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As filed with the Securities and Exchange Commission on November 5, 1998
Registration No. 2-79285/811-3567
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 45
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 46
THE ARCH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices)
Registrant's Telephone Number: (800) 551-3731
W. BRUCE MCCONNEL, III, Esq.
Drinker Biddle & Reath LLP
1100 Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
Copy to:
Jon W. Bilstrom, Esq.
Mercantile Bank of St. Louis N.A.
One Mercantile Center
8th and Washington Streets
St. Louis, MO 63101
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on March 31, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Title of Securities Being Registered. . . . Shares of common stock
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The purpose of this post-effective amendment is to register a new
portfolio of Registrant and its shares.
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CROSS REFERENCE SHEET
(Shares)
The Conning Money Market Portfolio
Form N-1A Part A Item............... Prospectus Caption
1. Cover Page.................... Cover Page
2. Synopsis...................... Expense Summary
.............................. For Shares
3. Condensed Financial
Information................. Certain Financial
.............................. Information; Yields and Total
.............................. Returns
4. General Description
of Registrant............... Highlights;
.............................. Investment Objectives, Policies and
Risk Considerations; Other Information
Concerning the Fund and Its Shares
5. Management of the Fund........ Management of the Fund
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and
Other Securities............ How to Purchase and Redeem Shares;
Dividends and Distributions; Taxes;
Other Information Concerning the Fund
and Its Shares
7. Purchase of Securities
Being Offered............... How to Purchase and
.............................. Redeem Shares
8. Redemption or Repurchase...... How to Purchase and
.............................. Redeem Shares
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9. Pending Legal Proceedings..... Inapplicable
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THE CONNING MONEY MARKET PORTFOLIO
PROSPECTUS DATED ______________, 1998
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TABLES OF CONTENTS
PAGE
HIGHLIGHTS...................................................................2
INVESTMENT OBJECTIVE, POLICIES AND RISK CONSIDERATIONS.......................5
INVESTMENT LIMITATIONS......................................................10
PRICING OF SHARES...........................................................11
HOW TO PURCHASE AND REDEEM SHARES...........................................11
Purchase Of Shares..........................................................11
Redemption Of Shares........................................................12
Other Purchase and Redemption Information...................................12
YIELDS......................................................................13
DIVIDENDS AND DISTRIBUTIONS.................................................14
TAXES ......................................................................14
MANAGEMENT OF THE FUND......................................................15
OTHER INFORMATION CONCERNING THE FUND AND ITS SHARES........................19
DESCRIPTION OF SHARES.......................................................19
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CONNING MONEY MARKET PORTFOLIO
OF
THE ARCH FUND(R), INC.
The Conning Money Market Portfolio (the "Portfolio") is a portfolio
of The ARCH Fund, Inc., an open-end, management investment company. Shares of
the Portfolio are sold through selected broker-dealers and other financial
advisers to individual or institutional customers.
The CONNING MONEY MARKET PORTFOLIO'S investment objective is to seek
current income with liquidity and stability of principal.
Mississippi Valley Advisors Inc. (the "Adviser"), an indirect wholly-owned
subsidiary of Mercantile Bancorporation Inc. ("Mercantile"), acts as investment
adviser for the Portfolio. Conning Asset Management Company ("Conning" or the
"Sub-Adviser") serves as sub-adviser. Mercantile Bank National Association (the
"Custodian"), an affiliate of the Adviser, serves as custodian; BISYS Fund
Services Ohio, Inc. (the "Administrator") serves as administrator; and BISYS
Fund Services (the "Distributor") serves as sponsor and distributor.
This Prospectus sets forth concisely certain information about the
Portfolio that prospective investors should know before investing. Investors
should read this Prospectus and retain it for future reference. Additional
information about the Portfolio, contained in a Statement of Additional
Information dated ______________, 1998, has been filed with the Securities and
Exchange Commission and is incorporated by reference in its entirety into this
Prospectus. Investors may obtain the Statement of Additional Information without
charge by writing the Fund at 3435 Stelzer Road, Columbus, Ohio 43219 or by
contacting their broker-dealers or financial advisers.
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.
Portfolio Shares are not bank deposits, are not federally insured or
guaranteed by the U.S. Government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other governmental agency, and are not the
obligations of or guaranteed or otherwise supported by any bank. An investment
in the Portfolio involves investment risk, including the possible loss of
principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_____________, 1998
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HIGHLIGHTS
The CONNING MONEY MARKET PORTFOLIO is a portfolio of The ARCH Fund, Inc.
(the "Fund"), an open-end, management investment company (commonly known as a
mutual fund) registered under the Investment Company Act of 1940, as amended.
Each portfolio of the Fund represents a separate pool of assets with different
investment objectives and policies (as described below under "Investment
Objective, Policies and Risk Considerations"). Mississippi Valley Advisors Inc.
(the "Adviser") serves as adviser, Conning Asset Management Company ("Conning"
or the "Sub-Adviser") serves as sub-adviser, Mercantile Bank National
Association serves as custodian, BISYS Fund Services Ohio, Inc. serves as
administrator and BISYS Fund Services as sponsor and distributor. For
information on expenses, fee waivers, and services, see "Expense Summary" and
"Management of the Fund."
The Portfolio's investment objective is to seek current income with
liquidity and stability of principal. There can be no assurance that the
Portfolio will be able to achieve its investment objective. The Portfolio's
assets are invested in dollar-denominated debt securities with remaining
maturities of 397 days (13 months) or less as defined by the Securities and
Exchange Commission, and the Portfolio's dollar-weighted average portfolio
maturity will not exceed 90 days. All securities acquired by the Portfolio will
be determined by Conning, under the supervision of the Adviser and pursuant to
guidelines approved by the Fund's Board of Directors, to present minimal credit
risks and to be rated in the highest category (or deemed comparable in quality)
at the time of purchase. The Portfolio seeks to maintain a net asset value of
$1.00 per Share. There can be no assurance that the Portfolio will be able to
achieve a stable net asset value on a continuous basis.
Investors should note that the Portfolio may, subject to its investment
policies and limitations, purchase variable and floating rate instruments,
including funding agreements, enter into repurchase agreements and reverse
repurchase agreements, lend securities, acquire certain U.S. dollar-dominated
instruments of foreign issuers, and make limited investments in illiquid
securities and securities issued by other investment companies. These investment
practices involve investment risks of varying degrees. For example, the absence
of a secondary market for a particular variable or floating rate instrument
could make it difficult for the Portfolio to dispose of an instrument if the
issuer were to default on its payment obligation. Default by a counterparty to a
repurchase agreement could expose the Portfolio to loss because of adverse
market action or possible delay in disposing of the underlying collateral.
Reverse repurchase agreements are subject to the risk that the market value of
the securities sold by the Portfolio will decline below the repurchase price
which the Portfolio is obligated to pay. Foreign securities entail certain
inherent risks, such as future political and economic developments and the
adoption of foreign government restrictions, that might adversely affect payment
of principal and interest. See "Investment Objective, Policies and Risk
Considerations" below and the Statement of Additional Information under
"Investment Objective and Policies."
Shares of the Portfolio are sold without a sales charge. For information
on purchasing, exchanging or redeeming Shares of the Portfolio, please see "How
to Purchase and Redeem Shares" below.
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EXPENSE SUMMARY
Set forth below is a summary of the Portfolio's operating expenses.
Examples based on the summary are also shown.
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets)
Investment Advisory Fees
(net of fee waivers)(1)..................... .25%
12b-1 Fees.................................... .00%
Other Expenses (including
administration fees, shareholder liaison/
administrative support services fees and
other expenses)
(net of fee waivers and
expenses reimbursements(2))................. .75%
-------
Total Portfolio Operating
Expenses (net of fee waivers
and expense reimbursements(3)).............. 1.00%
=======
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(1) Without fee waivers, Investment Advisory Fees would be .40%
(2) Without fee waivers, administration fees would be .20% and shareholder
liaison/administrative support services fees would be .75%.
(3) Without fee waivers and/or expense reimbursements, Other Expenses would be
1.03%, and Total Portfolio Operating Expenses would be 1.43%.
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EXAMPLE 1 YEAR 3 YEARS
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You would pay the following
expenses on a $1,000 investment,
assuming (1) a 5% annual return and $10 $32
(2) redemption at the end of each
period:
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. THE PORTFOLIO IS NEW AND ACTUAL EXPENSES AND RATES
OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. Information about the actual
performance of the Portfolio will be contained in the Fund's future annual and
semi-annual reports to shareholders which may be obtained, when available,
without charge by contacting the Fund at the address on page 1 of this
Prospectus or your broker-dealer or financial adviser.
The purpose of the foregoing Table is to assist in understanding the
various costs and expenses that an investor in the Portfolio will bear directly
or indirectly. The information contained in the Table is based on expenses which
the Portfolio expects to incur during the current fiscal year. (For more
complete descriptions of the various costs and expenses, see "Management of the
Fund" in this Prospectus and the Statement of Additional Information.) The Table
and Example have not been audited by the Fund's independent auditors and do not
reflect any charges that may be imposed by broker-dealers or financial advisers
on their customers.
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INVESTMENT OBJECTIVE, POLICIES AND RISK CONSIDERATIONS
Although management will use its best efforts to achieve the investment
objective of the Portfolio, there can be no assurance that it will be able to do
so. The investment objective of the Portfolio may be changed by the Fund's Board
of Directors without shareholder approval, although shareholders will be given
at least 30 days' written notice before any such change occurs. The Portfolio is
a "money market" fund that invests in instruments with remaining maturities of
397 days or less (with certain exceptions) and with a dollar-weighted average
portfolio maturity of 90 days or less, subject to the quality, diversification
and other requirements of Rule 2a-7 under the Investment Company Act of 1940, as
amended (the "1940 Act") and other rules of the Securities and Exchange
Commission (the "SEC").
The Portfolio's investment objective is to seek current income with
liquidity and stability of principal. In pursuing its investment objective, the
Portfolio invests substantially all of its assets in a broad range of money
market instruments. These instruments include obligations of the U.S.
Government, U.S. dollar-denominated foreign securities, obligations of U.S. and
foreign banks and savings and loan institutions and commercial obligations that
meet the applicable quality requirements described below.
The Portfolio will purchase only "First Tier Eligible Securities" (as
defined by the SEC) that present minimal credit risks as determined by the
Sub-Adviser under the supervision of the Adviser and pursuant to guidelines
approved by the Fund's Board of Directors. First Tier Eligible Securities
consist of (i) securities that either (a) have short-term debt ratings at the
time of purchase in the highest rating category by at least two unaffiliated
nationally recognized statistical rating organizations ("Rating Agencies") (or
one Rating Agency if the security was rated by only one Rating Agency), or (b)
are issued by issuers with such ratings, and (ii) certain securities that are
unrated (including securities of issuers that have long-term but not short-term
ratings) but are of comparable quality as determined in accordance with
guidelines approved by the Board of Directors. The applicable ratings issued by
Rating Agencies are described in Appendix A to the Statement of Additional
Information. The following descriptions illustrate the types of instruments in
which the Portfolio invests.
BANKING OBLIGATIONS. The Portfolio may purchase obligations of issuers in
the banking industry, such as certificates of deposit, letters of credit,
bankers' acceptances and time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions having total assets at the time of purchase in excess of $1
billion. The Portfolio may invest in obligations of foreign banks or foreign
branches of U.S. banks in amounts not in excess of 25% of its assets where the
Sub-Adviser deems the instrument to present minimal credit risks. (See "Risk
Factors -- Risks Associated with Foreign Securities" below.) The Portfolio may
also make interest-bearing savings deposits in commercial and savings banks in
amounts not in excess of 5% of the value of its total assets.
COMMERCIAL PAPER AND VARIABLE AND FLOATING RATE INSTRUMENTS. The Portfolio
may invest in commercial paper, including asset-backed commercial paper
representing interests in a pool of corporate receivables, dollar-denominated
obligations issued by domestic and foreign bank holding companies, and corporate
bonds that meet the quality and maturity requirements
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described above. The Portfolio may also invest in variable or floating rate
notes that may have a stated maturity in excess of thirteen months but will, in
any event, permit the Portfolio to demand payment of the principal of the
instrument at least once every thirteen months upon no more than 30 days' notice
(unless the instrument is guaranteed by the U.S. Government or an agency or
instrumentality thereof). Such instruments may include variable amount master
demand notes, which are unsecured instruments that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. Unrated variable and floating rate instruments will be determined
by the Sub-Adviser (under the supervision of the Board of Directors) to be of
comparable quality at the time of purchase to First Tier Eligible Securities.
There may be no active secondary market in the instruments, which could make it
difficult for the Portfolio to dispose of an instrument in the event the issuer
were to default on its payment obligation or during periods that the Portfolio
could not exercise its demand rights. The Portfolio could, for these or other
reasons, suffer a loss with respect to such instruments. Variable and floating
rate instruments held by the Portfolio will be subject to the Portfolio's 10%
limitation on illiquid investments when the Portfolio may not demand payment of
the principal amount within seven days and a liquid trading market is absent.
FUNDING AGREEMENTS. The Portfolio may invest in short-term funding
agreements. A funding agreement is a contract between an issuer and a purchaser
that obligates the issuer to pay a guaranteed rate of interest on a principal
sum deposited by the purchaser. Funding agreements will also guarantee the
return of principal and may guarantee a stream of payments over time. A funding
agreement has a fixed maturity and may have either a fixed rate or
variable/floating interest rate that is based on an index and guaranteed for a
set time period. Because there is no secondary market for these investments, any
such funding agreement purchased by the Portfolio will be regarded as illiquid.
Funding agreements, together with other illiquid securities, will not constitute
more than 10% of the Portfolio's net assets.
GOVERNMENT OBLIGATIONS. The Portfolio may invest in obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities. In
addition, the Portfolio may, when deemed appropriate by the Sub-Adviser, invest
in short-term obligations issued by state and local governmental issuers
("municipal obligations") that meet the quality requirements described above
and, as a result of the Tax Reform Act of 1986, carry yields that are
competitive with those of other types of money market instruments of comparable
quality.
OTHER APPLICABLE POLICIES
The investment policies described in this Prospectus are policies which
the Portfolio has the ability to utilize. Some of these policies may be employed
on a regular basis; others may not be used at all. Accordingly, reference to any
particular policy, method or technique carries no implication that it will be
utilized or, if it is, that it will be successful.
U.S. GOVERNMENT OBLIGATIONS. Securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities have historically involved little
risk of loss of principal if held to maturity. However, due to fluctuations in
interest rates, the market value of such securities may vary during the period a
shareholder owns Shares of the Portfolio. Certain U.S. Government securities
held by the Portfolio may have remaining maturities exceeding thirteen months if
such securities provide for adjustments in their interest rates no less
frequently than every thirteen months. Examples of the types of U.S. Government
obligations that may be held by the Portfolio, include, in addition to U.S.
Treasury bonds, notes and bills, the obligations of Federal Home Loan Banks,
Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association
("GNMA" ), Federal National Mortgage Association ("FNMA"), Federal Home Loan
Mortgage Corporation, General Services Administration, Student Loan Marketing
Association, Central Bank for Cooperatives, Federal Intermediate Credit Banks,
Resolution Trust Corporation, and Maritime Administration. Obligations of
certain agencies and instrumentalities of the U.S. Government,
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such as those of GNMA, are supported by the full faith and credit of the U.S.
Treasury; others, such as the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the Treasury; others, such
as those of FNMA, are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others such as those of
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the instrumentality. There is no assurance that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
were not obligated to do so by law.
TYPES OF MUNICIPAL OBLIGATIONS. The two principal classifications of
municipal obligations are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities include private activity bonds which
are not payable from the unrestricted revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved. Municipal
obligations may also include "moral obligation" bonds, which are normally issued
by special purpose public authorities. If the issuer of a moral obligation bond
is unable to meet its debt service obligations from current revenues, it may
draw on a reserve fund, the restoration of which is a moral commitment but not a
legal obligation of the state or municipality which created the issuer.
Municipal obligations include debt obligations issued by governmental
entities to obtain funds for various public purposes, including the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses and the extension of loans to public
institutions and facilities. Private activity bonds issued by or on behalf of
public authorities to finance various privately operated facilities are
considered municipal obligations. Interest on private activity bonds, although
free of regular federal income tax, may be an item of tax preference for
purposes of the federal alternative minimum tax.
