------
239,886
----------------
Manufacturing (0.1%):
219 Western Atlas Inc.(b).................... 14,865
-----------------
Manufacturing-Consumer Goods (0.2%):
118 Briggs & Stratton........................ 6,092
145 Fleetwood Enterprises.................... 3,915
649 Newell Co................................ 24,824
514 Pall Corp................................ 12,143
254 Tupperware Corp.......................... 9,208
----------------
56,182
----------------
Medical Equipment & Supplies (1.1%):
267 Allergan, Inc............................ 7,910
345 Alza Corp.(b)............................ 10,178
233 Bard (C.R.), Inc......................... 7,456
1,115 Baxter International, Inc................ 58,816
502 Becton Dickinson & Co.................... 24,724
467 Biomet, Inc.............................. 8,727
792 Boston Scientific Corp.(b)............... 42,273
303 Guidant Corp............................. 23,520
302 Mallinckrodt, Inc........................ 11,287
980 Medtronic, Inc........................... 72,520
381 St. Jude Medical, Inc.(b)................ 12,906
286 US Surgical Corp......................... 9,653
----------------
289,970
----------------
Medical Services (0.3%):
1,080 Amgen, Inc.(b)........................... 72,225
406 Beverly Enterprises, Inc.(b)............. 5,735
96 Shared Medical Systems Corp.............. 5,088
----------------
83,048
----------------
Medical-Hospital Services (0.5%):
2,742 Columbia/HCA Healthcare Corp............. 100,426
1,230 Tenet Healthcare Corp.(b)................ 33,825
----------------
134,251
----------------
Metals & Mining (0.6%):
708 Aluminum Co. of America.................. 52,127
175 Asarco, Inc.............................. 5,447
381 Cyprus Amax Minerals Co.................. 9,287
789 Freeport McMoRan......................... 22,980
687 Inco Ltd................................. 22,671
265 Phelps Dodge Corp........................ 22,161
297 Reynolds Metals.......................... 20,159
----------------
154,832
----------------
Natural Gas Utility (0.4%):
387 Consolidated Natural Gas Co.............. 20,559
203 NICOR, Inc............................... 6,978
561 NorAm Energy Corp........................ 8,555
112 ONEOK Inc................................ 3,388
617 PanEnergy Corp........................... 28,845
641 Williams Cos., Inc....................... 28,284
----------------
96,609
----------------
Office Equipment & Supplies (0.6%):
336 Deluxe Corp.............................. 10,920
550 Ikon Office Solutions Inc................ 15,950
126 John H. Harland Co....................... 2,882
408 Moore Corp. Ltd.......................... 9,078
606 Pitney Bowes, Inc........................ 42,572
1,326 Xerox Corp............................... 89,837
----------------
171,239
----------------
Oil & Gas Equipment/Services (0.2%):
594 Baker Hughes, Inc........................ 22,275
718 Dresser Industries, Inc.................. 24,592
284 ENSERCH Corp............................. 6,071
----------------
52,938
----------------
Oil & Gas Exploration, Production & Services (1.0%):
510 Burlington Resources..................... 23,715
430 Coastal Corp............................. 21,554
198 Kerr-McGee Corp.......................... 12,821
</TABLE>
Continued
-59-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
<TABLE>
<CAPTION>
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
Shares
or
Principal Security Market
Amount Description Value
- --------- ------------------------------------------ -----------------
<S> <C> <C>
Common Stocks, continued:
Oil & Gas Exploration, Production & Services, continued:
140 Louisiana Land & Exploration............. $ 7,210
428 Oryx Energy Co.(b)....................... 9,898
349 Rowan Cos., Inc.(b)...................... 8,071
421 Santa Fe Energy Resources(b)............. 6,368
1,006 Schlumberger Ltd......................... 119,840
352 Sonat, Inc............................... 20,240
1,020 Union Pacific Resources.................. 29,453
----------------
259,170
----------------
Oil Companies - Integrated (6.1%):
380 Amerada Hess Corp........................ 20,330
2,665 Chevron Corp............................. 186,549
10,193 Exxon Corp............................... 603,934
102 Helmerich & Payne, Inc................... 5,725
1,609 Mobil Corp............................... 225,058
1,343 Occidental Petroleums Corp............... 31,225
2,189 Royal Dutch Petroleum Co................. 427,401
298 Sun Co., Inc............................. 8,903
1,080 Texaco, Inc.............................. 117,855
----------------
1,626,980
----------------
Oil Field Services (0.1%):
511 Halliburton Co........................... 39,539
-----------------
Paper & Related Products (1.4%):
198 Boise Cascade Corp....................... 7,524
390 Champion International Corp.............. 19,256
373 Georgia Pacific Corp..................... 32,917
1,226 International Paper Co................... 58,848
352 James River Corp. of Virginia............ 12,364
2,308 Kimberly-Clark Corp...................... 115,689
444 Louisiana-Pacific Corp................... 8,658
213 Mead Corp................................ 13,579
118 Potlatch Corp............................ 5,059
226 Temple-Inland, Inc....................... 13,673
284 Union Camp Corp.......................... 14,910
416 Westvaco Corp............................ 13,000
810 Weyerhaeuser Co.......................... 40,399
226 Williamette Industries, Inc.............. 16,837
----------------
372,713
----------------
Petroleum--Domestic (0.6%):
303 Ashland, Inc............................. 14,506
Petroleum--Domestic, continued:
658 Atlantic Richfield Co.................... $ 95,739
1,075 Phillips Petroleum Co.................... 45,688
----------------
155,933
----------------
Photography (0.0%):
186 Polaroid Corp............................ 9,486
-----------------
Pipelines (0.2%):
1,039 Enron Corp............................... 42,339
-----------------
Precious Metals (0.4%):
1,459 Barrick Gold Corp........................ 36,840
917 Battle Mountain Gold Co.................. 5,617
569 Echo Bay Mines Ltd....................... 3,485
599 Homestake Mining Co...................... 8,311
637 Newmont Mining Corp...................... 24,919
978 Placer Dome, Inc......................... 17,849
----------------
97,021
----------------
Printing & Publishing (0.8%):
306 American Greetings....................... 10,481
395 Dow Jones & Co. Inc...................... 15,356
576 Gannett Co., Inc......................... 53,280
383 Knight-Ridder, Inc....................... 16,517
406 McGraw-Hill Cos., Inc.................... 22,178
395 New York Times Co........................ 18,195
616 R.R. Donnelley Co........................ 22,869
382 Times Mirror Co.......................... 21,440
503 Tribune Co............................... 21,755
----------------
202,071
----------------
Restaurants (0.6%):
653 Darden Restaurants, Inc.................. 5,469
2,850 McDonald's Corp.......................... 143,212
528 Wendy's International, Inc............... 12,342
----------------
161,023
----------------
Retail General Merchandise (0.1%):
849 Federated Department Stores(b)........... 31,413
-----------------
Retail Stores (0.0%):
247 Pep Boys-Manny Moe & Jack................ 7,719
-----------------
Retail Stores - Discount (1.3%):
1,978 K-Mart Corp.............................. 27,692
317 TJX Cos., Inc............................ 15,216
</TABLE>
Continued
-60-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------- -----------------
Common Stocks, continued:
<S> <C>
Retail Stores - Discount, continued:
9,418 Wal-Mart Stores, Inc..................... $ 280,185
547 Woolworth Corp........................... 13,196
---------------
336,289
---------------
Retail Stores - Grocery (0.5%):
1,025 Albertson's, Inc......................... 34,338
595 American Stores Co....................... 27,073
245 Giant Food, Inc.......................... 8,070
156 Great Atlantic & Pacific Tea Co.......... 4,310
1,030 Kroger Co.(b)............................ 26,394
613 Winn-Dixie Stores, Inc................... 23,447
---------------
123,632
---------------
Retail Stores - Specialty (0.8%):
614 AutoZone, Inc............................ 14,352
400 Circuit City Stores, Inc................. 15,800
1,962 Home Depot, Inc.......................... 123,606
707 Lowe's Cos............................... 27,838
1,186 Toys 'R' Us, Inc.(b)..................... 36,914
---------------
218,510
---------------
Retail Stores-Drug (0.4%):
432 CVS Corp................................. 20,682
159 Longs Drug Stores, Inc................... 3,776
501 Rite-Aid Corp............................ 23,297
1,005 Walgreen Co.............................. 46,984
---------------
94,739
---------------
Retail-Department Store (1.0%):
886 Dayton Hudson Corp....................... 42,639
464 Dillard Department Stores................ 15,660
290 Harcourt General, Inc.................... 13,739
1,009 J.C. Penney, Inc......................... 51,964
1,000 May Department Stores Co................. 47,125
150 Mercantile Stores Co., Inc............... 8,063
1,599 Sears, Roebuck & Co...................... 78,551
---------------
257,741
---------------
Retail--Apparel (0.2%):
430 Charming Shoppes......................... 2,258
1,107 Limited, Inc............................. 22,417
328 Nordstrom, Inc........................... 15,744
---------------
40,419
---------------
Semiconductors (2.9%):
558 Advanced Micro Devices(b)................ 22,320
739 Applied Materials, Inc.(b)............... 48,220
3,351 Intel Corp............................... 507,676
574 LSI Logic Corp.(b)....................... 23,965
856 Micron Technology, Inc.(b)............... 36,380
570 National Semiconductor Corp.(b).......... 16,031
894 Rockwell International Corp.............. 57,663
778 Texas Instruments, Inc................... 69,923
---------------
782,178
---------------
Technology-Software (0.0%):
195 Autodesk, Inc............................ 7,581
---------------
Telecommunications (0.7%):
2,048 AirTouch Communication, Inc.(b).......... 57,088
669 Frontier Corp............................ 12,293
2,797 MCI Communications....................... 107,335
---------------
176,716
---------------
Telecommunications-Services & Equipment (0.8%):
371 Andrew Corp.(b).......................... 10,110
153 King World Productions, Inc.............. 5,757
1,055 Northern Telecom Ltd..................... 88,620
316 Scientific-Atlanta, Inc.................. 5,728
732 Tellabs, Inc.(b)......................... 36,783
1,958 US West Communications Group............. 71,712
---------------
218,710
---------------
Telephone Long Distance (0.4%):
3,535 WorldCom, Inc............................ 104,724
---------------
Textile Products (0.0%):
82 Springs Industries, Inc.................. 4,151
---------------
Tire & Rubber (0.2%):
219 B. F. Goodrich Co........................ 9,417
336 Cooper Tire & Rubber..................... 7,518
635 Goodyear Tire & Rubber Co................ 37,148
---------------
54,083
---------------
Tobacco (1.7%):
10,028 Philip Morris Cos., Inc.................. 441,231
760 UST, Inc................................. 21,660
---------------
462,891
---------------
</TABLE>
Continued
-61-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------- -----------------
<S> <C> <C>
Common Stocks, continued:
Toys (0.2%):
528 Hasbro, Inc.............................. $ 15,312
1,180 Mattel, Inc.............................. 35,253
----------------
50,565
----------------
Transportation & Shipping (1.0%):
625 Burlington Northern Santa Fe............. 51,875
886 CSX Corp................................. 46,958
466 Federal Express Corp.(b)................. 24,407
1,282 Laidlaw, Inc............................. 17,307
511 Norfolk Southern Corp.................... 49,631
1,000 Union Pacific Corp....................... 67,750
----------------
257,928
----------------
Transportation & Shipping (0.0%):
128 Timken Co................................ 8,784
----------------
Trucking & Leasing (0.1%):
160 Caliber System, Inc...................... 5,120
310 Ryder Systems, Inc....................... 10,269
----------------
15,389
----------------
Utilities - Electric (0.1%):
974 Public Service Enterprise Group, Inc..... 24,107
----------------
Utilities - Gas & Electric (2.3%):
765 American Electric Power, Inc............. 31,174
603 Baltimore Gas & Electric................. 15,829
618 Carolina Power & Light................... 21,476
861 Central & South West Corp................ 18,296
644 CINergy Corp............................. 22,540
960 Consolidated Edison Co. of New York, Inc. 27,960
736 Dominion Resources Inc/VA................ 25,484
593 DTE Energy Co............................ 15,789
823 Duke Power Co............................ 37,035
1,769 Edison International..................... 41,350
943 Entergy Corp............................. 24,872
747 FPL Group, Inc........................... 34,736
492 GPU, Inc................................. 17,220
957 Houston Industries Inc................... 19,858
590 Niagara Mohawk Power Corp.(b)............ 5,163
282 Northern States Power Co................. 13,818
623 Ohio Edison Co........................... 13,239
1,203 PacifiCorp............................... 23,910
909 Peco Energy Co........................... 17,271
1,684 PG & E Corp.............................. 38,943
663 PP & L Resources, Inc.................... 13,343
2,751 Southern Co.............................. 58,459
917 Texas Utilities Co....................... 31,522
881 Unicom Corp.............................. 20,043
417 Union Electric Co........................ 15,273
----------------
604,603
----------------
Utilities--Telephone (4.9%):
765 Alltel Corp.............................. 25,149
2,244 Ameritech Corp........................... 146,981
6,667 AT&T Corp................................ 245,845
1,788 Bell Atlantic Corp....................... 125,160
4,048 BellSouth Corp........................... 183,677
3,928 GTE Corp................................. 173,322
1,797 Nynex Corp............................... 96,589
3,745 SBC Communications, Inc.................. 219,082
1,758 Sprint Corp.............................. 85,922
----------------
1,301,727
----------------
Wholesale Distribution (0.3%):
450 Cardinal Health, Inc..................... 26,213
857 Costo Companies, Inc.(b)................. 28,924
721 Sysco Corp............................... 25,145
----------------
80,282
----------------
Wire & Cable Products (0.1%):
559 General Instrument Corp.(b).............. 13,556
----------------
Total Common Stocks 26,593,973
----------------
Total (Cost--$25,163,040)(a) $ 26,641,966
================
</TABLE>
Continued
-62-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<S> <C>
Percentages indicated are based on net assets of $26,640,268.
(a) Represents cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
Unrealized appreciation ............................... $ 1,586,187
Unrealized depreciation ............................... (107,261)
------------
Net unrealized appreciation ........................... $ 1,478,926
============
(b) Represents non-income producing securities.
</TABLE>
See notes to financial statements
-63-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------- -------------
<S> <C> <C>
Commercial Paper (7.6%):
Financial Services (4.3%):
5,000,000 Xerox Credit, 5.60%, 6/2/97 $ 4,999,221
Telecommunications (3.3%):
3,854,000 Bell Commerce Research,
5.65%, 6/2/97............ 3,853,395
------------
Total Commercial Paper 8,852,616
------------
Common Stocks (54.6%):
Airlines (1.0%):
45,000 Southwest Airlines......... 1,158,750
------------
Automotive (0.5%):
19,000 Echlin, Inc. .............. 634,125
------------
Banking (2.2%):
13,000 Chase Manhattan Corp. ..... 1,228,500
35,000 Crestar Financial Corp. ... 1,330,000
------------
2,558,500
------------
Beverages (1.1%):
35,450 PepsiCo, Inc. ............. 1,302,788
------------
Business Services (3.0%):
31,200 Analog Devices, Inc. ...... 834,600
28,756 Automatic Data Processing,
Inc. .................... 1,412,639
33,200 First Data Corp.(b)........ 1,328,000
------------
3,575,239
------------
Chemicals (2.3%):
29,800 Millipore Corp. ........... 1,285,125
26,800 Praxair, Inc. ............. 1,410,350
------------
2,695,475
------------
Computer Software (3.2%):
30,000 Computer Associates
International, Inc. ..... 1,642,500
6,400 Microsoft Corp.(c)......... 793,600
27,000 Oracle Corp.(b)(c)......... 1,258,875
------------
3,694,975
------------
Consumer Goods & Services (0.9%):
45,000 CUC International Inc. .... 1,035,000
------------
Containers & Packaging (2.1%):
30,252 Avery Dennison Corp. ...... 1,138,232
Containers & Packaging, continued:
22,000 Crown Cork & Seal Co., Inc. 1,281,500
------------
2,419,732
------------
Diversified Operations (1.9%):
23,880 General Electric Co. ...... 1,441,755
30,291 Whitman Corp. ............. 730,770
------------
2,172,525
------------
Electrical Equipment (1.1%):
16,300 Grainger (W.W.), Inc. ..... 1,308,075
------------
Financial Services (4.7%):
31,200 First USA, Inc. ........... 1,544,400
31,200 Green Tree Financial Corp.. 1,092,000
22,377 PMI Group, Inc. ........... 1,227,938
8,009 Student Loan Marketing
Association.............. 974,095
28,000 United Cos. Financial
Corp.(b)................. 640,500
------------
5,478,933
------------
Food & Related (2.1%):
53,000 IBP, Inc. ................. 1,245,500
28,700 Sara Lee Corp. ............ 1,173,113
------------
2,418,613
------------
Health Care (1.1%):
16,940 Bristol Myers Squibb Co. .. 1,242,973
------------
Health Care-Drugs (4.4%):
18,000 American Home Products
Corp. ................... 1,372,500
8,600 Eli Lilly & Co. ........... 799,800
14,824 Pfizer, Inc. .............. 1,525,019
17,138 SmithKline Beecham PLC, ADR 1,499,575
------------
5,196,894
------------
Manufacturing-Consumer Goods (1.1%):
34,000 Newell Co. ................ 1,300,500
------------
Medical Equipment & Supplies (1.0%):
18,000 Allergan, Inc. ............ 533,250
20,400 Bard (C.R.), Inc. ......... 652,800
------------
1,186,050
------------
</TABLE>
Continued
-64-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------- -------------
<S> <C> <C>
Common Stocks, continued:
Medical-Hospital Services (1.0%):
31,000 Columbia/HCA Healthcare
Corp.(b)................. $ 1,135,375
-------------
Metals & Mining (0.4%):
10,000 UCAR International, Inc. .. 480,000
-------------
Oil & Gas Equipment/Services (3.2%):
32,000 Baker Hughes, Inc. ........ 1,200,000
40,000 Dresser Industries, Inc. .. 1,370,000
26,700 Tidewater, Inc. ........... 1,124,738
-------------
3,694,738
-------------
Oil & Gas Exploration, Production & Services (2.0%):
56,400 Union Texas Petroleum
Holdings, Inc. .......... 1,135,050
35,000 Vastar Resources........... 1,211,875
-------------
2,346,925
-------------
Oil Companies - Integrated (0.8%):
22,700 Phillips Petroleum Co. .... 964,750
-------------
Paper & Related (0.6%):
11,000 Mead Corp. ................ 701,250
-------------
Pharmaceuticals (1.3%):
16,322 Schering-Plough Corp. ..... 1,481,222
-------------
Retail Stores - Discount (1.7%):
15,800 Consolidated Stores........ 604,350
47,893 Wal-Mart Stores, Inc. ..... 1,424,817
-------------
2,029,167
-------------
Retail Stores - General Merchandise (0.5%):
11,063 J.C. Penney, Inc. ......... 569,745
-------------
Retail Stores - Grocery (0.5%):
18,000 Albertson's Inc. .......... 603,000
-------------
Retail Stores - Specialty (1.7%):
10,500 Home Depot, Inc. .......... 661,500
29,000 Nordstrom, Inc. ........... 1,392,000
-------------
2,053,500
-------------
Technology (1.1%):
20,000 Motorola, Inc. ............ 1,327,500
-------------
Tire & Rubber (1.1%):
22,500 Goodyear Tire & Rubber Co.. 1,316,250
-------------
Tobacco (1.2%):
31,800 Philip Morris Cos., Inc. .. $ 1,399,200
-------------
Transportation & Shipping (1.1%):
15,300 Burlington Northern Santa 1,269,900
Fe.......................
-------------
Utilities - Gas & Electric (1.6%):
15,000 Baltimore Gas & Electric... 393,750
35,500 Central & South West Corp.. 754,375
23,000 Western Resources, Inc. ... 750,375
-------------
1,898,500
-------------
Wholesale Distribution (1.1%):
35,669 Sysco Corp. ............... 1,243,956
-------------
Total Common Stocks 63,894,125
-------------
Medium Term Note (2.5%):
Automotive (0.9%):
1,000,000 General Motors Acceptance
Corp., 6.60%, 1/17/01.... 992,500
Finance (1.6%):
2,000,000 Federal Home Loan Bank,
5.35%, 2/7/01............ 1,920,500
-------------
Total Medium Term Note 2,913,000
-------------
U.S. Government Agencies (12.6%):
Federal Home Loan Mortgage Corp.:
163,636 9.50%, 2/1/98 ............ 168,186
204,785 7.00%, 3/1/98 ............ 205,743
430,875 6.00%, 4/1/98 ............ 421,448
85,350 6.50%, 4/1/98 ............ 84,629
329,947 6.50%, 4/1/98 ............ 327,162
92,628 7.00%, 4/1/98 ............ 93,061
547,729 6.50%, 4/1/08 ............ 534,890
254,280 7.00%, 4/1/08 ............ 252,927
227,364 7.00%, 4/1/08 ............ 226,154
763,747 6.50%, 1/1/09 ............ 745,845
Government National Mortgage Assoc.:
364,241 7.00%, 7/15/09 ........... 363,443
451,513 6.50%, 10/20/10 .......... 439,096
2,084,514 6.50%, 7/15/11 ........... 2,042,824
14,356 8.50%, 6/15/17 ........... 14,880
406,271 8.00%, 7/15/22 ........... 414,141
254,499 7.00%, 11/15/22 .......... 247,500
</TABLE>
Continued
-65-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------- -------------
<S> <C> <C>
U.S. Government Agencies, continued:
Government National Mortgage Assoc., continued:
346,475 7.00%, 11/15/22 .......... $ 336,947
657,009 7.50%, 3/15/23 ........... 654,545
9,886 8.50%, 3/15/23 ........... 10,247
338,879 7.50%, 4/15/23 ........... 337,608
589,792 8.50%, 8/15/24 ........... 611,355
549,031 8.50%, 9/15/24 ........... 569,104
139,778 8.50%, 9/15/24 ........... 144,888
142,881 8.50%, 1/15/25 ........... 148,105
130,990 8.50%, 2/15/25 ........... 135,779
372,159 8.50%, 3/15/25 ........... 385,765
175,378 8.50%, 4/15/25 ........... 181,790
416,257 8.00%, 8/15/25 ........... 424,320
23,721 7.50%, 9/15/25 ........... 23,632
24,152 7.50%, 10/15/25 .......... 24,061
37,642 7.50%, 10/15/25 .......... 37,501
876,657 7.50%, 10/15/25 .......... 873,369
25,472 7.50%, 10/15/25 .......... 25,377
899,444 7.50%, 10/15/25 .......... 896,071
144,505 6.50%, 1/15/26 ........... 136,691
672,849 6.50%, 1/15/26 ........... 636,468
24,366 6.50%, 3/15/26 ........... 23,048
488,054 6.50%, 4/15/26 ........... 461,665
495,560 6.50%, 4/15/26 ........... 468,765
473,525 6.50%, 4/15/26 ........... 447,922
183,575 6.50%, 5/15/26 ........... 173,649
------------
Total U.S. Government Agencies 14,750,601
------------
U.S. Treasury Bonds (7.9%):
300,000 10.75%, 8/15/05(b)......... 376,524
2,750,000 12.00%, 8/15/13............ 3,841,943
1,000,000 8.13%, 5/15/21(b).......... 1,128,450
1,000,000 8.13%, 8/15/21(b).......... 1,128,860
1,200,000 8.00%, 11/15/21(b)......... 1,337,952
1,500,000 6.25%, 8/15/23............. 1,367,220
------------
Total U.S. Treasury Bonds 9,180,949
------------
U.S. Treasury Notes (14.4%):
2,250,000 5.75%, 9/30/97(b).......... 2,253,240
2,000,000 5.00%, 2/15/99(b).......... 1,964,080
3,000,000 5.88%, 2/28/99(b).......... 2,987,700
3,000,000 7.50%, 5/15/02(b).......... 3,126,450
3,000,000 6.38%, 8/15/02(b).......... 2,983,260
1,000,000 6.25%, 2/15/03(b).......... 986,720
2,500,000 7.00%, 7/15/06............. 2,553,675
------------
Total U.S. Treasury Notes 16,855,125
------------
Investment Companies (0.4%):
500,000 Cash Assets Trust Money
Market Fund.............. 500,000
------------
Total Investment Companies 500,000
------------
Total (Cost--$101,783,519)(a) $116,946,416
============
</TABLE>
- ----------
Percentages indicated are based on net assets of $116,938,053.
(a) Represents cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ......................... $16,432,263
Unrealized depreciation ......................... (1,269,366)
------------
Net unrealized appreciation ..................... $15,162,897
============
</TABLE>
(b) A portion of this security was loaned as of May 31, 1997.
(c) Represents non-income producing securities.
See notes to financial statements
-66-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C> <C>
U.S. Government Agencies (34.8%):
Federal Home Loan Mortgage Corp.:
1,409,622 6.50%, 2/1/98 .................... $ 1,397,724
850,324 6.50%, 3/1/98 .................... 843,147
56,740 8.50%, 5/1/01 .................... 58,336
122,129 8.50%, 11/1/01 ................... 125,105
92,307 8.00%, 3/1/02 .................... 93,951
30,217 8.00%, 3/1/02 .................... 30,755
128,219 7.50%, 4/1/02 .................... 128,658
55,520 8.00%, 5/1/02 .................... 56,509
5,234 8.00%, 6/1/02 .................... 5,327
302,306 8.00%, 6/1/02 .................... 307,690
67,773 8.00%, 6/1/02 .................... 68,980
15,928 8.00%, 6/1/02 .................... 16,211
27,207 8.00%, 7/1/02 .................... 27,692
169,488 8.00%, 7/1/02 .................... 172,506
107,859 8.50%, 3/1/05 .................... 110,487
9,266 8.50%, 4/1/05 .................... 9,492
1,000,000 7.46%, 8/3/05(b) ................. 998,620
54,575 8.50%, 9/1/05 .................... 55,905
39,100 8.50%, 4/1/06 .................... 40,431
983,031 6.50%, 1/1/12 .................... 959,989
2,273,886 8.00%, 1/1/23 .................... 2,318,636
541,152 8.00%, 1/1/23 .................... 551,802
Federal National Mortgage Assoc.:
1,337,627 6.00%, 11/1/00, Pool #190070 ...... 1,292,897
4,813,768 6.00%, 5/1/11, Pool #345652 ...... 4,603,166
4,808,849 7.00%, 7/1/11 .................... 4,780,284
947,714 6.50%, 12/1/11, Pool #367178F ..... 924,609
3,884,948 6.50%, 12/1/11, Pool #367838F ..... 3,790,233
986,384 6.00%, 1/1/12, Pool #366788 ...... 943,230
3,119,577 8.00%, 7/1/24 .................... 3,175,136
Government National Mortgage Assoc.:
17,265 9.50%, 2/15/01 ................... 18,317
33,545 9.50%, 9/15/01 ................... 35,589
191,553 8.00%, 1/15/02 ................... 196,998
39,289 8.00%, 3/15/02 ................... 40,406
181,696 8.00%, 3/15/02 ................... 186,861
185,621 8.00%, 4/15/02 ................... 190,898
135,812 8.00%, 7/15/02 ................... 139,673
90,505 9.50%, 10/15/02 .................. 96,020
103,670 9.50%, 1/15/06 ................... 109,986
151,408 8.00%, 5/15/06 ................... 155,713
68,507 9.50%, 7/15/07 ................... 72,681
399,750 8.00%, 11/15/07 .................. 411,115
430,306 8.00%, 12/15/07 .................. 442,540
686,185 9.50%, 8/15/09, Pool #400219 ...... 727,995
198,426 9.50%, 9/15/09 ................... 210,516
742,790 9.50%, 2/15/10 ................... 788,048
41,877 8.00%, 5/15/10 ................... 43,068
175,264 6.50%, 8/15/10 ................... 171,758
203,138 8.00%, 9/15/10 ................... 208,913
1,023,551 8.00%, 11/12/10 .................. 1,052,651
263,240 8.00%, 11/15/10 .................. 270,724
326,889 8.00%, 11/15/10 .................. 336,183
425,640 6.50%, 3/15/11 ................... 417,127
118,651 6.50%, 3/15/11 ................... 116,278
368,996 6.50%, 4/15/11 ................... 361,616
113,575 6.50%, 4/15/11 ................... 111,304
475,555 6.50%, 4/15/11 ................... 466,044
659,613 6.50%, 5/15/11 ................... 646,420
469,131 6.50%, 5/15/11 ................... 459,749
78,412 6.50%, 5/15/11 ................... 76,844
604,833 6.50%, 6/15/11 ................... 592,737
112,563 6.50%, 6/15/11 ................... 110,312
315,697 6.50%, 6/15/11 ................... 309,383
756,450 6.50%, 6/15/11 ................... 741,321
354,167 6.50%, 7/15/11 ................... 347,084
414,020 6.50%, 8/15/11 ................... 405,739
2,504,885 8.50%, 4/15/17 ................... 2,596,464
1,539,276 8.00%, 4/15/22 ................... 1,569,092
3,741,402 7.50%, 1/15/23 ................... 3,727,372
2,221,940 8.00%, 1/15/23 ................... 2,264,979
1,016,638 7.50%, 4/15/23 ................... 1,012,825
1,480,163 9.00%, 3/15/25 ................... 1,557,398
4,898,466 6.50%, 6/15/26 ................... 4,633,606
-----------------
Total U.S. Government Agencies 56,317,855
-----------------
</TABLE>
Continued
-67-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C> <C>
U.S. Treasury Bonds (13.4%):
1,375,000 9.25%, 2/15/16..................... $ 1,699,624
1,675,000 8.75%, 5/15/17(b).................. 1,989,532
2,865,000 8.88%, 8/15/17..................... 3,444,217
4,150,000 8.88%, 2/15/19(b).................. 5,011,042
2,183,000 8.75%, 8/15/20(b).................. 2,617,744
7,600,000 6.25%, 8/15/23..................... 6,927,248
-----------------
Total U.S. Treasury Bonds 21,689,407
-----------------
U.S. Treasury Notes (49.7%):
32,300,000 5.13%, 2/28/98(b).................. 32,141,085
1,750,000 6.38%, 5/15/99(b).................. 1,755,460
11,800,000 6.00%, 10/15/99(b)................. 11,745,012
7,500,000 6.13%, 7/31/00(b).................. 7,447,275
2,000,000 5.63%, 2/28/01(b).................. 1,946,980
25,600,000 6.63%, 5/15/07..................... 25,534,208
-----------------
Total U.S. Treasury Notes 80,570,020
-----------------
Investment Companies (1.7%):
2,801,700 Federated Money Market Trust Fund..
2,801,700
-----------------
Total Investment Companies 2,801,700
-----------------
Total (Cost--$161,041,875)(a) $ 161,378,982
=================
</TABLE>
- -------------
Percentages indicated are based on net assets of $162,011,503.
(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 ....................... $ 1,622,359
Unrealized depreciation ....................... (1,285,252)
---------------
Net unrealized appreciation ................... $ 337,107
===============
</TABLE>
(b) A portion of this security was loaned as of May 31, 1997.
See notes to financial statements
-68-
<PAGE>
THE ARCH FUND, INC.
U.S. Government Securities Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ----------- --------------------------- ------------
<S> <C> <C>
U.S. Government Agencies (40.0%):
Federal Home Loan Mortgage Corp.:
174,442 7.50%, 8/1/97 ........... $ 176,895
458,536 6.50%, 2/1/98 ........... 454,666
257,344 9.50%, 2/1/98 ........... 264,501
544,562 6.00%, 5/1/98 ........... 532,647
19,135 9.50%, 9/1/04 ........... 20,176
500,000 7.46%, 8/3/05 ........... 499,310
297,065 8.50%, 3/1/06 ........... 307,183
564,387 7.50%, 4/1/08,
Pool #E4-5929 .......... 570,911
847,830 6.50%, 2/1/11, Pool
#E00419 ................ 827,957
484,934 7.00%, 11/1/11, Pool
#E65619 ................ 482,354
992,861 6.50%, 1/1/12 ........... 969,588
1,490,452 6.00%, 2/1/12, Pool
#E66284 ................ 1,426,631
754,899 6.50%, 2/1/12, Pool
#E66172 ................ 737,205
846,297 6.50%, 2/1/12, Pool
#E66272 ............... 826,460
998,761 6.00%, 3/1/12, Pool
#E66474 ................ 955,994
Federal National Mortgage Assoc.:
668,813 6.00%, 11/1/00, Pool
#190070 ................ 646,448
965,391 6.50%, 5/1/11, Pool
#335713 ............... 941,854
778,997 6.50%, 5/1/11, Pool
#346276 ................ 760,005
1,930,566 6.50%, 7/1/11, Pool
#250613 ................ 1,883,499
956,024 6.50%, 7/1/11, Pool
#351761 ............... 932,716
370,707 7.00%, 11/1/11, Pool
#250738 ................ 368,505
344,432 7.00%, 11/1/11, Pool
#349630 ................ 342,386
248,119 7.00%, 11/1/11, Pool
#351122 ................ 246,645
1,939,514 6.50%, 12/1/11, Pool
#250781 ................ 1,892,229
971,683 6.50%, 12/1/11, Pool
#368127 ................ 947,993
981,173 6.50%, 12/1/11, Pool
#367868 ................ 957,252
1,559,788 8.00%, 7/1/24 ........... 1,587,568
Government National Mortgage Assoc.:
280,340 8.00%, 1/15/07 .......... 288,310
80,156 6.50%, 5/15/08 .......... 78,552
336,928 9.00%, 7/15/09 .......... 352,511
468,291 9.00%, 11/15/09 ......... 489,950
828,291 8.00%, 10/15/10 ......... 851,839
124,164 6.50%, 11/15/10 ......... 121,681
385,665 6.50%, 2/15/11 .......... 377,952
398,392 6.50%, 3/15/11 .......... 390,424
407,098 6.50%, 3/15/11 .......... 398,956
440,086 6.50%, 3/15/11 .......... 431,284
710,029 6.50%, 3/15/11 .......... 695,828
64,143 6.50%, 3/15/11 .......... 62,860
775,675 6.50%, 4/15/11 .......... 760,162
423,715 6.50%, 4/15/11 .......... 415,240
382,669 6.50%, 5/15/11 .......... 375,016
58,872 6.50%, 5/15/11 .......... 57,695
149,191 6.50%, 5/15/11 .......... 146,207
265,060 6.50%, 6/15/11 .......... 259,759
116,397 6.50%, 6/15/11 .......... 114,069
398,205 6.50%, 7/15/11 .......... 390,241
860,228 6.50%, 7/15/11 .......... 843,023
182,626 8.50%, 5/15/17 .......... 189,303
174,854 8.50%, 6/15/21 .......... 181,247
1,105,249 7.50%, 12/15/22 ......... 1,101,104
646,631 8.00%, 5/15/23, Pool
#0352469 ............... 659,157
258,425 9.50%, 1/15/25 .......... 278,290
675,126 9.50%, 2/15/25, Pool
#365292 ................ 727,023
17,407 9.50%, 2/15/25 .......... 18,745
453,096 9.50%, 2/15/25, Pool
#401796 ................ 487,925
358,398 9.50%, 3/15/25, Pool
#407257 ................ 385,949
242,677 9.50%, 4/15/25, Pool
#386741 ................ 261,331
------------
Total U.S. Government Agencies 32,751,211
------------
U.S. Treasury Notes (57.4%):
2,500,000 7.25%, 2/15/98(b)......... 2,524,275
17,400,000 5.13%, 2/28/98(b)......... 17,314,393
3,300,000 7.12%, 10/15/98........... 3,346,002
3,600,000 7.00%, 4/15/99............ 3,652,200
6,750,000 6.38%, 5/15/99(b)......... 6,771,060
</TABLE>
Continued
-69-
<PAGE>
THE ARCH FUND, INC.
U.S. Government Securities Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ----------- --------------------------- ------------
<S> <C> <C>
U.S. Treasury Notes, continued:
6,650,000 7.75%, 11/30/99(b)........ $ 6,869,251
1,250,000 7.75%, 12/31/99(b)........ 1,292,138
5,300,000 6.63%, 5/15/07............ 5,286,379
-----------
Total U.S. Treasury Notes 47,055,698
-----------
Investment Companies (2.0%):
1,662,300 Federated U.S. Treasury
Obligation Fund......... $ 1,662,300
-----------
Total Investment Companies 1,662,300
-----------
Total (Cost--$81,684,694)(a) $81,469,209
===========
</TABLE>
- ----------
Percentages indicated are based on net assets of $81,935,244.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ................................ $ 201,008
Unrealized depreciation ................................ (416,493)
---------
Net unrealized depreciation ............................ $(215,485)
=========
</TABLE>
(b) A portion of this security was loaned as of May 31, 1997.
See notes to financial statements
-70-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------- ------------
<S> <C> <C>
Municipal Bonds (96.1%):
Alabama (3.6%):
1,000,000 Alabama State GO, 4.40%,
12/1/00 .................. $ 1,001,249
------------
Alaska (1.1%):
300,000 Anchorage, 5.40%,
8/1/98 ................... 304,875
------------
Colorado (4.0%):
390,000 Aurora-Colorado Springs,
5.40%, 9/1/98 ............ 394,988
720,000 El Paso County Colorado
School District No. 020,
5.15%, 12/15/99 .......... 734,400
------------
1,129,388
------------
Hawaii (5.6%):
1,000,000 Hawaii State, 4.10%,
11/1/01 .................. 978,749
600,000 Hawaii State Highway
Revenue, 4.80%, 7/1/03 ... 605,250
------------
1,583,999
------------
Illinois (9.3%):
500,000 Chicago, Water Revenue,
4.70%, 12/1/99 ........... 503,125
500,000 Dupage County, 5.90%,
11/1/01 .................. 525,625
400,000 Illinois State GO, 5.25%,
4/1/01 ................... 409,000
400,000 Illinois State GO
Refunding, 5.60%,
10/1/99 .................. 411,500
750,000 Toll Highway Authority,
4.75%, 1/1/02 ............ 750,000
------------
2,599,250
------------
Indiana (1.8%):
500,000 Muncie, School Board,
4.95%, 1/15/02 ........... 503,750
------------
Iowa (1.6%):
425,000 Ottumwa County, 5.10%,
6/1/01 ................... 435,625
------------
Kentucky (1.4%):
380,000 Kenton County, Water
Revenue, 5.60%, 2/1/99 ... 388,075
------------
Maine (2.9%):
800,000 Maine Municipal Bond
Refunding, 4.90%,
11/1/02 .................. 811,000
------------
Maryland (3.2%):
400,000 Department of
Transportation, 4.10%,
12/15/00 ................. $ 393,500
500,000 Washington, Suburban
Sanitation District,
5.00%, 6/1/00 ............ 509,375
------------
902,875
------------
Michigan (5.9%):
400,000 Chelsea, 5.25%, 5/1/01 ... 410,500
800,000 Kent City, Building
Authority GO, 4.50%,
12/1/01 .................. 799,000
450,000 Oakland County, Building
Authority, 4.75%,
4/1/00 ................... 454,500
------------
1,664,000
------------
Minnesota (3.1%):
365,000 Duluth, 4.65%, 2/1/02 .... 366,369
500,000 Minnesota State, 5.50%,
8/1/98 ................... 509,375
------------
875,744
------------
Mississippi (1.8%):
500,000 Mississippi State Capital
Improvement, 5.00%,
8/1/99 ................... 508,750
------------
Missouri (1.2%):
320,000 Jefferson County, School
District, 4.70%,
3/1/01 ................... 322,800
------------
Nevada (5.0%):
900,000 Sparks GO, 4.80%, 3/1/04 898,875
500,000 Washoe County, 5.30%,
8/1/00 ................... 513,750
------------
1,412,625
------------
New Mexico (3.7%):
345,000 Albuquerque, 4.40%,
7/1/00 ................... 345,431
700,000 New Mexico State Capital
Projects GO, 4.60%,
8/1/00 ................... 704,375
------------
1,049,806
------------
New York (1.8%):
500,000 New York Power Authority,
5.85%, 1/1/00 ............ 516,875
------------
Pennsylvania (3.2%):
500,000 Bucks County, 5.60%,
3/1/98 ................... 506,230
</TABLE>
Continued
-71-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------- ------------
<S> <C> <C>
Municipal Bonds, continued:
Pennsylvania, continued:
400,000 Delaware County, 4.35%,
10/1/00................... $ 399,000
-----------
905,230
-----------
Rhode Island (3.2%):
900,000 Commonwealth Construction
Capital Development,
4.60%, 11/1/03............ 884,250
-----------
South Carolina (3.0%):
400,000 Charleston S.C. GO, 4.50%,
2/1/00.................... 401,000
450,000 Charleston School District,
4.40%, 2/1/98............. 451,571
-----------
852,571
-----------
South Dakota (2.3%):
640,000 South Dakota Building
Authority, Finance Bonds,
5.00%, 9/1/02............. 646,400
-----------
Texas (7.6%):
450,000 Dallas, Water & Sewer Revenue,
4.60%, 4/1/01............. 451,688
800,000 Houston, Series C, 5.50%,
4/1/01.................... 826,000
400,000 San Antonio GO, 4.88%,
8/1/99 .................. 405,500
450,000 Tarrant Water Control,
5.60%, 3/1/00............. 464,625
-----------
2,147,813
-----------
Utah (5.8%):
675,000 Box Elder School District,
4.80%, 6/15/01............ 685,969
560,000 North Davis County Sewer
District, 5.70%, 3/1/02... 585,200
350,000 North Davis County Sewer
District, GO, 5.70%,
3/1/03.................... 366,625
-----------
1,637,794
-----------
Vermont (1.0%):
270,000 Vermont Municipal Bond,
4.50%, 12/1/01............ $ 270,000
-----------
Virginia (2.9%):
400,000 Virginia Beach GO, 4.20%,
7/15/98................... 401,500
400,000 Virginia Public Building
Refunding, 5.70%,
8/1/00.................... 414,500
-----------
816,000
-----------
Washington (7.5%):
500,000 Clark County, 4.60%,
1/1/01.................... 499,375
500,000 Grant County Public
Utilities District,
4.80%, 1/1/04............. 498,125
600,000 Seattle, 4.80%, 5/1/02.... 605,250
250,000 Seattle Water System
Refunding Bonds, 4.70%,
12/1/00................... 252,813
250,000 Washington State Refunding
Bonds, Series R-92C,
5.75%, 9/1/02............. 262,813
-----------
2,118,376
-----------
Wisconsin (2.6%):
325,000 Brown County, 4.80%,
11/1/01................... 328,250
380,000 Milwaukee County, Refunding
Bonds, Series A, 5.25%,
9/1/00.................... 388,075
-----------
716,325
-----------
Total Municipal Bonds 27,005,445
-----------
Investment Companies (2.8%):
467,000 Federated Tax-Free Trust
Mutual Fund............... 467,000
328,000 Nuveen Tax Exempt Money
Market Fund............... 328,000
-----------
Total Investment Companies 795,000
-----------
Total (Cost--$27,800,132)(a)......... $27,800,445
===========
</TABLE>
- ----------
Percentages indicated are based on net assets of $28,098,153.
(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 ......................... $66,755
Unrealized depreciation ......................... (66,442)
--------
Net unrealized appreciation ..................... $ 313
========
</TABLE>
See notes to financial statements
-72-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------- ------------
<S> <C> <C>
Municipal Bonds (96.0%):
Missouri (92.1%):
300,000 Christian County School District R-6, 7.05%, 3/1/11 .................................... $ 322,875
1,255,000 Columbia GO, 5.50%, 10/1/03 ............................................................ 1,317,750
1,000,000 Columbia Water & Electrical Revenue, 6.13%, 10/1/12 .................................... 1,037,500
750,000 Franklin County Union Reorganized School District Series 1993, 5.75%, 3/1/13 ........... 761,250
1,000,000 Hazelwood School District Series 1994, 5.85%, 3/1/09 ................................... 1,032,500
1,000,000 Jefferson City, School District, 6.70%, 3/1/11 ......................................... 1,135,000
150,000 Kansas City Municipal Assistance Corp., 7.15%, 4/15/04 ................................. 164,063
2,415,000 Kansas City School District Building, 5.15%, 2/1/08 .................................... 2,421,038
1,000,000 Kansas City School District Building Series D, 5.00%, 2/1/14, Insured by FGIC........... 945,000
1,000,000 Kansas City School District Series 1993 C, 5.38%, 7/1/05, Insured by FGIC............... 1,026,250
1,000,000 Kansas City Sewer Revenue, 7.25%, 4/1/99, Prerefunded 4/1/99 @ 100...................... 1,053,750
2,200,000 Kansas City Water Revenue, 5.00%, 12/1/16 .............................................. 2,076,250
700,000 Lincoln County IDR, 7.50%, 5/1/05 ...................................................... 742,000
1,500,000 Mehlville School District 09, 6.00%, 2/15/13 ........................................... 1,565,625
1,500,000 Missouri Board Public Buildings, 6.40%, 12/1/09 ........................................ 1,590,000
2,000,000 Missouri Building, Series A, 5.40%, 8/1/09 ............................................. 2,052,500
1,000,000 Missouri Environmental Improvement & Energy, 5.88%, 1/1/15 ............................. 1,012,500
1,000,000 Missouri Environmental Resources Authority, 6.45%, 7/1/08 .............................. 1,080,000
720,000 Missouri Environmental Resources Authority, 7.00%, 10/1/10 ............................. 783,900
1,100,000 Missouri Environmental Resources Authority, 6.88%, 6/1/14 .............................. 1,190,750
500,000 Missouri Environmental Resources Authority, 6.55%, 7/1/14 .............................. 535,625
1,250,000 Missouri Environmental Resources Authority, 5.63%, 7/1/16 .............................. 1,256,250
200,000 Missouri Environmental Resources Authority, 7.40%, 5/1/20 .............................. 216,500
100,000 Missouri Environmental Resources Authority, 7.40%, 5/1/20 .............................. 108,375
1,000,000 Missouri GO, 5.25%, 8/1/08 ............................................................. 1,011,250
1,000,000 Missouri GO, 5.13%, 8/1/09 ............................................................. 1,003,750
1,000,000 Missouri Health & Education Facilities Authority, 6.75%, 5/15/12 ....................... 1,140,000
1,300,000 Missouri Health & Educational Facilities Authority, 4.15%*, 12/1/05 .................... 1,300,000
800,000 Missouri Health & Educational Facilities Authority, 7.75%, 6/1/07 ...................... 829,464
600,000 Missouri Health & Educational Facilities Authority, 6.63%, 11/1/09 ..................... 662,250
500,000 Missouri Health & Educational Facilities Authority, 7.13%, 12/15/12, Prerefunded
12/15/00 @ 102........................................................................ 553,125
2,000,000 Missouri Health & Educational Facilities Authority, 5.10%, 11/15/13 .................... 1,897,500
1,000,000 Missouri Health & Educational Facilities Authority, 5.38%, 2/15/14 ..................... 986,250
750,000 Missouri Health & Educational Facilities Authority, 6.25%, 6/1/15 ...................... 788,438
2,000,000 Missouri Health & Educational Facilities Authority, 6.25%, 6/1/16 ...................... 2,090,000
2,500,000 Missouri Health & Educational Facilities Authority, 5.25%, 5/15/21 ..................... 2,393,750
1,200,000 Missouri Health & Educational Facilities Authority Child Mercy, 5.63%, 5/15/12 ......... 1,206,000
1,000,000 Missouri Higher Education Loan Authority, 5.75%, 2/15/02 ............................... 1,031,250
500,000 Missouri Housing Development, 7.00%, 9/1/10 ............................................ 530,625
490,000 Missouri Housing Development, 6.90%, 7/1/18 ............................................ 510,825
</TABLE>
Continued
-73-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------- ------------
<S> <C> <C>
Municipal Bonds, continued:
Missouri, continued:
980,000 Missouri Housing Development, 6.60%, 7/1/24 ............................................ $ 1,015,525
1,000,000 Missouri Sewer, 5.75%, 3/1/01 .......................................................... 1,042,500
750,000 Missouri Southern State College, 5.25%, 12/1/12 ........................................ 731,250
200,000 Missouri Water PCR, 7.13%, 12/1/10 ..................................................... 218,500
1,000,000 Missouri Water PCR, 5.75%, 8/1/12 ...................................................... 1,022,500
2,085,000 Missouri Water Pollution Control, Series A, 5.75%, 8/1/18 .............................. 2,124,094
1,000,000 Missouri Western State College, 5.40%, 10/1/16 ......................................... 985,000
570,000 O'Fallon GO, 5.75%, 3/1/10 ............................................................. 578,550
600,000 Phelps County Hospital Revenue, 8.20%, 3/1/05, Prerefunded 3/1/00 @ 102................. 669,750
1,000,000 Sikeston Electric Revenue, 5.00%, 6/1/22 ............................................... 921,250
1,000,000 Sikeston Electric Revenue, 6.25%, 6/1/22, Prerefunded 6/1/02 @ 102...................... 1,087,500
500,000 Southeast Missouri Correctional Facilities, 5.75%, 10/15/08 ............................ 511,250
500,000 Southeast Missouri Correctional Facilities, 5.75%, 10/15/16 ............................ 498,750
2,000,000 Springfield School District R-12, 5.25%, 3/1/11 ........................................ 1,977,500
400,000 Springfield School District R-12 Series A, 6.75%, 3/1/11 ............................... 431,500
2,000,000 Springfield Water Works Revenue, 5.60%, 5/1/23 ......................................... 1,980,000
500,000 St. Charles County GO, 5.70%, 2/15/05 .................................................. 519,375
1,000,000 St. Charles County GO, 6.00%, 2/15/09 .................................................. 1,037,500
500,000 St. Charles County Public Facilities, 6.38%, 3/15/07 ................................... 536,250
750,000 St. Louis County Paltonville R-3 School District, 6.25%, 2/1/10 ........................ 803,438
1,000,000 St. Louis County Rockwood School District R-6, 5.00%, 2/1/04 ........................... 1,003,750
2,500,000 St. Louis County Series B, 5.50%, 2/1/13 ............................................... 2,500,000
800,000 St. Louis County, IDR, 7.38%, 2/1/14 ................................................... 859,000
400,000 St. Louis IDR, 6.65%, 5/1/16 ........................................................... 449,500
500,000 St. Louis Water Revenue, 6.00%, 7/1/14 ................................................. 519,375
1,740,000 St. Peters GO, 5.80%, 1/1/09 ........................................................... 1,796,550
1,065,000 St. Peters GO, 5.85%, 1/1/13 ........................................................... 1,079,644
3,000,000 University of Missouri Health & Education, 5.60%, 11/1/26 .............................. 2,981,249
1,400,000 University of Missouri Industrial Development, 5.95%, 12/20/25 ......................... 1,407,000
3,000,000 University of Missouri Revenue, 5.50%, 11/1/21 ......................................... 2,954,999
3,000,000 University of Missouri Revenue, 5.80%, 11/1/27 ......................................... 3,029,999
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 ................................... 1,962,500
400,000 Webster Groves, 6.60%, 2/1/10 .......................................................... 450,500
-------------
84,050,245
-------------
Puerto Rico (3.9%):
500,000 Commonwealth, 6.45%, 7/1/17 ............................................................ 536,250
1,000,000 Commonwealth GO Series A, 6.00%, 7/1/06 ................................................ 1,051,250
</TABLE>
Continued
-74-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Fund
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------------------------------------------------------------------- ------------
<S> <C> <C>
Municipal Bonds, continued:
Puerto Rico, continued:
2,000,000 Public Buildings Authority, 5.50%, 7/1/21 .............................................. $ 1,920,000
------------
3,507,500
------------
Total Municipal Bonds 87,557,745
------------
Investment Companies (3.0%):
2,409,000 Federated Tax-Free Trust Fund........................................................... 2,409,000
353,000 Nuveen Tax Exempt Money Market Fund..................................................... 353,000
------------
Total Investment Companies 2,762,000
------------
Total (Cost--$88,281,124)(a) $90,319,745
============
- ----------
</TABLE>
Percentages indicated are based on net assets of $91,251,695.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation .......... $2,354,032
Unrealized depreciation .......... (315,411)
----------
Net unrealized appreciation ...... $2,038,621
==========
* 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 May 31, 1997.