STRIPPED GOVERNMENT SECURITIES. The Portfolio may invest in bills, notes
and bonds (including zero coupon bonds) issued by the U.S. Treasury. In
addition, the Portfolio may also invest in "stripped" U.S. Treasury obligations
offered under the Separate Trading of Registered Interest and Principal
Securities ("STRIPS") program or Coupon Under Bank-Entry Safekeeping ("CUBES")
program or other stripped securities issued directly by agencies or
instrumentalities of the U.S. Government. STRIPS and CUBES represent either
future interest or principal payments and are direct obligations of the U.S.
Government that clear through the Federal Reserve System. The Portfolio may also
purchase U.S. Treasury and agency securities that are stripped by brokerage
firms and custodian banks and sold under proprietary names. These stripped
securities are resold in custodial receipt programs with a number of different
names (such as TIGRs and CATS) and are not considered U.S. Government securities
for purposes of the 1940 Act.
Stripped securities are issued at a discount to their "face value" and may
exhibit greater price volatility than ordinary debt securities because of the
manner in which their principal and
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interest are returned to investors. The Sub-Adviser will consider the liquidity
needs of the Portfolio when any investments in zero coupon obligations or other
principal-only obligations are made.
REPURCHASE AGREEMENTS. The Portfolio may agree to purchase U.S. Government
securities from financial institutions such as banks and broker-dealers, subject
to the seller's agreement to repurchase them at a mutually agreed-upon date and
price ("repurchase agreements"). The Portfolio will enter into repurchase
agreements only with financial institutions such as banks and broker-dealers
that the Sub-Adviser believes to be creditworthy. During the term of any
repurchase agreement, the Sub-Adviser will continue to monitor the
creditworthiness of the seller and will require the seller to maintain the value
of the securities subject to the agreement at not less than 102% of the
repurchase price (including accrued interest). Default by a seller could expose
the Portfolio to possible loss because of adverse market action or possible
delay in disposing of the underlying obligations. Because of the seller's
repurchase obligations, the securities subject to repurchase agreements do not
have maturity limitations. Although the Portfolio does not presently intend to
enter into repurchase agreements providing for settlement in more than seven
days, the Portfolio does have the authority to do so subject to its limitation
on the purchase of illiquid securities described below. Repurchase agreements
are considered to be loans under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow funds for
temporary purposes by entering into reverse repurchase agreements in accordance
with the investment limitations described below. Pursuant to such agreements,
the Portfolio would sell portfolio securities to financial institutions such as
banks and broker-dealers and agree to repurchase them at an agreed upon date and
price. Reverse repurchase agreements involve the risk that the market value of
the securities sold by the Portfolio may decline below the repurchase price
which the Portfolio is obligated to pay. Reverse repurchase agreements are
considered to be borrowings by the Portfolio under the 1940 Act.
SECURITIES LENDING. To increase return or offset expenses, the Portfolio
may from time to time, lend its portfolio securities to broker-dealers, banks or
institutional borrowers pursuant to agreements requiring that the loans be
continuously secured by collateral equal at all times in value to at least the
market value of the securities loaned. Collateral for such loans may include
cash, securities of the U.S. Government, or its agencies or instrumentalities,
or an irrevocable letter of credit issued by a bank that has at least $1.5
billion in total assets, 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 Portfolio. By lending its
securities, the Portfolio can increase its income by continuing to receive
interest on the loaned securities as well as by 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. In
accordance with current SEC policies, the Portfolio is currently limiting its
securities lending to 33-1/3% of the value of its total assets (including the
value of the collateral for the loans) at the time of the loan. Loans are
subject to termination by the Portfolio or a borrower at any time.
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SECURITIES OF OTHER INVESTMENT COMPANIES. The Portfolio may invest in
securities issued by other investment companies which invest in securities in
which the Portfolio is permitted to invest and which determine their net asset
value per share based on the amortized cost or penny-rounding method. The
Portfolio may invest in securities of other investment companies within the
limits prescribed by the 1940 Act, which include, subject to certain exceptions,
a prohibition on the Portfolio investing more than 10% of the value of its total
assets in such securities. Investments in other investment companies will cause
the Portfolio (and, indirectly, the Portfolio's shareholders) to bear
proportionately the cost incurred in connection with the operations of such
other investment companies. In addition, investment companies in which the
Portfolio may invest may impose a sales or distribution charge in connection
with the purchase or redemption of their shares as well as other types of
commissions or charges. Such charges will be payable by the Portfolio and,
therefore, will be borne indirectly by its shareholders. See the Statement of
Additional Information under "Investment Objectives and Policies -- Securities
of Other Investment Companies."
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. The Portfolio may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions involve a commitment by the
Portfolio to purchase or sell securities at a stated price and yield with
settlement beyond the normal settlement date. Such transactions permit the
Portfolio to lock-in a price or yield on a security, regardless of future
changes in interest rates. When-issued purchases and forward commitment
transactions involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date, or if the value of the security to be
sold increases prior to the settlement date. The Portfolio expects that these
transactions will not exceed 25% of the value of its total assets (at the time
of purchase) under normal market conditions. The Portfolio does not intend to
engage in such transactions for speculative purposes but only for the purpose of
acquiring portfolio securities.
FOREIGN SECURITIES. The Portfolio may acquire U.S. dollar-denominated
securities of foreign corporations and certain types of bank instruments issued
or supported by the credit of foreign banks or foreign branches of domestic
banks where the Sub-Adviser deems the investments to present minimal credit
risks. Investments made in foreign securities involve certain inherent risks,
such as future political and economic developments, the possible imposition of
foreign withholding tax on the interest income payable on such instruments, the
possible establishment of foreign controls, the possible seizure or
nationalization of foreign deposits or assets, or the adoption of other foreign
government restrictions that might adversely affect payment of interest or
principal. In addition, foreign banks and foreign branches of U.S. banks are
subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks.
ILLIQUID SECURITIES. The Portfolio will not invest more than 10% of the
value of its net assets in illiquid securities. Repurchase agreements that do
not provide for settlement within seven days, time deposits maturing in more
than seven days, and securities that are not registered under the Securities Act
of 1933, as amended (the "1933 Act") but that may be purchased by institutional
buyers pursuant to SEC Rule 144A are subject to the applicable limit (unless the
Sub-Adviser, pursuant to guidelines established by the Board of Directors,
determines that a liquid market exists). The purchase of securities which can be
sold under Rule 144A could have
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the effect of increasing the level of illiquidity in the Portfolio to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these restricted securities.
INVESTMENT LIMITATIONS
The Portfolio's investment policies discussed above are not fundamental
and may be changed by the Fund's Board of Directors without shareholder
approval. However, the Portfolio also has in place certain fundamental
investment limitations, some of which are set forth below, which may be changed
only by a vote of a majority of the outstanding Shares of the Portfolio. Other
investment limitations that also cannot be changed without a vote of
shareholders are contained in the Statement of Additional Information under
"Investment Objective and Policies."
The Portfolio may not:
1. Make loans, except that the Portfolio may purchase or hold debt
instruments in accordance with its investment objective and policies, lend
portfolio securities, and enter into repurchase agreements with respect to
securities (together with any cash collateral) that are consistent with
the Portfolio's permitted investments and that equal at all times at least
100% of the value of the repurchase price.
2. Borrow money or issue senior securities, except that the
Portfolio may borrow from banks and the Portfolio may enter into reverse
repurchase agreements for temporary purposes in amounts up to 10% of the
value of its total assets at the time of such borrowing; or mortgage,
pledge or hypothecate any assets, except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the Portfolio's total assets at the time
of such borrowing. The Portfolio will not purchase securities while its
borrowings (including reverse repurchase agreements) are outstanding.
3. Invest 25% or more of its total assets in one or more issuers
conducting their principal business activities in the same industry,
except that the Portfolio may invest more than 25% of its total assets in
either government securities, as defined in the 1940 Act, or instruments
of domestic banks.
In accordance with current regulations of the SEC, the Portfolio intends
to limit investments in the securities of any single issuer (other than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities) to not more than 5% of the Portfolio's total assets at the
time of purchase, provided that the Portfolio may invest up to 25% of its total
assets in the securities of any one issuer for a period of up to three business
days. This intention
-10-
<PAGE> 17
is not, however, a fundamental policy of the Portfolio. The Portfolio would have
the ability to invest more than five percent of its assets in any one issuer in
accordance with its fundamental policy only in the event that Rule 2a-7 of the
1940 Act is amended in the future.
PRICING OF SHARES
The Portfolio's net asset value per Share is determined by the
Administrator as of 12:00 noon (Eastern time) and as of the close of regular
trading hours on the New York Stock Exchange (the "Exchange") (currently, 4:00
p.m. Eastern time) on each weekday, with the exception of those holidays on
which the Exchange or the Federal Reserve Bank of St. Louis are closed (a
"Business Day"). Currently one or both of these institutions are closed on the
customary national business holidays of New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day (observed), Independence Day
(observed), Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and
Christmas Day (observed).
The Portfolio's assets are valued based upon the amortized cost method.
Although the Portfolio seeks to maintain its net asset value per Share at $1.00,
there can be no assurance that the net asset value per Share will not vary. See
the Statement of Additional Information under "Net Asset Value" for further
information.
The public offering price for Shares of the Portfolio is based upon the
net asset value per Share. The net asset value of the Shares is calculated by
adding the value of the Portfolio's investments, cash and other assets,
subtracting the Portfolio's liabilities, and then dividing the result by the
total number of Shares that are outstanding.
HOW TO PURCHASE AND REDEEM SHARES
PURCHASE OF SHARES
Shares of the Portfolio are sold without any sales charge through
broker-dealers or other financial advisers acting on behalf of their customers.
Generally, investors purchase Shares through a broker-dealer organization which
has a sales agreement with the Distributor or through a financial organization
which has entered into a servicing agreement with the Fund with respect to the
Portfolio. The organization is responsible for transmitting purchase orders
directly to the Fund.
Purchases may be effected on Business Days when the Adviser, Sub-Adviser,
Distributor, and Custodian are open for business. The Fund reserves the right to
reject any purchase order, including purchases made with foreign and third party
drafts or checks. All orders for new IRAs or other retirement plan accounts
placed through the transfer agent must be accompanied by an account application.
Account applications may be obtained from your broker-dealer or financial
adviser.
EFFECTIVE TIME OF PURCHASE. A purchase order for the Portfolio received
and accepted by the Fund by 2:00 p.m. (Eastern time) on a Business Day is
effected at the net asset value per Share
-11-
<PAGE> 18
next determined after receipt of the order in good form if the Fund's Custodian
has received payment in federal funds or other immediately available funds by
4:00 p.m. (Eastern time) that day. If such funds are not available for
investment by 4:00 p.m. (Eastern time), the order will be cancelled. Purchase
orders received after 2:00 p.m. (Eastern time) will be placed the following
Business Day.
It is the responsibility of broker-dealers or financial advisers to
promptly transmit orders to the Distributor. If a broker-dealer or financial
adviser fails to do so, the investor's right to that day's closing price must be
settled between the investor and the broker-dealer or financial adviser. Payment
for orders which are not received or accepted will be returned after prompt
inquiry to the transmitting organization.
REDEMPTION OF SHARES
Redemption orders should be placed with or through the same broker-dealer
or financial adviser that placed the original purchase order. Redemption orders
are effected at the Portfolio's net asset value per Share next determined after
receipt of the order by the Fund. The broker-dealer or financial adviser through
which the investor placed the order is responsible for transmitting redemption
orders to the Fund on a timely basis. No charge for sending redemption payments
electronically is currently imposed by the Fund, although a charge may be
imposed in the future. The Fund reserves the right to send redemption proceeds
electronically within seven days after receiving a redemption order if, in the
judgment of the Sub-Adviser, an earlier payment could adversely affect the
Portfolio.
The transfer agent may require a signature guarantee by an eligible
guarantor institution on written redemption requests. For purposes of this
policy, the term "eligible guarantor institution" shall include banks, brokers,
dealers, credit unions, securities exchanges and associations, clearing agencies
and savings associations as those terms are defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. The Transfer Agent reserves the right to reject
any signature guarantee if (1) it has reason to believe that the signature is
not genuine, (2) it has reason to believe that the transaction would otherwise
be improper, or (3) the guarantor institution is a broker or dealer that is
neither a member of a clearing corporation nor maintains net capital of at least
$100,000. The signature guarantee requirement will be waived if all of the
following conditions apply: (1) the redemption check is payable to the
shareholder(s) of record and (2) the redemption check is mailed to the
shareholder(s) at the address of record or the proceeds are either mailed or
sent electronically to a commercial bank account previously designated on the
account application. An investor with questions or needing assistance should
contact his or her broker-dealer or financial adviser. Additional documentation
may be required if the redemption is requested by a corporation, partnership,
trust, fiduciary, executor, or administrator.
OTHER PURCHASE AND REDEMPTION INFORMATION
On a Business Day when the Exchange closes early due to a partial holiday
or otherwise, the Fund reserves the right to advance the times at which purchase
and redemption orders must be received in order to be processed on that Business
Day.
-12-
<PAGE> 19
At various times, the Fund may be requested to redeem Shares for which it
has not yet received good payment. In such circumstances, the Fund may delay the
forwarding of proceeds until payment has been collected for the purchase of such
Shares which may take up to 15 days or more. To avoid delay in payment upon
redemption shortly after purchasing Shares, investors should purchase Shares by
certified or bank check or by electronic transfer. The Fund intends to pay cash
for all Shares redeemed, but under abnormal conditions which make payment in
cash unwise, the Fund may make payment wholly or partly in portfolio securities
at their then market value equal to the redemption price. In such cases, an
investor may incur brokerage costs in converting such securities to cash.
YIELDS
YIELD QUOTATIONS WILL FLUCTUATE, ARE BASED ON HISTORICAL EARNINGS, AND ARE
NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The methods used to compute the
Portfolio's yields are described below and in the Statement of Additional
Information.
From time to time, performance information such as "yield," and "effective
yield" for the Portfolio's Shares may be quoted in advertisements or in
communications to shareholders. The "yield" quoted in advertisements refers to
the income generated by an investment in Shares of the Portfolio over a
specified period (such as a seven-day period) identified in connection with the
particular yield quotation. This income is then "annualized." That is, the
amount of income generated by the investment during that period is assumed to be
generated for each such period over a 52-week or one-year period and is shown as
a percentage of the investment. The "effective yield" is calculated similarly
but, when annualized, the income earned by an investment in Shares of the
Portfolio is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment.
Performance data for the Portfolio may be compared to the performance of
other mutual funds with comparable investment objectives and policies through
various mutual fund or market indices and data such as that provided by Lehman
Brothers, Inc. or any of its affiliates, Ibbotson Associates, Inc., Lipper
Analytical Services, Inc., Mutual Fund Forecaster and IBC MONEY FUND REPORT(R)
published by IBC. References may also be made to indices or data published in
Money Magazine, Forbes, Barron's, The Wall Street Journal, The New York Times,
Business Week, American Banker, Institutional Investor, Pensions and
Investments, U.S.A. Today, Fortune, CDA/Wiesenberger, Morningstar, Inc. and
publications of a local or regional nature. In addition to performance
information, general information about the Portfolio that appears in a
publication such as those mentioned above may be included in advertisements and
in reports to Shareholders.
Performance quotations represent the Portfolio's past performance and
should not be considered as representative of future results. Any account fees
charged by an investment representative will not be included in the calculations
of the Portfolio's yields and total returns. Such fees, if any, will reduce the
investor's net return on an investment in the Portfolio.
-13-
<PAGE> 20
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income of the Portfolio are declared daily
and paid monthly not later than five Business Days after the end of each month.
Shares of the Portfolio earn dividends from the day the purchase order is
received by the transfer agent through the day before the redemption order for
such Shares is received.
The Portfolio does not expect to realize capital gains. Net realized
capital gains of the Portfolio, if any, are distributed at least annually. All
dividends and distributions are automatically reinvested in additional Shares of
the Portfolio unless the investor has (i) otherwise indicated in the account
application, or (ii) redeemed all the Shares held in the Portfolio, in which
case a distribution will be paid in cash. Reinvested dividends and distributions
will be taxed in the same manner as those paid in cash.
TAXES
The Portfolio's distributions will generally be taxable to shareholders.