See notes to financial statements
-75-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------------------------------------------------- --------------
<S> <C> <C>
Municipal Bonds (101.5%):
Alabama (1.6%):
2,000,000 Birmingham, Series A, 5.70%, 6/1/13 .................................................. $ 2,027,500
3,000,000 Birmingham, Series A, 5.90%, 6/1/18 .................................................. 3,015,000
--------------
5,042,500
--------------
Alaska (0.3%):
1,000,000 State Housing Finance Corp., Series A, 5.70%, 12/1/11 ................................ 1,011,250
--------------
Arizona (3.0%):
1,000,000 Mohave County Unified School District No. 1, Series A, 5.90%, 7/1/15 ................. 1,036,250
6,400,000 Salt River Project Agricultural Impact, Series C, 6.20%, 1/1/12 ...................... 6,696,000
1,000,000 Salt River Project Agriculture Impact, 6.00%, 1/1/13 ................................. 1,032,500
1,000,000 State Transportation Board Excise Tax, Series B, 5.75%, 7/1/05 ....................... 1,057,500
--------------
9,822,250
--------------
California (0.9%):
1,000,000 California State, 6.00%, 9/1/09 ...................................................... 1,082,500
2,000,000 Southern California Public Power Authority, Series A, 5.00%, 7/1/15 .................. 1,855,000
--------------
2,937,500
--------------
Colorado (2.1%):
6,655,000 Adams County Colorado School District, 5.40%, 12/15/13 ............................... 6,679,956
--------------
Connecticut (3.6%):
3,000,000 Connecticut State, Series A, 5.80%, 3/15/07 .......................................... 3,135,000
8,785,000 Connecticut State, Series A, 5.25%, 3/1/13 ........................................... 8,587,338
--------------
11,722,338
--------------
Florida (6.6%):
2,000,000 Brevard County, 6.00%, 9/1/11 ........................................................ 2,075,000
5,525,000 Florida State Department of Transportation, 5.25%, 7/1/17 ............................ 5,379,969
5,000,000 Florida State Environmental, 5.50%, 7/1/13 ........................................... 5,062,500
8,000,000 Palm Beach County Solid Waste Authority, 5.38%, 10/1/11 .............................. 7,940,000
1,000,000 State Board of Education Capital Outlay Pub. Ed., Series A, 5.88%, 6/1/16 ............ 1,022,500
--------------
21,479,969
--------------
Georgia (0.7%):
1,000,000 Atlanta, Series A, 6.10%, 12/1/19 .................................................... 1,041,250
1,000,000 Georgia State, Series B, 6.30%, 3/1/09 ............................................... 1,113,750
--------------
2,155,000
--------------
Hawaii (4.4%):
8,000,000 Hawaii State, Series CN, 5.50%, 3/1/14, Insured by FGIC............................... 8,000,000
5,815,000 Honolulu City & County, 6.00%, 1/1/09 ................................................ 6,214,781
--------------
14,214,781
--------------
</TABLE>
Continued
-76-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------------------------------------------------- --------------
<S> <C> <C>
Municipal Bonds, continued:
Illinois (10.8%):
3,000,000 Chicago, 6.00%, 1/1/11, Insured by AMBAC.............................................. $ 3,146,250
1,000,000 Chicago Metropolitan Water Reclamation, 5.40%, 12/1/06 ............................... 1,027,500
1,000,000 Chicago Metropolitan Water Reclamation, 5.50%, 12/1/08 ............................... 1,031,250
9,090,000 Cook County, 6.25%, 11/15/12 ......................................................... 9,885,375
2,000,000 Cook County, 5.90%, 11/15/16, Insured by FGIC......................................... 2,040,000
1,000,000 Edwardsville Waterworks, 6.00%, 2/1/17 ............................................... 1,040,000
1,000,000 Illinois State, 5.75%, 4/1/12, Insured by MBIA........................................ 1,016,250
3,000,000 Illinois State, 5.88%, 8/1/12 ........................................................ 3,082,500
8,400,000 Illinois State, 5.25%, 2/1/13 ........................................................ 8,127,000
2,000,000 Illinois State, 5.63%, 7/1/13 ........................................................ 2,010,000
2,000,000 Illinois State, 5.50%, 8/1/14, Insured by MBIA........................................ 1,975,000
1,000,000 Illinois State, 5.75%, 7/1/16 ........................................................ 1,006,250
--------------
35,387,375
--------------
Indiana (5.6%):
5,000,000 Goshen-Chandler School Building, 5.75%, 1/15/10 ...................................... 5,093,750
3,000,000 Hammond Multi-School Building Corp., 5.80%, 1/15/15 .................................. 3,018,750
5,000,000 Hammond Multi-School Building Corp., 5.85%, 1/15/20 .................................. 5,031,250
3,500,000 Transportation Finance Authority, Series A, 5.75%, 6/1/12 ............................ 3,622,500
1,500,000 Whitko Middle School Building Corp., 5.88%, 7/15/12 .................................. 1,543,125
--------------
18,309,375
--------------
Kentucky (1.8%):
6,000,000 Daviess County Kentucky, 4.15%*, 6/2/97 .............................................. 6,000,000
--------------
Louisiana (0.2%):
700,000 Calcasieu Parish Louisiana, 4.00%, 2/1/16 ............................................ 700,000
--------------
Massachusetts (3.8%):
4,975,000 Massachusetts Bay Transportation Authority, 5.40%, 3/1/08 ............................ 5,118,031
7,115,000 Massachusetts State Water Pollution Abatement Trust, 5.63%, 2/1/15 ................... 7,212,831
--------------
12,330,862
--------------
Michigan (1.2%):
1,000,000 Greenville Public Schools, 5.75%, 5/1/11 ............................................. 1,027,500
1,000,000 Johannesburg-Lewistown Area Schools, 5.00%, 5/1/13 ................................... 947,500
2,000,000 Redford School District, 5.95%, 5/1/15 ............................................... 2,067,500
--------------
4,042,500
--------------
Minnesota (2.5%):
1,000,000 Minneapolis Special School District, Series A, 5.70%, 2/1/09 ......................... 1,038,750
6,000,000 Monticello Minnesota Independent Schools, 5.40%, 2/1/15 .............................. 5,925,000
1,000,000 Northern Municipal Power Agency, Series A, 5.90%, 1/1/08 ............................. 1,046,250
--------------
8,010,000
--------------
</TABLE>
Continued
-77-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------------------------------------------------- --------------
<S> <C> <C>
Municipal Bonds, continued:
Mississippi (0.3%):
1,000,000 Mississippi State, 6.20%, 2/1/08 ..................................................... $ 1,075,000
--------------
Missouri (1.2%):
1,000,000 Independence Electrical Utility Revenue, 7.10%, 6/1/04, Prerefunded 12/1/98 @ 100..... 1,038,750
1,500,000 State Health & Education Facilities, Series B, 7.00%, 6/1/05 ......................... 1,665,000
1,200,000 State Health & Educational Facilities, 7.75%, 6/1/07 ................................. 1,244,196
--------------
3,947,946
--------------
Nebraska (0.6%):
1,000,000 Omaha Public Power District Electric Revenue, Series B, 6.00%, 2/1/07 ................ 1,080,000
1,000,000 Public Power District Revenue, Series A, 5.50%, 1/1/13 ............................... 993,750
--------------
2,073,750
--------------
Nevada (4.0%):
5,000,000 Clark County Nevada School District, 5.50%, 6/15/11 .................................. 5,037,500
5,000,000 Nevada State Water Utility Improvements, 5.13%, 9/1/11 ............................... 4,881,250
3,000,000 Nevada State Water Utility Improvements, 6.50%, 12/1/12 .............................. 3,258,750
--------------
13,177,500
--------------
New Hampshire (0.3%):
1,000,000 Concord, 6.15%, 10/15/10 ............................................................. 1,065,000
--------------
New Jersey (3.3%):
2,000,000 New Jersey State, Series D, 5.90%, 2/15/08 ........................................... 2,120,000
8,000,000 New Jersey State, Series E, 6.00%, 7/15/09 ........................................... 8,660,000
--------------
10,780,000
--------------
North Carolina (3.4%):
2,000,000 Eastern Municipal Power Agency, Series B, 6.00%, 1/1/13 .............................. 2,045,000
1,000,000 Municipal Power Agency No. 1, 5.75%, 1/1/15 .......................................... 1,003,750
8,000,000 North Carolina State School Improvements, 5.20%, 3/1/13 .............................. 7,980,000
--------------
11,028,750
--------------
Ohio (0.6%):
2,000,000 Columbus Waterworks Enlargement No. 44, 6.00%, 5/1/13 ................................ 2,095,000
--------------
Oklahoma (0.3%):
1,000,000 Tulsa, 6.25%, 6/1/11 ................................................................. 1,052,500
--------------
Pennsylvania (4.7%):
1,000,000 Allegheny County Series C-40, 16.88%, 5/1/07 ......................................... 1,055,000
1,500,000 Burrell School District, 5.65%, 11/15/16 ............................................. 1,515,000
1,000,000 Easttown Township Public/Highway Improvements, 5.65%, 8/1/17 ......................... 1,005,000
9,000,000 Pennsylvania State, 5.13%, 9/15/11, Insured by AMBAC.................................. 8,786,250
2,000,000 State Higher Education Facilities, Series A, 5.88%, 1/1/15 ........................... 2,037,500
1,000,000 State Higher Education Facilities, Series B, 5.88%, 1/1/15 ........................... 1,018,750
--------------
15,417,500
--------------
</TABLE>
Continued
-78-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------------------------------------------------- --------------
<S> <C>
Municipal Bonds, continued:
Tennessee (1.0%):
1,000,000 Memphis Water Revenue, Series A, 6.00%, 1/1/12 ....................................... $ 1,043,750
1,000,000 Metropolitan Government Nashville & Davidson County, 5.75%, 1/1/15 ................... 1,006,250
1,000,000 Metropolitan Government Nashville & Davidson County, 6.13%, 5/15/19 .................. 1,036,250
--------------
3,086,250
--------------
Texas (12.5%):
3,000,000 Austin Independent School District, 5.75%, 8/1/15 .................................... 3,045,000
3,400,000 Harris County Health Facilities, Series B, 4.05%, 2/15/16 ............................ 3,400,000
8,000,000 Harris County Texas Health, 5.50%, 6/1/17 ............................................ 7,800,000
2,500,000 Harris County Texas Health Care Facilities, 4.05%*, 6/2/97 ........................... 2,500,000
1,000,000 Humble Independent School District, 6.25%, 2/1/07 .................................... 1,072,500
1,000,000 Manor Independent School District, 5.70%, 8/1/10 ..................................... 1,030,000
1,000,000 Royse City Independent School District, 5.50%, 2/15/15 ............................... 1,000,000
1,000,000 San Antonio Electric & Gas, 5.75%, 2/1/11 ............................................ 1,017,500
3,000,000 State Public Finance Authority, Series A, 5.95%, 10/1/15 ............................ 3,101,250
1,000,000 State Public Financing Authority, Series A, 5.70%, 10/1/07 ........................... 1,031,250
6,750,000 Texas State Water Development, 5.40%, 8/1/21 ......................................... 6,513,750
7,500,000 University of Texas, Series B, 5.10%, 8/15/13 ........................................ 7,190,625
2,000,000 Water Development Board Revenue Series A, 5.75%, 7/15/15 ............................. 2,032,500
--------------
40,734,375
--------------
Utah (1.6%):
4,000,000 Intermountain Power Agency, Utah Power Supply, Series B, 6.00%, 7/1/12 ............... 4,095,000
1,000,000 Intermountain Power Agency, Utah Power Supply, Series B, 6.00%, 7/1/15 ............... 1,000,090
--------------
5,095,090
--------------
Virginia (2.8%):
1,000,000 Newport News, Series A, 6.13%, 6/1/10 ................................................ 1,058,750
2,200,000 Peninsula Port Authority Revenue - Shell Co., 4.00%*, 6/2/97 ......................... 2,200,000
1,000,000 State Public School Authority, 5.90%, 7/15/11 ........................................ 1,037,500
4,920,000 Virginia State Trust Brd., 5.13%, 5/15/12 ............................................ 4,772,400
--------------
9,068,650
--------------
Washington (10.2%):
1,000,000 Grant County Public Utility, Series F, 5.70%, 1/1/15 ................................. 1,002,500
1,000,000 King County Library System, 6.05%, 12/1/07 ........................................... 1,072,500
1,500,000 King County School District No. 415, 5.75%, 6/1/11 ................................... 1,543,125
2,000,000 King County School District No. 415, 5.88%, 6/1/16 ................................... 2,035,000
1,000,000 King County, Series A, 6.00%, 12/1/09 ................................................ 1,041,250
1,000,000 Seattle Municipal Light & Power Revenue, 6.20%, 7/1/06 ............................... 1,086,250
1,000,000 Seattle Municipal Light & Power Revenue, 6.25%, 7/1/07 ............................... 1,082,500
1,000,000 Snohomish County Public Utility District 001, 6.45%, 1/1/06 .......................... 1,105,000
2,000,000 Snohomish County Public Utility District 001, 6.50%, 1/1/12 .......................... 2,142,500
</TABLE>
Continued
-79-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------------------------------------------------- --------------
<S> <C> <C>
Municipal Bonds, continued:
Washington, continued:
3,000,000 Snohomish County Public Utility District 001, 6.00%, 1/1/13 .......................... $ 3,082,500
1,000,000 Snohomish County School District No. 2, 6.20%, 12/1/12 ............................... 1,061,250
3,000,000 Spokane Regular Solid Waste Management, 5.50%, 12/1/10 ............................... 3,033,750
1,000,000 Tacoma Electrical System, 6.25%, 1/1/15 .............................................. 1,046,250
8,000,000 Washington State Motor Vehicle Fuel Tax Series, 5.38%, 1/1/22 ........................ 7,810,000
4,190,000 Washington State Series, 5.50%, 1/1/17 ............................................... 4,148,100
1,000,000 Washington State, Series DD-14 & Series B, 5.75%, 9/1/07 ............................. 1,043,750
--------------
33,336,225
--------------
West Virginia (2.4%):
7,940,000 West Virginia School Building, 5.40%, 7/1/10 ......................................... 7,949,925
--------------
Wisconsin (2.5%):
1,000,000 Dane County, Series A, 5.65%, 3/1/12 ................................................. 1,013,750
1,000,000 Green Bay Area Public School District, Series A, 5.50%, 4/1/12 ....................... 1,003,750
3,000,000 Kenosha, Series B, 5.85%, 12/1/11 .................................................... 3,082,500
3,000,000 Milwaukee County, Series A, 6.00%, 9/1/09 ............................................ 3,097,500
--------------
8,197,500
--------------
Wyoming (0.7%):
2,200,000 Uinta County Wyoming Chevron USA, 4.00%*, 6/2/97 ..................................... 2,200,000
--------------
Total Municipal Bonds 331,226,617
--------------
Investment Companies (1.7%):
2,710,000 Federated Tax-Free Trust Mutual Fund.................................................. 2,710,000
3,029,000 Nuveen Tax-Exempt Money Market Fund................................................... 3,029,000
--------------
Total Investment Companies 5,739,000
--------------
Total (Cost--$331,006,272)(a) $336,965,617
==============
</TABLE>
- ----------
Percentages indicated are based on net assets of $326,427,257.
(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 ........................... $6,223,969
Unrealized depreciation ........................... (264,624)
-----------
Net unrealized appreciation ....................... $5,959,345
===========
</TABLE>
* 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 May 31, 1997.
AMBAC--AMBAC Indemnity Corp.
FGIC--Financial Guaranty Insurance Corp.
MBIA--Municipal Bond Insurance Association
See notes to financial statements
-80-
<PAGE>
THE ARCH FUND, INC.
Intermediate Corporate Bond Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- ---------------------------- ------------
<S> <C> <C>
Corporate Bonds (61.4%):
Banking (9.8%):
200,000 BankAmerica Corp., 8.13%,
2/1/02.................... $ 209,250
500,000 Bankers Trust New York,
7.25%, 1/15/03(b)......... 504,375
400,000 Boatmen's Bancshares,
8.62%, 11/15/03........... 430,500
500,000 Chase Manhattan Corp.,
7.12%, 3/1/05(b).......... 498,125
500,000 NationsBank Corp., 7.75%,
8/15/04................... 516,875
600,000 NationsBank Corp., 6.88%,
2/15/05................... 587,250
750,000 Toronto-Dominion Bank-NY,
7.88%, 8/15/04............ 758,438
300,000 Wells Fargo & Co., 8.38%,
5/15/02................... 317,625
-----------
3,822,438
-----------
Beverages (6.2%):
200,000 Anheuser-Busch Cos, Inc.,
8.75%, 12/1/99............ 210,750
1,000,000 Anheuser-Busch Cos. Inc.,
6.75%, 8/1/03(b).......... 996,250
1,000,000 Brown-Forman, Corp., 7.38%,
5/10/05................... 1,012,500
200,000 Coca Cola Co., 7.88%,
9/15/98................... 204,526
-----------
2,424,026
-----------
Electrical & Electronic (2.7%):
1,000,000 Motorola Inc., 7.60%,
1/1/07(b)................. 1,041,250
-----------
Entertainment (2.5%):
1,000,000 Walt Disney Co. - Global
Bond, 6.75%, 3/30/06...... 978,750
-----------
Financial Services (12.5%):
500,000 Bear Stearns Co. Inc.,
9.13%, 4/15/98............ 513,315
500,000 Bear Stearns Co. Inc.,
8.25%, 2/1/02(b).......... 524,375
1,000,000 CIT Group Holdings, 6.80%,
4/17/00................... 1,007,500
200,000 Ford Motor Credit, 9.38%,
12/15/97.................. 203,914
800,000 Ford Motor Credit, 7.50%,
1/15/03................... 820,000
500,000 General Motors Acceptance
Corp., 8.50%, 2/4/02...... 531,250
500,000 GMAC Global Bond, 6.75%,
2/7/02.................... 497,500
300,000 Merrill Lynch & Co., 7.75%,
3/1/99.................... 306,750
175,000 U.S. Leasing International
Inc., 7.00%, 11/1/97...... 176,234
300,000 United Postal Savings,
9.00%, 7/26/99............ 314,625
-----------
4,895,463
-----------
Food Products (6.4%):
1,000,000 Campbell Soup Co., 6.90%,
10/15/06.................. 993,750
200,000 General Mills, 8.47%,
12/15/98.................. 206,702
1,000,000 General Mills, 8.90%,
3/15/06................... 1,121,250
150,000 Quaker Oats Co., 9.00%,
12/7/01................... 161,499
-----------
2,483,201
-----------
Health Care (2.8%):
1,000,000 Eli Lilly & Co., 8.38%,
12/1/06................... 1,088,750
-----------
Industrial Goods & Services (7.6%):
150,000 BP Amercia, 9.38%, 11/1/00.. 162,375
200,000 BP America, 8.50%, 4/15/01.. 212,000
100,000 Clorox, 8.80%, 7/15/01...... 107,250
200,000 E.I. du Pont de Nemours,
8.50%, 2/15/03............ 211,000
1,000,000 E.I. du Pont de Nemours,
8.13%, 3/15/04(b)......... 1,065,000
200,000 Kimberly-Clark, 8.62%,
5/1/01(b)................. 213,250
1,000,000 Texaco Capital, 7.09%,
2/1/07(b)................. 1,000,000
-----------
2,970,875
-----------
Retail Stores - Discount (2.7%):
400,000 Wal-Mart Stores, 8.62%,
4/1/01.................... 425,500
</TABLE>
Continued
-81-
<PAGE>
THE ARCH FUND, INC.
Intermediate Corporate Bond Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ----------------------------- ------------
<S> <C> <C>
Corporate Bonds, continued:
Retail Stores - Discount, continued:
600,000 Wal-Mart Stores, 7.50%,
5/15/04................... $ 618,000
-----------
1,043,500
-----------
Telecommunications (7.7%):
1,000,000 AT&T Corp., 6.75%, 4/1/04(b) 986,250
1,000,000 Lucent Technologies Inc.,
7.25%, 7/15/06(b)......... 1,008,750
1,000,000 Pacific Bell, 7.25%, 7/1/02. 1,018,750
-----------
3,013,750
-----------
Transportation & Shipping (0.5%):
200,000 Union Pacific Co., 7.88%,
2/15/02................... 205,750
-----------
Total Corporate Bonds 23,967,753
-----------
Medium Term Notes (7.7%):
Financial Services (2.7%):
1,000,000 General Electric Capital
Corp., 7.66%, 8/2/04...... 1,047,500
-----------
Health Care-Drugs (2.5%):
1,000,000 SmithKline Beecham, 6.63%,
10/1/01................... 993,750
-----------
Telecommunications (2.5%):
1,000,000 Southwestern Bell, 6.56%,
11/15/05.................. 967,500
-----------
Total Medium Term Notes 3,008,750
-----------
U.S. Government Agencies (23.2%):
Federal Farm Credit Bank:
500,000 8.95%, 6/1/06 ............. 563,565
Federal Home Loan Mortgage Corp.:
1,966,062 6.50%, 1/1/12 ............. 1,919,976
Federal National Mortgage Assoc.:
837,207 7.00%, 11/1/10, Pool
#328614 .................. 832,234
988,445 7.00%, 6/1/11, Pool #349980 982,574
988,618 6.50%, 3/1/12, Pool #372705 964,516
987,973 6.50%, 3/1/12, Pool #372719 963,886
Government National Mortgage Assoc.:
1,005,413 6.00%, 4/15/26, Pool
#345610 .................. 922,778
1,006,979 6.50%, 1/15/27 ............ 952,532
996,427 7.00%, 1/15/27 ............ 969,025
-----------
Total U.S. Government Agencies 9,071,086
-----------
U.S. Treasury Bonds (3.7%):
1,500,000 5.88%, 11/15/05............. 1,423,800
-----------
Total U.S. Treasury Bonds 1,423,800
-----------
U.S. Treasury Notes (1.6%):
500,000 7.25%, 8/15/04.............. 518,025
100,000 6.63%, 5/15/07.............. 99,743
-----------
Total U.S. Treasury Notes 617,768
-----------
Investment Companies (1.5%):
572,997 Federated Money Market
Trust Shares of
Beneficial Interest....... 572,997
-----------
Total Investment Companies 572,997
-----------
Total (Cost--$38,672,237)(a) $38,662,154
===========
</TABLE>
- ----------
Percentages indicated are based on net assets of $39,020,616.
(a) Represents cost for federal income tax purposes differs from value by net
unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .......................... $578,916
Unrealized depreciation .......................... (588,999)
========
Net unrealized depreciation ...................... $(10,083)
========
</TABLE>
(b) A portion of this security was loaned as of May 31, 1997.
See notes to financial statements
-82-
<PAGE>
THE ARCH FUND, INC.
Bond Index Portfolio
Schedule of Portfolio Investments
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------- --------------------------- -------------
<S> <C> <C>
Corporate Bonds (23.0%):
Automotive (4.0%):
2,000,000 Ford Motor Credit, 7.00%,
9/25/01(b)............... $ 2,010,000
1,000,000 Ford Motor Credit, 7.75%,
11/15/02................. 1,038,750
2,000,000 General Motors Corp.,
8.88%, 5/15/03........... 2,182,500
------------
5,231,250
------------
Entertainment (1.5%):
1,000,000 Walt Disney Co., 6.38%,
3/30/01.................. 990,000
1,000,000 Walt Disney Co. - Global
Bond, 6.75%, 3/30/06..... 978,750
------------
1,968,750
------------
Financial Services (9.8%):
1,800,000 American Express Credit,
6.50%, 8/1/00............ 1,793,250
1,000,000 Dean Witter Discover,
6.25%, 3/15/00........... 991,250
1,500,000 Dean Witter Discover,
6.75%, 8/15/00........... 1,505,625
2,000,000 General Electric Capital
Corp., 8.85%, 4/1/05..... 2,225,000
1,000,000 General Electric Capital
Corp., 8.50%, 7/24/08.... 1,105,000
1,000,000 Household Finance Corp.,
8.38%, 11/15/01.......... 1,056,250
1,000,000 Household Finance Corp.,
6.88%, 3/1/07(b)......... 973,750
2,000,000 Merrill Lynch & Co.,
6.70%, 8/1/00............ 1,997,500
1,000,000 Merrill Lynch & Co.,
8.00%, 2/1/02............ 1,042,500
------------
12,690,125
------------
Oil & Exploration Products & Services (1.2%):
1,500,000 Texaco Capital, 9.45%,
3/1/00................... 1,608,750
Retail Stores - Discount (1.7%):
2,000,000 Wal-Mart Stores, Inc.,
9.10%, 7/15/00(b)........ 2,137,500
Telecommunications (4.0%):
1,000,000 Bell Telephone Penn,
8.75%, 8/15/31........... 1,142,500
3,000,000 Lucent Technologies, Inc.,
6.90%, 7/15/01........... 3,015,000
1,000,000 Pacific Bell, 7.25%, 7/1/02 1,018,750
------------
5,176,250
------------
Yankee Corporate Bond (0.8%):
1,000,000 Household Finance Co.,
7.45%, 4/1/00............ 1,016,250
------------
Total Corporate Bonds 29,828,875
------------
Medium Term Note (2.3%):
Food Products (2.3%):
3,000,000 Pepsico Inc., 6.80%,
5/15/00.................. 3,018,750
------------
Total Medium Term Note 3,018,750
------------
U.S. Government Agencies (30.5%):
Federal Home Loan Mortgage Corp.:
223,472 6.50%, 1/1/98, Gold Pool
#L90010 ................. 221,586
986,968 6.00%, 4/1/98, Gold Pool
#M17791 ................. 965,373
222,932 6.50%, 4/1/98, Gold Pool
#M17876 ................. 221,050
182,813 6.50%, 5/1/98, Gold Pool
#M18001 ................. 181,270
55,785 8.50%, 10/1/01, Pool
#200055 ................. 57,144
206,188 9.00%, 3/1/03, Pool
#380019 ................. 213,081
69,088 9.00%, 5/1/03, Pool
#380021 ................ 71,398
432,962 7.00%, 11/1/10, Gold Pool
#E62010 ................. 430,659
392,352 7.00%, 11/1/10, Gold Pool
#E20202 ................. 390,265
962,208 6.00%, 3/1/11, Gold Pool
#E63503 ................. 921,006
975,719 6.00%, 4/1/11, Gold Pool
#E63515 ................. 933,939
976,597 6.00%, 6/1/11, Gold Pool
#E00439 ................. 934,779
</TABLE>
Continued
-83-
<PAGE>
THE ARCH FUND, INC.
Bond Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------- -------------
<S> <C> <C>
U.S. Government Agencies, continued:
1,500,000 6.00%, 3/1/12, Gold Pool
#E66538 ................. $ 1,435,770
266,801 6.00%, 2/1/26, Gold Pool
#D68286F ................ 246,124
881,600 6.00%, 3/1/26, Gold Pool
#C80393F ................ 813,276
442,686 6.00%, 4/1/26, Gold Pool
#D70772F ................ 408,377
398,619 6.00%, 4/1/26, Gold Pool
#D70405F ................ 367,726
118,937 6.00%, 4/1/26, Gold Pool
#C803465 ................ 109,719
503,476 8.00%, 11/1/26, Gold Pool
#D76134 ................. 513,385
28,909 6.00%, 12/1/26, Gold Pool
#D76870F ................ 26,669
859,668 6.00%, 12/1/26, Gold Pool
#C80465 ................. 793,044
961,628 8.00%, 12/1/26, Gold Pool
#D76530 ................. 980,553
460,034 8.00%, 12/1/26, Gold Pool
#D76906 ................. 469,088
996,625 7.00%, 1/1/27, Gold Pool
#D77743 ................. 972,018
2,009,241 7.00%, 1/1/27, Gold Pool
#D77720 ................. 1,959,633
963,618 8.00%, 1/1/27, Gold Pool
#C00490 ................. 982,582
Federal National Mortgage Assoc.:
500,000 8.35%, 11/10/99 .......... 524,525
668,813 6.00%, 11/1/00, Pool
#190070 ................. 646,448
990,824 6.00%, 5/1/11, Pool
#337194 ................. 947,475
998,350 6.00%, 2/1/12, Pool
#250917 ................. 954,672
993,152 6.00%, 3/1/12, Pool
#359504 ................. 949,702
1,000,217 6.00%, 3/1/12, Pool
#373131 ................. 956,458
991,971 6.00%, 3/1/12, Pool
#374638 ................. 948,573
498,939 9.00%, 10/1/26, Pool
#353671 ................. 524,509
498,050 9.00%, 10/1/26, Pool
#358137 ................. 523,576
498,936 9.00%, 10/1/26, Pool
#361800 ................. 524,507
414,758 9.00%, 11/1/26, Pool
#358703 ................. 436,015
498,922 9.00%, 11/1/26, Pool
#364453 ................. 524,492
368,078 9.00%, 12/1/26, Pool
#368686 ................. 386,942
Government National Mortgage Assoc.:
208,988 7.50%, 4/15/02, Pool
#210173 ................. 211,926
35,460 7.50%, 7/15/02, Pool
#216193 ................. 35,959
484,427 7.50%, 7/15/08, Pool
#349404 ................. 491,238
161,253 7.50%, 8/15/10, Pool
#413412 ................. 163,520
103,838 7.50%, 9/15/10, Pool
#413117 ................. 105,298
468,998 7.50%, 11/15/10, Pool
#415775 ................. 475,592
52,274 6.00%, 3/15/11, Pool
#425964 ................. 50,118
24,932 6.50%, 3/15/11, Pool
#419123 ................. 24,433
447,991 6.00%, 4/15/11, Pool
#393849 ................. 429,511
60,522 6.00%, 4/15/11, Pool
#421800 ................. 58,025
497,263 6.00%, 4/15/11, Pool
#429397 ................. 476,751
54,550 6.00%, 5/15/11, Pool
#345647 ................. 52,300
665,222 6.00%, 5/15/11, Pool
#421871 ................. 637,781
540,151 6.00%, 5/15/11, Pool
#432659 ................. 517,870
616,880 6.50%, 5/15/11, Pool
#412598 ................. 604,542
419,886 6.50%, 5/15/11, Pool
#432640 ................. 411,488
</TABLE>
Continued
-84-
<PAGE>
THE ARCH FUND, INC.
Bond Index Portfolio
Schedule of Portfolio Investments, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ---------------------------- -------------
<S> <C> <C>
U.S. Government Agencies, continued:
280,899 6.00%, 6/15/11, Pool
#406582 ................. $ 269,312
350,331 6.00%, 6/15/11, Pool
#423828 ................. 335,880
548,974 6.50%, 6/15/11, Pool
#426173 ................. 537,995
394,362 6.50%, 8/15/11, Pool
#421746 ................. 386,475
494,755 6.50%, 2/15/12, Pool
#39334 .................. 484,860
461,685 6.50%, 3/15/12, Pool
#399161 ................. 452,451
367,180 8.50%, 11/15/21, Pool
#297863 ................. 380,604
537,074 8.00%, 5/15/23, Pool
#350495 ................. 547,477
576,646 9.00%, 5/15/25, Pool
#386743 ................. 606,736
310,387 9.00%, 5/15/25, Pool
#401372 ................. 326,583
488,059 9.50%, 8/15/25, Pool
#414557 ................. 525,576
473,512 7.50%, 10/15/25, Pool
#366152 ................. 471,737
492,697 7.50%, 10/15/25, Pool
#366154 ................. 490,850
70,696 6.50%, 3/15/26, Pool
#419578 ................. 66,873
998,462 6.50%, 4/15/26 ............ 944,475
85,711 6.50%, 5/15/26, Pool
#428852 ................. 81,077
823,932 6.50%, 6/15/26 ........... 779,382
591,087 7.00%, 8/20/26, Pool
#226660 ................. 572,243
538,716 9.50%, 9/15/26, Pool
#438724 ................. 580,127
186,388 9.50%, 10/15/26, Pool
#436991 ................. 200,715
U.S. Government Agencies, continued:
396,069 9.50%, 10/15/26, Pool
#438728 ................. $ 426,515
377,268 9.50%, 11/15/26, Pool
#436994 ................. 406,268
550,063 9.50%, 11/15/26, Pool
#438731 ................. 592,346
-------------
Total U.S. Government Agencies 39,680,317
-------------
U.S. Treasury Bonds (17.4%):
500,000 11.63%, 11/15/04........... 644,975
4,975,000 12.75%, 11/15/10........... 6,873,559
2,055,000 12.00%, 8/15/13............ 2,870,979
1,250,000 7.50%, 11/15/16(b)......... 1,318,525
1,500,000 8.75%, 5/15/17............. 1,781,670
6,000,000 8.13%, 8/15/19............. 6,753,900
2,000,000 8.75%, 8/15/20............. 2,398,300
-------------
Total U.S. Treasury Bonds 22,641,908
-------------
U.S. Treasury Notes (25.5%):
500,000 8.88%, 11/15/98............ 519,330
8,500,000 6.38%, 5/15/99(b).......... 8,526,519
9,000,000 6.00%, 10/15/99(b)......... 8,958,059
1,000,000 6.25%, 8/31/00(b).......... 996,100
4,000,000 5.75%, 10/31/00(b)......... 3,922,320
1,000,000 5.50%, 12/31/00(b)......... 970,600
500,000 6.38%, 9/30/01............. 497,800
3,400,000 6.50%, 5/15/05............. 3,368,686
5,000,000 7.63%, 11/15/22............ 5,362,350
-------------
Total U.S. Treasury Notes 33,121,764
-------------
Investment Companies (0.9%):
1,119,841 Federated Money Market
Trust Shares of
Beneficial Interest...... 1,119,841
-------------
Total Investment Companies 1,119,841
-------------
Total (Cost--$129,101,860)(a) $129,411,455
=============
</TABLE>
- ----------
Percentages indicated are based on net assets of $129,985,620.
(a) Represents cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation .............................. $1,575,456
Unrealized depreciation .............................. (1,265,861)
-----------
Net unrealized appreciation .......................... $ 309,595
===========
</TABLE>
(b) A portion of this security was loaned as of May 31, 1997.
See notes to financial statements
-85-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements
May 31, 1997
(Unaudited)
1. Organization
The ARCH Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. As of May 31, 1997, 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,
International Equity, Equity Income, Equity Index, Balanced, Government &
Corporate Bond, U.S. Government Securities, Short-Intermediate Municipal,
Missouri Tax-Exempt Bond, National Municipal Bond, Intermediate Corporate
Bond, and Bond Index Portfolios (referred to individually as a "Portfolio"
and collectively, the "Portfolios"). The Fund was organized as a Maryland
corporation on September 9, 1982. The Kansas Tax-Exempt Bond Portfolio has
not yet commenced operations.
The Portfolio's 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. Equity Income seeks to provide an above-average level of
income consistent with long-term capital appreciation. Equity Index seeks
investment results that, before deduction of operating expenses,
approximate the price and yield performance of U.S. publicly traded common
stocks with large stock market capitalizations, as represented by the
Standard & Poor's 500 Composite Stock Price Index. 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 current interest income exempt from federal income tax as is
consistent with conservation of capital. Intermediate Corporate Bond seeks
as high a level of current income as is consistent with the preservation
of capital. Bond Index seeks to provide investment results that, before
deduction of operating expenses, approximate the price and yield
performance of U.S. Government, mortgage-backed, asset-backed and
corporate debt securities, as represented by the Lehman Brothers Aggregate
Bond Index.
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
Continued
-86-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
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, Equity Income, Equity Index, Balanced, Government & Corporate
Bond, U.S. Government Securities, Short-Intermediate Municipal, Missouri
Tax-Exempt Bond, National Municipal Bond, Intermediate Corporate Bond, and
Bond Index Portfolios (collectively, "the variable net asset value
portfolios") that are traded on a recognized exchange are valued at the
last sale price on the national securities market. Securities traded only
on over-the-counter markets are valued on the basis of market value when
available. Securities for which there were no transactions are valued at
the mean of the most recent bid and asked prices. Securities maturing in
60 days or less are valued at amortized cost. Securities, including
restricted securities, for which market quotations are not readily
available, are valued at fair market value by the investment adviser (or
the sub-investment adviser) in accordance with guidelines approved by the
Fund's Board of Directors. Quotations of foreign securities in foreign
currency are converted to the U.S. dollar equivalent at the prevailing
exchange rate on the date of conversion. Investments in investment
companies are valued at their respective net asset values as reported by
such companies. The differences between cost and market values of the
investments of the variable net asset portfolios are reflected as
unrealized appreciation or depreciation.
Repurchase agreements:
The Portfolios may engage in repurchase agreement transactions. Under the
terms of a typical repurchase agreement, a Portfolio takes possession of
an underlying debt obligation subject to an obligation of the seller to
repurchase, and the Portfolio to resell, the obligation at an agreed upon
price and time, thereby determining the yield during the Portfolio's
holding period. This arrangement results in a fixed rate of return that is
not subject to market fluctuations during the Portfolio's holding period.
The value of the collateral exceeds at all times the total amount of the
repurchase obligations, including interest. In the event of counterparty
default, the Portfolio has the right to use the collateral to offset
losses incurred. There is potential for loss to the Portfolio in the event
the Portfolio is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period while
the Portfolio seeks to assert its rights. The Portfolios' investment
adviser, acting under the supervision of the Board of Directors, reviews
the value of the collateral and the creditworthiness of those banks and
dealers with which the Portfolios enter into repurchase agreements to
evaluate potential risks.
Securities transactions and investment income:
Securities transactions are recorded on the trade date. Realized gains and
losses on investments sold are recorded on the identified cost basis.
Interest income is accrued on a daily basis. Dividend income is recorded
on the ex-dividend date. Realized and unrealized gains and losses are
allocated based upon relative net assets of each class of shares.
Foreign currency translation:
The market value of investment securities, other assets and liabilities of
the International Equity Portfolio denominated in a foreign currency are
translated into U.S. dollars at the current exchange rate. Purchases and
Continued
-87-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
sales of securities, income receipts and expense payments are translated
into U.S. dollars at the exchange rate on the dates of the transactions.
The International Equity Portfolio isolates that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from the fluctuation arising from changes in market prices of securities
held.
Reported net realized foreign exchange gains or losses arise from sales
and maturities of foreign securities, sales of foreign currencies,
currency exchange fluctuations between the trade and settlement dates on
securities transactions, and the difference between the amount of assets
and liabilities recorded and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and
losses arise from changes in the value of assets and liabilities,
including investments in securities, resulting from changes in exchange
rates.
Risks associated with foreign securities and currencies:
Investments in securities of foreign issuers carry certain risks not
ordinarily associated with investments in securities of domestic issuers.
Such risks include future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental
laws and restrictions. In addition, with respect to certain countries,
there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments which
could adversely affect investments in those countries.
Certain countries may also impose substantial restrictions on investments
in their capital markets by foreign entities, including restrictions on
investments in issuers of industries deemed sensitive to relevant national
interests. These factors may limit the investment opportunities available
in the International Equity Portfolio and 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 a forward foreign
currency exchange contract ("forwards"). A forward is an agreement between
two parties to buy and sell a currency at a set price on a future date.
The market value of the forward fluctuates with changes in currency
exchange rates. The forward is marked-to-market daily and the change in
market value is recorded by the Fund as unrealized appreciation or
depreciation. When the forward is closed, the Portfolio records a realized
gain or loss equal to the fluctuation in value during the period the
forward was opened. The Portfolio could be exposed to risk if a counter
party is unable to meet the terms of a forward or if the value of the
currency changes unfavorably.
Securities lending:
To increase return, the Growth & Income Equity, Small Cap Equity,
International Equity, Equity Income, Balanced, Government & Corporate
Bond, U.S. Government Securities, Short-Intermediate Municipal, National
Municipal Bond, Intermediate Corporate Bond and Bond Index 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,
Continued
-88-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
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
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 Portfolios must compensate the borrower
for the deficiency. At May 31, 1997, the Portfolios had securities with
the following market values on loan:
<TABLE>
<CAPTION>
Market Value of Loaned
Portfolio Securities
------------- ------------------------
<S> <C>
Growth & Income Portfolio............................ $40,340,410
Small Cap Equity Portfolio........................... 31,313,078
Balanced Portfolio................................... 22,372,192
Equity Income Portfolio.............................. 10,269,413
U.S. Government Securities Portfolio................. 17,353,996
Government & Corporate Bond Portfolio................ 40,746,551
Bond Index Portfolio................................. 35,820,072
Intermediate Corporate Bond Portfolio................ 5,337,354
</TABLE>
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 Bond, Missouri Tax-Exempt, National Municipal Bond,
Intermediate Corporate Bond, and Bond Index 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. Net investment
income for the Growth & Income Equity, Equity Income, Equity Index and
Balanced Portfolios as declared and paid monthly as a dividend to
shareholders of record. The Small Cap Equity, and International Equity
Portfolios declare and pay dividends from net investment income quarterly.
Net realized capital gains for each Portfolio, if any, are distributed at
least annually. Additional distributions of net investment income and
capital gains may be made at the discretion of the Board of Directors in
order to avoid the 4% excise tax to which a Portfolio is subject with
respect to certain undistributed amounts of net investment income and
capital gains.
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.
Continued
-89-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
Federal income taxes:
It is the policy of each of the Portfolios to qualify or to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of net
investment income and net realized capital gains sufficient to relieve it
from all, or substantially all, federal income taxes.
Organization costs:
The Portfolios bear all costs in connection with their organization,
including the fees and expenses of registering and qualifying shares for
distribution under Federal and state securities regulations. All such
costs are amortized using the straight-line method over a period of five
years from the dates each Portfolio commenced operations: December 2,
1991, for the Treasury Money Market Portfolio; from May 1, 1992, for the
Small Cap Equity Portfolio; from April 1, 1993, for the Balanced
Portfolio; from April 4, 1994, for the International Equity Portfolio; and
from July 10, 1995, for the Short-Intermediate Municipal Portfolio, from
February 26, 1997 for the Equity Income Portfolio, from May 1, 1997 for
the Equity Index Portfolio, from February 10, 1997 for the Intermediate
Corporate Bond Portfolio and the Bond Index Portfolio. As of November 30,
1995, all costs were fully amortized for the Money Market, Tax-Exempt
Money Market, Growth & Income Equity, Government & Corporate Bond, U.S.
Government Securities, 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, Equity Index,
Short-Intermediate Municipal, Intermediate Corporate Bond and Equity Index
Portfolios), Trust Shares, and Institutional Shares (except the Tax-Exempt
Money Market, Missouri Tax-Exempt Bond, Short-Intermediate Municipal and
National Municipal Bond Portfolios). Investor A shares of the variable net
asset value portfolios are sold with front-end sales charges. Investor B
Shares of the variable net asset value portfolios may be subject to
contingent deferred sales charges ("CDSC") based on the lesser of the net
asset value of the shares on the redemption date or the original cost of
the shares redeemed. The following table sets forth the time schedule of
redemptions of Investor B Shares subject to CDSC:
<TABLE>
<CAPTION>
CDSC
(percentage of
Number of Years amount subject
Elapsed Since Purchase to the charge)
--------------------------------- -----------------------
<S> <C>
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 & including six.............. 1.0%
More than six................................ None
</TABLE>
Continued
-90-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
Investor B Shares of the Money Market Portfolio may not be purchased
directly but are available only through exchanges of Investor B Shares of
the variable net asset value portfolios. Each class of shares in a
Portfolio has identical rights and privileges except with respect to the
fees paid by the classes under either a Distribution and Services Plan or
an Administrative Services Plan, expenses allocable exclusively to each
class of shares, voting rights on matters affecting a single class of
shares, the exchange privilege of each class of shares, and the automatic
conversion of Investor B Shares of a Portfolio into Investor A Shares of
that Portfolio eight years after purchase.
As of May 31, 1997, the Fund's Articles of Incorporation authorize the
Board of Directors, in its discretion, to issue up to seven billion full
and fractional shares of capital stock, $0.001 par value per share, and to
classify or reclassify any unissued shares of the Fund into one or more
additional classes. Pursuant to such authority, as of May 31, 1997, 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 Investor B
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 Emerging Growth Investor A
Class F--Special Series 1 Shares........ 15,000 Emerging Growth Trust
Class F--Special Series 2 Shares........ 20,000 Emerging Growth Investor B
Class F--Special Series 3 Shares........ 50,000 Emerging Growth 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
-91-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<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 Intermediate Corporate Bond Investor A
Class O--Special Series 1 Shares.......... 50,000 Intermediate Corporate Bond Trust
Class O--Special Series 2 Shares.......... 25,000 Intermediate Corporate Bond Investor B
Class P Shares........................... 25,000 Equity Index Investor A
Class P--Special Series 1 Shares.......... 50,000 Equity Index Trust
Class P--Special Series 2 Shares.......... 25,000 Equity Index Institutional
Class Q Shares........................... 25,000 Bond Index Investor A
Class Q--Special Series 1 Shares.......... 50,000 Bond Index Trust
Class Q--Special Series 2 Shares.......... 25,000 Bond Index Institutional
Unclassified.............................. 1,225,000
</TABLE>
Each Portfolio share represents an equal, proportionate interest in the
Portfolio with respect to other shares outstanding, irrespective of series.
Continued
-92-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
4. Capital Share Transactions
Transactions in portfolio shares of the Fund were as follows:
<TABLE>
<CAPTION>
Money Market
Portfolio
-------------------------------------------
Six months Year
ended ended
May 31, November 30,
1997 1996
-------------------- ------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued .............................. $ 48,378,692 $ 104,686,425
Dividends reinvested ..................................... 2,074,551 3,310,910
Cost of shares redeemed .................................. (55,027,777) (81,696,699)
-------------------- --------------------
Change in net assets from Investor A share
transactions ............................................ $ (4,574,534) $ 26,300,636
==================== ====================
Investor B Shares:
Proceeds from shares issued .............................. $ 45,619 $ 64,563
Dividends reinvested ..................................... 1,016 954
Cost of shares redeemed .................................. (2,268) (24,585)
-------------------- --------------------
Change in net assets from Investor B share
transactions ............................................ $ 44,367 $ 40,932
==================== ====================
Trust Shares:
Proceeds from shares issued .............................. $ 1,811,984,698 $ 2,117,336,443
Dividends reinvested ..................................... 7,174,570 11,554,554
Cost of shares redeemed .................................. (1,730,238,692) (2,109,752,319)
-------------------- --------------------
Change in net assets from Trust share
transactions ............................................ $ 88,920,576 $ 19,138,678
==================== ====================
Institutional Shares:
Proceeds from shares issued .............................. $ 41,405,191 $ 77,856,028
Dividends reinvested ..................................... 9,668 8,204
Cost of shares redeemed .................................. (34,295,668) (75,283,110)
-------------------- --------------------
Change in net assets from Institutional share
transactions ........................................... $ 7,119,191 $ 2,581,122
==================== ====================
<CAPTION>
SHARE TRANSACTIONS:
Investor A Shares:
Issued ................................................... 48,378,692 104,686,425
Reinvested ............................................... 2,074,551 3,310,910
Redeemed ................................................. (55,027,777) (81,696,699)
-------------------- --------------------
Change in Investor A Shares .............................. (4,574,534) 26,300,636
==================== ====================
Investor B Shares:
Issued ................................................... 45,619 64,563
Reinvested ............................................... 1,017 954
Redeemed ................................................. (2,268) (24,585)
-------------------- --------------------
Change in Investor B Shares .............................. 44,368 40,932
==================== ====================
Trust Shares:
Issued ................................................... 1,811,984,698 2,117,336,443
Reinvested ............................................... 7,174,571 11,554,554
Redeemed ................................................. (1,730,238,692) (2,109,752,319)
-------------------- --------------------
Change in Trust Shares ................................... 88,920,577 19,138,678
==================== ====================
Institutional Shares:
Issued ................................................... 41,405,191 77,856,028
Reinvested ............................................... 9,668 8,204
Redeemed ................................................. (34,295,667) (75,283,110)
-------------------- --------------------
Change in Institutional Shares ........................... 7,119,192 2,581,122
==================== ====================
<CAPTION>
Treasury Money
Market Portfolio
-----------------------------------------
Six months Year
ended ended
May 31, November 30,
1997 1996
-------------------- -------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued .............................. $ 6,310,297 $ 14,064,613
Dividends reinvested ..................................... 147,710 198,801
Cost of shares redeemed .................................. (8,131,403) (9,372,706)
------------------ --------------------
Change in net assets from Investor A share
transactions ............................................ $ (1,673,396) $ 4,890,708
================== ====================
Investor B Shares:
Proceeds from shares issued ..............................
Dividends reinvested .....................................
Cost of shares redeemed ..................................
Change in net assets from Investor B share
transactions ............................................
Trust Shares:
Proceeds from shares issued .............................. $ 386,518,708 $ 899,191,996
Dividends reinvested ..................................... 1,367,679 3,311,570
Cost of shares redeemed .................................. (356,891,319) (1,023,961,242)
------------------ --------------------
Change in net assets from Trust share
transactions ............................................ $ 30,995,068 $ (121,457,676)
================== ====================
Institutional Shares:
Proceeds from shares issued .............................. $ 511,376 $ 5,811,068
Dividends reinvested ..................................... 164 412
Cost of shares redeemed .................................. (376,857) (5,541,015)
------------------ --------------------
Change in net assets from Institutional share
transactions ........................................... $ 134,683 $ 270,465
================== ====================
SHARE TRANSACTIONS:
Investor A Shares:
Issued ................................................... 6,310,297 14,064,613
Reinvested ............................................... 147,709 198,801
Redeemed ................................................. (8,131,403) (9,372,706)
------------------ --------------------
Change in Investor A Shares .............................. (1,673,397) 4,890,708
================== ====================
Investor B Shares:
Issued ...................................................
Reinvested ...............................................
Redeemed .................................................
Change in Investor B Shares ..............................
Trust Shares:
Issued ................................................... 386,518,708 899,191,996
Reinvested ............................................... 1,367,679 3,311,570
Redeemed ................................................. (356,891,319) (1,023,961,242)
------------------ --------------------
Change in Trust Shares ................................... 30,995,068 (121,457,676)
================== ====================
Institutional Shares:
Issued ................................................... 511,376 5,811,068
Reinvested ............................................... 164 412
Redeemed ................................................. (376,857) (5,541,015)
------------------ --------------------
Change in Institutional Shares ........................... 134,683 270,465
================== ====================
</TABLE>
Continued
-93-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Tax-Exempt Money
Market Portfolio
----------------------------------------
Six months Year
ended ended
May 31, November 30,
1997 1996
------------------ -------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ...................................... $ 9,450,245 $ 27,071,489
Dividends reinvested ............................................. 234,309 235,312
Cost of shares redeemed .......................................... (14,282,918) (14,725,931)
------------------ ------------------
Change in net assets from Investor A share
transactions .................................................... $ (4,598,364) $ 12,580,870
================== ==================
Investor B Shares:
Proceeds from shares issued ...................................... -- --
Dividends reinvested ............................................. -- --
Cost of shares redeemed .......................................... -- --
------------------ ------------------
Change in net assets from Investor B share
transactions .................................................... -- --
================== ==================
Trust Shares:
Proceeds from shares issued ...................................... $ 169,950,800 $ 186,179,822
Dividends reinvested ............................................. 183,784 327,245
Cost of shares redeemed .......................................... (142,348,796) (168,808,702)
------------------ ------------------
Change in net assets from Trust share transactions ............... $ 27,785,788 $ 17,698,365
================== ==================
Institutional Shares:
Proceeds from shares issued ...................................... -- --
Dividends reinvested ............................................. -- --
Cost of shares redeemed .......................................... -- --
------------------ ------------------
Change in net assets from Institutional share
transactions .................................................... -- --
================== ==================
SHARE TRANSACTIONS:
Investor A Shares:
Issued ........................................................... 9,450,245 27,071,489
Reinvested ....................................................... 234,309 235,312
Redeemed ......................................................... (14,282,918) (14,725,931)
------------------ ------------------
Change in Investor A Shares ...................................... (4,598,364) 12,580,870
================== ==================
Investor B Shares:
Issued ........................................................... -- --
Reinvested ....................................................... -- --
Redeemed ......................................................... -- --
------------------ ------------------
Change in Investor B Shares ...................................... -- --
================== ==================
Trust Shares:
Issued ........................................................... 169,950,800 186,179,822
Reinvested ....................................................... 183,784 327,245
Redeemed ......................................................... (142,348,796) (168,808,702)
------------------ ------------------
Change in Trust Shares ........................................... 27,785,788 17,698,365
================== ==================
Institutional Shares:
Issued ........................................................... -- --
Reinvested ....................................................... -- --
Redeemed ......................................................... -- --
------------------ ------------------
Change in Institutional Shares ................................... -- --
================== ==================
<CAPTION>
Growth & Income
Equity Portfolio
-------------------------------------
Six months Year
ended ended
May 31, November 30,
1997 1996
------------------ -------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ...................................... $ 3,549,111 $ 9,870,808
Dividends reinvested ............................................. 3,156,529 1,806,750
Cost of shares redeemed .......................................... (4,276,381) (3,418,441)
------------------ -----------------
Change in net assets from Investor A share
transactions .................................................... $ 2,429,259 $ 8,259,117
================== =================
Investor B Shares:
Proceeds from shares issued ...................................... $ 1,110,904 $ 2,406,329
Dividends reinvested ............................................. 291,838 62,055
Cost of shares redeemed .......................................... (156,806) (141,771)
------------------ -----------------
Change in net assets from Investor B share
transactions .................................................... $ 1,245,936 $ 2,326,613
================== =================
Trust Shares:
Proceeds from shares issued ...................................... $ 50,279,455 $ 55,386,626
Dividends reinvested ............................................. 21,924,989 17,221,218
Cost of shares redeemed .......................................... (124,495,331) (57,945,665)
------------------ -----------------
Change in net assets from Trust share transactions ............... $ (52,290,887) $ 14,662,179
================== =================
Institutional Shares:
Proceeds from shares issued ...................................... $ 7,947,420 24,656,743
Dividends reinvested ............................................. 6,095,932 2,967,915
Cost of shares redeemed .......................................... (5,909,644) (3,784,451)
------------------ -----------------
Change in net assets from Institutional share
transactions .................................................... $ 8,133,708 $ 23,840,207
================== =================
SHARE TRANSACTIONS:
Investor A Shares:
Issued ........................................................... 203,411 598,426
Reinvested ....................................................... 185,263 115,115
Redeemed ......................................................... (243,326) (204,520)
------------------ -----------------
Change in Investor A Shares ...................................... 145,348 509,021
================== =================
Investor B Shares:
Issued ........................................................... 63,980 146,675
Reinvested ....................................................... 17,230 3,961
Redeemed ......................................................... (8,962) (8,326)
------------------ -----------------
Change in Investor B Shares ...................................... 72,248 142,310
================== =================
Trust Shares:
Issued ........................................................... 3,462,543 3,359,483
Reinvested ....................................................... 1,283,873 1,095,493
Redeemed ......................................................... (7,245,179) (3,405,972)
------------------ -----------------
Change in Trust Shares ........................................... (2,498,763) 1,049,004
================== =================
Institutional Shares:
Issued ........................................................... 453,348 1,473,440
Reinvested ....................................................... 357,788 189,057
Redeemed ......................................................... (335,506) (225,116)
------------------ -----------------
Change in Institutional Shares ................................... 475,630 1,437,381
================== =================
</TABLE>
Continued
-94-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Small Cap Equity
Portfolio
---------------------------------------
Six months Year
ended ended
May 31, November 30,
1997 1996
----------------- -------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ..................................... $ 689,641 $ 8,330,915
Dividends reinvested ............................................ 843,177 1,175,137
Cost of shares redeemed ......................................... (2,185,008) (10,568,422)
----------------- -----------------
Change in net assets from Investor A share transactions ......... $ (652,190) $ (1,062,370)
================= =================
Investor B Shares:
Proceeds from shares issued ..................................... $ 117,771 $ 668,648
Dividends reinvested ............................................ 78,176 51,148
Cost of shares redeemed ......................................... (108,754) (82,619)
----------------- -----------------
Change in net assets from Investor B share transactions ......... $ 87,193 $ 637,177
================= =================
Trust Shares:
Proceeds from shares issued ..................................... $ 10,648,378 $ 57,112,437
Dividends reinvested ............................................ 9,147,048 9,768,137
Cost of shares redeemed ......................................... (11,883,159) (38,246,394)
----------------- -----------------
Change in net assets from Trust share transactions .............. $ 7,912,267 $ 28,634,180
================= =================
Institutional Shares:
Proceeds from shares issued ..................................... $ 3,903,774 $ 13,386,432
Dividends reinvested ............................................ 1,847,189 1,411,691
Cost of shares redeemed ......................................... (3,219,488) (3,039,946)
----------------- -----------------
Change in net assets from Institutional share transactions ...... $ 2,531,475 $ 11,758,177
================= =================
SHARE TRANSACTIONS:
Investor A Shares:
Issued .......................................................... 54,570 652,412
Reinvested ...................................................... 66,549 96,278
Redeemed ........................................................ (171,831) (832,375)
----------------- -----------------
Change in Investor A Shares ..................................... (50,712) (83,685)
================= =================
Investor B Shares:
Issued .......................................................... 9,319 53,222
Reinvested ...................................................... 6,249 4,217
Redeemed ........................................................ (8,828) (6,486)
----------------- -----------------
Change in Investor B Shares ..................................... 6,740 50,953
================= =================
Trust Shares:
Issued .......................................................... 832,580 4,475,488
Reinvested ...................................................... 717,487 796,399
Redeemed ........................................................ (930,367) (2,922,899)
----------------- -----------------
Change in Trust Shares .......................................... 619,700 2,348,988
================= =================
Institutional Shares:
Issued .......................................................... 307,172 1,064,056
Reinvested ...................................................... 146,372 116,019
Redeemed ........................................................ (255,655) (242,572)
----------------- -----------------
Change in Institutional Shares .................................. 197,889 937,503
================= =================
<CAPTION>
International Equity
Portfolio
---------------------------------------
Six months Year
ended ended
May 31, November 30,
1997 1996
--------------- -------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ..................................... $ 451,017 $ 1,165,994
Dividends reinvested ............................................ 70,515 --
Cost of shares redeemed ......................................... (214,151) (393,881)
--------------- ----------------
Change in net assets from Investor A share transactions ......... $ 307,381 $ 772,113
=============== ================
Investor B Shares:
Proceeds from shares issued ..................................... $ 87,828 $ 314,369
Dividends reinvested ............................................ 11,989 --
Cost of shares redeemed ......................................... (33,509) (7,784)
--------------- ----------------
Change in net assets from Investor B share transactions ......... $ 66,308 $ 306,585
=============== ================
Trust Shares:
Proceeds from shares issued ..................................... $ 4,614,904 $ 18,402,546
Dividends reinvested ............................................ 737,704 --
Cost of shares redeemed ......................................... (4,604,055) (7,672,403)
--------------- ----------------
Change in net assets from Trust share transactions .............. $ 748,553 $ 10,730,143
=============== ================
Institutional Shares:
Proceeds from shares issued ..................................... $ 1,030,202 $ 3,792,099
Dividends reinvested ............................................ 166,866 --
Cost of shares redeemed ......................................... (860,617) (346,775)
--------------- ----------------
Change in net assets from Institutional share transactions ...... $ 336,451 $ 3,445,324
=============== ================
SHARE TRANSACTIONS:
Investor A Shares:
Issued .......................................................... 38,563 103,191
Reinvested ...................................................... 6,094 --
Redeemed ........................................................ (18,221) (35,253)
--------------- ----------------
Change in Investor A Shares ..................................... 26,436 67,938
=============== ================
Investor B Shares:
Issued .......................................................... 7,627 27,867
Reinvested ...................................................... 1,050 --
Redeemed ........................................................ (2,830) (672)
--------------- ----------------
Change in Investor B Shares ..................................... 5,847 27,195
=============== ================
Trust Shares:
Issued .......................................................... 394,001 1,619,798
Reinvested ...................................................... 63,363 --
Redeemed ........................................................ (389,190) (658,505)
--------------- ----------------
Change in Trust Shares .......................................... 68,174 961,293
=============== ================
Institutional Shares:
Issued .......................................................... 87,722 333,036
Reinvested ...................................................... 14,446 --
Redeemed ........................................................ (73,866) (30,224)
--------------- ----------------
Change in Institutional Shares .................................. 28,302 302,812
=============== ================
</TABLE>
Continued
-95-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Equity Income Equity Index
Portfolio Portfolio
----------------- ----------------
February 26, May 1,
1997 to 1997 to
May 31, May 31,
1997 (a) 1997 (a)
----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ................................................ $ 36,981 $ 2,000
Dividends reinvested ....................................................... 53 --
------------ ------------
Change in net assets from Investor A share transactions .................... $ 37,034 $ 2,000
============ ============
Investor B Shares:
Proceeds from shares issued ................................................ $ 6,886 --
Dividends reinvested ....................................................... 1 --
------------ ------------
Change in net assets from Investor B share transactions .................... $ 6,887 --
============ ============
Trust Shares:
Proceeds from shares issued ................................................ $73,422,556 $25,150,010
Dividends reinvested ....................................................... 5,309 --
Cost of shares redeemed .................................................... (3,944,967) --
------------ ------------
Change in net assets from Trust share transactions ......................... $69,482,898 $25,150,010
============ ============
Institutional Shares:
Proceeds from shares issued ................................................ $ 1,000 1,000
Dividends reinvested ....................................................... 2 --
------------ ------------
Change in net assets from Institutional share transactions ................. $ 1,002 1,000
============ ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued ..................................................................... 4,055 200
Reinvested ................................................................. 6 --
Redeemed ................................................................... -- --
------------ ------------
Change in Investor A Shares ................................................ 4,061 200
============ ============
Investor B Shares:
Issued ..................................................................... 678 --
------------ ------------
Change in Investor B Shares ................................................ 678 --
============ ============
Trust Shares:
Issued ..................................................................... 12,264,796 2,514,823
Reinvested ................................................................. 557 --
Redeemed ................................................................... (412,851) --
------------ ------------
Change in Trust Shares ..................................................... 11,852,502 2,514,823
============ ============
Institutional Shares:
Issued ..................................................................... 100 100
------------ ------------
Change in Institutional Shares ............................................. 100 100
============ ============
</TABLE>
(a) Period from commencement of operations.