The Portfolio expects that all, or substantially all, of its distributions will
consist of ordinary income. You will be subject to income tax on these
distributions regardless whether they are paid in cash or reinvested in
additional shares. The one major exception to these tax principles is that
distributions on shares held in an IRA (or other tax-qualified plan) will not be
currently taxable.
The Portfolio may be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends or gross sale proceeds paid to
shareholders who have failed to provide a correct tax identification number in
the manner required, who are subject to backup withholding by the Internal
Revenue Service for prior failure properly to include on their return payments
of taxable interest or dividends, or who have failed to certify to the Portfolio
that they are not subject to backup withholding when required to do so or that
they are "exempt recipients."
You should consult your tax adviser for further information regarding
federal, state and local tax consequences with respect to your specific
situation.
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<PAGE> 21
MANAGEMENT OF THE FUND
The Fund is managed under the direction of its Board of Directors. The
Statement of Additional Information contains the names of and general background
information concerning each director.
INVESTMENT ADVISER AND SUB-ADVISER
Mississippi Valley Advisors Inc. (the "Adviser") serves as the investment
adviser to the Portfolio. The Adviser's principal office is located at One
Mercantile Center, Seventh & Washington Streets, St. Louis, Missouri 63101. The
Adviser is an indirect wholly-owned subsidiary of Mercantile. As of December 31,
1997, the Adviser had approximately $9.4 billion
-15-
<PAGE> 22
in assets under investment management, including the Funds' assets, which were
approximately $3.9 billion.
Subject to the general supervision of the Fund's Board of Directors and in
accordance with the Fund's investment policies, the Adviser manages the
Portfolio, makes investment decisions with respect to and places orders for all
purchases and sales of the Portfolio's securities and other investments, and
directs the maintenance of the Portfolio's records relating to such purchases
and sales.
For the services provided and expenses assumed pursuant to the investment
advisory agreement, the Adviser is entitled to receive fees, computed daily and
payable monthly, at the annual rate of .40% of the first $1.5 billion of the
Portfolio's average daily net assets, .35% of the next $1.0 billion of net
assets and .25% of net assets in excess of $2.5 billion.
The Adviser may from time to time voluntarily reduce all or a portion of
its advisory fee to increase the net income of the Portfolio available for
distributions as dividends. The voluntary fee reduction will cause the return of
the Portfolio to be higher than it would otherwise be in the absence of such
reduction.
The Adviser has entered into a sub-advisory agreement with Conning Asset
Management Company ("Conning"). Pursuant to the terms of such sub-advisory
agreement, Conning has been retained by the Adviser to manage the investment and
reinvestment of the assets of the Portfolio, subject to the supervision of the
Adviser and to the direction and control of the Fund's Board of Directors.
Under this arrangement, Conning is responsible for the day-to-day
management of the Portfolio's assets. The Adviser reviews investment performance
policies and guidelines, maintains certain books and records, is responsible for
selecting and monitoring the performance of Conning, and for reporting the
activities of Conning in managing the Portfolio to the Fund's Board of
Directors.
Conning is registered as an investment adviser with the SEC and is an
indirect subsidiary of GenAmerica Corporation, [a financial services holding
company]. Conning's principal office is located at 700 Market St, St. Louis, MO
63101. Conning, founded in 1912, has extensive experience in investment
management and as of December 31, 1997 had approximately $26 billion in assets
under management.
For the services provided and expenses assumed pursuant to its
sub-advisory agreement with the Adviser, Conning receives from the Adviser a
fee, computed daily and payable monthly, at the annual rate of .30% of the first
$1.5 billion of the Portfolio's average daily net assets, .25% of the next $1.0
billion of net assets and .15% of net assets in excess of $2.5 billion.
ADMINISTRATOR
BISYS Fund Services Ohio, Inc., located at 3435 Stelzer Road, Columbus,
Ohio 43219, acts as the Portfolio's Administrator.
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<PAGE> 23
The Administrator generally assists in all aspects of the Portfolio's
administration and operation. For its services, the Administrator is entitled to
receive a fee, computed daily and payable monthly, at the annual rate of .20% of
the Portfolio's average daily net assets. From time to time, the Administrator
may voluntarily waive all or a portion of the administration fees otherwise
payable by the Portfolio in order to increase the net income available for
distribution to shareholders.
DISTRIBUTOR
Shares in the Portfolio are sold continuously by the Distributor, BISYS
Fund Services, an affiliate of the Administrator. The Distributor also monitors
the Fund's arrangements under the Distribution and Services Plan described
below. The Distributor is a registered broker-dealer with principal offices at
3435 Stelzer Road, Columbus, Ohio 43219.
SHAREHOLDER SERVICES PLAN
The Fund has adopted a Shareholder Services Plan with respect to the
Portfolio (the "Plan"). Under the Plan, the Portfolio may pay (a) Service
Organizations for shareholder liaison services, which means personal services
for shareholders and/or the maintenance of shareholder accounts, such as
responding to customer inquiries and providing information on accounts, and (b)
Service Organizations for administrative support services, which include but are
not limited to (i) transfer agent and sub-transfer agent services for beneficial
owners of Shares of the Portfolio; (ii) aggregating and processing purchase and
redemption orders; (iii) providing beneficial owners with statements showing
their positions in Shares of the Portfolio; (iv) processing dividend payments;
(v) providing sub-accounting services for Shares of the Portfolio held
beneficially; (vi) forwarding shareholder communications, such as proxies,
shareholder reports, dividend and tax notices, and updating prospectuses to
beneficial owners; and (vii) receiving, translating and transmitting proxies
executed by beneficial owners. See "Management of the Fund -- Service
Organizations" below for a description of the servicing agreements.
Under the Plan, payments by the Fund (i) to a Service Organization for
shareholder liaison services and/or administrative support services may not
exceed the annual rates of .25% and .50%, respectively, of the average daily net
assets attributable to the Portfolio's outstanding Shares which are owned of
record or beneficially by that Service Organization's customers for whom the
Service Organization is the dealer of record or shareholder of record or with
whom it has a servicing relationship. As of the date of this Prospectus, the
Fund intends to limit the Portfolio's payments for shareholder liaison and
administrative support services under the Plan to an aggregate fee of not more
than .45% (on an annualized basis) of the average daily net asset value of
Shares owned of record or beneficially by customers of Service Organizations.
SERVICE ORGANIZATIONS
The servicing agreements adopted under the Plan (the "Servicing
Agreements") require the Service Organizations receiving such compensation
(which may include affiliates of the Adviser and Sub-Adviser) to perform certain
services, including providing shareholder liaison
-17-
<PAGE> 24
services and/or administrative support services with respect to the beneficial
owners of Shares of the Portfolio, such as those described above.
Under the Servicing Agreements and upon notice to the Fund, a Service
Organization may subcontract with one or more entities for the performance of
certain services provided under its Servicing Agreement with the Fund. Such
Service Organization shall be as fully responsible to the Fund for the acts or
omissions of any subcontractor as it would be for its own acts or omissions. The
fees payable to any sub-contractor are paid by the Service Organization out of
the fees it receives from the Fund.
The Fund understands that Service Organizations providing such services
may also charge fees to their customers beneficially owning such Shares. These
fees would be in addition to any amounts which may be received by such a Service
Organization under its Servicing Agreement with the Fund. The Fund's Servicing
Agreements require a Service Organization to disclose to its customers any
compensation payable to the Service Organization by the Portfolio and any other
compensation payable by its customers in connection with their investment in
such Shares. Customers of such a Service Organization receiving servicing fees
should read this Prospectus in light of the terms governing their accounts with
their Service Organization.
CUSTODIAN AND TRANSFER AGENT
Mercantile Bank National Association, an affiliate of the Fund and a
wholly-owned subsidiary of Mercantile, with principal offices located at One
Mercantile Center, 8th and Locust Streets, St. Louis, Missouri 63101, serves as
Custodian of the Portfolio's assets. BISYS Fund Services Ohio, Inc. also serves
as the Fund's transfer agent and dividend disbursing agent. Its address is 3435
Stelzer Road, Columbus, Ohio 43219.
EXPENSES
Except as noted above and in the Statement of Additional Information under
"Investment Advisory and Administrative Contracts" and "Custodian and Transfer
Agent," the Fund's service contractors bear all expenses in connection with the
performance of their services. Expenses are deducted from the total income of
the Portfolio before dividends and distributions are paid. These expenses
include, but are not limited to, fees paid to the Adviser and Administrator,
transfer agency fees, fees and expenses of officers and directors who are not
affiliated with the Adviser or the Distributor, taxes, interest, legal fees,
custodian fees, auditing fees, shareholder servicing fees, certain fees and
expenses in registering and qualifying the Portfolio and its Shares for
distribution under federal and state securities laws, costs of preparing and
printing prospectuses and statements of additional information for regulatory
purposes and for distribution to existing shareholders, the expense of reports
to shareholders, shareholders' meetings and proxy solicitations, fidelity bond
and directors and officers liability insurance premiums, the expense of using
independent pricing services and other expenses which are not expressly assumed
by the Adviser, Distributor or Administrator under their respective agreements
with the Fund. The Fund also pays for brokerage fees, commissions and other
transaction charges, if any, in connection with the purchase and sale of
portfolio securities. Any general expenses of the Fund that are not readily
identifiable as belonging to a particular
-18-
<PAGE> 25
portfolio will be allocated among all portfolios by or under the direction of
the Board of Directors in a manner the Board determines to be fair and
equitable. See "Expense Summary" and "Management of the Fund" above for
additional information regarding expenses of each Portfolio.
OTHER INFORMATION CONCERNING
THE FUND AND ITS SHARES
DESCRIPTION OF SHARES
The Fund was organized on September 9, 1982 as a Maryland corporation, and
is a mutual fund of the type known as an "open-end management investment
company." The Fund's principal office is located at 3435 Stelzer Road, Columbus,
Ohio 43219.
The Fund's Charter authorizes the Board of Directors to issue up to twenty
billion full and fractional Shares of common stock, and to classify and
reclassify any unauthorized and unissued Shares into one or more classes of
Shares. The Board of Directors may similarly classify or reclassify any class of
Shares into one or more series. Pursuant to such authority, the Board of
Directors has authorized the issuance of the following series of shares
representing interests in the Portfolio, which is classified as a diversified
company under the 1940 Act: 2 billion Shares, representing interests in the
Conning Money Market Portfolio. Shares in the Portfolio will be issued without
Share certificates.
Shareholders are entitled to one vote for each full Share held and
proportionate fractional votes for fractional Shares held. Shares of all
portfolios will vote together and not by class unless otherwise required by law
or permitted by the Board of Directors. All shareholders of a particular
portfolio will vote together as a single class on matters relating to the
portfolio's investment advisory (or sub-advisory) agreement, distribution plan,
investment objective, if fundamental, and fundamental policies.
The Fund is not required, and currently does not intend, to hold annual
meetings except as required by the 1940 Act or other applicable law. Upon the
written request of the holders of 10% or more of the outstanding Shares, the
Fund will call a special meeting to vote on the question of removal of a
director.
Shares of the Fund's portfolios have noncumulative voting rights and,
accordingly, the holders of more than 50% of the Fund's outstanding Shares
(irrespective of portfolio or class) may elect all of the Directors. Shares have
no preemptive rights and only such conversion and exchange rights as the Board
may grant in its discretion. When issued for payment as described in this
Prospectus, Shares will be fully paid and nonassessable.
MISCELLANEOUS
As used in this Prospectus, a "vote of a majority of the outstanding
Shares" of the Portfolio means, with respect to the approval of an investment
advisory or sub-advisory agreement or a change in a fundamental investment
policy, the affirmative vote of the lesser of
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<PAGE> 26
(a) more than 50% of the outstanding Shares of the Portfolio, or (b) 67% or more
of the Shares of the Portfolio present at a meeting if more than 50% of the
outstanding Shares of the Portfolio are represented at the meeting in person or
by proxy.
As of ______, 1998, Mercantile Bank National Association and its
affiliates possessed, of record on behalf of their underlying customer accounts,
voting or investment power with respect to more than 25% of the Fund's
outstanding Shares. Therefore, Mercantile Bank National Association may be
deemed to be a controlling person of the Fund within the meaning of the 1940
Act.
Inquiries regarding the Fund and the Portfolio may be directed to your
broker-dealer or financial organization.
YEAR 2000 RISKS. Like other investment companies, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers do not properly process and calculate date-related information
and data from and after January 1, 2000. This is commonly known as the "Year
2000 Problem." The Adviser is taking steps to address the Year 2000 Problem with
respect to the computer systems that it uses and to obtain assurance that
comparable steps are being taken by the Fund's other major service providers. At
this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund as a result of the Year 2000
Problem.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE PORTFOLIO'S
STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE PORTFOLIO, THE FUND, OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE PORTFOLIO, THE FUND OR THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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<PAGE> 27
CONNING MONEY MARKET PORTFOLIO
OF
THE ARCH FUND(R), INC.
[OLD LOGO]
PROSPECTUS
______________, 1998
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<PAGE> 28
CROSS REFERENCE SHEET
The Conning Money Market Portfolio
<TABLE>
<CAPTION>
Heading in Statement of
Form N-1A Part B Item Additional Information
- --------------------- -----------------------
<S> <C>
10. Cover Page............................................................ Cover Page
11. Table of Contents..................................................... Table of Contents
12. General Information and History....................................... The Fund
13. Investment Objective and Policies..................................... Investment
Objective and Policies
14. Management of the Fund................................................ Management of the Fund
15. Control Persons and Principal......................................... Miscellaneous
Holders of Securities
16. Investment Advisory and Other......................................... Management of the Fund;
Services Independent Auditors;
Counsel
17. Brokerage Allocation and Other........................................ Investment Objective
Practices and Policies
18. Capital Stock and Other............................................... Description of Shares
Securities
19. Purchase, Redemption and Pricing...................................... Net Asset Value;
of Securities Being Offered Additional Purchase and
Redemption Information
20. Tax Status............................................................ Additional Information
Concerning Taxes
21. Underwriters.......................................................... Management of the Fund
22. Calculation of Performance Data....................................... Additional Yield and
Total Return
Information; Net Asset
Value
23. Financial Statements.................................................. Inapplicable
</TABLE>
<PAGE> 29
THE CONNING MONEY MARKET PORTFOLIO
OF
THE ARCH FUND(R), INC.
Statement of Additional Information
Part B
______________________, 1998
<PAGE> 30
Statement of Additional Information
for
The Conning Money Market Portfolio
of
The ARCH Fund(R), Inc.
___________________, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
THE FUND ........................................................................................................2
INVESTMENT OBJECTIVE AND POLICIES................................................................................2
NET ASSET VALUE.................................................................................................10
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION..................................................................11
ADDITIONAL YIELD INFORMATION....................................................................................12
DESCRIPTION OF SHARES...........................................................................................13
ADDITIONAL INFORMATION CONCERNING TAXES.........................................................................15
MANAGEMENT OF THE FUND..........................................................................................17
INDEPENDENT AUDITORS............................................................................................23
COUNSEL ........................................................................................................23
MISCELLANEOUS...................................................................................................23
APPENDIX A.......................................................................................................1
</TABLE>
This Statement of Additional Information, which provides supplemental
information applicable to the Conning Money Market Portfolio of The ARCH Fund,
Inc., is not a prospectus. It should be read only in conjunction with such
Portfolio's Prospectus dated ___________, 1998 and is incorporated by reference
in its entirety into the Prospectus. No investment in Shares of such Portfolio
should be made without reading the Prospectus. A copy of the Prospectus may be
obtained by writing The ARCH Fund, Inc. at 3435 Stelzer Road, Columbus, Ohio
43219 or by contacting your broker-dealer or financial organization. Capitalized
terms used but not defined herein have the same meanings as in the Prospectus.
- i -
<PAGE> 31
THE FUND
This Statement of Additional Information relates to the
Conning Money Market Portfolio (the "Portfolio") of The ARCH Fund, Inc. (the
"Fund"), an open-end, management investment company. The Fund was organized on
September 9, 1982 as a Maryland corporation.
INVESTMENT OBJECTIVE AND POLICIES
The Sub-Adviser, under the supervision of the Adviser, makes
investment decisions with respect to the Portfolio in accordance with the SEC's
rules and regulations for money market funds.