Continued
-96-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Balanced Government & Corporate
Portfolio Bond Portfolio
--------------------------- ---------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1997 1996 1997 1996
----------- ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued .......................... $ 1,096,960 $ 1,279,888 $ 338,578 $ 1,081,992
Dividends reinvested ................................. 684,775 540,237 110,308 288,701
Cost of shares redeemed .............................. (1,216,424) (1,566,057) (618,482) (1,822,047)
------------ ------------ ------------ ------------
Change in net assets from Investor A share
transactions ....................................... $ 565,311 $ 254,068 $ (169,596) $ (451,354)
============ ============ ============ ============
Investor B Shares:
Proceeds from shares issued .......................... $ 119,159 $ 255,917 $ 77,034 $ 431,722
Dividends reinvested ................................. 21,151 5,128 10,738 12,973
Cost of shares redeemed .............................. (9,067) (2,897) (8,416) (42,309)
------------ ------------ ------------ ------------
Change in net assets from Investor B share
transactions ....................................... $ 131,243 $ 258,148 $ 79,356 $ 402,386
============ ============ ============ ============
Trust Shares:
Proceeds from shares issued .......................... $ 2,583,904 $ 8,437,415 $ 13,634,714 $ 33,574,691
Dividends reinvested ................................. 4,177,029 4,712,847 2,176,335 4,910,841
Cost of shares redeemed .............................. (21,009,116) (29,178,365) (11,922,861) (22,962,197)
------------ ------------ ------------ ------------
Change in net assets from Trust share transactions ... $(14,248,183) $(16,028,103) $ 3,888,188 $ 15,523,335
============ ============ ============ ============
Institutional Shares:
Proceeds from shares issued .......................... $ 8,757,138 $ 15,950,520 $ 2,057,288 $ 7,558,229
Dividends reinvested ................................. 4,091,745 2,533,910 428,359 708,554
Cost of shares redeemed .............................. (5,988,699) (4,695,716) (1,311,515) (2,656,046)
------------ ------------ ------------ ------------
Change in net assets from Institutional share
transactions ........................................ $ 6,860,184 $ 13,788,714 $ 1,174,132 $ 5,610,737
============ ============ ============ ============
SHARE TRANSACTIONS:
Investor A Shares:
Issued ............................................... 93,004 111,445 33,666 105,753
Reinvested ........................................... 58,149 47,412 10,899 28,274
Redeemed ............................................. (102,325) (134,124) (61,216) (180,569)
------------ ------------ ------------ ------------
Change in Investor A Shares .......................... 48,828 24,733 (16,651) (46,542)
============ ============ ============ ============
Investor B Shares:
Issued ............................................... 10,141 22,386 7,671 42,182
Reinvested ........................................... 1,810 447 1,061 1,284
Redeemed ............................................. (765) (249) (838) (4,176)
------------ ------------ ------------ ------------
Change in Investor B Shares .......................... 11,186 22,584 7,894 39,290
============ ============ ============ ============
Trust Shares:
Issued ............................................... 272,356 732,718 1,350,332 3,312,003
Reinvested ........................................... 354,650 413,590 215,095 481,194
Redeemed ............................................. (1,786,651) (2,470,952) (1,184,079) (2,242,645)
------------ ------------ ------------ ------------
Change in Trust Shares ............................... (1,159,645) (1,324,644) 381,348 1,550,552
============ ============ ============ ============
Institutional Shares:
Issued ............................................... 743,059 1,372,147 203,697 737,749
Reinvested ........................................... 348,596 222,611 42,349 69,542
Redeemed ............................................. (503,264) (401,065) (130,648) (262,357)
------------ ------------ ------------ ------------
Change in Institutional Shares ....................... 588,391 1,193,693 115,398 544,934
============ ============ ============ ============
</TABLE>
Continued
-97-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
U.S. Government Short-Intermediate
Securities Portfolio Municipal Portfolio
----------------------------------------------------------------
Six months Year Six months Year
ended ended ended ended
May 31, November 30, May 31, November 30,
1997 1996 1997 1996
-------------- -------------- --------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ................................ $ 61,222 $ 322,833 $ 205,699 $ 50,234
Dividends reinvested ....................................... 160,431 467,398 1,124 1,301
Cost of shares redeemed .................................... (1,906,627) (1,672,421) (225,172) --
-------------- -------------- --------------- -------------
Change in net assets from Investor A share transactions .... $ (1,684,974) $ (882,190) $ (18,349) $ 51,535
============== ============== =============== =============
Investor B Shares:
Proceeds from shares issued ................................ $ 69,784 $ 316,733 -- --
Dividends reinvested ....................................... 9,155 11,390 -- --
Cost of shares redeemed .................................... (18,460) (8,781) -- --
-------------- -------------- --------------- -------------
Change in net assets from Investor B share transactions .... $ 60,479 $ 319,342 -- --
============== ============== =============== =============
Trust Shares:
Proceeds from shares issued ................................ $ 17,668,161 $ 17,936,354 $ 2,365,735 $ 9,434,735
Dividends reinvested ....................................... 1,020,324 1,953,246 22,004 63,662
Cost of shares redeemed .................................... (8,296,627) (4,671,823) (3,587,156) (3,763,873)
-------------- -------------- --------------- -------------
Change in net assets from Trust share transactions ......... $ 10,391,858 $ 15,217,777 $ (1,199,417) $ 5,734,524
============== ============== =============== =============
Institutional Shares:
Proceeds from shares issued ................................ $ 5,907,728 $ 1,798,550 -- --
Dividends reinvested ....................................... 83,150 80,448 -- --
Cost of shares redeemed .................................... (1,433,379) (319,286) -- --
-------------- -------------- --------------- -------------
Change in net assets from Trust share transactions ......... $ 4,557,499 $ 1,559,712 -- --
============== ============== =============== =============
SHARE TRANSACTIONS:
Investor A Shares:
Issued ..................................................... 5,821 30,791 20,507 4,971
Reinvested ................................................. 15,226 43,886 113 131
Redeemed ................................................... (181,392) (157,854) (22,597) --
-------------- -------------- --------------- -------------
Change in Investor A Shares ................................ (160,345) (83,177) (1,977) 5,102
============== ============== =============== =============
Investor B Shares:
Issued ..................................................... 6,646 29,636 -- --
Reinvested ................................................. 870 1,081 -- --
Redeemed ................................................... (1,764) (835) -- --
-------------- -------------- --------------- -------------
Change in Investor B Shares ................................ 5,752 29,882 -- --
============== ============== =============== =============
Trust Shares:
Issued ..................................................... 1,681,351 1,690,682 236,248 939,097
Reinvested ................................................. 96,816 184,241 2,198 6,368
Redeemed ................................................... (790,085) (438,058) (358,479) (377,354)
-------------- -------------- --------------- -------------
Change in Trust Shares ..................................... 988,082 1,436,865 (120,033) 568,111
============== ============== =============== =============
Institutional Shares:
Issued ..................................................... 567,788 171,123 -- --
Reinvested ................................................. 7,932 7,639 -- --
Redeemed ................................................... (138,073) (30,613) -- --
-------------- -------------- --------------- -------------
Change in Trust Shares ..................................... 437,647 148,149 -- --
============== ============== =============== =============
</TABLE>
Continued
-98-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Missouri Tax-Exempt
Bond Portfolio
-------------------------------------
Six months Year
ended ended
May 31, November 30,
1997 1996
---------------- ------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ........................................ $ 1,068,965 $ 2,404,280
Dividends reinvested ............................................... 429,291 884,429
Cost of shares redeemed ............................................ (2,859,111) (2,791,258)
---------------- ----------------
Change in net assets from Investor A share transactions ............ $ (1,360,855) $ 497,451
================ ================
Investor B Shares:
Proceeds from shares issued ........................................ $ 336,424 $ 284,623
Dividends reinvested ............................................... 7,408 9,017
Cost of shares redeemed ............................................ (92,106) (52,123)
---------------- ----------------
Change in net assets from Investor B share transactions ............ $ 251,726 $ 241,517
================ ================
Trust Shares:
Proceeds from shares issued ........................................ $ 13,905,267 $ 15,517,040
Dividends reinvested ............................................... 162,783 432,469
Cost of shares redeemed ............................................ (2,773,034) (7,879,384)
---------------- ----------------
Change in net assets from Trust share transactions ................. $ 11,295,016 $ 8,070,125
================ ================
SHARE TRANSACTIONS:
Investor A Shares:
Issued ............................................................. 92,440 210,587
Reinvested ......................................................... 37,114 76,641
Redeemed ........................................................... (247,841) (242,599)
---------------- ----------------
Change in Investor A Shares ........................................ (118,287) 44,629
================ ================
Investor B Shares:
Issued ............................................................. 29,375 24,662
Reinvested ......................................................... 641 784
Redeemed ........................................................... (8,007) (4,537)
---------------- ----------------
Change in Investor B Shares ........................................ 22,009 20,909
================ ================
Trust Shares:
Issued ............................................................. 1,202,113 1,348,946
Reinvested ......................................................... 14,075 37,452
Redeemed ........................................................... (239,880) (674,245)
---------------- ----------------
Change in Trust Shares ............................................. 976,308 712,153
================ ================
<CAPTION>
National Municipal
Bond Portfolio
--------------------------------------
Six months November 18,
ended 1996 to
May 31, November 30,
1997 1996 (a)
---------------- -------------------
(Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ........................................ $ 973,386 $ 1,000
Dividends reinvested ............................................... 1,202 --
Cost of shares redeemed ............................................ (433,505) --
---------------- -----------------
Change in net assets from Investor A share transactions ............ $ 541,083 $ 1,000
================ =================
Investor B Shares:
Proceeds from shares issued ........................................ -- $ 1,000
Dividends reinvested ............................................... 21 --
Cost of shares redeemed ............................................ -- --
---------------- -----------------
Change in net assets from Investor B share transactions ............ $ 21 $ 1,000
================ =================
Trust Shares:
Proceeds from shares issued ........................................ $ 24,521,687 $ 314,006,996
Dividends reinvested ............................................... 2,089 --
Cost of shares redeemed ............................................ (6,398,390) (4,987,761)
---------------- -----------------
Change in net assets from Trust share transactions ................. $ 18,125,386 $ 309,019,235
================ =================
SHARE TRANSACTIONS:
Investor A Shares:
Issued ............................................................. 98,097 100
Reinvested ......................................................... 122 --
Redeemed ........................................................... (43,804) --
---------------- -----------------
Change in Investor A Shares ........................................ 54,415 100
================ =================
Investor B Shares:
Issued ............................................................. -- 100
Reinvested ......................................................... 2 --
Redeemed ........................................................... -- --
---------------- -----------------
Change in Investor B Shares ........................................ 2 100
================ =================
Trust Shares:
Issued ............................................................. 2,470,437 31,400,089
Reinvested ......................................................... 212 --
Redeemed ........................................................... (647,424) (498,183)
---------------- -----------------
Change in Trust Shares ............................................. 1,823,225 30,901,906
================ =================
</TABLE>
(a) Period from commencement of operations.
Continued
-99-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Intermediate Bond
Corporate Bond Index
Portfolio Portfolio
-------------------- -------------------
February 10, February 10,
1997 to 1997 to
May 31, May 31,
1997 (a) 1997 (a)
-------------------- --------------------
(Unaudited) (Unaudited)
<S> <C> <C>
CAPITAL TRANSACTIONS:
Investor A Shares:
Proceeds from shares issued ......................................... $ 65,346 $ 200,267
Dividends reinvested ................................................ 14 407
Cost of shares redeemed ............................................. -- (155,750)
---------------- -----------------
Change in net assets from Investor A share transactions ............. $ 65,360 $ 44,924
================ =================
Trust Shares:
Proceeds from shares issued ......................................... $ 40,029,731 $ 130,226,939
Dividends reinvested ................................................ 24,393 15,763
Cost of shares redeemed ............................................. (1,589,918) (1,085,848)
---------------- -----------------
Change in net assets from Trust share transactions .................. $ 38,464,206 $ 129,156,854
================ =================
Institutional Shares:
Proceeds from shares issued ......................................... $ 1,000 $ 1,000
Dividends reinvested ................................................ 14 13
---------------- -----------------
Change in net assets from Institutional share transactions .......... $ 1,014 $ 1,013
================ =================
SHARE TRANSACTIONS:
Investor A Shares:
Issued .............................................................. 6,673 20,517
Reinvested .......................................................... 1 42
Redeemed ............................................................ -- (15,901)
---------------- -----------------
Change in Investor A Shares ......................................... 6,674 4,658
================ =================
Trust Shares:
Issued .............................................................. 4,124,696 13,289,473
Reinvested .......................................................... 2,494 1,607
Redeemed ............................................................ (161,706) (110,439)
---------------- -----------------
Change in Trust Shares .............................................. 3,965,484 13,180,641
================ =================
Institutional Shares:
Issued .............................................................. 100 100
Reinvested .......................................................... 1 1
---------------- -----------------
Change in Institutional Shares ...................................... 101 101
================ =================
</TABLE>
(a) Period from commencement of operations.
Continued
-100-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
5. Purchases and Sales of Investment Securities
Purchases and sales of securities (excluding short-term securities) during
the six months ended May 31, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Purchases Sales
------------ ----------
<S> <C> <C>
Growth & Income Equity............... $128,864 $200,480
Small Cap Equity..................... 83,551 98,775
International Equity................. 22,981 24,606
Equity Income........................ 95,765 29,226
Equity Index......................... 25,164 54
Balanced............................. 30,327 45,066
Government & Corporate Bond.......... 104,964 134,574
U.S. Government Securities........... 51,906 57,588
Short-Intermediate Municipal......... -- --
Missouri Tax-Exempt Bond............. 12,268 2,966
National Municipal Bond.............. 176,294 157,819
Intermediate Corporate Bond.......... 59,614 23,990
Bond Index........................... 177,717 51,221
</TABLE>
6. Related Party Transactions
Investment advisory services are provided to the Fund by Mississippi
Valley Advisors Inc. ("MVA"), a wholly owned subsidiary of Mercantile Bank
of St. Louis National Association ("Mercantile"), which in turn is a
wholly owned subsidiary of Mercantile Bancorporation Inc. Under the terms
of the investment advisory agreement, MVA is entitled to receive fees
based on a percentage of the average daily net assets of the Fund.
Mercantile serves as custodian for the Fund.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services
("BISYS") is an Ohio limited partnership. BISYS Fund Services Ohio,
Inc. (the "Company"), and BISYS are subsidiaries of The BISYS Group, Inc.
The Company, with whom certain officers of the Fund are affiliated, serves
the Fund as Administrator. Such officers are paid no fees directly by the
Portfolios for serving as officers of the Fund. Under the terms of the
administration agreement, the Company receives fees computed as 0.20%
(0.10% for the Tax-Exempt Money Market Portfolio) of the average daily net
assets of each Portfolio. The Company serves the Fund as Transfer Agent.
BISYS serves as the Funds' distributor and is entitled to receive
commissions on sales of Investor A Shares and Investor B Shares of the
variable net asset value portfolios. For the six month period ended May
31, 1997, BISYS received approximately $236,735 from commissions earned on
sales of Investor A Shares and redemptions of Investor B Shares of which
BISYS re-allowed $207,099 to dealers of the Fund's shares.
With respect to Investor A Shares of the Portfolios, the Fund has adopted
a Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act. Under the Plan, each portfolio may pay (i) up to 0.10% of
the average daily net assets of each Portfolio's outstanding Investor A
Shares to BISYS or another organization for distribution services
performed and expenses assumed relating to the Fund's Investor A shares
and (ii) up to 0.20% (0.15% for the money market portfolios) of the
average daily net assets of each Portfolio's
Continued
-101-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
outstanding Investor A Shares to broker-dealers and other organizations
for shareholder administrative services provided pursuant to servicing
agreements under the Plan.
Similarly, with respect to Investor B Shares, the Fund has adopted a
Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under
the 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
May 31, 1997:
<TABLE>
<CAPTION>
Investment Advisory Administration
Fees Fees
------------------------- ------------------
Annual Fee
before
voluntary Voluntary Fund
fees fees Voluntary fee Custodian Accounting Transfer
reductions reductions reductions Fees Fees Agent Fees
----------- ------------ ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Money Market Portfolio................ 0.40% $222,405 $444,796 $60,182 $ 596 $118,135
Treasury Money Market Portfolio....... 0.40% 36,194 72,387 10,109 15 14,999
Tax-Exempt Money Market Portfolio..... 0.40% 34,494 -- 9,919 713 16,624
Growth & Income Portfolio............. 0.55% -- 202,005 61,900 920 63,452
Small Cap Equity Portfolio............ 0.75% -- 108,451 33,463 1,638 30,908
International Equity Portfolio........ 1.00% -- -- 53,255 15 9,626
Equity Income Portfolio............... 0.75% 197,973 38,275 94 1,598 11,656
Equity Index Portfolio................ 0.30% 6,451 2,150 -- -- --
Balanced Portfolio.................... 0.75% -- 56,532 17,673 4,727 16,208
Government & Corporate Bond Portfolio. 0.45% -- 80,558 24,366 4,792 22,112
U.S. Government Securities Portfolio.. 0.45% -- 37,860 11,380 3,443 10,232
Short-Intermediate Municipal Portfolio 0.55% 78,658 14,301 4,477 4,333 4,520
Missouri Tax Exempt Bond Portfolio.... 0.45% -- 43,624 13,272 5,091 10,374
National Municipal Bond Portfolio..... 0.55% 863,303 70,635 1,294 3,837 27,773
Intermediate Corporate Bond Portfolio. 0.55% 59,488 15,683 110 1,870 13,970
Bond Index Portfolio.................. 0.30% 110,238 36,746 11,134 1,099 6,160
</TABLE>
Continued
-102-
<PAGE>
THE ARCH FUND, INC.
Notes to Financial Statements, Continued
May 31, 1997
(Unaudited)
7. Concentration of Credit Risk
The Missouri Tax-Exempt Bond Portfolio invests a substantial proportion of
its assets in debt obligations issued by the State of Missouri and its
political subdivisions, agencies and public authorities. The Portfolio is
more susceptible to factors adversely affecting issuers of Missouri
municipal securities than a fund that is not concentrated in these issuers
to the same extent.
8. Conversion of Common Trust Funds:
On February 15, 1997 the Bond Index and Intermediate Corporate Bond
Portfolios issued Trust Shares to acquire all of the assets and
liabilities of certain common trust funds of the Merchantile Bank of St.
Louis National Association. On March 8, 1997 the Equity Income Portfolio
issued Trust Shares to acquire all of the assets and liabilities of
certain common trust funds of Merchantile Bank of St. Louis National
Association. The following is a summary of shares issued, net assets
converted, and net asset values per share, and unrealized appreciation as
of the conversion date (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
Net Asset Unrealized
Shares Net Assets Value Appreciation
-------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Bond Index Portfolio.......................... 12,688 $127,309 $10.03 $ 2,983
Intermediate Corporate Bond Portfolio......... 3,657 $ 36,723 $10.04 $ 1,280
Equity Income Portfolio....................... 11,901 $118,889 $ 9.99 $48,912
</TABLE>
Continued
-103-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended --------------------------------------------------------
May 31, 1997 1996 1995 1994 (a) 1993
-------------- ----------- ----------- ----------- -----------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
-------------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ----------- ----------- ----------- -----------
Investment Activities
Net investment income .................................. 0.024 0.047 0.052 0.033 0.025
---------- ----------- ----------- ----------- -----------
Total from Investment Activities .................. 0.024 0.047 0.052 0.033 0.025
---------- ----------- ----------- ----------- -----------
Distributions
Net investment income .................................. (0.024) (0.047) (0.052) (0.033) (0.025)
---------- ----------- ----------- ----------- -----------
Total Distributions ............................... (0.024) (0.047) (0.052) (0.033) (0.025)
---------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== =========== =========== ===========
Total Return (excludes sales charge) ...................... 2.39%(b) 4.81% 5.33% 3.37% 2.52%
Ratios/Supplementary Data:
Net Assets at end of period (000) ...................... $ 86,591 $ 91,166 $ 64,865 $ 48,384 $ 46,920
Ratio of expenses to average net assets ................ 0.77%(c) 0.78% 0.77% 0.78% 0.79%
Ratio of net investment income to average net assets ... 4.75%(c) 4.70% 5.20% 3.35% 2.50%
Ratio of expenses to average net assets* ............... 0.92%(c) 0.93% 0.92% 0.93% 0.93%
Ratio of net investment income to average net assets* .. 4.60%(c) 4.55% 5.05% 3.20% 2.36%
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-104-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months January 26, 1996
Ended to
May 31, 1997 November 30, 1996 (a)
----------------- -----------------------
Investor B Investor B
Shares Shares
----------------- -----------------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period .................................. $ 1.00 $ 1.00
--------- ---------
Investment Activities
Net investment income .............................................. 0.020 0.033
--------- ---------
Total from Investment Activities .............................. 0.020 0.033
--------- ---------
Distributions
Net investment income .............................................. (0.020) (0.033)
--------- ---------
Total Distributions ........................................... (0.020) (0.033)
--------- ---------
Net Asset Value, End of Period ........................................ $ 1.00 $ 1.00
========= =========
Total Return (excludes sales charge) .................................. 2.01%(b) 3.35%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) .................................. $ 85 $ 41
Ratio of expenses to average net assets ............................ 1.52%(c) 1.47%(c)
Ratio of net investment income to average net assets ............... 4.03%(c) 3.73%(c)
Ratio of expenses to average net assets* ........................... 1.67%(c) 1.68%(c)
Ratio of net investment income to average net assets* .............. 3.88%(c) 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
-105-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended --------------------------------------------------
May 31, 1997 1996 1995 1994 1993
------------ -------- -------- -------- --------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------------ -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Investment Activities
Net investment income ................................ 0.024 0.049 0.054 0.035 0.026
-------- -------- -------- -------- ---------
Total from Investment Activities ................. 0.024 0.049 0.054 0.035 0.026
-------- -------- -------- -------- ---------
Distributions
Net investment income ................................ (0.024) (0.049) (0.054) (0.035) (0.026)
-------- -------- -------- -------- ---------
Total Distributions .............................. (0.024) (0.049) (0.054) (0.035) (0.026)
-------- -------- -------- -------- ---------
Net Asset Value, End of Period ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =========
Total Return ........................................... 2.45%(a) 4.99% 5.52% 3.55% 2.72%
Ratios/Supplementary Data:
Net Assets at end of period (000) .................... $806,187 $717,265 $698,131 $544,952 $621,717
Ratio of expenses to average net assets .............. 0.65%(b) 0.61% 0.59% 0.61% 0.59%
Ratio of net investment income to average
net assets ......................................... 4.87%(b) 4.88% 5.38% 3.45% 2.70%
Ratio of expenses to average net assets* ............. 0.80%(b) 0.76% 0.74% 0.93% 0.80%
Ratio of net investment income to average
net assets* ........................................ 4.72%(b) 4.73% 5.23% 3.13% 2.49%
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements
-106-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -----------------------------------------------------
May 31, 1997 1996 1995 1994(a) 1993
------------- ------------- ------------- ---------- ----------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
------------- ------------- ------------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income ...................................... 0.024 0.047 0.052 0.033 0.025
------- ------- ------- ------- -------
Total from Investment Activities ...................... 0.024 0.047 0.052 0.033 0.025
------- ------- ------- ------- -------
Distributions
Net investment income ...................................... (0.024) (0.047) (0.052) (0.033) (0.025)
------- ------- ------- ------- -------
Total Distributions ................................... (0.024) (0.047) (0.052) (0.033) (0.025)
------- ------- ------- ------- -------
Net Asset Value, End of Period ................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return .................................................. 2.39%(b) 4.81% 5.33% 3.34% 2.52%
Ratios/Supplementary Data:
Net Assets at end of period (000) .......................... $23,040 $15,921 $13,340 $10,295 $46,920
Ratio of expenses to average net assets .................... 0.77%(c) 0.78% 0.77% 0.78% 0.79%
Ratio of net investment income to average net assets........ 4.75%(c) 4.70% 5.20% 3.48% 2.50%
Ratio of expenses to average net assets* ................... 0.92%(c) 0.93% 0.92% 0.95% 0.93%
Ratio of net investment income to average net assets* ...... 4.60%(c) 4.55% 5.05% 3.31% 2.36%
</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) Not annualized.