The following policies supplement the description of the
investment objective and policies of the Portfolio described in the Prospectus.
COMMERCIAL PAPER, BANKERS' ACCEPTANCES, CERTIFICATES OF
DEPOSIT AND TIME DEPOSITS. Commercial paper represents short-term unsecured
promissory notes issued in bearer form by banks or bank holding companies,
corporations and finance companies. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank for a definite
period of time and earning a specified return. Bankers' acceptances are
negotiable drafts or bills of exchange, normally drawn by an importer or
exporter to pay for specific merchandise, which are "accepted" by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value
of the instrument on maturity. Fixed time deposits are bank obligations payable
at a stated maturity date and bearing interest at a fixed rate. Fixed time
deposits may be withdrawn on demand by the investor but may be subject to early
withdrawal penalties that vary depending upon market conditions and the
remaining maturity of the obligation. There are no contractual restrictions on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits.
As stated in the Prospectus, the Portfolio may invest a
portion of its assets in the obligations of foreign banks and foreign branches
of domestic banks. Such obligations may include Eurodollar Certificates of
Deposit ("ECDs") which are U.S. dollar-denominated certificates of deposit
issued by offices of foreign and domestic banks located outside the United
States; Eurodollar Time Deposits ("ETDs") which are U.S. dollar-denominated
deposits in a foreign branch of a U.S. bank or a foreign bank; Canadian Time
Deposits ("CTDs") which are essentially the same as ETDs except they are issued
by Canadian offices of major Canadian banks; Schedule Bs, which are obligations
issued by Canadian branches of foreign or domestic banks; Yankee Certificates of
Deposit ("Yankee CDs") which are U.S. dollar-denominated certificates of deposit
issued by a U.S. branch of a foreign bank and held in the United States; and
Yankee Bankers' Acceptances ("Yankee BAs") which are U.S. dollar-denominated
bankers' acceptances issued by a U.S. branch of a foreign bank and held in the
United States.
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OTHER APPLICABLE INVESTMENT POLICIES
MUNICIPAL OBLIGATIONS. As described in the Prospectus and
subject to its investment limitations, the Portfolio may invest in municipal
obligations. Municipal obligations include debt obligations issued by
governmental entities which obtain funds for various public purposes, including
the construction of a wide range of public facilities, the refunding of
outstanding obligations, the payment of general operating expenses and the
extension of loans to public institutions and facilities.
The two principal classifications of municipal obligations
consist of "general obligation" and "revenue" issues. There are, of course,
variations in the quality of municipal obligations both within a particular
classification and between classifications, and the yields on municipal
obligations depend upon a variety of factors, including general conditions of
the money market and/or the municipal bond market, the financial condition of
the issuer, the size of a particular offering, the maturity of the obligation
and the rating of the issue. The ratings of Rating Agencies, such as Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Group ("S&P"),
represent their opinions as to the quality of municipal obligations. It should
be emphasized, however, that ratings are general and are not absolute standards
of quality, and municipal obligations with the same maturity, interest rate and
rating may have different yields while municipal obligations of the same
maturity and interest rate with different ratings may have the same yield.
The payment of principal and interest on most municipal
securities purchased by the Portfolio will depend upon the ability of the
issuers to meet their obligations. An issuer's obligations under its municipal
obligations are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the federal
bankruptcy code, and laws, if any, which may be enacted by federal or state
legislatures extending the time for payment of principal or interest, or both,
or imposing other constraints upon enforcement of such obligations or upon the
ability of municipalities to levy taxes. The power or ability of an issuer to
meet its obligations for the payment of interest on and principal of its
municipal obligations may be materially adversely affected by litigation or
other conditions. The District of Columbia, each state, each of their political
subdivisions, agencies, instrumentalities and authorities and each multi-state
agency of which a state is a member is a separate "issuer" as that term is used
in this Statement of Additional Information and the Prospectus. The
non-governmental user of facilities financed by private activity bonds is also
considered to be an "issuer."
The Portfolio may also purchase general obligation notes, tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
tax-exempt commercial paper, construction loan notes and other tax-exempt loans.
Such instruments are issued in anticipation of the receipt of tax funds, the
proceeds of bond, placements, or other revenues.
Certain types of municipal obligations (private activity
bonds) have been or are issued to obtain funds to provide, among other things,
privately operated housing facilities, pollution control facilities, convention
or trade show facilities, mass transit, airport, port or
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parking facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal. Private activity bonds are also
issued to privately held or publicly owned corporations in the financing of
commercial or industrial facilities. State and local governments are authorized
in most states to issue private activity bonds for such purposes in order to
encourage corporations to locate within their communities. The principal and
interest on these obligations may be payable from the general revenues of the
users of such facilities. Furthermore, payment of principal and interest on
municipal obligations of certain projects may be secured by mortgages or deeds
of trust. In the event of a default, enforcement of the mortgages or deeds of
trust will be subject to statutory enforcement procedures and limitations,
including rights of redemption and limitations on obtaining deficiency
judgments. In the event of a foreclosure, collection of the proceeds of the
foreclosure may be delayed, and the amount of proceeds from the foreclosure may
not be sufficient to pay the principal of and accrued interest on the defaulted
municipal obligations.
Dividends paid by the Portfolio that are derived from interest
on municipal obligations would be taxable to its shareholders for federal income
tax purposes.
VARIABLE AND FLOATING RATE INSTRUMENTS. The Portfolio may
purchase variable and floating rate obligations as described in the Prospectus.
The Sub-Adviser will consider the earning power, cash flows and other liquidity
ratios of the issuers and guarantors of such obligations and, for obligations
subject to a demand feature, will monitor their financial status to meet payment
on demand. The Portfolio will invest in such instruments only when the
Sub-Adviser believes that any risk of loss due to issuer default is minimal. In
determining average weighted portfolio maturity, a variable or floating rate
instrument issued or guaranteed by the U.S. Government, its agencies and
instrumentalities, or a variable or floating rate instrument scheduled on its
face to be paid in 397 days or less, will be deemed to have a maturity equal to
the period remaining until the obligation's next interest rate adjustment. Other
variable or floating rate notes will be deemed to have a maturity equal to the
longer of the period remaining to the next interest rate adjustment or the time
the Portfolio can recover payment of principal as specified in the instrument.
Variable or floating rate obligations held by the Portfolio
may have maturities of more than 397 days provided that: (i) the Portfolio is
entitled to payment of principal at any time upon not more than 30 days' notice
or at specified intervals not exceeding 397 days (upon not more than 30 days'
notice); (ii) the rate of interest on a variable rate instrument is adjusted
automatically on set dates not exceeding 397 days, and the instrument, upon
adjustment, can reasonably be expected to have a market value that approximates
its par value; and (iii) the rate of interest on a floating rate instrument is
adjusted automatically whenever a specified interest rate changes and the
instrument, at any time, can reasonably be expected to have a market value that
approximates its par value.
RESTRICTED SECURITIES. The SEC has adopted Rule 144A which
allows for a broader institutional trading market for securities otherwise
subject to restrictions on resale to the general public. The Portfolio will not
invest more than 10% of its total assets in the securities of
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issuers which are restricted as to disposition, other than restricted securities
eligible for resale pursuant to Rule 144A.
The Sub-Adviser monitors the liquidity of restricted
securities in the Portfolio under the supervision of the Board of Directors. In
reaching liquidity decisions, the Sub-Adviser may consider the following
factors, although such factors may not necessarily be determinative: (1) the
unregistered nature of a security; (2) the frequency of trades and quotes for
the security; (3) the number of dealers willing to purchase or sell the security
and the number of other potential purchasers; (4) the trading markets for the
security; (5) dealer undertakings to make a market in the security; and (6) the
nature of the security and the nature of the marketplace trades (including the
time needed to dispose of the security, methods of soliciting offers, and
mechanics of transfer).
U.S. GOVERNMENT OBLIGATIONS. Examples of the types of U.S.
Government obligations that may be held by the Portfolio include, in addition to
U.S. Treasury bills, the obligations of Federal Home Loan Banks, Federal Farm
Credit Banks, Federal Land Banks, the Federal Housing Administration, Farmers
Home Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Maritime Administration,
Resolution Trust Corporation, and International Bank for Reconstruction and
Development.
Obligations of certain agencies and instrumentalities of the
U.S. Government, such as the Government National Mortgage Association, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Export-Import Bank of the United States, are supported by the right
of the issuer to borrow from the Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; still others, such as
those of the Federal Home Loan Mortgage Corporation, are supported only by the
credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law.
STRIPPED U.S. GOVERNMENT OBLIGATIONS. As described in the
Prospectus, the Portfolio may hold stripped U.S. Treasury securities, including
(1) coupons that have been stripped from U.S. Treasury bonds, which are held
through the Federal Reserve Bank's book-entry system called "Separate Trading of
Registered Interest and Principal of Securities" ("STRIPS") or (2) through a
program entitled "Coupon Under Book-Entry Safekeeping" ("CUBES"). Having
separated the interest coupons from the underlying principal of the U.S.
Government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRS") and "Certificates of Accrual on Treasury
Securities" ("CATS"). Such securities may not be as liquid as STRIPS and CUBES
and are not viewed by the staff of the SEC as U.S. Government securities for
purposes of the 1940 Act.
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The stripped coupons are sold separately from the underlying
principal, which is sold at a deep discount because the buyer receives only the
right to receive a future fixed payment on the security and does not receive any
rights to periodic interest (cash) payments. Purchasers of stripped
principal-only securities acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury
Department sells itself. In the case of bearer securities (i.e., unregistered
securities which are owned ostensibly by the bearer or holder), the underlying
U.S. Treasury bonds and notes themselves are held in trust on behalf of the
owners. Counsel to the underwriters of these certificates or other evidences of
ownership of the U.S. Treasury securities have stated that, in their opinion,
purchasers of the stripped securities, such as the Portfolio, most likely will
be deemed the beneficial holders of the underlying U.S. Government obligations
for federal tax and securities law purposes.
The U.S. Government does not issue stripped Treasury
securities directly. The STRIPS program, which is ongoing, is designed to
facilitate the secondary market in the stripping of selected U.S. Treasury notes
and bonds into separate interest and principal components. Under the program,
the U.S. Treasury continues to sell its notes and bonds through its customary
auction process. A purchaser of those specified notes and bonds who has access
to a book-entry account at a Federal Reserve bank, however, may separate the
Treasury notes and bonds into interest and principal components. The selected
Treasury securities thereafter may be maintained in the book-entry system
operated by the Federal Reserve in a manner that permits the separate trading
and ownership of the interest and principal payments.
For custodial receipts, the underlying debt obligations are
held separate from the general assets of the custodian and nominal holder of
such securities, and are not subject to any right, charge, security interest,
lien or claim of any kind in favor of or against the custodian or any person
claiming through the custodian. The custodian is also responsible for applying
all payments received on those underlying debt obligations to the related
receipts or certificates without making any deductions other than applicable tax
withholding. The custodian is required to maintain insurance for the protection
of holders of receipts or certificates in customary amounts against losses
resulting from the custody arrangement due to dishonest or fraudulent action by
the custodian's employees. The holders of receipts or certificates, as the real
parties in interest, are entitled to the rights and privileges of the underlying
debt obligations, including the right, in the event of default in payment of
principal or interest, to proceed individually against the issuer without acting
in concert with other holders of those receipts or certificates or the
custodian.
SECURITIES LENDING. As described in the Prospectus, the
Portfolio may lend its portfolio securities to broker-dealers, banks or
institutional borrowers. While the Portfolio would not have the right to vote
securities on loan, the Portfolio intends to terminate the loan and regain the
right to vote should this be considered important with respect to the
investment. When the Portfolio lends its securities, it continues to receive
interest or dividends on the securities loaned and may simultaneously earn
interest on the investment of the cash collateral which will be invested in
readily marketable, high quality, short-term obligations. Although voting
rights, or rights to consent, attendant to securities on loan pass to the
borrower, such loans may be called
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at any time and will be called so that the securities may be voted by the
Portfolio if a material event affecting the investment is to occur.
Securities lending arrangements with broker-dealers require
that the loans be secured by the collateral equal in value to at least the
market value of the securities loaned. During the term of such arrangements, the
Portfolio will maintain such value by the daily marking-to-market of the
collateral.
SECURITIES OF OTHER INVESTMENT COMPANIES. As described in the
Prospectus, the Portfolio intends to limit investments in securities issued by
other investment companies within the limits prescribed by the 1940 Act. The
Portfolio currently intends to limit its investments so that, as determined
immediately after a securities purchase is made: (a) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
(c) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Portfolio; and (d) not more than 10% of the
outstanding voting stock of any one investment company will be owned in the
aggregate by the Portfolio and other investment companies advised by the Adviser
or Sub-Adviser.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. When-issued and
forward commitment transactions are made to secure what is considered to be an
advantageous price or yield for the Portfolio. When the Portfolio agrees to
purchase or sell securities on a when-issued or forward commitment basis, the
Custodian (or sub-custodian) will maintain in a segregated account cash or
liquid portfolio securities having a value (determined daily) at least equal to
the amount of the Portfolio's commitments. In the case of a forward commitment
to sell portfolio securities, the Custodian (or sub-custodian) will hold the
portfolio securities themselves in a segregated account while the commitment is
outstanding. These procedures are designed to ensure that the Portfolio will
maintain sufficient assets at all times to cover its obligations under
when-issued purchases and forward commitment transactions.
The Portfolio will make commitments to purchase securities on
a when-issued basis or to purchase or sell securities on a forward commitment
basis only with the intention of completing the transaction and actually
purchasing or selling the securities. If deemed advisable as a matter of
investment strategy, however, the Portfolio may dispose of or renegotiate a
commitment after it is entered into and may sell securities it has committed to
purchase before those securities are delivered to the Portfolio on the
settlement date. In these cases, the Portfolio may realize a capital gain or
loss.
When the Portfolio engages in when-issued and forward
commitment transactions, it relies on the other party to consummate the trade.
Failure of such party to do so may result in the Portfolio's incurring a loss or
missing an opportunity to obtain a price considered to be advantageous.
The value of the securities underlying such commitments to
purchase or sell securities, and any subsequent fluctuations in their value, is
taken into account when determining
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the Portfolio's net asset value starting on the day the Portfolio agrees to
purchase the securities. The Portfolio does not earn interest on the securities
it has committed to purchase until they are paid for and delivered on the
settlement date. When the Portfolio makes a forward commitment to sell
securities it owns, the proceeds to be received upon settlement are included in
the Portfolio's assets, and fluctuations in the value of the underlying
securities are not reflected in the Portfolio's net asset value as long as the
commitment remains in effect.
Because the Portfolio will set aside cash or liquid assets to
satisfy its purchase commitments in the manner described, the Portfolio's
liquidity and ability to manage its portfolio might be affected in the event its
commitments to purchase securities on a when-issued or forward commitment basis
ever exceeded 25% of the value of its total assets.
REPURCHASE AGREEMENTS. Under the terms of a repurchase
agreement, the Portfolio purchases securities from financial institutions such
as banks and broker-dealers that are deemed to be creditworthy by the
Sub-Adviser under guidelines approved by the Board of Directors, subject to the
seller's agreement to repurchase them at a mutually agreed-upon date and price.
Securities subject to repurchase agreements are held by the Portfolio's
Custodian or in the Federal Reserve/Treasury book-entry system. During the term
of any repurchase agreement, the Sub-Adviser will continue to monitor the
creditworthiness of the seller. The repurchase price generally equals 102% of
the price paid by the Portfolio plus interest negotiated on the basis of current
short-term rates (which may be more or less than the rate on the underlying
portfolio securities). Under a repurchase agreement, the seller is required to
maintain the value of the securities subject to the agreement at not less than
the repurchase price, and securities subject to repurchase agreements are
maintained by the Portfolio's Custodian in segregated accounts in accordance
with the 1940 Act. Default by the seller could, however, expose the Portfolio to
possible loss because of adverse market action or delay in connection with the
disposition of the underlying securities. Repurchase agreements are considered
to be loans by the Portfolio under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. As described in the Prospectus,
the Portfolio may enter into reverse repurchase agreements. At the time the
Portfolio enters into such an arrangement, it will place, in a segregated
custodial account, liquid assets having a value at least equal to the repurchase
price (including accrued interest) and will subsequently monitor the account to
ensure that such equivalent value is maintained.
Reverse repurchase agreements involve the risk that the market
value of the securities sold by the Portfolio may decline below the price of the
securities that it is obligated to repurchase. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act. The Portfolio intends to limit
its borrowings (including reverse repurchase agreements) during the current
fiscal year to not more than 5% of its net assets.
PORTFOLIO TRANSACTIONS
Subject to the general control of the Fund's Board of
Directors and under the supervision of the Adviser, the Sub-Adviser is
responsible for making decisions with respect to,
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and placing orders for, all purchases and sales of portfolio securities for the
Portfolio. Securities purchased and sold by the Portfolio which are traded in
the over-the-counter market are generally done so on a net basis (i.e., without
commission) through dealers, or otherwise involve transactions directly with the
issuer of an instrument. There is generally no stated commission in the case of
securities traded in the over-the-counter markets, but the price of those
securities includes an undisclosed commission or mark-up. The cost of securities
purchased from underwriters includes an underwriter's commission or concession,
and the prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down.
The Portfolio may participate, if and when practicable, in
bidding for the purchase of portfolio securities directly from an issuer in
order to take advantage of the lower purchase price available to members of a
bidding group. The Portfolio will engage in this practice, however, only when
the Sub- Adviser, in its sole discretion, believes such practice to be otherwise
in the Portfolio's interests.
Investment decisions for the Portfolio are made independently
from those for other investment companies and accounts advised or managed by the
Sub-Adviser. Such other investment companies and accounts may also invest in the
same securities as the Portfolio. When a purchase or sale of the same security
is made at substantially the same time on behalf of the Portfolio and another
investment company or account, the transaction will be averaged as to price, and
available investments allocated as to amount, in a manner which the Sub-Adviser
believes to be equitable to the Portfolio and such other investment company or
account. In some instances, this investment procedure may adversely affect the
price paid or received by the Portfolio or the size of the position obtained by
the Portfolio. To the extent permitted by law, Sub-Adviser may aggregate the
securities to be sold or purchased for the Portfolio with those to be sold or
purchased for other investment companies or accounts in order to obtain best
execution.
PORTFOLIO TURNOVER
The Portfolio's annual portfolio turnover rate is calculated
by dividing the lesser of purchases or sales of portfolio securities for the
year by the monthly average value of the Portfolio's securities. The calculation
excludes all securities the maturities of which at the time of acquisition were
thirteen months or less. Consequently, because the Portfolio is a money market
fund, there is not expected to be any portfolio turnover for the Portfolio for
regulatory reporting purposes.
INVESTMENT LIMITATIONS
The following investment limitations may be changed only by an
affirmative vote of a majority of the outstanding shares of the Portfolio (as
defined under "Other Information Concerning the Fund and Its Shares --
Miscellaneous" in the Portfolio's Prospectus). These investment limitations
supplement those that appear in the Prospectus.
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THE PORTFOLIO MAY NOT:
1. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization or
acquisition of assets, or where otherwise permitted by the 1940 Act.
2. Purchase securities of any one issuer, other than
obligations of the U.S. Government, its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of the Portfolio's
total assets would be invested in such issuer, except that up to 25% of the
value of the Portfolio's total assets may be invested without regard to such 5%
limitation.
3. Purchase or sell real estate (the Portfolio may purchase
commercial paper issued by companies which invest in real estate or interests
therein).
4. Purchase securities on margin, make short sales of
securities or maintain a short position.
5. Underwrite the securities of other issuers.
6. Purchase or sell commodity contracts, or invest in oil, gas
or mineral exploration or development programs.
7. Write or purchase put or call options.
In accordance with Rule 2a-7 of the 1940 Act, the Portfolio
intends to invest no more than five percent of its total assets in the
securities of any one issuer; provided, however, that the Portfolio may invest
more than five percent of its total assets in the First Tier Eligible Securities
of a single issuer for a period of up to three business days after the purchase
thereof, provided further that the Portfolio would not make more than one
investment in accordance with the foregoing provision at any time. This
intention is not, however, a fundamental policy of the Portfolio and may change
in the event Rule 2a-7 is amended in the future.
NET ASSET VALUE
As stated in the Prospectus, the net asset value per share of
the Portfolio is calculated by adding the value of all of the portfolio
securities and other assets belonging to the Portfolio, subtracting the
liabilities of the Portfolio, and dividing the result by the number of
outstanding shares of the Portfolio.
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The assets in the Portfolio are valued according to the
amortized cost method of valuation. Pursuant to this method, an instrument is
valued at its cost initially and, thereafter, a constant amortization to
maturity of any discount or premium is assumed, regardless of the impact of
fluctuating interest rates on the market value of the instrument. This method
may result in periods during which value, as determined by amortized cost, is
higher or lower than the market price the Portfolio would receive if it sold the
instrument. The value of securities in the Portfolio can be expected to vary
inversely with changes in prevailing interest rates.
The Portfolio invests only in instruments that present minimal
credit risks and meet the ratings criteria described in the Prospectus. In
addition, the Portfolio maintains a dollar-weighted average portfolio maturity
appropriate to its objective of maintaining a stable net asset value per share,
provided that the Portfolio will not purchase any security with a remaining
maturity of more than thirteen months (397 days) (securities subject to
repurchase agreements and certain other securities may bear longer maturities)
nor maintain a dollar-weighted average portfolio maturity that exceeds 90 days.
The Fund's Board of Directors has approved procedures that are intended to
stabilize the Portfolio's net asset value per share at $1.00 for purposes of
pricing sales and redemptions. These procedures include the determination, at
such intervals as the Board deems appropriate, of the extent, if any, to which
the net asset value per share of the Portfolio calculated by using available
market quotations deviates from $1.00 per share. In the event such deviation
exceeds one-half of one percent, the Board will promptly consider what action,
if any, should be initiated. If the Board believes that the extent of any
deviation from the Portfolio's $1.00 amortized cost price per share may result
in material dilution or other unfair results to new or existing investors, it
will take such steps as it considers appropriate to eliminate or reduce to the
extent reasonably practicable any such dilution or unfair results. These steps
may include, but are not limited to, selling portfolio instruments prior to
maturity; shortening the average portfolio maturity; withholding or reducing
dividends; redeeming shares in kind; or utilizing a net asset value per share
determined by using available market quotations.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares in the Portfolio are sold on a continuous basis by the
Distributor. As described in the Prospectus, Shares of the Portfolio are sold to
customers of broker-dealers and other financial advisers at the public offering
price based on the Portfolio's net asset value without a sales charge.
The Fund may redeem Shares involuntarily if the net income
with respect to the Portfolio is negative or such redemption otherwise appears
appropriate in light of the Fund's responsibilities under the 1940 Act.
Under the 1940 Act, the Portfolio may suspend the right of
redemption or postpone the date of payment for Shares during any period when (a)
trading on the Exchange is restricted by applicable rules and regulations of the
SEC; (b) the Exchange is closed for other than customary weekend and holiday
closing; (c) the SEC has by order permitted such suspension; or (d) an emergency
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exists as determined by the SEC. The Portfolio may also suspend or postpone the
recordation of the transfer of its Shares upon the occurrence of any of the
foregoing conditions.
In addition to the situations described in the Prospectus
under "How to Purchase and Redeem Shares," the Portfolio may redeem Shares
involuntarily to reimburse the Portfolio for any loss sustained by reason of the
failure of a shareholder to make full payment for Shares purchased by the
shareholder or to collect any charge relating to a transaction effected for the
benefit of a shareholder which is applicable to Portfolio Shares as provided in
the Prospectus from time to time.
ADDITIONAL YIELD INFORMATION
The Portfolio's "yield" and "effective yield," as described in
the Prospectus, are calculated according to formulas prescribed by the SEC.
Standardized 7 day "yield" is computed by determining the net change, exclusive
of capital changes, in the value of a hypothetical preexisting account in the
Portfolio having a balance of one Share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, dividing the difference by the value of the account at the beginning
of the base period to obtain the base period return, and then multiplying the
base period return by (365/7). The net change in the value of an account
includes the value of additional Shares purchased with dividends from the
original Share, and dividends declared on both the original Share and any such
additional Shares, net of all fees, other than nonrecurring account or sales
charges, that are charged by the Portfolio to all shareholder accounts in
proportion to the length of the base period and the Portfolio's mean (or median)
account size. The capital changes to be excluded from the calculation of the net
change in account value are realized gains and losses from the sale of
securities and unrealized appreciation and depreciation. "Effective yield" is
computed by compounding the unannualized base period return (calculated as
above) by adding one to the base period return, raising the sum to a power equal
to 365 divided by seven, and subtracting one from the result. Based upon the
same calculations, the Portfolio's 30-day yields and 30-day effective yields may
also be quoted.
The Portfolio's quoted yield is not indicative of future
yields and depends upon factors such as portfolio maturity, the Portfolio's
expenses, and the types of instruments held by the Portfolio. Any account fees
imposed by financial institutions, Service Organizations, or broker-dealers
would reduce the Portfolio's effective yield.
Investors may judge the performance of the Portfolio by
comparing it to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies. Such comparisons may be made
by referring to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds. Such
comparisons may also be made by referring to data prepared by Lipper Analytical
Services, Inc. (a widely recognized independent service which monitors the
performance of mutual funds), Indata, Frank
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Russell, CDA, and the Bank Rate Monitor (which reports average yields for money
market accounts offered by the 50 leading banks and thrift institutions in the
top five standard metropolitan statistical areas). Other similar yield data,
including comparisons to the performance of Mercantile Bank repurchase
agreements, or the average yield data for similar asset classes including but
not limited to Treasury bills, notes and bonds, may also be used for comparison
purposes. Comparisons may also be made to indices or data published in the
following national financial publications: IBC's Money Fund Report(R),
MorningStar, CDA/Wiesenberger, Money Magazine, Forbes, Fortune, Barron's, The
Wall Street Journal, The New York Times, Business Week, American Banker,
Fortune, Institutional Investor, U.S.A. Today and publications of Ibbotson
Associates, Inc. and other publications of a local or regional nature. In
addition to performance information, general information about the Portfolio
that appears in a publication such as those mentioned above may be included in
advertisements, supplemental sales literature and in reports to Shareholders.
From time to time, the Fund may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principles (such
as the effects of inflation and the power of compounding); (2) discussions of
general economic trends; (3) presentations of statistical data to supplement
such discussions; (4) descriptions of past or anticipated portfolio holdings for
the Portfolio; (5) descriptions of investment strategies for the Portfolio; (6)
descriptions or comparisons of various investment products, which may or may not
include the Portfolio; (7) comparisons of investment products (including the
Portfolio) with relevant market or industry indices or other appropriate
benchmarks; and (8) discussions of rankings or ratings by recognized rating
organizations. Such data are for illustrative purposes only and are not intended
to indicate past or future performance results of the Portfolio. Actual
performance of the Portfolio may be more or less than that noted in the
hypothetical illustrations.
Since performance will fluctuate, performance data for the Portfolio
cannot necessarily be used to compare an investment in the Portfolio with bank
deposits, savings accounts, and similar investment alternatives which often
provide an agreed or guaranteed fixed yield for a stated period of time.
Shareholders should remember that performance is generally a function of the
kind and quality of the instruments held in the Portfolio, portfolio maturity,
operating expenses, and market conditions. The current yield and performance of
the Portfolio may be obtained by calling your broker-dealer or financial
organization.
DESCRIPTION OF SHARES
The Fund's Articles of Incorporation authorize the Board of Directors
to issue up to twenty billion full and fractional shares of capital stock, and
to classify or reclassify any unissued shares of the Fund into one or more
additional classes or by setting or changing in any one or more respects, their
respective preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption.
-13-
<PAGE> 43
Pursuant to such authority the Fund's Board of Directors has authorized the
issuance of sixty-five classes of shares representing interests in one of
nineteen investment portfolios: the Treasury Money Market, Money Market,
Tax-Exempt Money Market, Conning Money Market, U.S. Government Securities,
Intermediate Corporate Bond, Bond Index, Government & Corporate Bond,
Short-Intermediate Municipal, Missouri Tax-Exempt Bond, Kansas Tax-Exempt Bond,
National Municipal Bond, Equity Income, Equity Index, Growth & Income Equity,
Growth Equity, Small Cap Equity, Small Cap Equity Index, International Equity
and Balanced Portfolios. This Statement of Additional Information relates only
to the Shares of the Conning Money Market Portfolio. Trust Shares, Institutional
Shares, S Shares, Investor A Shares and/or Investor B Shares in each of the
Fund's other portfolios are offered through separate prospectuses to different
categories of investors. Portfolio Shares have no preemptive rights and only
such conversion or exchange rights as the Board may grant in its discretion.
When issued for payment as described in the Prospectus, Shares of the Portfolio
will be fully paid and nonassessable.
In the event of a liquidation or dissolution of the Fund,
Shares of the Portfolio are entitled to receive the assets available for
distribution belonging to that Portfolio, and a proportionate distribution,
based upon the relative asset values of the respective portfolios of the Fund,
of any general assets not belonging to any particular portfolio which are
available for distribution. Shareholders of the Portfolio are entitled to
participate equally in the net distributable assets of the portfolio on
liquidation. Holders of all outstanding Shares of the Portfolio will vote
together in the aggregate. Further, shareholders of all of the Fund's
portfolios, irrespective of class, will vote in the aggregate and not separately
on a portfolio-by-portfolio basis, except as otherwise required by law or when
the Board of Directors determines that the matter to be voted upon affects only
the interests of the shareholders of a particular portfolio or class of shares.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of the outstanding voting securities of a "series" investment
company such as the Fund shall not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares of each
series (portfolio) affected by the matter. A portfolio is considered to be
affected by a matter unless it is clear that the interests of each portfolio in
the matter are identical or that the matter does not affect any interest of the
portfolio. Under the Rule, the approval of an investment advisory or
sub-advisory agreement, the approval of a Rule 12b-1 distribution plan or any
change in a fundamental investment objective or investment policy would be
effectively acted upon with respect to a portfolio only if approved by a
majority of the outstanding shares of that Portfolio. However, the Rule also
provides that the ratification of the appointment of independent auditors, the
approval of principal underwriting contracts, and the election of directors may
be effectively acted upon by shareholders of the Fund's portfolios voting
without regard to portfolio or class.
Shares in the Portfolio will be issued without certificates.
-14-
<PAGE> 44
ADDITIONAL INFORMATION CONCERNING TAXES
The Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, and to distribute out its income to
shareholders each year, so that the Portfolio itself generally will be relieved
of federal income and excise taxes. If the Porfolio were to fail to so qualify:
(1) the Portfolio would be taxed at regular corporate rates without any
deduction for distributions to shareholders; and (2) shareholders would be taxed
as if they received ordinary dividends, although corporate shareholders could be
eligible for the dividends received deduction.
-15-
<PAGE> 45
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
The directors and executive officers of the Fund, their
addresses, ages, principal occupations during the past five years, and other
affiliations are as follows:
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 years
Name and Address the Fund and Other Affiliations
- ---------------- -------- ----------------------
<S> <C> <C>
Jerry V. Woodham* Chairman of Treasurer, St. Louis
St. Louis University the Board; University, August 1996
3500 Lindell President and to present; Treasurer,
Fitzgerald Hall Director Washington University,
St. Louis, MO 63131 1981 to 1995
Age: 54
Robert M. Cox, Jr. Director Senior Vice President and
Emerson Electric Co. Advisory Director, Emerson
8000 W. Florissant Ave. Electric Co. since November
P.O. Box 4100 1990.
St. Louis, MO 63136-8506
Age: 52
Joseph J. Hunt Director General Vice-President
Iron Workers District International Association of
Council Bridge, Structural and Orna-
3544 Watson Road mental Iron Workers (Interna-
St. Louis, MO 63139 tional Labor Union), January
Age: 55 1994 to present; General Organizer,
International Association of
Bridge, Structural and Ornamental
Iron Workers, September 1983 to
December 1993.
</TABLE>
- ------------------------
* Mr. Woodham is an "interested person" of the Fund as defined in the 1940
Act.