(c) Annualized
See notes to financial statements
-107-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Investor A Shares
<TABLE>
<CAPTION>
Financial Highlights
Six Months Years Ended November 30,
Ended ----------------------------------------------
May 31, 1997 1996 1995 1994(a) 1993
------------ ----------- ----------- ----------- ---------
Investor Investor A Investor A Investor A Investor
Shares A Shares Shares Shares Shares
------------ ----------- ----------- ----------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------ ------ ------ -------
Investment Activities
Net investment income ........................ 0.022 0.044 0.048 0.031 0.024
------- ------ ------ ------ -------
Total from Investment Activities ......... 0.022 0.044 0.048 0.031 0.024
------- ------ ------ ------ -------
Distributions
Net investment income ........................ (0.022) (0.044) (0.048) (0.031) (0.024)
------- ------ ------ ------ -------
Total Distributions ...................... (0.022) (0.044) (0.048) (0.031) (0.024)
------- ------ ------ ------ -------
Net Asset Value, End of Period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ====== ====== ====== =======
Total Return ................................... 2.23%(b) 4.46% 4.93% 3.16% 2.43%
Ratios/Supplementary Data:
Net Assets at end of period (000) ............ $ 5,993 $7,667 $2,776 $1,713 $ 1,411
Ratio of expenses to average net assets ...... 0.77%(c) 0.81% 0.78% 0.71% 0.64%
Ratio of net investment income to average net
assets ..................................... 4.42%(c) 4.35% 4.84% 3.14% 2.41%
Ratio of expenses to average net assets* ..... 0.92%(c) 0.96% 0.93% 0.94% 0.97%
Ratio of net investment income to average net
assets* .................................... 4.27%(c) 4.20% 4.69% 2.90% 2.08%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-108-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Trust Shares
<TABLE>
<CAPTION>
Financial Highlights
Six Months Years Ended November 30,
Ended --------------------------------------------------
May 31, 1997 1996 1995 1994 1993
------------ -------- -------- -------- ---------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------------ -------- -------- -------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Investment Activities
Net investment income .................. 0.023 0.045 0.050 0.033 0.026
-------- -------- -------- -------- --------
Total from Investment Activities ... 0.023 0.045 0.050 0.033 0.026
-------- -------- -------- -------- --------
Distributions
Net investment income .................. (0.023) (0.045) (0.050) (0.033) (0.026)
-------- -------- -------- -------- --------
Total Distributions ................ (0.023) (0.045) (0.050) (0.033) (0.026)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ............................. 2.31%(a) 4.64% 5.12% 3.38% 2.67%
Ratios/Supplementary Data:
Net Assets at end of period (000) ...... $162,313 $131,322 $252,780 $242,099 $256,503
Ratio of expenses to average net assets. 0.61%(b) 0.61% 0.60% 0.49% 0.41%
Ratio of net investment income to
average net assets ................... 4.58%(b) 4.55% 5.01% 3.26% 2.64%
Ratio of expenses to average net 0.76%(b) 0.76% 0.75% 0.94% 0.85%
assets* ..............................
Ratio of net investment income to
average net assets* .................. 4.43%(b) 4.40% 4.86% 2.82% 2.21%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See notes to financial statements
-109-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Year January 26, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
----------------- ----------------- -----------------
Institutional Institutional Institutional
Shares Shares Shares
----------------- ----------------- -----------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ....................... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Investment Activities
Net investment income .................................... 0.022 0.044 0.042
------- ------- --------
Total from Investment Activities ..................... 0.022 0.044 0.042
------- ------- --------
Distributions
Net investment income .................................... (0.022) (0.044) (0.042)
------- ------- --------
Total Distributions .................................. (0.022) (0.044) (0.042)
------- ------- --------
Net Asset Value, End of Period ............................. $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return ............................................... 2.23%(b) 4.46% 4.94%(d)
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................ $ 433 $ 299 $ 28
Ratio of expenses to average net assets .................. 0.77%(c) 0.79% 0.92%(c)
Ratio of net investment income to average net assets ..... 4.42%(c) 4.39% 5.76%(c)
Ratio of expenses to average net assets* ................. 0.92%(c) 0.94% 1.07%(c)
Ratio of net investment income to average net assets* .... 4.27%(c) 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) Not annualized.
(c) Annualized.
(d) 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.
See notes to financial statements
-110-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Year Six Months
Six Months Ended Ended Years Ended May 31,
Ended November 30, November 30, ---------------------------------
May 31, 1997 1996 1995 (d) 1995(a) 1994 1993
------------ -------------- -------------- -------- --------- ---------
Investor A Investor A Investor A Investor Investor Investor
Shares Shares Shares Shares Shares Shares
------------ -------------- -------------- -------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period ......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------ -------
Investment Activities
Net investment income .......... 0.014 0.028 0.014 0.027 0.017 0.019
------- ------- ------- ------- ------ -------
Total from Investment
Activities ............... 0.014 0.028 0.014 0.027 0.017 0.019
------- ------- ------- ------- ------ -------
Distributions
Net investment income .......... (0.014) (0.028) (0.014) (0.027) (0.017) (0.019)
------- ------- ------- ------- ------ -------
Total Distributions ........ (0.014) (0.028) (0.014) (0.027) (0.017) (0.019)
------- ------- ------- ------- ------ -------
Net Asset Value, End of Period ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ====== =======
Total Return ..................... 1.38%(b) 2.83% 1.45%(b) 2.70% 1.73% 1.90%
Ratios/Supplementary Data:
Net Assets at end of period $13,386 $17,984 $ 5,403 $ 5,138 $8,631 $ 6,837
(000) ........................
Ratio of expenses to average
net assets ................... 0.77%(c) 0.75% 0.94%(c) 0.84% 0.76% 0.80%
Ratio of net investment income
to average net assets......... 2.72%(c) 2.78% 2.87%(c) 2.63% 1.72% 1.88%
Ratio of expenses to average
net assets* .................. 0.82%(c) 0.80% 0.99%(c) 0.93% 0.86% 0.90%
Ratio of net investment income
to average net assets*........ 2.67%(c) 2.73% 2.82%(c) 2.54% 1.62% 1.78%
</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 merging into 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
-111-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Year Six Months
Six Months Ended Ended Years Ended May 31,
Ended November 30, November 30, ----------------------------------
May 31, 1997 1996 1995 (c) 1995 1994 1993
-------------- -------------- ------------- -------- -------- -------
Trust Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares Shares
-------------- -------------- ------------- -------- -------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ------- -------- ------- --------- --------
Investment Activities
Net investment income .... 0.015 0.030 0.016 0.029 0.020 0.021
--------- ------- -------- ------- --------- ---------
Total from Investment
Activities ......... 0.015 0.030 0.016 0.029 0.020 0.021
--------- ------- -------- ------- --------- ---------
Distributions
Net investment income .... (0.015) (0.030) (0.016) (0.029) (0.020) (0.021)
--------- ------- -------- ------- --------- ---------
Total Distributions .. (0.015) (0.0300) (0.016) (0.029) (0.020) (0.021)
--------- ------- -------- ------- --------- ---------
Net Asset Value, End of
Period ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======= ======== ======= ========= ========
Total Return ............... 1.48%(a) 3.06% 1.57%(a) 2.93% 1.97% 2.16%
Ratios/Supplementary
Data:
Net Assets at end of
period (000) ........... $ 123,512 $95,726 $ 78,031 $85,324 $ 112,594 $137,602
Ratio of expenses to
average net assets ..... 0.58%(b) 0.53% 0.70%(b) 0.61% 0.52% 0.52%
Ratio of net investment
income to average net
assets ................. 2.93%(b) 3.01% 3.10%(b) 2.87% 1.95% 2.13%
Ratio of expenses to
average net assets* .... 0.63%(b) 0.58% 0.75%(b) 0.70% 0.86% 0.62%
Ratio of net investment
income to average net
assets* ................ 2.88%(b) 2.96% 3.05%(b) 2.78% 1.61% 2.03%
</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 merging into 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
-112-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -----------------------------------------------
May 31, 1997 1996 1995 1994(a) 1993
------------- ----------- ---------- --------- --------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------- ----------- ---------- --------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......... $ 18.67 $ 16.30 $ 12.70 $ 14.74 $ 14.49
------- ------- ------- -------- -------
Investment Activities
Net investment income ...................... 0.06 0.20 0.23 0.20 0.25
Net realized and unrealized gains (losses)
from investments ......................... 1.72 3.32 3.74 (0.17) 1.06
------- ------- ------- -------- -------
Total from Investment Activities ....... 1.78 3.52 3.97 0.03 1.31
------- ------- ------- -------- -------
Distributions
Net investment income ...................... (0.06) (0.20) (0.23) (0.21) (0.25)
In excess of net investment income ......... (0.04) (0.01) -- -- --
Net realized gains ......................... (1.46) (0.94) (0.14) (0.18) (0.81)
In excess of net realized gains ............ -- -- -- (1.68) --
------- ------- ------- -------- -------
Total Distributions .................... (1.56) (1.15) (0.37) (2.07) (1.06)
------- ------- ------- -------- -------
Net Asset Value, End of Period ............... $ 18.89 $ 18.67 $ 16.30 $ 12.70 $ 14.74
======= ======= ======= ======== =======
Total Return (excludes sales charge) ......... 10.52%(b) 22.99% 31.95% 0.20% 9.65%
Ratios/Supplementary Data:
Net Assets at end of period (000) .......... $41,437 $38,229 $25,082 $ 18,343 $11,157
Ratio of expenses to average net assets .... 1.04%(c) 1.05% 1.05% 1.05% 0.74%
Ratio of net investment income to average
net assets ............................... 0.71%(c) 1.20% 1.59% 1.45% 1.74%
Ratio of expenses to average net assets* ... 1.14%(c) 1.15% 1.15% 1.15% 0.96%
Ratio of net investment income to average
net assets* .............................. 0.61%(c) 1.10% 1.49% 1.35% 1.52%
Portfolio turnover**........................ 32.33% 63.90% 58.50% 65.00% 41.00%
Average commission rate paid (d)............ $0.0600 -- -- -- --
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-113-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
-------------- --------------- ---------------
Investor B Investor B Investor B
Shares Shares Shares
-------------- --------------- ---------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 18.58 $ 16.23 $ 13.43
--------- --------- ---------
Investment Activities
Net investment income ................................... 0.02 0.11 0.14
Net realized and unrealized gains from investments and
foreign currency ...................................... 1.70 3.30 2.81
--------- --------- ---------
Total from Investment Activities .................... 1.72 3.41 2.95
--------- --------- ---------
Distributions
Net investment income ................................... (0.02) (0.11) (0.15)
In excess of net investment income ...................... (0.06) (0.01) --
Net realized gains ...................................... (1.46) (0.94) --
--------- --------- ---------
Total Distributions ................................. (1.54) (1.06) (0.15)
--------- --------- ---------
Net Asset Value, End of Period ............................ $ 18.76 $ 18.58 $ 16.23
========= ========= =========
Total Return (excludes sales charge) ...................... 10.17%(d) 22.29% 31.20%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ....................... $ 4,926 $ 3,537 $ 781
Ratio of expenses to average net assets ................. 1.74%(c) 1.75% 1.75%(c)
Ratio of net investment income to average net assets .... 0.01%(c) 0.49% 0.87%(c)
Ratio of expenses to average net assets* ................ 1.84%(c) 1.85% 1.85%(c)
Ratio of net investment income (loss) to average net (0.09)%(c) 0.39% 0.77%(c)
assets* ...............................................
Portfolio turnover**..................................... 32.33% 63.90% 58.50%
Average commission rate paid (e)......................... $ 0.0600 -- --
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations. On September 27, 1994, the Portfolio
authorized the issuance of a series designated as "Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from March
1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-114-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended --------------------------------------------------
May 31, 1997 1996 1995 1994 1993
------------- --------- --------- ---------- ---------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------------- --------- --------- ---------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .... $ 18.71 $ 16.32 $ 12.72 $ 14.74 $ 14.49
-------- -------- -------- --------- --------
Investment Activities
Net investment income ................. 0.10 0.24 0.27 0.22 0.25
Net realized and unrealized gains
(losses) from investments ........... 1.72 3.34 3.74 (0.17) 1.06
-------- -------- -------- --------- --------
Total from Investment Activities .. 1.82 3.58 4.01 0.05 1.31
-------- -------- -------- --------- --------
Distributions
Net investment income ................. (0.10) (0.24) (0.27) (0.21) (0.25)
In excess of net investment income .... (0.02) (0.01) -- -- --
Net realized gains .................... (1.46) (0.94) (0.14) (0.18) (0.81)
In excess of net realized gains ....... -- -- -- (1.68) --
-------- -------- -------- --------- --------
Total Distributions ............... (1.58) (1.19) (0.41) (2.07) (1.06)
-------- -------- -------- --------- --------
Net Asset Value, End of Period .......... $ 18.95 $ 18.71 $ 16.32 $ 12.72 $ 14.74
======== ======== ======== ========= ========
Total Return ............................ 10.71%(a) 23.45% 32.27% 0.36% 9.65%
Ratios/Supplementary Data:
Net Assets at end of period (000) ..... $305,342 $348,183 $286,546 $ 235,955 $238,771
Ratio of expenses to average net 0.74%(b) 0.75% 0.75% 0.75% 0.74%
assets ..............................
Ratio of net investment income to
average net assets .................. 1.01%(b) 1.50% 1.89% 1.72% 1.74%
Ratio of expenses to average net 0.84%(b) 0.85% 0.85% 1.15% 0.96%
assets* .............................
Ratio of net investment income to
average net assets* ................. 0.91%(b) 1.40% 1.79% 1.32% 1.52%
Portfolio turnover**................... 32.33% 63.90% 58.50% 65.00% 41.00%
Average commission rate paid (c)....... $ 0.0600 -- -- -- --
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized.
(c) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-115-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended --------------------------------------------------
May 31, 1997 1996 1995 1994 (a) 1993
-------------- ------------- ------------- ----------- ---------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
-------------- ------------- ------------- ----------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ....... $ 18.67 $ 16.29 $ 12.70 $ 14.74 $ 14.49
-------- -------- -------- --------- --------
Investment Activities
Net investment income .................... 0.06 0.20 0.23 0.20 0.25
Net realized and unrealized gains
(losses) from investments .............. 1.73 3.33 3.74 (0.17) 1.06
-------- -------- -------- --------- --------
Total from Investment Activities ..... 1.79 3.53 3.97 0.03 1.31
-------- -------- -------- --------- --------
Distributions
Net investment income .................... (0.06) (0.20) (0.24) (0.21) (0.25)
In excess of net investment income ....... (0.04) (0.01) -- -- --
Net realized gains ....................... (1.46) (0.94) (0.14) (0.18) (0.81)
In excess of net realized gains .......... -- -- -- (1.68) --
-------- -------- -------- --------- --------
Total Distributions .................. (1.56) (1.15) (0.38) (2.07) (1.06)
-------- -------- -------- --------- --------
Net Asset Value, End of Period ............. $ 18.90 $ 18.67 $ 16.29 $ 12.70 $ 14.74
======== ======== ======== ========= ========
Total Return ............................... 10.58%(b) 23.08% 31.88% 0.19% 9.65%
Ratios/Supplementary Data:
Net Assets at end of period (000) ........ $82,825 $72,950 $40,228 $ 21,897 $11,157
Ratio of expenses to average net assets .. 1.04%(c) 1.05% 1.05% 1.05% 0.74%
Ratio of net investment income to average
net assets ............................. 0.71%(c) 1.19% 1.58% 1.41% 1.74%
Ratio of expenses to average net assets* . 1.14%(c) 1.15% 1.15% 1.16% 0.96%
Ratio of net investment income to average
net assets* ............................ 0.61%(c) 1.09% 1.48% 1.30% 1.52%
Portfolio turnover**...................... 32.33% 63.90% 58.50% 65.00% 41.00%
Average commission rate paid (d).......... $0.0600 -- -- -- --
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(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) 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
-116-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ------------------------------------------------
May 31, 1997 1996 1995 1994 (a) 1993
------------ ------------ ---------- ------------ ---------
Investor A Investor A Investor A Investor A Investor
Shares Shares Shares Shares Shares
------------ ------------ ----------- ------------ ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 13.40 $ 13.44 $ 11.99 $ 13.14 $11.23
-------- -------- --------- -------- -------
Investment Activities
Net investment income (loss) .............. (0.03) (0.01) -- (0.03) 0.03
Net realized and unrealized gains from
investments ............................. 0.98 1.03 2.36 0.89 2.14
-------- -------- --------- -------- -------
Total from Investment Activities ...... 0.95 1.02 2.36 0.86 2.17
-------- -------- --------- -------- -------
Distributions
Net investment income ..................... -- -- -- -- (0.05)
In excess of net investment income ........ -- (0.01) -- -- --
Net realized gains ........................ (0.82) (1.05) (0.91) (1.78) (0.21)
In excess of net realized gains ........... -- -- -- (0.23) --
-------- -------- --------- -------- -------
Total Distributions ................... (0.82) (1.06) (0.91) (2.01) (0.26)
-------- -------- --------- -------- -------
Net Asset Value, End of Period .............. $ 13.53 $ 13.40 $ 13.44 $ 11.99 $13.14
======== ======== ========= ======== =======
Total Return (excludes sales charge) ........ 7.53%(b) 8.36% 21.47% 7.38% 19.75%
Ratios/Supplementary Data:
Net Assets at end of period (000) ......... $13,336 $13,889 $ 15,056 $10,899 $4,559
Ratio of expenses to average net assets ... 1.25%(c) 1.26% 1.26% 1.25% 0.61%
Ratio of net investment income (loss) to
average net assets ...................... (0.32)%(c) (0.13)% (0.12)% (0.44)% 0.19%
Ratio of expenses to average net assets* .. 1.35%(c) 1.36% 1.36% 1.36% 1.23%
Ratio of net investment loss to average
net assets* ............................. (0.42)%(c) (0.23)% (0.22)% (0.55)% (0.43)%
Portfolio turnover**....................... 40.00% 65.85% 83.13% 85.00% 65.00%
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.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-117-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
-------------- --------------- --------------
Investor B Investor B Investor B
Shares Shares Shares
-------------- --------------- --------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ....................... $ 13.24 $ 13.37 $11.83
-------- -------- --------
Investment Activities
Net investment loss ...................................... (0.06) (0.07) (0.03)
Net realized and unrealized gains from investments ....... 0.96 0.99 1.57
-------- -------- --------
Total from Investment Activities ..................... 0.90 0.92 1.54
-------- -------- --------
Distributions
Net realized gains ....................................... (0.82) (1.05) --
------- --------- --------
Total Distributions .................................. (0.82) (1.05) --
-------- -------- --------
Net Asset Value, End of Period ............................. $ 13.32 $ 13.24 $13.37
======== ======== ========
Total Return (excludes sales charge) ....................... 7.19%(c) 7.63% 20.83%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................ $ 1,370 $ 1,272 $ 603
Ratio of expenses to average net assets .................. 1.95%(d) 1.96% 1.96%(d)
Ratio of net investment loss to average net assets ....... (1.02)%(d) (0.83)% (0.78)%(d)
Ratio of expenses to average net assets* ................. 2.05%(d) 2.06% 2.06%(d)
Ratio of net investment loss to average net assets* ...... (1.12)%(d) (0.93)% (0.88)%(d)
Portfolio turnover**...................................... 40.00% 65.85% 83.13%
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.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(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) 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
-118-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended -------------------------------------------------------
May 31, 1997 1996 1995 1994 1993
--------------- ---------- ---------- ---------- ----------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
--------------- ---------- --------- -------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .............. $ 13.49 $ 13.49 $ 12.01 $ 13.14 $ 11.23
---------- ---------- --------- -------- ---------
Investment Activities
Net investment income (loss) ................... -- 0.02 0.03 (0.01) 0.03
Net realized and unrealized gains from
investments .................................. 0.98 1.05 2.36 0.89 2.14
---------- ---------- --------- -------- ---------
Total from Investment Activities ........... 0.98 1.07 2.39 0.88 2.17
---------- ---------- --------- -------- ---------
Distributions
Net investment income .......................... -- (0.02) -- -- (0.05)
In excess of net investment income ............. (0.01) -- -- -- --
Net realized gains ............................. (0.82) (1.05) (0.91) (1.78) (0.21)
In excess of net realized gains ................ -- -- -- (0.23) --
---------- ---------- --------- -------- ---------
Total Distributions ........................ (0.83) (1.07) (0.91) (2.01) (0.26)
---------- ---------- --------- -------- ---------
Net Asset Value, End of Period .................... $ 13.64 $ 13.49 $ 13.49 $ 12.01 $ 13.14
========== ========== ========= ======== =========
Total Return ...................................... 7.68%(a) 8.72% 21.70% 7.56% 19.75%
Ratios/Supplementary Data:
Net Assets at end of period (000) .............. $ 181,715 $ 171,295 $ 139,681 $ 77,690 $ 47,473
Ratio of expenses to average net assets ........ 0.95%(b) 0.96% 0.96% 0.95% 0.61%
Ratio of net investment income (loss) to
average net assets............................ (0.02)%(b) 0.17% 0.18% (0.16)% 0.19%
Ratio of expenses to average net assets* ....... 1.05%(b) 1.06% 1.06% 1.36% 1.23%
Ratio of net investment income (loss) to
average net assets* .......................... (0.12)%(b) 0.07% 0.08% (0.56)% (0.43)%
Portfolio turnover**............................ 40.00% 65.85% 83.13% 85.00% 65.00%
Average commission rate paid (c)................ $ 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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized.
(c) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-119-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ---------------------------------------------------------
May 31, 1997 1996 1995 1994(a) 1993
-------------- -------------- ------------- --------------- --------
Institutional Institutional Institutional Institutional Investor
Shares Shares Shares Shares Shares
-------------- -------------- ------------- --------------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $ 13.36 $ 13.40 $ 11.96 $ 13.14 $ 11.23
--------- ---------- --------- -------- --------
Investment Activities
Net investment income (loss) ..................... (0.02) (0.01) (0.01) (0.03) 0.03
Net realized and unrealized gains from
investments .................................... 0.97 1.03 2.36 0.86 2.14
--------- ---------- --------- -------- --------
Total from Investment Activities ............. 0.95 1.02 2.35 0.83 2.17
--------- ---------- --------- -------- --------
Distributions
Net investment income ............................ -- -- -- -- (0.05)
In excess of net investment income ............... -- (0.01) -- -- --
Net realized gains ............................... (0.82) (1.05) (0.91) (1.78) (0.21)
In excess of net realized gains .................. -- -- -- (0.23) --
--------- ---------- --------- -------- --------
Total Distributions .......................... (0.82) (1.06) (0.91) (2.01) (0.26)
--------- ---------- --------- -------- --------
Net Asset Value, End of Period ...................... $ 13.49 $ 13.36 $ 13.40 $ 11.96 $ 13.14
========= ========== ========= ======== ========
Total Return ........................................ 7.54%(b) 8.39% 21.43% 7.11% 19.75%
Ratios/Supplementary Data:
Net Assets at end of period (000) ................ $ 33,046 $ 30,081 $ 17,620 $ 5,633 $ 4,559
Ratio of expenses to average net assets .......... 1.25%(c) 1.26% 1.26% 1.25% 0.61%
Ratio of net investment income (loss) to average
net assets ..................................... (0.31)%(c) (0.13)% (0.11)% (0.41)% 0.19%
Ratio of expenses to average net assets* ......... 1.35%(c) 1.36% 1.36% 1.37% 1.23%
Ratio of net investment loss to average net
assets* ........................................ (0.41)%(c) (0.23)% (0.21)% (0.53)% (0.43)%
Portfolio turnover**.............................. 40.00% 65.85% 83.13% 85.00% 65.00%
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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On May 6, 1992 the Emerging Growth Portfolio issued a series of shares
designated as "Investor" Shares. In addition, on January 3, 1994, the
Portfolio issued a new series of shares designated as "Institutional"
Shares. The financial highlights presented for periods prior to January 3,
1994 represent financial highlights applicable to the Investor Shares.