-16-
<PAGE> 46
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 years
Name and Address the Fund and Other Affiliations
- ---------------- ------------- ----------------------
<S> <C> <C>
James C. Jacobsen Director Director, Kellwood Company, (manufacturer of wearing
Kellwood Company apparel and camping softgoods) since 1975; Vice Chairman,
600 Kellwood Kellwood Company since May 1989.
Parkway Chesterfield, MO
63017 Age: 52
Donald E. Brandt Director Senior Vice President, Finance and Corporate Services,
Union Electric Company Union Electric Company (electric utility company);
P.O. Box 66149 Director, Huntco, Inc. (intermediate steel processors).
St. Louis, MO 63166
Age: 43
Patrick J. Moore Director Vice President & Chief Financial Officer since 1996 and
Jefferson Smurfit Vice President & General Manager, 1994-1996, of Industrial
Corporation Packaging Division, Corporate Vice President & Treasurer,
8182 Maryland Avenue 1993-1994, and Treasurer, 1992-1993, Jefferson Smurfit
St. Louis, MO 63105 Corporation (paper, paperboard and packaging).
Age: 43
Ronald D. Winney* Director and Treasurer, Ralston Purina Company Since 1985.
Ralston Purina Company Treasurer
Checkerboard Square
St. Louis, MO 63164
Age: 55
W. Bruce McConnel, III* Secretary Partner of the law firm of Drinker Biddle & Reath LLP,
Suite 1100 Philadelphia, Pennsylvania Since 1977.
1345 Chestnut Street
Philadelphia, PA 19107
Age: 55
Walter B. Grimm* Vice President and Employee of BISYS Fund Services.
3435 Stelzer Road Assistant Treasurer
Columbus, OH 43219
Age: 52
David Bunstine* Assistant Secretary Employee of BISYS Fund Services.
3435 Stelzer Road
Columbus, OH 43219
Age: 32
</TABLE>
- ------------------------
* Messrs. Grimm, Winney, McConnel and Bunstine are "interested persons" of the
Fund as defined in the 1940 Act.
-17-
<PAGE> 47
Each Director receives an annual fee of $10,000 plus
reimbursement of expenses incurred as a Director. The Chairman of the Board and
President of the Fund receives an additional annual fee of $5,000 for his
services in these capacities. For the fiscal year ended November 30, 1997, the
Fund paid or accrued for the account of its directors as a group, for services
in all capacities, a total of $65,000. Drinker Biddle & Reath LLP, of which Mr.
McConnel is a partner, receives legal fees as counsel to the Fund. As of the
date of this Statement of Additional Information, the directors and officers of
the Fund, as a group, owned less than 1% of the outstanding shares of the Fund.
The following chart provides certain information about the
fees received by the Fund's directors for their services as members of the Board
of Directors and committees thereof for the fiscal year ended November 30, 1997:
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL
AGGREGATE BENEFITS COMPENSATION
COMPENSATION ACCRUED AS FROM THE FUND
FROM PART OF FUND AND
NAME OF DIRECTOR** THE FUND EXPENSE FUND COMPLEX*
------------------ -------- ------- -------------
<S> <C> <C> <C>
Jerry V. Woodham $15,000 N/A $15,000
Robert M. Cox, Jr. $10,000 N/A $10,000
Joseph J. Hunt $10,000 N/A $10,000
James C. Jacobsen $10,000 N/A $10,000
Donald E. Kiernan*** $5,000 N/A $5,000
Lyle L. Meyer*** $5,000 N/A $5,000
Ronald D. Winney $10,000 N/A $10,000
</TABLE>
* The "Fund Complex" consists solely of the Fund.
** Messrs. Brandt and Moore were not directors of the Fund as of November
30, 1997.
*** Messrs. Kiernan and Meyer resigned as directors of the Fund on April 3,
1997 and September 17, 1997, respectively.
INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATION AGREEMENTS
Mississippi Valley Advisors, Inc. (the "Adviser") serves as
investment adviser to the Portfolio. In addition, Conning Asset Management
Company ("Conning") serves as sub-adviser to the Portfolio. Pursuant to the
advisory and sub-advisory agreements, the Adviser and Conning have agreed to
provide investment advisory and sub-investment advisory services, respectively,
as described in the Portfolio's Prospectus. The Adviser and Conning have agreed
to pay all expenses incurred by them in
-18-
<PAGE> 48
connection with their activities under their respective agreements other than
the cost of securities, including brokerage commissions, if any, purchased for
the Portfolio.
The investment advisory agreement and sub-advisory agreement
provide that the Adviser and Conning, respectively, shall not be liable for any
error of judgment or mistake of law or for any loss suffered in connection with
the performance of their respective agreements, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of their duties or from reckless disregard by them
of their duties and obligations thereunder.
Under its administration agreement with the Fund, BISYS Fund
Services Ohio, Inc. (the "Administrator") serves as administrator. The
Administrator has agreed to maintain office facilities for the Portfolio,
furnish the Portfolio with statistical and research data, clerical, accounting,
and certain bookkeeping services, stationery and office supplies, and certain
other services required by the Portfolio, and to compute the net asset value and
net income of the Portfolio. The Administrator prepares annual and semi-annual
reports to the SEC on Form N-SAR, compiles data for and prepares federal and
state tax returns and required tax filings other than those required to be made
by the Fund's custodian and transfer agent, prepares the Fund's compliance
filings with state securities commissions, maintains the registration or
qualification of Shares for sale under the securities laws of any state in which
the Fund's Shares shall be registered, assists in the preparation of annual and
semi-annual reports to shareholders of record, participates in the periodic
updating of the Fund's Registration Statement, prepares and assists in the
timely filing of notices to the SEC required pursuant to Rule 24f-2 under the
1940 Act, arranges for and bears the cost of processing Share purchase, exchange
and redemption orders, keeps and maintains the Portfolio's financial accounts
and records including calculation of daily expense accruals, monitors compliance
procedures for the Portfolio with the Portfolio's investment objective, policies
and limitations, tax matters, and applicable laws and regulations, and generally
assists in all aspects of the Portfolio's operations. The Administrator bears
all expenses in connection with the performance of its services.
From time to time, the Adviser, Conning and the Administrator
may voluntarily waive a portion or all of their respective fees otherwise
payable to them with respect to the Portfolio in order to increase the net
income available for distribution to shareholders.
CUSTODIAN AND TRANSFER AGENT
Mercantile Bank National Association is Custodian of the
Portfolio's assets pursuant to a Custodian Agreement. Under the Custodian
Agreement, the Custodian has agreed to (i) maintain a separate account or
accounts in the name of the Portfolio; (ii) receive and disburse money on behalf
of the Portfolio; (iii) collect and receive all income and other payments and
distributions on account of the Portfolio's portfolio securities; (iv) respond
to correspondence relating to its duties; and (v) make periodic reports to the
Fund's Board of Directors concerning the operations of the Portfolio. The
Custodian may, at its own expense, open and maintain a custody account or
accounts on behalf of the Portfolio with other banks or trust companies,
provided that the Custodian shall remain liable for the performance of all of
its custodial duties
-19-
<PAGE> 49
under the Custodian Agreement, notwithstanding any delegation. The Custodian is
authorized to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Portfolio, provided that the Custodian shall
remain responsible for the performance of all of its duties under the Custodian
Agreement and shall hold the Fund harmless from the acts and omissions of any
bank or trust company serving as sub-custodian.
In the opinion of the staff of the SEC, since the Custodian is
an affiliate of the investment adviser, the Fund and the Custodian are subject
to the requirements of Rule 17f-2 under the 1940 Act. Accordingly the Fund and
the Custodian intend to comply with the requirements of such rule.
Pursuant to the Custodian Agreement with the Fund, the
Portfolio pays the Custodian an annual fee. For the Portfolio this fee is paid
monthly and calculated daily at the rate of $.125 for each $1,000 of the
Portfolio's average daily net assets.
BISYS Fund Services Ohio, Inc. also serves as the Fund's
transfer agent and dividend disbursing agent (in those capacities, the "Transfer
Agent") pursuant to a Transfer Agency Agreement. Under the Agreement, the
Transfer Agent has agreed to (i) process shareholder purchase and redemption
orders; (ii) maintain shareholder records for each of the Portfolio's
shareholders; (iii) process transfers and exchanges of Shares of the Portfolio;
(iv) issue periodic statements for the Portfolio's shareholders; (v) process
dividend payments and reinvestments; (vi) assist in the mailing of shareholder
reports and proxy solicitation materials; and (vii) make periodic reports to the
Fund's Board of Directors concerning the operations of the Portfolio.
SHAREHOLDER SERVICES PLAN
As described in the Prospectus, the Fund has adopted a
Shareholder Services Plan (the "Plan") with respect to the Portfolio. Any
material amendment to the Plan or arrangements with Service Organizations (which
may include affiliates of the Fund's Adviser and Sub-Adviser) must be approved
by a majority of the Board of Directors. Pursuant to the Plan, the Fund may
enter into Servicing Agreements with broker-dealers and other organizations
("Servicing Agreements") that purchase Shares of the Portfolio. The Servicing
Agreements provide that the Servicing Organizations will render certain
shareholder liaison and/or administrative support services to their customers
who are the record or beneficial owners of Portfolio Shares. Services provided
pursuant to the Servicing Agreements may include such services as providing
information periodically to customers showing their positions in Shares and
monitoring services for their customers who have invested in Shares including
the operation of telephone lines for daily quotations of return information.
OTHER PLAN INFORMATION. The Board of Directors has approved
the Plan and its respective arrangements with Service Organizations based on
information provided by the Fund's service contractors that there is a
reasonable likelihood that the Plan and arrangements will benefit the Portfolio
and its shareholders. Pursuant to the Plan, the Board of Directors reviews, at
least quarterly, a written report of the amounts of servicing fees expended
pursuant to the Plan and the purposes for which the expenditures were made.
-20-
<PAGE> 50
Depending upon the terms governing the particular customer accounts,
Service Organizations and other institutions may also charge their customers
directly for cash management and other services provided in connection with the
accounts, including, for example, account maintenance fees, compensating balance
requirements, or fees based upon account transactions, assets, or income. An
investor should therefore read the Prospectus and this Statement of Additional
Information in light of the terms of his or her account with a Service
Organization, or other institution before purchasing Shares of the Portfolio.
REGULATORY MATTERS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any affiliate
thereof from sponsoring, organizing, or controlling the Shares of a registered,
open-end investment company continuously engaged in the issuance of its Shares,
and prohibit banks generally from issuing, underwriting, selling, or
distributing securities such as Shares of the Portfolio. Such banking laws and
regulations do not prohibit such a holding company or affiliate, or banks, from
acting as investment adviser, transfer agent, or custodian to such an investment
company, or from purchasing Shares of such a company as agent for and upon the
order of customers. Mercantile Bank, the Adviser, Service Organizations that are
banks or bank affiliates, and broker-dealers that are bank affiliates are
subject to such laws and regulations, but believe they may perform the services
for the Portfolio contemplated by its agreement, this Prospectus and the
Statement of Additional Information without violating applicable banking laws
and regulations. In addition, state securities laws on this issue may differ
from the interpretation of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
Should future legislative, judicial, or administrative action prohibit
or restrict the activities of such companies in connection with the provision of
services on behalf of the Portfolio and the shareholders, the Fund might be
required to alter materially or discontinue its arrangements with such companies
and change its method of operation. It is not expected that investors would
suffer any adverse financial consequences as a result of any of these
occurrences.
If current restrictions preventing a bank from legally sponsoring,
organizing, controlling, or distributing Shares of an investment company were
relaxed, Mercantile Bank National Association, or an affiliate of Mercantile
Bank National Association, would consider the possibility of offering to perform
additional services for the Portfolio. It is not possible, of course, to predict
whether or in what form such legislation might be enacted or the terms upon
which Mercantile Bank National Association, or such an affiliate, might offer to
provide such services.
Conflict of interest restrictions may apply to the receipt of
compensation paid pursuant to a Servicing Agreement by the Portfolio to a
financial intermediary in connection with the investment of fiduciary funds in
the Portfolio. Institutions, including banks regulated by the Comptroller of the
Currency and investment advisers and other money managers subject to the
-21-
<PAGE> 51
jurisdiction of the SEC, the department of labor or state securities
commissions, should consult legal counsel before entering into Servicing
Agreements.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, certified public accountants,
with offices at Two Nationwide Plaza, Columbus, Ohio 43215, serves as
independent auditors for the Fund for the fiscal year ended November 30,
1998. KPMG Peat Marwick LLP performs an annual audit of the Fund's
financial statements. Reports of its activities are provided to the Fund's
Board of Directors.
COUNSEL
Drinker Biddle & Reath LLP (of which W. Bruce McConnel,
III, Secretary of the Fund, is a partner), Suite 1100, 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107-3496, is counsel to the Fund and
will pass upon certain legal matters on its behalf.
MISCELLANEOUS
As of October 28, 1998, Mercantile held of record 99.995% and
16.933% of the outstanding Institutional and Trust shares, respectively,
in the Treasury Money Market Portfolio; 89.170% and 34.240% of the
outstanding Institutional and Trust shares, respectively, in the Money
Market Portfolio; 77.064% of the outstanding Trust shares in the
Tax-Exempt Money Market Portfolio; 93.989% and 95.694% of the outstanding
Institutional and Trust shares, respectively, in the U.S. Government
Securities Portfolio; 99.896% and 98.252% of the outstanding Institutional
and Trust shares, respectively, in the Intermediate Corporate Bond
Portfolio; 96.378% and 98.886% of the outstanding Institutional and Trust
shares, respectively, in the Government & Corporate Bond Portfolio;
99.982% and 97.342% of the outstanding Institutional and Trust shares,
respectively, in the Bond Index Portfolio; 97.366% of the outstanding
Trust shares in the Short-Intermediate Municipal Portfolio; 97.817% of the
outstanding Trust shares in the Missouri Tax-Exempt Bond Portfolio;
99.401% of the outstanding Trust shares in the National Municipal Bond
Portfolio; 96.818% and 95.321% of the outstanding Institutional and Trust
shares, respectively, in the Growth & Income Equity Portfolio; 98.079% and
62.317% of the outstanding Institutional and Trust shares, respectively,
in the Small Cap Equity Portfolio; 95.130% and 92.366% of the outstanding
Institutional and Trust shares, respectively, in the International Equity
Portfolio; 89.967% of the outstanding Trust shares in the Equity Income
Portfolio; 99.999% of the Trust shares in the Equity Index Portfolio;
92.297% and 99.964% of the outstanding Institutional and Trust shares,
respectively, in the Balanced Portfolio, and 99.999% and 97.912% of the
outstanding Institutional and Trust shares, respectively, in the Growth
Equity Portfolio, as fiduciary or agent on behalf of its customers.
Mercantile is a wholly owned subsidiary of Mercantile Bancorporation Inc.,
a Missouri corporation. Under the 1940 Act, Mercantile may be deemed to be
a controlling person of the Fund.
As of the same date, the following institutions also owned of
record 5% or more of the Treasury Money Market Portfolio's outstanding
shares as fiduciary or agent on behalf of their customers: Trust Shares -
BISYS Fund Services, FBO Mercantile EOD Sweep, Attn: Mike Bryan, 3435
Stelzer Road, Columbus, OH 43219 (26.318%); Mercantile Bank NA Trust,
Trust Securities Unit 17-1, Attn: Dede Clark, PO Box 387 Main Post Office,
St Louis, MO 63166-0000 (16.933%); Hare & Co., Stif/Master Note, The Bank
of New York, Attn: Paul Madden, One Wall Street 2nd Floor, New York, NY
10286 (36.065%); Flefco, PO Box 19264, Springfield, IL 62794-9264
(7.483%); Investor A Shares - National Financial Services Corp., For the
Benefit of Our Customers, 1 World Financial Center, 200 Liberty Street,
5th Floor, New York, NY 10281 (96.229%); Institutional Shares - Mercantile
Bank of St. Louis, N.A., Attn: Trust Securities Unit 17-1, P.O. Box 387,
St. Louis, MO 63166-0000, (99.995%).
As of the same date, the following institutions also owned of
record 5% or more of the Money Market Portfolio's outstanding shares as
fiduciary or agent on behalf of their customers: Trust Shares - Pacific
Century Trust, 741 Mutual Fund
<PAGE> 52
Accounting, P.O. Box 3170, Honolulu, HI 96802-3170 (6.064%); BISYS Fund
Services, FBO Mercantile EOD Sweep, Attn: Mike Bryan, 3435 Stelzer Road,
Columbus, OH 43219 (51.243%); Mercantile Bank, N.A. Trust, Trust
Securities Unit 17-1, Attn: Dede Clark, P.O. Box 387 Main Post Office, St.