(b) 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
-120-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30, April 4, 1994 to
Ended ---------------------------- November 30,
May 31, 1997 1996 1995 1994 (a)(b)(c)
--------------- ------------ ------------ ------------------
Investor A Investor A Investor A Investor A
Shares Shares Shares Shares
--------------- ------------ ------------ ------------------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......................... $ 12.05 $ 10.76 $ 9.90 $ 10.00
--------- --------- -------- --------
Investment Activities
Net investment income ..................................... 0.01 0.02 0.02 (0.01)
Net realized and unrealized gains from investments and
foreign currency ........................................ 0.73 1.27 0.86 (0.09)
--------- --------- -------- --------
Total from Investment Activities ...................... 0.74 1.29 0.88 (0.10)
--------- --------- -------- --------
Distributions
Net investment income ..................................... (0.01) -- -- --
In excess of net investment income ........................ (0.01) -- -- --
Net realized gains ........................................ (0.31) -- (0.01) --
Tax return of capital ..................................... -- -- (0.01) --
--------- --------- -------- --------
Total Distributions ................................... (0.33) -- (0.02) --
--------- --------- -------- --------
Net Asset Value, End of Period ............................... $ 12.46 $ 12.05 $ 10.76 $ 9.90
========= ========= ======== ========
Total Return (excludes sales charges) ........................ 6.36%(d) 11.99% 8.89% (1.00)%(d)
Ratios/Supplementary Data:
Net Assets at end of period (000) ......................... $ 2,991 $ 2,573 $ 1,568 $ 791
Ratio of expenses to average net assets ................... 1.50%(e) 1.44% 1.45% 1.55%(e)
Ratio of net investment income to average net asset........ 0.14%(e) 0.19% 0.07% (0.39)%(e)
Ratio of expenses to average net assets* .................. 1.77%(e) 1.75% 1.76% 1.89%(e)
Ratio of net investment income (loss) to average net
assets *................................................. (0.13)%(e) (0.12)% (0.24)% (0.73)%(e)
Portfolio turnover**....................................... 39.39% 77.63% 62.78% 21.00%
Average commission rate paid (f)........................... $ 0.0187 -- -- --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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
-121-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995(a)
----------------- ------------------ ----------------
Investor B Investor B Investor B
Shares Shares Shares
----------------- ------------------ ----------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ...................................... $ 11.90 $ 10.71 $ 9.26
---------- ---------- --------
Investment Activities
Net investment loss .................................................... (0.02) (0.04) (0.03)
Net realized and unrealized gains from investments
and foreign currency.................................................. 0.70 1.23 1.48
---------- ---------- ---------
Total from Investment Activities .................................. 0.68 1.19 1.45
---------- ---------- ---------
Distributions
Net investment income .................................................. -- -- --
In excess of net investment income ..................................... (0.02) -- --
Net realized gains ..................................................... (0.31) -- --
In excess of net realized gains ........................................ -- -- --
---------- ---------- ---------
Total Distributions ............................................... (0.33) -- --
---------- ---------- ---------
Net Asset Value, End of Period ............................................ $ 12.25 $ 11.90 $ 10.71
========== ========== ========
Total Return (excludes sales charge) ...................................... 5.88%(d) 11.11% 8.38%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ...................................... $ 521 $ 437 $ 102
Ratio of expenses to average net assets ................................ 2.20%(c) 2.14% 2.02%(c)
Ratio of net investment loss to average net assets ..................... (0.54)%(c) (0.50)% (0.96)%(c)
Ratio of expenses to average net assets* ............................... 2.47%(c) 2.46% 2.44%(c)
Ratio of net investment loss to average net assets* .................... (0.81)%(c) (0.82)% (1.38)%(c)
Portfolio turnover**.................................................... 39.39% 77.63% 62.78%
Average commission rate paid (e)........................................ $ 0.0187 -- --
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from March
1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-122-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30, April 4, 1994 to
Ended ---------------------------- November 30,
May 31, 1997 1996 1995 1994(a)
---------------- ----------- ----------- ---------------
Trust Trust Trust Trust
Shares Shares Shares Shares
---------------- ----------- ----------- ---------------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............................. $ 12.12 $ 10.79 $ 9.92 $ 10.00
----------- ----------- ----------- -----------
Investment Activities
Net investment income ......................................... 0.02 0.06 0.03 0.01
Net realized and unrealized gains from investments
and foreign currency ........................................ 0.75 1.27 0.86 (0.09)
----------- ----------- ----------- -----------
Total from Investment Activities ......................... 0.77 1.33 0.89 (0.08)
----------- ----------- ----------- -----------
Distributions
Net investment income ......................................... (0.02) -- -- --
Net realized gains ............................................ (0.31) -- (0.01) --
Tax return of capital ......................................... -- -- (0.01) --
----------- ----------- ----------- -----------
Total Distributions ...................................... (0.33) -- (0.02) --
----------- ----------- ----------- -----------
Net Asset Value, End of Period ................................... $ 12.56 $ 12.12 $ 10.79 $ 9.92
=========== =========== =========== ===========
Total Return ..................................................... 6.59%(b) 12.33% 8.97% (0.80)%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................. $ 54,908 $ 52,181 $ 36,096 $ 23,746
Ratio of expenses to average net assets ....................... 1.20%(c) 1.14% 1.16% 1.23%(c)
Ratio of net investment income to average net assets........... 0.41%(c) 0.51% 0.39% 0.23%(c)
Ratio of expenses to average net assets* ...................... 1.46%(c) 1.45% 1.46% 1.95%(c)
Ratio of net investment income to average net assets *......... 0.15%(c) 0.20% 0.09% (0.49)%(c)
Portfolio turnover**........................................... 39.39% 77.63% 62.78% 21.00%
Average commission rate paid (d)............................... $ 0.0187 -- -- --
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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
-123-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30, April 4, 1994 to
Ended ----------------------------------- November 30,
May 31, 1997 1996 1995 1994(a)
------------- ------------- ------------- -------------
Institutional Institutional Institutional Institutional
Shares Shares Shares Shares
------------- ------------- ------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................... $ 12.03 $ 10.75 $ 9.90 $ 10.00
----------- ----------- --------- ----------
Investment Activities
Net investment income ................................ 0.01 0.01 0.01 (0.01)
Net realized and unrealized gains from investments
and foreign currency ............................... 0.73 1.27 0.86 (0.09)
----------- ----------- --------- ----------
Total from Investment Activities ................ 0.74 1.28 0.87 (0.10)
----------- ----------- --------- ----------
Distributions
Net investment income ................................ (0.01) -- -- --
In excess of net investment income ................... (0.01) -- -- --
Realized net gains ................................... (0.31) -- (0.01) --
Total return of capital .............................. -- -- (0.01) --
----------- ----------- --------- ----------
In excess of net realized gains ...................... -- -- -- --
----------- ----------- --------- ----------
Total Distributions ............................. (0.33) -- (0.02) --
----------- ----------- --------- ----------
Net Asset Value, End of Period .......................... $ 12.44 $ 12.03 $ 10.75 $ 9.90
=========== =========== ========= ==========
Total Return ............................................ 6.37%(b) 11.91% 8.78% (1.00)%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) .................... $ 6,619 $ 6,059 $ 2,159 $ 197
Ratio of expenses to average net assets .............. 1.50%(c) 1.44% 1.44% 1.70%(c)
Ratio of net investment income to average
net assets ......................................... 0.12%(c) 0.16% 0.13% (0.48)%(c)
Ratio of expenses to average net assets* ............. 1.76%(c) 1.76% 1.75% 2.17%(c)
Ratio of net investment loss to average net
assets*............................................ (0.14)%(c) (0.16)% (0.18)% (0.94)%(c)
Portfolio turnover**.................................. 39.39% 77.63% 62.78% 21.00%
Average commission rate paid (d)...................... $ 0.0187 -- -- --
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(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
-124-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
March 7, 1997
to
May 31, 1997 (a)
----------------
Investor A
Shares
----------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period .............................................. $ 10.00
-------
Investment Activities
Net investment income .......................................................... 0.04
Net realized and unrealized gains from investments ............................. 0.12
-------
Total from Investment Activities .......................................... 0.16
-------
Distributions
Net investment income .......................................................... (0.04)
In excess of net investment income ............................................. (0.01)
-------
Total Distributions ....................................................... (0.05)
-------
Net Asset Value, End of Period .................................................... $ 10.11
=======
Total Return (excludes sales charge) .............................................. 1.58%(b)***
Ratios/Supplementary Data:
Net Assets at end of period (000) .............................................. $ 41
Ratio of expenses to average net assets ........................................ 0.44%(c)
Ratio of net investment income to average net assets ........................... 2.32%(c)
Ratio of expenses to average net assets* ....................................... 1.26%(c)
Ratio of net investment income to average net assets* .......................... 1.50%(c)
Portfolio turnover**............................................................ 26.29%
Average commission rate paid (d)................................................ $0.0600
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
*** Aggregate since inception.
(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
-125-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
Investor B Shares
<TABLE>
<CAPTION>
Financial Highlights
March 7, 1997
to
May 31, 1997 (a)
----------------
Investor B
Shares
----------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ...................... $ 10.00
---------
Investment Activities
Net investment income .................................. 0.03
Net realized and unrealized gains from investments ..... 0.11
---------
Total from Investment Activities .................. 0.14
---------
Distributions
Net investment income .................................. (0.02)
---------
Total Distributions ............................... (0.02)
---------
Net Asset Value, End of Period ............................ $ 10.12
=========
Total Return (excludes sales charge) ...................... 1.43%(b)***
Ratios/Supplementary Data:
Net Assets at end of period (000) ...................... $ 7
Ratio of expenses to average net assets ................ 1.04%(c)
Ratio of net investment income to average net assets ... 1.21%(c)
Ratio of expenses to average net assets* ............... 1.92%(c)
Ratio of net investment income to average net assets* .. 0.34%(c)
Portfolio turnover**.................................... 26.29%
Average commission rate paid (d)........................ $ 0.0600
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(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
-126-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
March 7, 1997
to
May 31, 1997 (a)
----------------
Trust
Shares
----------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ................................................ $ 10.00
--------
Investment Activities
Net investment income ............................................................ 0.05
Net realized and unrealized gains from investments ............................... 0.11
--------
Total from Investment Activities ............................................ 0.16
--------
Distributions
Net investment income ............................................................ (0.05)
--------
Total Distributions ......................................................... (0.05)
--------
Net Asset Value, End of Period ...................................................... $ 10.11
========
Total Return ........................................................................ 1.61%(b)***
Ratios/Supplementary Data:
Net Assets at end of period (000) ................................................ $119,885
Ratio of expenses to average net assets .......................................... 0.14%(c)
Ratio of net investment income to average net assets ............................. 2.20%(c)
Ratio of expenses to average net assets* ......................................... 0.67%(c)
Ratio of net investment income to average net assets* ............................ 1.67%(c)
Portfolio turnover**.............................................................. 26.29%
Average commission rate paid (d).................................................. $ 0.0600
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(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
-127-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
March 7, 1997
to
May 31, 1997 (a)
----------------------
Institutional
Shares
----------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ........................................... $ 10.00
-----------
Investment Activities
Net investment income ....................................................... 0.04
Net realized and unrealized gains from investments .......................... 0.12
-----------
Total from Investment Activities ....................................... 0.16
-----------
Distributions
Net investment income ....................................................... (0.04)
In excess of net investment income .......................................... (0.01)
-----------
Total Distributions .................................................... (0.05)
-----------
Net Asset Value, End of Period ................................................. $ 10.11
===========
Total Return (excludes sales charge) ........................................... 1.61%(b)***
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................................... $ 1
Ratio of expenses to average net assets ..................................... 1.05%(c)
Ratio of net investment income to average net assets ........................ 1.76%(c)
Ratio of expenses to average net assets* .................................... 1.50%(c)
Ratio of net investment income to average net assets* ....................... 1.31%(c)
Portfolio turnover**......................................................... 26.29%
Average commission rate paid (d)............................................. $ 0.0600
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(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
-128-
<PAGE>
THE ARCH FUND, INC.
EQUITY INDEX
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
May 1, 1997
to
May 31, 1997 (a)
----------------
Investor A
Shares
----------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ............................................ $ 10.00
-----------
Investment Activities
Net investment income ........................................................ 0.02
Net realized and unrealized gains from investments ........................... 0.59
-----------
Total from Investment Activities ........................................ 0.61
-----------
Distributions
Net investment income ........................................................ (0.02)
-----------
Total Distributions ..................................................... (0.02)
-----------
Net Asset Value, End of Period .................................................. $ 10.59
===========
Total Return (excludes sales charge) ............................................ 6.08%(b)***
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................ $ 2
Ratio of expenses to average net assets ...................................... 0.69%(c)
Ratio of net investment income to average net assets ......................... 2.39%(c)
Ratio of expenses to average net assets* ..................................... 1.22%(c)
Ratio of net investment income to average net assets* ........................ 1.86%(c)
Portfolio turnover**.......................................................... 0.20%
Average commission rate paid (d).............................................. $0.0200
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(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
-129-
<PAGE>
THE ARCH FUND, INC.
EQUITY INDEX
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
May 1, 1997
to
May 31, 1997 (a)
----------------
Trust
Shares
----------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ............................................ $ 10.00
-----------
Investment Activities
Net investment income ........................................................ 0.02
Net realized and unrealized gains from investments ........................... 0.59
-----------
Total from Investment Activities ........................................ 0.61
-----------
Distributions
Net investment income ........................................................ (0.02)
-----------
Total Distributions ..................................................... (0.02)
-----------
Net Asset Value, End of Period .................................................. $ 10.59
===========
Total Return .................................................................... 6.10%(b)***
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................................ $ 26,637
Ratio of expenses to average net assets ...................................... 0.33%(c)
Ratio of net investment income to average net assets ......................... 2.77%(c)
Ratio of expenses to average net assets* ..................................... 0.43%(c)
Ratio of net investment income to average net assets* ........................ 2.67%(c)
Portfolio turnover**.......................................................... 0.20%
Average commission rate paid (d).............................................. $ 0.0200
</TABLE>
- -------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(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
-130-
<PAGE>
THE ARCH FUND, INC.
EQUITY INDEX
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
May 1, 1997
to
May 31, 1997 (a)
------------------
Institutional
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 ................ 0.59
----------
Total from Investment Activities .............................. 0.61
----------
Distributions
Net investment income ............................................. (0.02)
----------
Total Distributions ........................................... (0.02)
----------
Net Asset Value, End of Period ....................................... $ 10.59
==========
Total Return ......................................................... 6.10%(b)***
Ratios/Supplementary Data:
Net Assets at end of period (000) ................................. $ 1
Ratio of expenses to average net assets ........................... 0.35%(c)
Ratio of net investment income to average net assets .............. 2.75%(c)
Ratio of expenses to average net assets* .......................... 1.05%(c)
Ratio of net investment income to average net assets* ............. 2.05%(c)
Portfolio turnover**............................................... 0.20%
Average commission rate paid (d)................................... $ 0.0200
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
*** Aggregate since inception.
(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
-131-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Six Months Years Ended November 30, to
Ended ----------------------------------------- November 30,
May 31, 1997 1996 1995 1994 (a) 1993 (b)
---------------- ------------ ------------ ---------- ---------------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
---------------- ------------ ------------ ---------- ---------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $ 12.58 $ 11.65 $ 9.61 $ 10.22 $ 10.00
--------- ---------- -------- -------- --------
Investment Activities
Net investment income ............................ 0.16 0.32 0.32 0.28 0.23
Net realized and unrealized gains (losses) from
investments .................................... 0.49 1.34 2.02 (0.47) 0.15
--------- ---------- -------- -------- --------
Total from Investment Activities ............. 0.65 1.66 2.34 (0.19) 0.38
--------- ---------- -------- -------- --------
Distributions
Net investment income ............................ (0.16) (0.31) (0.30) (0.29) (0.16)
In excess of net investment income ............... (0.08) -- -- -- --
Net realized gains ............................... (0.49) (0.42) -- -- --
In excess of net realized gains .................. (0.22) -- -- (0.13) --
--------- ---------- -------- -------- --------
Total Distributions .......................... (0.95) (0.73) (0.30) (0.42) (0.16)
--------- ---------- -------- -------- --------
Net Asset Value, End of Period ...................... $ 12.28 $ 12.58 $ 11.65 $ 9.61 $ 10.22
========= ========== ======== ======== ========
Total Return (excludes sales charge) ................ 5.59%(c) 15.10% 24.85% (1.91)% 3.86%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................ $ 9,707 $ 9,328 $ 8,348 $ 7,321 $ 1,978
Ratio of expenses to average net assets .......... 1.27%(d) 1.27% 1.27% 1.27% 0.56%(d)
Ratio of net investment income to average net
assets ......................................... 2.72%(d) 2.79% 2.98% 2.77% 3.42%(d)
Ratio of expenses to average net assets* ......... 1.37%(d) 1.37% 1.37% 1.39% 1.21%(d)
Ratio of net investment income to average net
assets* ........................................ 2.62%(d) 2.69% 2.88% 2.65% 2.77%(d)
Portfolio turnover **............................. 28.56% 85.16% 58.16% 49.00% 26.00%
Average commission rate paid (e).................. $ 0.0600 -- -- -- --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Period from commencement of operations.
(c) Not annualized.
(d) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased
and sold for which commissions were charged.
See notes to financial statements
-132-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1,
Six Months Ended 1995 to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
---------------- ----------------- ----------------
Investor B Investor B Investor B
Shares Shares Shares
---------------- ----------------- ----------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .............................. $ 12.49 $ 11.59 $ 10.13
-------- -------- -------
Investment Activities
Net investment income .......................................... 0.13 0.25 0.22
Net realized and unrealized gains from investments ............. 0.47 1.33 1.44
-------- -------- -------
Total from Investment Activities ........................... 0.60 1.58 1.66
-------- -------- -------
Distributions
Net investment income .......................................... (0.13) (0.26) (0.20)
In excess of net investment income ............................. (0.07) -- --
Net realized gains ............................................. (0.47) (0.42) --
In excess of net realized gains ................................ (0.24) -- --
-------- -------- -------
Total Distributions ........................................ (0.91) (0.68) (0.20)
-------- -------- -------
Net Asset Value, End of Period .................................... $ 12.18 $ 12.49 $ 11.59
======== ======== =======
Total Return (excludes sales charge) .............................. 5.21%(e) 14.35% 23.92%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) .............................. $ 450 $ 321 $ 36
Ratio of expenses to average net assets ........................ 1.97%(c) 1.96% 1.93%(c)
Ratio of net investment income to average net assets ........... 2.02%(c) 2.09% 2.28%(c)
Ratio of expenses to average net assets* ....................... 2.07%(c) 2.06% 2.03%(c)
Ratio of net investment income to average net assets* .......... 1.92%(c) 1.99% 2.18%(c)
Portfolio turnover**............................................ 28.56% 85.16% 58.16%
Average commission rate paid (d)................................ $ 0.0600 -- --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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.
(e) Not annualized.
See notes to financial statements
-133-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Six Months Years Ended November 30, to
Ended -------------------------------------------- November 30,
May 31, 1997 1996 1995 1994 1993 (a)
---------------- --------------- -------------- ---------- -----------------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
---------------- --------------- -------------- ---------- -----------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ....... $ 12.58 $ 11.64 $ 9.62 $ 10.22 $ 10.00
-------- -------- --------- -------- ---------
Investment Activities
Net investment income ................... 0.21 0.37 0.34 0.29 0.23
Net realized and unrealized gains
(losses) from investments ............. 0.46 1.34 2.02 (0.47) 0.15
-------- -------- --------- -------- ---------
Total from Investment Activities .... 0.67 1.71 2.36 (0.18) 0.38
-------- -------- --------- -------- ---------
Distributions
Net investment income ................... (0.21) (0.35) (0.34) (0.29) (0.16)
In excess of net investment income ...... (0.05) -- -- -- --
Net realized gains ...................... (0.46) (0.42) -- -- --
In excess of net realized gains ......... (0.25) -- -- (0.13) --
-------- -------- --------- -------- ---------
Total Distributions ................. (0.97) (0.77) (0.34) (0.42) (0.16)
-------- -------- --------- -------- ---------
Net Asset Value, End of Period ............. $ 12.28 $ 12.58 $ 11.64 $ 9.62 $ 10.22
======== ======== ========= ======== =========
Total Return ............................... 5.74%(b) 15.56% 24.97% (1.81)% (3.86)%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ....... $ 46,138 $ 61,821 $ 72,669 $ 65,288 $ 69,720
Ratio of expenses to average net assets 0.97%(c) 0.97% 0.98% 0.97% 0.56%(c)
Ratio of net investment income to
average net assets .................... 3.03%(c) 3.08% 3.29% 3.04% 3.42%(c)
Ratio of expenses to average net assets*
1.07%(c) 1.07% 1.08% 1.39% 1.21%(c)
Ratio of net investment income to
average net assets income to average
net assets *........................... 2.93%(c) 2.98% 3.19% 2.63% 2.77%(c)
Portfolio turnover**..................... 28.56% 85.16% 58.16% 49.00% 26.00%
Average commission rate paid (d)......... $ 0.0600 -- -- -- --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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
-134-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
April 1, 1993
Six Months Years Ended November 30, to
Ended ------------------------------------------- November 30,
May 31, 1997 1996 1995 1994 (a) 1993 (b)
---------------- --------------- -------------- ---------- -----------------
Investor Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
---------------- --------------- -------------- ---------- -----------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............. $ 12.54 $ 11.62 $ 9.60 $ 10.22 $ 10.00
--------- --------- ---------- --------- --------
Investment Activities
Net investment income ......................... 0.16 0.32 0.31 0.28 0.23
Net realized and unrealized gains (losses)
from investments ............................ 0.50 1.34 2.02 (0.48) 0.15
--------- --------- ---------- --------- --------
Total from Investment Activities .......... 0.66 1.66 2.33 (0.20) 0.38
--------- --------- ---------- --------- --------
Distributions
Net investment income ......................... (0.16) (0.32) (0.31) (0.29) (0.16)
In excess of net investment income ............ (0.08) -- -- -- --
Net realized gains ............................ (0.50) (0.42) -- -- --
In excess of net realized gains ............... (0.21) -- -- (0.13) --
--------- --------- ---------- --------- --------
Total Distributions ....................... (0.95) (0.74) (0.31) (0.42) (0.16)
--------- --------- ---------- --------- --------
Net Asset Value, End of Period ................... $ 12.25 $ 12.54 $ 11.62 $ 9.60 $ 10.22
========= ========= ========== ========= ========
Total Return ..................................... 5.70%(c) 15.08% 24.67% (2.00)% 3.86%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............. $ 60,643 $ 54,731 $ 36,827 $ 22,723 $ 1,978
Ratio of expenses to average net assets ....... 1.27%(d) 1.27% 1.27% 1.27% 0.56%(d)
Ratio of net investment income to average net
assets ...................................... 2.71%(d) 2.78% 2.97% 2.77% 3.42%(d)
Ratio of expenses to average net assets* ...... 1.37%(d) 1.37% 1.37% 1.40% 1.21%(d)
Ratio of net investment income income to
average net assets* ......................... 2.61%(d) 2.68% 2.87% 2.64% 2.77%(d)
Portfolio turnover**........................... 28.56% 85.16% 58.16% 49.00% 26.00%
Average commission rate paid (e)............... $ 0.0600 $ 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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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
-135-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended --------------------------------------------------
May 31, 1997 1996 1995 1994(a) 1993
------------ ---------- ---------- -------- --------
Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares
------------ ---------- ---------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 10.34 $ 10.53 $ 9.64 $ 10.65 $ 10.26
------- --------- ------- ------- -------
Investment Activities
Net investment income .................................. 0.28 0.64 0.61 0.60 0.64
Net realized and unrealized gains (losses) from
investments .......................................... (0.30) (0.19) 0.89 (0.94) 0.39
------- --------- ------- ------- -------
Total from Investment Activities ................... (0.02) 0.45 1.50 (0.34) 1.03
------- --------- ------- ------- -------
Distributions
Net investment income .................................. (0.28) (0.64) (0.61) (0.60) (0.64)
In excess of net investment income ..................... -- -- -- (0.07) --
------- --------- ------- ------- -------
Total Distributions ................................ (0.28) (0.64) (0.61) (0.67) (0.64)
------- --------- ------- ------- -------
Net Asset Value, End of Period ............................ $ 10.04 $ 10.34 $ 10.53 $ 9.64 $ 10.65
======= ========= ======= ======= =======
Total Return (excludes sales charge) ...................... (0.14)%(b) 4.51% 15.98% (3.32)% 10.23%
Ratios/Supplementary Data:
Net Assets at end of period (000) ...................... $ 4,607 $ 4,915 $ 5,496 $ 5,167 $ 3,737
Ratio of expenses to average net assets ................ 0.95%(c) 0.95% 0.95% 0.95% 0.95%
Ratio of net investment income to average net assets.... 5.64%(c) 6.06% 6.03% 6.00% 6.00%
Ratio of expenses to average net assets* ............... 1.05%(c) 1.05% 1.05% 1.05% 1.05%
Ratio of net investment income to average net assets* .. 5.54%(c) 5.96% 5.93% 5.90% 5.90%
Portfolio turnover**.................................... 76.99% 149.20% 59.32% 50.00% 31.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-136-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
---------------- ----------------- ----------------
Investor B Investor B Investor B
Shares Shares Shares
---------------- ----------------- ----------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ................................... $ 10.34 $ 10.53 $ 9.92
------- -------- -------
Investment Activities
Net investment income ............................................... 0.25 0.57 0.38
Net realized and unrealized losses from investments ................. (0.29) (0.19) 0.61
------- -------- -------
Total from Investment Activities ................................ (0.04) 0.38 0.99
------- -------- -------
Distributions
Net investment income ............................................... (0.25) (0.57) (0.38)
------- -------- -------
Total Distributions ............................................. (0.25) (0.57) (0.38)
------- -------- -------
Net Asset Value, End of Period ......................................... $ 10.05 $ 10.34 $ 10.53
======= ======== =======
Total Return (excludes sales charge) ................................... (0.38)%(d) 3.79% 15.27%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................................... $ 576 $ 511 $ 106
Ratio of expenses to average net assets ............................. 1.65%(c) 1.65% 1.65%(c)
Ratio of net investment income to average net assets ................ 4.92%(c) 5.37% 5.19%(c)
Ratio of expenses to average net assets* ............................ 1.75%(c) 1.75% 1.75%(c)
Ratio of net investment income to average net assets * .............. 4.82%(c) 5.27% 5.09%(c)
Portfolio turnover**................................................. 76.99% 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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio redesignated the Investor Shares as "Investor A" Shares
and authorized the issuance of a series of shares designated as
"Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994
to February 28, 1995 plus the total return for the Investor B Shares
from March 1, 1995 to November 30, 1995.
(c) Annualized.
(d) Not annualized.
See notes to financial statements
-137-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ----------------------------------------------------------
May 31, 1997 1996 1995 1994 1993
-------------- ----------- ----------- ----------- -----------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
-------------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........... $ 10.34 $ 10.53 $ 9.64 $ 10.65 $ 10.26
--------- ---------- ---------- ---------- ----------
Investment Activities
Net investment income ....................... 0.30 0.67 0.64 0.63 0.68
Net realized and unrealized gains (losses)
from investments .......................... (0.30) (0.19) 0.89 (0.94) 0.39
--------- ---------- ---------- ---------- -----------
Total from Investment Activities ........ -- 0.48 1.53 (0.31) 1.07
--------- ---------- ---------- ---------- -----------
Distributions
Net investment income ....................... (0.30) (0.67) (0.64) (0.63) (0.68)
In excess of net realized gains ............. -- -- -- (0.07) --
--------- ---------- ---------- ---------- -----------
Total Distributions ..................... (0.30) (0.67) (0.64) (0.70) (0.68)
--------- ---------- ---------- ---------- -----------
Net Asset Value, End of Period ................. $ 10.04 $ 10.34 $ 10.53 $ 9.64 $ 10.65
========= ========== ========== ========== ==========
Total Return ................................... 0.01%(a) 4.82% 16.31% (3.03)% 10.55%
Ratios/Supplementary Data:
Net Assets at end of period (000) ........... $ 141,221 $ 141,440 $ 127,741 $ 132,577 $ 149,674
Ratio of expenses to average net assets ..... 0.65%(b) 0.65% 0.65% 0.65% 0.65%
Ratio of net investment income to average
net assets ................................ 5.93%(b) 6.36% 6.32% 6.25% 6.32%
Ratio of expenses to average net assets* .... 0.75%(b) 0.75% 0.75% 1.05% 0.88%
Ratio of net investment income to average
net assets* ............................... 5.83%(b) 6.26% 6.22% 5.85% 6.09%
Portfolio turnover**......................... 76.99% 149.20% 59.32% 50.00% 31.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized.
See notes to financial statements
-138-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ------------------------------------------------------
May 31,1997 1996 1995 1994(a) 1993
-------------- -------------- -------------- -------------- ----------
Institutional Institutional Institutional Institutional Investor
Shares Shares Shares Shares Shares
-------------- -------------- -------------- -------------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 10.34 $ 10.53 $ 9.64 $ 10.65 $ 10.26
-------- --------- ------- ------- -------
Investment Activities
Net investment income .............................. 0.28 0.64 0.61 0.60 0.64
Net realized and unrealized gains (losses) from
investments ...................................... (0.30) (0.19) 0.89 (0.94) 0.39
-------- --------- ------- ------- --------
Total from Investment Activities ............... (0.02) 0.45 1.50 (0.34) 1.03
-------- --------- ------- ------- --------
Distributions
Net investment income .............................. (0.28) (0.64) (0.61) (0.60) (0.64)
In excess of net realized gains .................... -- -- -- (0.07) --
-------- --------- ------- ------- --------
Total Distributions ............................ (0.28) (0.64) (0.61) (0.67) (0.64)
-------- --------- ------- ------- --------
Net Asset Value, End of Period ........................ $ 10.04 $ 10.34 $ 10.53 $ 9.64 $ 10.65
======== ========= ======= ======= =======
Total Return .......................................... (0.14)%(b) 4.51% 15.98% (3.32)% 10.23%
Ratios/Supplementary Data:
Net Assets at end of period (000) .................. $ 15,608 $ 14,875 $ 9,413 $ 5,965 $ 3,737
Ratio of expenses to average net assets ............ 0.95%(c) 0.95% 0.95% 0.96% 0.95%
Ratio of net investment income to average net
assets ........................................... 5.63%(c) 6.06% 6.01% 6.03% 6.00%
Ratio of expenses to average net assets* ........... 1.05%(c) 1.05% 1.05% 1.07% 1.05%
Ratio of net investment income to average net
assets * ......................................... 5.53%(c) 5.96% 5.91% 5.92% 5.90%
Portfolio turnover**................................ 76.99% 149.20% 59.32% 50.00% 31.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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) Not annualized.