Louis, MO 631666-0000 (34.240%); Investor A Shares - National Financial
Services Corp., For the Benefit of Our Customers, 1 World Financial
Center, 200 Liberty Street, 5th Floor, New York, NY 10281 (92.412%);
Investor B Shares - Mercantile Bank of St. Louis, NA Custodian Pheba A.
Steinmeyer, IRA, 28413 Polk Dr., Rocky Mt., MO 65072-9042 (5.947%);
Alberta Buenemann and Ernie W. Buenemann Trust, Alberta Buenemann
Revocable Living Trust DTD 08-30-91, 1649 Sand Run Road, Troy, MO 63379
(8.016%); Homer R. Turner and Edna M. Turner Trust, Edna M. Turner Trust
DTD 04-17-90, 33409 E. Pink Hill Rd., Grain Valley, MO 64029 (13.438%);
Mercantile Bank of St Louis, NA Cust, John E. Hill, IRA, 806 Bitterfield
Dr., Ballwin, MO 63011 (6.056%); Mercantile Bank of St Louis, NA Cust,
Sandra L. Hill, IRA, 806 Bitterfield Dr., Ballwin, MO 63011 (6.056%);
Institutional Shares - Mercantile Bank of St. Louis, N.A., Attn: Trust
Securities Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0000 (83.843%);
Mercantile Bank, Expediter Daily Valuation Account, Attn: Institutional
Retirement Tram 16-2, P.O. Box 387, St Louis, MO 63166 (5.327%); RIBAT &
Co., 230 18th St., P.O. Box 4870, Rock Island, IL 61204-4870 (7.184%).
As of the same date, the following institutions also owned of
record 5% or more of the Tax-Exempt Money Market Portfolio's outstanding
shares as fiduciary or agent on behalf of their customers: Trust Shares -
BISYS Fund Services, FBO Mercantile EOD Sweep, Attn: Mike Bryan, 3435
Stelzer Road, Columbus, OH 43219 (20.315%); Mercantile Bank N.A. Trust,
Trust Securities Unit 17-1, Attn: Dede Clark, P.O. Box 387 Main Post
Office, St. Louis, MO 63166-0000 (77.064%); Investor A Shares - National
Financial Services Corp., For the Benefit of Our Customers, 1 World
Financial Center, 200 Liberty Street, 5th Floor, New York, NY 10281
(95.875%).
As of the same date, the following institutions also owned of
record 5% or more of the U.S. Government Securities Portfolio's
outstanding shares as fiduciary or agent on behalf of their customers:
Trust Shares - Locust & Company, Mercantile Bank, St. Louis, N.A., Trust
Securities Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0387 (37.129%);
Olive & Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit
17-1, P.O. Box 387, St. Louis, MO 63166-0387 (58.565%); Investor A Shares
- Mercantile Bank of St. Louis, NA Custodian Edmund C. Albrecht, Jr., IRA,
236 Carlyle Lake Dr., St. Louis, MO 63141 (7.230%); Investor B Shares -
Mercantile Bank of St Louis, NA Cust, Richard Dell Woods, SEP IRA, 3114
Pickett Rd, St Joseph, MO 64503 (10.481%); Mercantile Bank of St Louis, NA
Cust, Evelyn Joan Sutton, IRA, 510 N Main Cross, Bowling Green, MO 63334
(6.848%); NFSC FEBO M22-038326, NFSC FMTC IRA, FBO Lynette A. Broeg, 60
Frontenac Dr, St Louis, MO 63131 (7.579%); NFSC FEBO M22-038563, NFSC FMTC
IRA, FBO Betty J. Kolseth, 300 No 4th Apt 2009, St Louis, MO 63102
(9.452%); NFSC FEBO M26-037249, NFSC FMTC IRA, FBO Marvin R. Zielsdorf,
<PAGE> 53
3625 NE Wabash, Topeka, KS 66617 (5.145%); Stanley Markenson and Shirley
J. Markenson TRST, Markenson Rev Trust, DTD 5/14/92, 362 Hibler Ct., Creve
Coevr, MO 63141 (5.137%); Charlie J. Vancil, 3073 Valley Dr., Festus, MO
63028 (5.697%); NFSC FEBO M26-044865, June M Swift, Tod William D Smith,
Robert M Swift, Gwynneth A Mejia, 2823 Seneca, St Joseph, MO 64507
(10.800%); NFSC FEBO M26-945293, NFSC FMTC IRA Rollover, FBO Charlene V.
Brunk, 17825 Hwy. 21, St. Joseph, MO 64505 (21.814%); Institutional Shares
- Locust & Company, Mercantile Bank of St. Louis, N.A., Attn: Trust
Securities Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0000 (93.989%);
Mercantile Bank, Expediter Daily Valuation Account, ATTN Institutional
Retirement Tram 16-2, P.O. Box 387, St. Louis, MO 63166 (5.952%).
As of the same date, the following institutions also owned of
record 5% or more of the Intermediate Corporate Bond Portfolio's
outstanding shares as fiduciary or agent on behalf of their customers:
Trust Shares - Locust & Company, Mercantile Bank, St. Louis, N.A., Trust
Securities Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0387 (7.490%);
Olive & Company, Mercantile Bank, St. Louis, N.A., Trust Securities Unit
17-1, P.O. Box 387, St. Louis, MO 63166-0387 (90.762%); Investor A
Shares-Jill Larson, 10835 Autillo Way, San Diego, CA 92127 (6.589%);
George Gregory Timmons, 1332 E. Desert Cv., Phoenix, AZ 85020 (6.589%);
Betty Jane Eckhart, Trust Betty Jane Eckhart Trust U/A DTD 04-19-82, 28265
Beach Rd., Sarcoxie, MO 64862 (24.015%); Lynn C. Prescott, Trst Lynn C.
Prescott Trust, UAD 8-30-90, 4180 Rincon Circle, Palo Alto, CA 94306-3138
(13.218%); NFSC FEBO M22-830925, Sandra A. Smith, Charles W. Smith, 6726
Vermont, St. Louis, MO 63111, (7.768%); Mercantile Bank, St. Louis,
Custodian, Douglas A. Tabachik, Rollover IRA, 15327 Thistebriar Ct.,
Chesterfield, MO 63017-0000 (13.794%); Alice Ann Jones, 213 S. Clay #2-S,
Kirkwood, MO 63122 (10.150%); Institutional Shares Locust & Company,
Mercantile Bank, St. Louis, N.A., Trust Securities Unit 17-1, P.O. Box
387, St. Louis, MO 63166-0387 (99.896%).
As of the same date, the following institutions also owned of
record 5% or more of the Bond Index Portfolio's outstanding shares as
fiduciary or agent on behalf of their customers: Trust Shares - Olive &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (97.342%); Investor A Shares -
Thomas Young Trust, Beatrice Young Trust DTD 8-15-69 A/C M27-997382, 9204
Roger Lee Lane, St. Louis, MO 63126 (5.345%); Gerhard Radi, 2965 Berwick
Ct., St. Charles, MO 63303 (6.914%); Gary C. Nelling and Helen L. Nelling,
JTWROS, 850 Warder Ave., St. Louis, MO 63130 (6.458%); NFSC FEBO
M27-901393, Judith T Betz, John N. Betz, 6539 Pernod, St Louis, MO 63139
(15.610%); NFSC FEBO M22-034134, NFSC FMTC IRA SEPP, FBO Ronald E. Ryan,
875 Glen Elm Dr., St. Louis, MO 63122, (16.047%); Dennis G Vesper, and
Julie A Vesper, JTWROS, 1300 Bellevue Blvd, N, Bellevue, NE 68005
(14.875%); George R Swartz, and Donna K Swartz, Trst George & Donna Swartz
Trust, DTD 5-19-94, 2203 Marian Pl, Venice, CA 90291, (14.874%); NFSC
FEBO, M22-866377, Stanley E. Anderson, Eunice I. Anderson, 3501 Arsenal
St, St Louis,
<PAGE> 54
MO 63118-2003 (5.975%); Institutional Shares - Locust & Company,
Mercantile Bank of St. Louis, N.A., Trust Securities Units 17-1, P.O. Box
387, St. Louis, MO 63166-0387 (99.982%).
As of the same date, the following institutions also owned of record 5% or
more of the Government & Corporate Bond Portfolio's outstanding shares as
fiduciary or agent on behalf of their customers: Trust Shares - Locust &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (42.181%); Olive & Company,
Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1, P.O. Box
387, St. Louis, MO 63166-0387 (56.705%); Investor A Shares - Mercantile
Bank of St. Louis, NA Custodian Eugene F. Tucker, IRA Rollover, 70
Berkshire, St. Louis, MO 63117 (6.013%); Mercantile Bank of St. Louis,
Custodian, Glenn J. Holler, IRA Rollover, 226 Grimsley Sta., St. Louis, MO
63129 (5.233%); Investor B Shares - Mercantile Bank of St. Louis, NA Cust,
Gerald C. Pasch, IRA, 2817 Duncan, St. Joseph, MO 64507 (5.042%); NFSC
FEBO M22-050563, Carl S. Jackson, Steven J. Jackson, 3016 Sunset Drive,
Apt. B, Carbondale, IL 62901 (5.683%); Homer R. Turner and Edna M. Turner
Trust, Edna M. Turner Trust DTD 04-17-90, 33409 E. Pink Hill Road, Grain
Valley, MO 64029 (7.242%); NFSC FEBO M25-022500, NFSC FMTC IRA, FBO Jackie
L Stricklin, 10 Willowood Rd, North Little Rock, AR 72117 (9.738%);
Institutional Shares - Locust & Company, Mercantile Bank of St. Louis,
N.A., Attn: Trust Securities Unit 17-1, P.O. Box 387, St. Louis, MO
63166-0000 (85.748%); Mercantile Bank, Expediter Daily Valuation Account,
Attn: Institutional Retirement Tram 16-2, P.O. Box 387, St. Louis, MO
63166 (10.630%).
As of the same date, the following institutions also owned of
record 5% or more of the Short-Intermediate Municipal Bond Portfolio's
outstanding shares as fiduciary or agent on behalf of their customers:
Trust Shares - Olive & Company, Attn: Trust Securities Unit 17-1, P.O. Box
387, St. Louis, MO 63166-0387 (97.366%); Investor A Shares - James Sutten,
P.O. Box 2465, Inverness, FL 34451-2465 (8.205%); National Financial
Services Corp., FBO Bettina H. Clouse, 200 Liberty St. Fifth Floor, New
York, NY 10281 (91.711%).
As of the same date, the following institutions also owned of
record 5% or more of the Missouri Tax-Exempt Bond Portfolio's outstanding
shares as fiduciary or agent on behalf of their customers: Trust Shares -
Locust & Company, Mercantile Bank of St. Louis, N.A., Trust Securities
Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0387 (6.419%); Olive &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (91.398%); Investor B Shares - NFSC
FEBO M22-901580, Alban C Hurlebaus, Catherine L Bruketa, 6144 S Grand, St
Louis, MO 63111 (5.059%); NFSC FEBO M22-402761, Kenneth Russell, Helen
Russell, Trustee, Helen Russell Revocable Trust, 320 Lake Apollo,
Hannibal, MO 63401 (6.785%).
As of the same date, the following institutions also owned of
record 5% or more of the National Municipal Bond Portfolio's outstanding
shares as
<PAGE> 55
fiduciary or agent on behalf of their customers: Trust Shares - Olive &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (99.401%); Investor A Shares - Joe
N. Basore TRST, Joe N. Basore Trust, DTD 12/23/97, 311 Town Ctr., W. Bella
Vista, AR 72714 (39.934%); Ann W. Basore TRST, Ann W. Basore Trust, DTD
12/23/97, 311 Town Ctr., W. Bella Vista, AR 72714 (39.934%); Investor B
Shares - NFSC FEBO M22-988642, Ronald E. Ryan, Marian H. Ryan, 875 Glen
Elm Drive, St. Louis, MO 63122 (8.581%); NFSC FEBO M22-967220, Casatta
Revocable Living Trust, Raymond H. Casatta U/A 10-06-87, 5658 Tholozan,
St. Louis, MO 65109 (12.307%); NFSC FEBO M22-961817, Gladine Coleman,
Andrew B. Coleman, 5945 Loughborough, St. Louis, MO 63109 (8.502%); NFSC
FEBO M22-423394, Nancy M. Prewitt, TOD, 16 Toussaint, O'Fallon, MO 63366
(7.224%); NFSC FEBO M22-479039, Constance M. McManus, TOD, 4271 Wyoming,
St. Louis, MO 63116 (14.626%); NFSC M22-473782, Roland Charles Oesterle,
TOD, 2849 Missouri, St. Louis, MO 63118 (6.115%); NFSC FEBO M22-848700,
Jessica Schumacher, Newell D. Timmermeier, 3204 Edwards St., Alton, IL
62002 (8.052%); NFSC FEBO M22-841897, Beatrice J. Teter, 5201 Asbury Ave.
Apt. 232, Godfrey, IL 62035 (7.833%); NFSC FEBO M22-841900, Leona B.
Teter, 5201 Asbury Ave. Apt. 232, Godfrey, IL 62035 (7.833%).
As of the same date, the following institutions also owned of
record 5% or more of the Equity Income Portfolio's outstanding shares as
fiduciary or agent on behalf of their customers: Trust Shares - Olive &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (89.967%); Norwest Bank Minnesota
NA, Trst National By-Products Inc P/S Plan, c/o Mutual Fund Processing, PO
Box 1533, Minneapolis, MN 55480-1533 (5.812%); Institutional Shares -
CoreLink Financial Inc., P.O. Box 4054, Concord, CA 94524 (95.925%);
Investor A Shares - Mori & Co, c/o Commerce Bank, Attn: Mutual Fund
Operations, PO Box 13366/TBTS-2, Kansas City, MO 64199-3366 (13.026%);
NFSC Febo M22-898880 William Oliver Shillington, II, Kim Shillington, 2917
N. Kristopher Bend, ST. Charles, MO 63126 (7.266%); Sandra Kungle Trust,
Sandra Kungle Trust, 139 Arrowhead Court, Boone, NC 28607 (10.567%); NFSC
FEBO M27-901393, Judith T Betz, John N Betz, 6539 Pernod, St Louis, MO
63139 (6.126%); NFSC FEBO M22-406252, Thomas G. Smith, Francis T. Smith,
Nichole T. Smith, 10214 Hobkirk Dr., St Louis, MO 63137 (6.105%); Investor
B Shares - NFSC FEBO M22-979570, NFSC FMTC IRA Rollover FBO Kevin O. Webb,
702 Hudson Rd, ST. Louis, MO 63130 (5.247%); NFSC FEBO M24-914932, NFSC
FMTC IRA Rollover, FBO Daniel L Bodensteiner, 515 2nd St, Evansdale, IA
50707 (8.829%); NFSC FEBO M22-858650, Frances M Lafata, 1302 Steamboat Ln
Apt 2, Ballwin, MO 63011 (5.365%); NFSC FEBO M22-821691, Arlene T.
Kleimeier TTEE, Arlene T. Kleimeier REV LIV TR, U A 10/16/98, 3033 Apt. 6,
Florissant, MO 63033 (14.491%); NFSC FEBO M23-031925, Anne Lloyd DuPont,
3500 NE Kingwood Ct., Lees Summit, MO 64064 (17.234%); NFSC FEBO
M26-852155, Thelma P. Rhodes, TOD Ruby G. North, TOD Gladys Law, 1919
Mimosa, Springfield, MO 65804 (11.289%).
<PAGE> 56
As of the same date, the following institutions also owned of
record 5% or more of the Equity Index Portfolio's outstanding shares as
fiduciary or agent on behalf of their customers: Trust Shares - Olive &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (9.569%); Locust & Company,
Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1, P.O. Box
387, St. Louis, MO 63166-0387 (90.430%); Investor A Shares - Mercantile
Bank of St Louis, Custodian, Donald E Gaddy, IRA, PO Box 682-309 Cherry
St, Colstrip, MT 59323-0000 (6.294%); NFSC FEBO M23-874612, NFSC FMTC IRA
ROLLOVER, FBO Mary H. Hernandez, 1056 Merriam Lane, Kansas City, KS 66103
(7.877%); Institutional Shares - Locust & Company, Mercantile Bank St.