(c) Annualized.
See notes to financial statements
-139-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ---------------------------------------------------
May 31, 1997 1996 1995 1994(a) 1993
---------------- ------------ ------------ ------------ ----------
Investor A Investor A Investor A Investor A Investor
Shares Shares Shares Shares Shares
---------------- ------------ ------------ ------------ ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........................ $ 10.67 $ 10.85 $ 10.05 $ 11.20 $ 10.80
-------- -------- -------- -------- --------
Investment Activities
Net investment income .................................... 0.30 0.62 0.64 0.61 0.59
Net realized and unrealized gains (losses) from
investments ............................................ (0.19) (0.15) 0.80 (1.00) 0.47
-------- -------- -------- -------- --------
Total from Investment Activities ..................... 0.11 0.47 1.44 (0.39) 1.06
-------- -------- -------- -------- --------
Distributions
Net investment income .................................... (0.29) (0.62) (0.64) (0.61) (0.59)
In excess of net investment income ....................... -- (0.03) -- -- --
Net realized gains ....................................... -- -- -- -- (0.07)
In excess of net realized gains .......................... -- -- -- (0.18) --
-------- -------- -------- -------- --------
Total Distributions .................................. (0.29) (0.65) (0.64) (0.79) (0.66)
-------- -------- -------- -------- --------
Net Asset Value, End of Period .............................. $ 10.49 $ 10.67 $ 10.85 $ 10.05 $ 11.20
======== ======== ======== ======== ========
Total Return (excludes sales charges) ....................... 1.11%(b) 4.57% 14.66% (3.14)% 10.03%
Ratios/Supplementary Data:
Net Assets at end of period (000) ........................ $ 5,349 $ 7,153 $ 8,179 $ 9,631 $ 9,567
Ratio of expenses to average net assets .................. 0.96%(c) 0.97% 0.97% 0.96% 0.97%
Ratio of net investment income to average net assets ..... 5.63%(c) 5.82% 6.05% 5.98% 5.25%
Ratio of expenses to average net assets* ................. 1.06%(c) 1.07% 1.07% 1.06% 1.08%
Ratio of net investment income to average net assets* .... 5.53%(c) 5.72% 5.95% 5.88% 5.14%
Portfolio turnover**...................................... 78.33% 53.76% 93.76% 50.00% 24.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-140-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Year March 1, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
------------ ------------ --------------
Investor B Investor B Investor B
Shares Shares Shares
------------ ------------ --------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .................................... $ 10.66 $ 10.84 $ 10.34
------- ------- -------
Investment Activities
Net investment income ................................................. 0.26 0.55 0.31
Net realized and unrealized losses from investments ................... (0.18) (0.15) 0.50
------- ------- -------
Total from Investment Activities .................................. 0.08 0.40 0.81
------- ------- -------
Distributions
Net investment income ................................................. (0.26) (0.55) (0.31)
Net realized gains .................................................... -- (0.03) --
------- ------- -------
Total Distributions ............................................... (0.26) (0.58) (0.31)
------- ------- -------
Net Asset Value, End of Period .......................................... $ 10.48 $ 10.66 $ 10.84
======= ======= =======
Total Return (excludes sales charge) .................................... 0.75%(c) 3.85% 12.85%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ..................................... $ 413 $ 359 $ 41
Ratio of expenses to average net assets ............................... 1.66%(d) 1.66% 1.68%(d)
Ratio of net investment income to average net assets .................. 4.92%(d) 5.06% 5.37%(d)
Ratio of expenses to average net assets* .............................. 1.76%(d) 1.76% 1.78%(d)
Ratio of net investment income to average net assets* ................. 4.82%(d) 4.96% 5.27%(d)
Portfolio turnover** .................................................. 78.33% 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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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) Not annualized.
(d) Annualized.
See notes to financial statements
-141-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ----------------------------------------------------
May 31, 1997 1996 1995 1994 1993
------------ -------- -------- -------- --------
Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares
------------ -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 10.67 $ 10.85 $ 10.05 $ 11.20 $ 10.80
-------- -------- -------- -------- --------
Investment Activities
Net investment income .............................. 0.31 0.66 0.67 0.66 0.62
Net realized and unrealized gains (losses) from
investments ...................................... (0.18) (0.15) 0.80 (0.97) 0.47
-------- -------- -------- -------- --------
Total from Investment Activities ............... 0.13 0.51 1.47 (0.31) 1.09
-------- -------- -------- -------- --------
Distributions
Net investment income .............................. (0.31) (0.66) (0.67) (0.66) (0.62)
Net realized gains ................................. -- -- -- -- (0.07)
In excess of net realized gains .................... -- (0.03) -- (0.18) --
-------- -------- -------- -------- --------
Total Distributions ............................ (0.31) (0.69) (0.67) (0.84) (0.69)
-------- -------- -------- -------- --------
Net Asset Value, End of Period ....................... $ 10.49 $ 10.67 $ 10.85 $ 10.05 $ 11.20
======== ======== ======== ======== ========
Total Return ......................................... 1.26%(a) 4.88% 15.00% (2.85)% 10.36%
Ratios/Supplementary Data:
Net Assets at end of period (000) .................. $ 69,406 $ 60,079 $ 45,513 $ 33,166 $ 35,121
Ratio of expenses to average net assets ............ 0.66%(b) 0.67% 0.67% 0.66% 0.67%
Ratio of net investment income to average net
assets ........................................... 5.91%(b) 6.10% 6.36% 6.25% 5.57%
Ratio of expenses to average net assets* ........... 0.76%(b) 0.77% 0.77% 1.06% 0.91%
Ratio of net investment income to average net
assets * ......................................... 5.81%(b) 6.00% 6.26% 5.85% 5.33%
Portfolio turnover** ............................... 78.33% 53.67% 93.76% 50.00% 24.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized.
See notes to financial statements
-142-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended November 30,
Ended ------------------------------------------------------
May 31,1997 1996 1995 1994(a) 1993
-------------- -------------- -------------- ---------- ----------
Institutional Institutional Institutional Investor Investor
Shares Shares Shares Shares Shares
-------------- -------------- -------------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..................... $ 10.64 $ 10.82 $ 10.02 $ 11.20 $ 10.80
------- ------- ------- ------- -------
Investment Activities
Net investment income ................................. 0.27 0.62 0.63 0.61 0.59
Net realized and unrealized gains (losses) from
investments ......................................... (0.17) (0.15 ) 0.80 (1.00) 0.47
------- ------- ------- ------- -------
Total from Investment Activities .................. 0.10 0.47 1.43 (0.39) 1.06
------- ------- ------- ------- -------
Distributions
Net investment income ................................. (0.27) (0.62 ) (0.63) (0.61) (0.59)
In excess of net investment income .................... (0.02) -- -- (0.18) --
Net realized gains .................................... -- -- -- -- (0.07)
In excess of net realized gains ....................... -- (0.03 ) -- -- --
------- ------- ------- ------- -------
Total Distributions ............................... (0.29) (0.65 ) (0.63) (0.79) (0.66)
------- ------- ------- ------- -------
Net Asset Value, End of Period ........................... $ 10.45 $ 10.64 $ 10.82 $ 10.02 $ 11.20
======= ======= ======= ======= =======
Total Return ............................................. 1.01%(b) 4.55 % 14.69% (3.46)% 10.03%
Ratios/Supplementary Data:
Net Assets at end of period (000) ..................... $ 6,766 $ 2,232 $ 667 $ 51 $ 9,567
Ratio of expenses to average net assets ............... 0.96%(c) 0.96 % 0.97% 0.95% 0.97%
Ratio of net investment income to average net assets .. 5.59%(c) 5.75 % 5.91% 6.54% 5.25%
Ratio of expenses to average net assets* .............. 1.06%(c) 1.06 % 1.07% 1.16% 1.08%
Ratio of net investment income to average net assets* . 5.49%(c) 5.65 % 5.81% 6.33% 5.14%
Portfolio turnover**................................... 78.33% 53.76 % 93.76% 50.00% 24.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on June 7, 1994, the Portfolio
issued a new series of shares designated as "Institutional" Shares. The
financial highlights presented for periods prior to June 7, 1994 represent
financial highlights applicable to the Investor Shares.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-143-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Year July 10, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
---------------- ---------------- ----------------
Investor A Investor A Investor A
Shares Shares Shares
---------------- ---------------- ----------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ................................. $ 10.08 $ 10.08 $ 10.00
--------- --------- --------
Investment Activities
Net investment income ............................................. 0.19 0.40 --
Net realized and unrealized losses from investments ............... (0.07) -- 0.08
--------- --------- --------
Total from Investment Activities .............................. 0.12 0.40 0.08
--------- --------- --------
Distributions
Net investment income ............................................. (0.19) (0.40) --
--------- --------- --------
Total Distributions ........................................... (0.19) (0.40) --
--------- --------- --------
Net Asset Value, End of Period ....................................... $ 10.01 $ 10.08 $ 10.08
========= ========= ========
Total Return (excludes sales charges) ................................ 1.20%(b) 4.02% 0.80%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................................. $ 31 $ 51(c) --(c)
Ratio of expenses to average net assets ........................... 0.61%(d) 0.56% 0.00%(d)
Ratio of net investment income to average net assets .............. 3.80%(d) 3.83% 0.00%(d)
Ratio of expenses to average net assets* .......................... 1.21%(d) 1.26% 0.00%(d)
Ratio of net investment income to average net assets* ............. 3.20%(d) 3.13% 0.00%(d)
Portfolio turnover** .............................................. 0.00% 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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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
-144-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Year July 10, 1995
Six Months Ended to
Ended November 30, November 30,
May 31, 1997 1996 1995 (a)
--------------- ---------------- ----------------
Trust Trust Trust
Shares Shares Shares
--------------- ---------------- ----------------
(Unaudited)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ............................. $ 10.07 $ 10.07 $ 10.00
--------- ---------- ----------
Investment Activities
Net investment income ......................................... 0.20 0.41 0.14
Net realized and unrealized losses from investments ........... (0.07) -- 0.07
--------- ---------- ----------
Total from Investment Activities .......................... 0.13 0.41 0.21
--------- ---------- ----------
Distributions
Net investment income ......................................... (0.20) (0.41) (0.14)
--------- ---------- ----------
Total Distributions ....................................... (0.20) (0.41) (0.14)
--------- ---------- ----------
Net Asset Value, End of Period ................................... $ 10.00 $ 10.07 $ 10.07
========= ========== ==========
Total Return ..................................................... 1.32%(b) 4.15% 2.15%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................. $ 28,067 $ 29,472 $ 23,754
Ratio of expenses to average net assets ....................... 0.36%(c) 0.31% 0.47%(c)
Ratio of net investment income to average net assets........... 4.04%(c) 4.07% 3.81%(c)
Ratio of expenses to average net assets* ...................... 1.01%(c) 0.96% 1.12%(c)
Ratio of net investment income to average net assets * ........ 3.39%(c) 3.42% 3.16%(c)
Portfolio turnover** .......................................... 0.00% 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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-145-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Six Months
Ended Ended Ended Year Ended May 31,
May 31, November 30, November 30, -----------------------------------------
1997 1996 1995 (d) 1995(a) 1994 1993
-------------- -------------- -------------- ------------- ---------- ----------
Investor A Investor A Investor A Investor A Investor Investor
Shares Shares Shares Shares Shares Shares
-------------- -------------- -------------- ------------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...
$ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
---------- --------- ---------- --------- --------- ----------
Investment Activities
Net investment income ............... 0.27 0.55 0.27 0.55 0.55 0.58
Net realized and unrealized gains
(losses) from investments ......... (0.10) (0.05) 0.22 0.40 (0.37) 0.64
---------- --------- ---------- --------- --------- ----------
Total from Investment Activities 0.17 0.50 0.49 0.95 0.18 1.22
---------- --------- ---------- --------- --------- ----------
Distributions
Net investment income ............... (0.27) (0.55) (0.27) (0.55) (0.55) (0.58)
Net realized gains .................. -- -- -- (0.01) (0.04) (0.07)
---------- --------- ---------- --------- --------- ----------
Total Distributions ............. (0.27) (0.55) (0.27) (0.56) (0.59) (0.65)
---------- --------- ---------- --------- --------- ----------
Net Asset Value, End of Period ......... $ 11.59 $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54
========== ========= ========== ========= ========= ==========
Total Return (excludes sales charges) .. 1.45%(b) 4.41% 4.32%(b) 8.91% 1.53% 11.47%
Ratios/Supplementary Data:
Net Assets at end of period (000) ... $ 23,565 $ 25,144 $ 24,726 $ 24,318 $ 27,919 $ 23,223
Ratio of expenses to average net
assets ............................ 0.86%(c) 0.85% 0.95%(c) 0.84% 0.65% 0.63%
Ratio of net investment income to
average net assets................. 4.61%(c) 4.75% 4.64%(c) 5.02% 4.75% 5.11%
Ratio of expenses to average net
assets* ........................... 0.96%(c) 1.05% 1.18%(c) 1.18% 1.12% 1.18%
Ratio of net investment income to
average net assets* ............... 4.51%(c) 4.55% 4.44%(c) 4.68% 4.28% 4.56%
Portfolio turnover**................. 3.77% 3.66% 1.55% -- 20.00% 15.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(d) Upon merging into 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
-146-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Six Months
Ended Ended Ended March 1, 1995
May 31, November 30, November 30, to May 31,
1997 1996 1995 (e) 1995 (a)
---------------- ---------------- ---------------- --------------
Investor A Investor A Investor A Investor A
Shares Shares Shares Shares
---------------- ---------------- ---------------- --------------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 11.68 $ 11.74 $ 11.52 $ 11.19
-------- -------- -------- --------
Investment Activities
Net investment income .................................. 0.22 0.45 0.22 0.11
Net realized and unrealized gains (losses) from
investments .......................................... (0.10) (0.06) 0.22 0.33
-------- -------- -------- --------
Total from Investment Activities ................... 0.12 0.39 0.44 0.44
-------- -------- -------- --------
Distributions
Net investment income .................................. (0.22) (0.45) (0.22) (0.11)
-------- -------- -------- --------
Total Distributions ................................ (0.22) (0.45) (0.22) (0.11)
-------- -------- -------- --------
Net Asset Value, End of Period ............................ $ 11.58 $ 11.68 $ 11.74 $ 11.52
======== ======== ======== ========
Total Return (excludes sales charges) ..................... 1.04%(b) 3.48% 3.88%(b) 8.61%(c)
Ratios/Supplementary Data:
Net Assets at end of period (000) ...................... $ 924 $ 675 $ 433 $ 94
Ratio of expenses to average net assets ................ 1.65%(d) 1.65% 1.77%(d) 1.76%(d)
Ratio of net investment income to average net assets ... 3.82%(d) 3.96% 3.82%(d) 4.00%(d)
Ratio of expenses to average net assets* ............... 1.75%(d) 1.75% 1.87%(d) 1.88%(d)
Ratio of net investment income to average net assets *.. 3.72%(d) 3.86% 3.72%(d) 3.89%(d)
Portfolio turnover**.................................... 3.77% 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.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(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 merging into 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
-147-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Six Months
Ended Ended Ended Year Ended May 31,
May 31, November 30, November 30, ---------------------------------------
1997 1996 1995 (c) 1995 1994 1993
---------------- --------------- ------------- ---------- --------- ----------
Trust Trust Trust Trust Trust Trust
Shares Shares Shares Shares Shares Shares
---------------- --------------- ------------- ---------- --------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...
$ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
---------- --------- ---------- --------- --------- ----------
Investment Activities
Net investment income ............... 0.28 0.57 0.28 0.57 0.58 0.60
Net realized and unrealized gains
(losses) from investments ......... (0.10) (0.05) 0.22 0.40 (0.37) 0.64
---------- --------- ---------- --------- --------- ----------
Total from Investment Activities 0.18 0.52 0.50 0.97 0.21 1.24
---------- --------- ---------- --------- --------- ----------
Distributions
Net investment income ............... (0.28) (0.57) (0.28) (0.57) (0.58) (0.60)
Net realized gains .................. -- -- -- (0.01) (0.04) (0.07)
---------- --------- ---------- --------- --------- ----------
Total Distributions ............. (0.28) (0.57) (0.28) (0.58) (0.62) (0.67)
---------- --------- ---------- --------- --------- ----------
Net Asset Value, End of Period ......... $ 11.59 $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54
========== ========= ========== ========= ========= ==========
Total Return ........................... 1.55%(a) 4.62% 4.41%(a) 9.12% 1.73% 11.70%
Ratios/Supplementary Data:
Net Assets at end of period (000) ... $ 66,763 $ 55,905 $ 47,773 $ 44,336 $ 47,743 $ 32,777
Ratio of expenses to average net
assets ............................ 0.66%(b) 0.65% 0.78%(b) 0.64% 0.45% 0.43%
Ratio of net investment income to
average net assets ................ 4.82%(b) 4.95% 4.83%(b) 5.22% 4.96% 5.30%
Ratio of expenses to average net
assets* ........................... 0.76%(b) 0.75% 0.88%(b) 1.16% 1.13% 0.98%
Ratio of net investment income to
average net assets* ............... 4.72%(b) 4.85% 4.73%(b) 4.70% 4.28% 4.75%
Portfolio turnover**................. 3.77% 3.66% 1.55% -- 20.00% 15.00%
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized.
(c) Upon merging into 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
-148-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months November 18, 1996
Ended to
May 31, 1997 November 30, 1996 (a)
---------------------- ----------------------
Investor A Investor A
Shares Shares
---------------------- ----------------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period .................................... $ 10.05 $ 10.00
-------- ---------
Investment Activities
Net investment income ................................................ 0.27 0.02
Net realized and unrealized losses from investments .................. (0.10) 0.05
-------- ---------
Total from Investment Activities ................................. 0.17 0.07
-------- ---------
Distributions
Net investment income ................................................ (0.27) (0.02)
-------- ---------
Total Distributions .............................................. (0.27) (0.02)
-------- ---------
Net Asset Value, End of Period .......................................... $ 9.95 $ 10.05
======== =========
Total Return (excludes sales charge) .................................... 1.69%(b) 0.73%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) .................................... $ 543 $ 1
Ratio of expenses to average net assets .............................. 0.33%(c) 0.37%(c)
Ratio of net investment income to average net assets ................. 5.34%(c) 9.08%(c)
Ratio of expenses to average net assets* ............................. 0.82%(c) 1.07%(c)
Ratio of net investment income to average net assets* ................ 4.85%(c) 8.38%(c)
Portfolio turnover** ................................................. 50.81% --
</TABLE>
- ------------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-149-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
Investor B Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months November 18, 1996
Ended to
May 31, 1997 November 30, 1996(a)
------------------ ---------------------
Investor B Investor B
Shares Shares
------------------ ---------------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period ................................ $10.05 $10.00
------- --------
Investment Activities
Net investment income ............................................. 0.23 0.02
Net realized and unrealized losses from investments ............... (0.09) 0.05
------- --------
Total from Investment Activities .............................. 0.14 0.07
------- --------
Distributions
Net investment income ............................................. (0.23) (0.02)
------- --------
Total Distributions ........................................... (0.23) (0.02)
------- --------
Net Asset Value, End of Period ...................................... $ 9.96 $10.05
======= ========
Total Return (excludes sales charge) ................................ 1.41%(b) 0.70%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ................................. $ 1 $ 1
Ratio of expenses to average net assets ........................... 1.09%(c) 1.10%(c)
Ratio of net investment income to average net assets .............. 4.62%(c) 8.35%(c)
Ratio of expenses to average net assets* .......................... 1.09%(c) 1.80%(c)
Ratio of net investment income to average net assets* ............. 4.62%(c) 7.65%(c)
Portfolio turnover** .............................................. 50.81% --
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-150-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
Six Months November 18, 1996
Ended to
May 31, 1997 November 30, 1996(a)
------------------ --------------------
Trust Trust
Shares Shares
------------------ --------------------
(Unaudited)
<S> <C> <C>
Net Asset Value, Beginning of Period ........................... $ 10.05 $ 10.00
--------- ----------
Investment Activities
Net investment income ........................................ 0.28 0.02
Net realized and unrealized losses from investments .......... (0.09) 0.05
--------- ----------
Total from Investment Activities ......................... 0.19 0.07
--------- ----------
Distributions
Net investment income ........................................ (0.28) (0.02)
--------- ----------
Total Distributions ...................................... (0.28) (0.02)
--------- ----------
Net Asset Value, End of Period ................................. $ 9.96 $ 10.05
========= ==========
Total Return.................................................... 1.91%(b) 0.74%(b)
Ratios/Supplementary Data:
Net Assets at end of period (000) ............................ $325,884 $ 310,413
Ratio of expenses to average net assets ...................... 0.13%(c) 0.12%(c)
Ratio of net investment income to average net assets ......... 5.61%(c) 5.77%(c)
Ratio of expenses to average net assets* ..................... 0.73%(c) 0.82%(c)
Ratio of net investment income to average net assets* ........ 5.01%(c) 5.07%(c)
Portfolio turnover**.......................................... 50.81% --
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-151-
<PAGE>
THE ARCH FUND, INC.
INTERMEDIATE CORPORATE BOND
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
February 10, 1997
to
May 31, 1997 (a)
-------------------
Investor A
Shares
-------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period .................................. $10.00
------
Investment Activities
Net investment income ............................................... 0.19
Net realized and unrealized losses from investments ................. (0.17)
------
Total from Investment Activities ................................ 0.02
------
Distributions
Net investment income ............................................... (0.19)
------
Total Distributions ............................................. (0.19)
------
Net Asset Value, End of Period ........................................ $ 9.83
======
Total Return (excludes sales charge) .................................. 0.25%(b)***
Ratios/Supplementary Data:
Net Assets at the end of period (000)................................ $ 66
Ratio of expenses to average net assets ............................. 0.60%(c)
Ratio of net investment income to average net assets ................ 9.77%(c)
Ratio of expenses to average net assets* ............................ 0.99%(c)
Ratio of net investment income to average net assets* ............... 9.38%(c)
Portfolio turnover** ................................................ 66.10%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-152-
<PAGE>
THE ARCH FUND, INC.
INTERMEDIATE CORPORATE BOND
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
February 10, 1997
to
May 31, 1997 (a)
-------------------
Trust
Shares
-------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period .................................... $ 10.00
--------
Investment Activities
Net investment income ................................................. 0.19
Net realized and unrealized losses from investments ................... (0.18)
--------
Total from Investment Activities .................................. 0.01
--------
Distributions
Net investment income ................................................. (0.19)
--------
Total Distributions ............................................... (0.19)
--------
Net Asset Value, End of Period .......................................... $ 9.82
========
Total Return............................................................. 0.17%(b)***
Ratios/Supplementary Data:
Net assets at the end of period (000).................................. $ 38,954
Ratio of expenses to average net assets ............................... 0.30%(c)
Ratio of net investment income to average net assets .................. 13.95%(c)
Ratio of expenses to average net assets* .............................. 0.68%(c)
Ratio of net investment income to average net assets* ................. 13.57%(c)
Portfolio turnover** .................................................. 66.10%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-153-
<PAGE>
THE ARCH FUND, INC.
INTERMEDIATE CORPORATE BOND
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
February 10, 1997
to
May 31, 1997 (a)
--------------------
Institutional
Shares
-------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ...................................... $10.00
--------
Investment Activities
Net investment income ................................................... 0.19
Net realized and unrealized losses from investments ..................... (0.17)
--------
Total from Investment Activities .................................... 0.02
--------
Distributions
Net investment income ................................................... (0.19)
--------
Total Distributions ................................................. (0.19)
--------
Net Asset Value, End of Period ............................................ $ 9.83
========
Total Return............................................................... 0.24%(b)***
Ratios/Supplementary Data:
Net Assets at the end of period (000) ................................... $ 1
Ratio of expenses to average net assets ................................. 0.69%(c)
Ratio of net investment income to average net assets .................... 14.04%(c)
Ratio of expenses to average net assets* ................................ 1.78%(c)
Ratio of net investment income to average net assets* ................... 12.95%(c)
Portfolio turnover**..................................................... 66.10%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-154-
<PAGE>
THE ARCH FUND, INC.
BOND INDEX
Investor A Shares
Financial Highlights
<TABLE>
<CAPTION>
February 10, 1997
to
May 31, 1997 (a)
-------------------
Investor A
Shares
-------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ..................................... $10.00
--------
Investment Activities
Net investment income .................................................. 0.18
Net realized and unrealized losses from investments .................... (0.13)
--------
Total from Investment Activities ................................... 0.05
--------
Distributions
Net investment income .................................................. (0.18)
--------
Total Distributions ................................................ (0.18)
--------
Net Asset Value, End of Period ........................................... $ 9.87
========
Total Return (excludes sales charge) ..................................... 0.49%(b)***
Ratios/Supplementary Data:
Net Assets at the end of period (000) .................................. $ 46
Ratio of expenses to average net assets ................................ 0.52%(c)
Ratio of net investment income to average net assets ................... 6.72%(c)
Ratio of expenses to average net assets* ............................... 0.93%(c)
Ratio of net investment income to average net assets* .................. 6.31%(c)
Portfolio turnover** ................................................... 40.66%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-155-
<PAGE>
THE ARCH FUND, INC.
BOND INDEX
Trust Shares
Financial Highlights
<TABLE>
<CAPTION>
February 10, 1997
to
May 31, 1997 (a)
-------------------
Trust
Shares
-------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ........................................ $ 10.00
----------
Investment Activities
Net investment income ..................................................... 0.19
Net realized and unrealized losses from investments ....................... (0.14)
----------
Total from Investment Activities ...................................... 0.05
----------
Distributions
Net investment income ..................................................... (0.19)
----------
Total Distributions ................................................... (0.19)
----------
Net Asset Value, End of Period .............................................. $ 9.86
==========
Total Return................................................................. 0.54%(b)***
Ratios/Supplementary Data:
Net Assets at the end of period (000) ..................................... $ 129,939
Ratio of expenses to average net assets ................................... 0.22%(c)
Ratio of net investment income to average net assets ...................... 15.79%(c)
Ratio of expenses to average net assets* .................................. 0.31%(c)
Ratio of net investment income to average net assets* ..................... 15.70%(c)
Portfolio turnover** ...................................................... 40.66%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-156-
<PAGE>
THE ARCH FUND, INC.
BOND INDEX
Institutional Shares
Financial Highlights
<TABLE>
<CAPTION>
February 10, 1997
to
May 31, 1997 (a)
-------------------
Investor A
Shares
-------------------
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period ....................................... $10.00
--------
Investment Activities
Net investment income .................................................... 0.19
Net realized and unrealized losses from investments ...................... (0.13)
--------
Total from Investment Activities ..................................... 0.06
--------
Distributions
Net investment income .................................................... (0.19)
--------
Total Distributions .................................................. (0.19)
--------
Net Asset Value, End of Period ............................................. $ 9.87
========
Total Return................................................................ 0.58%(b)***
Ratios/Supplementary Data:
Net Assets at the end of period (000) .................................... $ 1
Ratio of expenses to average net assets .................................. 0.75%(c)
Ratio of net investment income to average net assets ..................... 15.59%(c)
Ratio of expenses to average net assets* ................................. 1.14%(c)
Ratio of net investment income to average net assets* .................... 15.21%(c)
Portfolio turnover**...................................................... 40.66%
</TABLE>
- ----------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
*** Aggregate since inception.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-157-
<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 Fund's investment policies and expenses as
well as other pertinent information.