Louis NA, Trust Securities Unit 17-1, P.O. Box 387, St. Louis, MO
63166-0387 (93.022%); Mercantile Bank, Expediter Daily Valuation Account,
Attn: Institutional Retirement Tram 16-2, P.O. Box 387, St. Louis, MO
63166 (6.975%).
As of the same date, the following institutions also owned of
record 5% or more of the Small Cap Equity Portfolio's outstanding shares
as fiduciary or agent on behalf of their customers: Trust Shares -
American Bar Endowment, 750 N. Lake Shore Dr., Chicago, IL 60611
(10.417%); Olive & Company, Mercantile Bank of St. Louis, N.A., Trust
Securities Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0387 (15.542%);
Locust & Company, Mercantile Bank of St. Louis, N.A., Trust Securities
Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0387 (46.775%); State Street
Bank & Trust Co., TRST Pioneer HI-BRED International Retirement Plan
Trust, ATTN Chris Murphy, One Enterprise Dr., North Quincy, MA 02171
(6.484%); Bankers' Trust Co., FBO Sheet Metal Local 36, Miss Van Arch FD
191719, Attn: Mike Bloebaun, 648 Grassmere Park Road, Nashville, TN 37211
(8.147%); Investor A Shares - Strafe & Co, FBO RKFD PIPE/MVA, PO Box 160,
Westerville, OH 43230-0160 (7.116%); Institutional Shares - Locust &
Company, Mercantile Bank of St. Louis, N.A., Attn: Trust Securities Unit
17-1, P.O. Box 387, St. Louis, MO 63166-0000 (89.125%); Mercantile Bank,
Expediter Daily Valuation Account, Attn: Institutional Retirement Tram
16-2, P.O. Box 387, St. Louis, MO 63166 (8.954%).
As of the same date, the following institutions also owned of
record 5% or more of the International Equity Portfolio's outstanding
shares as fiduciary or agent on behalf of their customers: Trust Shares -
Locust and Company, Attn: Trust Securities Unit 17-1, P.O. Box 387, St.
Louis, MO 63166-0000 (44.957%); Olive & Company, Attn: Trust Securities
Unit 17-1, P. O. Box 387, St. Louis, MO 63166-0387 (47.409%); Investor A
Shares - Frances Dakers, 200 E. 89th St. 28D, New York, NY 10128
(12.535%); Institutional Shares - Locust & Company, Attn: Trust Securities
Unit 17-1, P.O. Box 387, St. Louis, MO 63166-0000 (95.130%).
As of the same date, the following institutions also owned of
record 5% or more of the Balanced Portfolio's outstanding share as
fiduciary or agent on behalf of their customers: Trust Shares - Locust &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (93.426%); Olive & Company,
Mercantile Bank St Louis NA, Trust Securities Unit
<PAGE> 57
17-1, PO Box 387, St Louis, MO 63166-0387 (6.538%); Investor A Shares -
Mercantile Bank of St. Louis, NA Custodian Robert W. Davis, Rollover IRA,
818 Broadway, Elsberry, MO 63343-1109 (5.709%); Investor B Shares - NFSC
FEBO M26-044423, NFSC FMTC IRA, FBO Wayne Brunk, 17825 Highway 71, St
Joseph, MO 64505 (12.903%); Institutional Shares - Locust & Company,
Mercantile Bank of St. Louis, N.A., Attn: Trust Securities Unit 17-1, P.O.
Box 387, St. Louis, MO 63166-0000 (79.137%); Mercantile Bank, Expediter
Daily Valuation Account, Attn: Institutional Retirement Tram 16-2, P.O.
Box 387, St. Louis, MO 63166 (13.160%); Corelink Financial Inc, PO Box
4054, Concord, CA 94524 (7.683%).
As of the same date, the following institutions also owned of
record 5% or more of the Growth Equity Portfolio's outstanding shares as
fiduciary or agent on behalf of their customers: Trust Shares - Olive &
Company, Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1,
P.O. Box 387, St. Louis, MO 63166-0387 (85.047%); Locust & Company,
Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1, P.O. Box
387, St. Louis, MO 63166-0387 (12.865%); Investor A Shares - NFSC FEBO
M22-540196, Tiger Limited Partnership, 903 Claymark, ST. Louis, MO 63131
(9.205%); NFSC FEBO M22-478237, Bernard B. Birger, Trustee, Bernard B.
Birger Revocable Living Trust U/A 5-25-76, 250 Hilltop, Collinsville, IL
62234 (5.232%); NFSC FEBO M22-968030, NFSC FMTC IRA ROLLOVER, FBO Carl R.
Stock, 4000 D Brittany Circle, Bridgeton, MO 63044 (9.974%); Investor B
Shares - NFSC FEBO M24-914932, NFSC FMTC IRA Rollover, FBO Daniel L
Bodensteiner, 515 2nd St, Evansdale, IA 50707 (12.734%); Mercantile Bank
of St Louis, Custodian, Lonie J Neely, IRA, 1628 Meredith Dr, St Louis, MO
63125-2227 (5.152%); NFSC FEBO M22- 861596, Estle S. Smith III, Patti
Bruce Smith, 2335 Fairview Dr., Alton, IL 62002 (7.832%); NFSC FEBO
M26-838560, NFSC FMTC IRA, FBO Terry L. Bliss, 215 W Lincoln , Lewistown,
IL 61542 (5.073%); Institutional Shares - Locust & Company, Mercantile
Bank of St. Louis, N.A., Trust Securities Unit 17-1, P.O. Box 387, St.
Louis, MO 63166-0387 (99.999%).
As of the same date, the following Institutions also owned of
record 5% or more of the Growth & Income Equity Portfolio's outstanding
shares as fiduciary or agent on behalf of their customers: Trust Shares -
Locust & Company, Mercantile Bank of St. Louis, N.A., Trust Securities
Unit 17-1, P.O. 387, St. Louis, MO 63166-0387 (52.463%); Olive & Company,
Mercantile Bank of St. Louis, N.A., Trust Securities Unit 17-1, P.O. Box
387, St. Louis, MO 63166-0387 (42.858%); Institutional Shares - Locust &
Company, Mercantile Bank of St. Louis, N.A., Attn: Trust Securities Unit
17-1, P.O. Box 387, St. Louis, MO 63166-0000 (89.102%); Mercantile Bank,
Expediter Daily Valuation Account, Attn: Institutional Retirement Tram
16-2, P.O. Box 387, St. Louis, MO 63166 (7.716%).
On the basis of information received from these institutions,
the Fund believes that substantially all of the shares owned of record
were also beneficially owned by these institutions because they possessed
or shared voting or investment power with respect to such shares on behalf
of their underlying accounts.
<PAGE> 58
APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's ("S&P") commercial paper rating is a
current assessment of the likelihood of timely payment of debt having an
original maturity of no more than 365 days. The following summarizes the rating
categories used by Standard and Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category
indicating that the obligor's capacity to meet its financial commitment is
strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations rated "A-1". However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
"B" - Obligations are regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and
are dependent on favorable business, financial, and economic conditions for the
obligor to meet its financial obligation.
"D" - Obligations are in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due,
even if the applicable grace period has not expired, unless S&P believes such
payments will be made during such grace period. The "D" rating will also be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually senior debt obligations not having an original
maturity in excess of one year, unless explicitly noted. The following
summarizes the rating categories used by Moody's for commercial paper:
A-1
<PAGE> 59
"Prime-1" - Issuers (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an
acceptable ability for repayment of senior short-term debt obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime
rating categories.
The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff &
Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:
"D-1+" - Debt possesses the highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
access to alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
"D-2" - Debt possesses good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
"D-3" - Debt possesses satisfactory liquidity and other
protection factors qualify issues as investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.
A-2
<PAGE> 60
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or
interest payments.
Fitch IBCA short-term ratings apply to debt obligations that
have time horizons of less than 12 months for most obligations, or up to three
years for U.S. public finance securities. The following summarizes the rating
categories used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This
designation indicates the strongest capacity for timely payment of financial
commitments and may have an added "+" to denote any exceptionally strong credit
feature.
"F2" - Securities possess good credit quality. This
designation indicates a satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of
securities rated "F1".
"F3" - Securities possess fair credit quality. This
designation indicates that the capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.
"B" - Securities possess speculative credit quality. this
designation indicates minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.
"C" - Securities possess high default risk. This designation
indicates that the capacity for meeting financial commitments is solely reliant
upon a sustained, favorable business and economic environment.
"D" - Securities are in actual or imminent payment default.
Thomson BankWatch short-term ratings assess the likelihood of
an untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's
highest category and indicates a very high likelihood that principal and
interest will be paid on a timely basis.
"TBW-2" - This designation represents Thomson BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents Thomson BankWatch's
lowest investment-grade category and indicates that while the obligation is more
susceptible to adverse
A-3
<PAGE> 61
developments (both internal and external) than those with higher ratings, the
capacity to service principal and interest in a timely fashion is considered
adequate.
"TBW-4" - This designation represents Thomson BankWatch's
lowest rating category and indicates that the obligation is regarded as
non-investment grade and therefore speculative.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating
assigned by Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - Debt is less vulnerable to non-payment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
"B" - Debt is more vulnerable to non-payment than obligations
rated "BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial or economic conditions
will likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
A-4
<PAGE> 62
"CCC" - Debt is currently vulnerable to non-payment, and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
"CC" - An obligation rated "CC" is currently highly vulnerable
to non-payment.
"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
"D" - An obligation rated "D" is in payment default. This
rating is used when payments on an obligation are not made on the date due, even
if the applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. "D" rating is also used upon the
filing of a bankruptcy petition or the taking of similar action if payments on
an obligation are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC"
may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid,
and certain other obligations that S & P believes may experience high volatility
or high variability in expected returns due to non-credit risks. Examples of
such obligations are: securities whose principal or interest return is indexed
to equities, commodities, or currencies; certain swaps and options; and
interest-only and principal-only mortgage securities. The absence of an "r"
symbol should not be taken as an indication that an obligation will exhibit no
volatility or variability in total return.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
A-5
<PAGE> 63
"A" - Bonds possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of
these ratings provide questionable protection of interest and principal ("Ba"
indicates speculative elements; "B" indicates a general lack of characteristics
of desirable investment; "Caa" are of poor standing; "Ca" represents obligations
which are speculative in a high degree; and "C" represents the lowest rated
class of bonds). "Caa," "Ca" and "C" bonds may be in default.
Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some
other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which
Moody's believes possess the strongest investment attributes are designated by
the symbols, Aa1, A1, Baa1, Ba1 and B1.
The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt.
"AA" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below-average protection factors but
such protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
A-6
<PAGE> 64
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when due.
Debt rated "B" possesses the risk that obligations will not be met when due.
Debt rated "CCC" is well below investment grade and has considerable uncertainty
as to timely payment of principal, interest or preferred dividends. Debt rated
"DD" is a defaulted debt obligation, and the rating "DP" represents preferred
stock with dividend arrearages.
To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major categories.
The following summarizes the ratings used by Fitch IBCA for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the
highest credit quality. These ratings denote the lowest expectation of
investment risk and are assigned only in case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is very unlikely to
be adversely affected by foreseeable events.
"AA" - Bonds considered to be investment grade and of very
high credit quality. These ratings denote a very low expectation of investment
risk and indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.
"A" - Bonds considered to be investment grade and of high
credit quality. These ratings denote a low expectation of investment risk and
indicate strong capacity for timely payment of financial commitments. This
capacity may, nevertheless, be more vulnerable to adverse changes in
circumstances or in economic conditions than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of good
credit quality. These ratings denote that there is currently a low expectation
of investment risk. The capacity for timely payment of financial commitments is
adequate, but adverse circumstances and in economic conditions are more likely
to impair this category.
"BB" - Bonds considered to be speculative. These ratings
indicate that there is a possibility of credit risk developing, particularly as
the result of adverse economic changes over time; however, business or financial
alternatives may be available to allow financial commitments to be met.
Securities rated in this category are not investment grade.
"B" - Bonds are considered highly speculative. these ratings
indicate that significant credit risk is present, but a limited margin of safety
remains. Financial commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable business and
economic environment.
A-7
<PAGE> 65
"CCC", "CC", "C" - Bonds have high default risk. Capacity for
meeting financial commitments is reliant upon sustained, favorable business or
economic developments. "CC" ratings indicate that default of some kind appears
probable, and "C" ratings signal imminent default.
"DDD," "DD" and "D" - Bonds are in default. Securities are not
meeting obligations and are extremely speculative. "DDD" designates the highest
potential for recovery on these securities, and "D" represents the lowest
potential for recovery.
To provide more detailed indications of credit quality, the
Fitch IBCA ratings from and including "AA" to "B" may be modified by the
addition of a plus (+) or minus (-) sign to show relative standing within these
major rating categories.
Thomson BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation represents the highest category
assigned by Thomson BankWatch to long-term debt and indicates that the ability
to repay principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to
repay principal and interest on a timely basis with limited incremental risk
compared to issues rated in the highest category.
"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment-grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned
by Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
A-8
<PAGE> 66
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
MUNICIPAL NOTE RATINGS
A Standard and Poor's rating reflects the liquidity concerns
and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's Ratings Group for
municipal notes:
"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess very
strong characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.
"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit risk
and long-term risk. The following summarizes the ratings by Moody's Investors
Service, Inc. for short-term notes:
"MIG-1"/"VMIG-1" - This designation denotes best quality,
enjoying strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
"MIG-2"/"VMIG-2" - This designation denotes high quality, with
margins of protection ample although not so large as in the preceding group.
"MIG-3"/"VMIG-3" - This designation denotes favorable quality,
with all security elements accounted for but lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - This designation denotes adequate quality,
carrying specific risk but having protection commonly regarded as required of an
investment security and not distinctly or predominantly speculative.
A-9
<PAGE> 67
"SG" - This designation denotes speculative quality and lack
of margins of protection.
Fitch IBCA and Duff & Phelps use the short-term ratings
described under Commercial Paper Ratings for municipal notes.
A-10
<PAGE> 68
FORM N-1A
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: Not Applicable
(b) Exhibits:
(1) (a) Articles of Incorporation dated September 9,
1982.(2)
(b) Articles Supplementary to Registrant's
Articles of Incorporation dated October 28,
1982.(2)
(c) Articles Supplementary to Registrant's
Articles of Incorporation dated December 22,
1987.(2)
(d) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
October 30, 1990.(2)
(e) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
November 9, 1990.(2)
(f) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
March 19, 1991.(2)
(g) Certificate of Correction dated April 30,
1991 to Articles Supplementary dated as of
March 19, 1991.(2)
(h) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
June 25, 1991.(2)
(i) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
November 15, 1991.(2)
(j) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
January 26, 1993.(2)
(k) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
March 23, 1993.(2)
- 1 -
<PAGE> 69
(l) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
March 7, 1994.(2)
(m) Certificate of Correction dated October 17,
1994 to Articles Supplementary dated as of
March 8, 1994 to Registrant's Articles of
Incorporation.(2)
(n) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
February 22, 1995.(2)
(o) Articles Supplementary to Registrant's
Articles of Incorporation dated as of
April 17, 1995.(2)
(p) Articles Supplementary to Registrant's
Articles of Incorporation dated June 27,
1995.(2)
(q) Articles Supplementary to Registrant's
Articles of Incorporation dated September
18, 1995.(2)
(r) Articles Supplementary to Registrant's
Articles of Incorporation dated August 30,
1996.(4)
(s) Articles Supplementary to Registrant's
Articles of Incorporation dated February 3,
1997.(6)
(t) Articles Supplementary to Registrant's
Articles of Incorporation dated June 17,
1997.(9)
(u) Articles Supplementary to Registrant's
Articles of Incorporation dated October 29,
1997.(11)
(v) Articles Supplementary to Registrant's
Articles of Incorporation dated March 23,
1998.(14)
(w) Articles Supplementary to Registrant's Articles of
Incorporation dated September 17, 1998. (14)
(2) Restated and Amended By-Laws as approved and
adopted by Registrant's Board of Directors.(5)
(3) None.
(4) None.
(5) (a) Amended and Restated Advisory Agreement
between Registrant and Mississippi Valley
Advisors Inc. dated April 1, 1991.(2)
- 2 -
<PAGE> 70
(b) Addendum No. 1 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the ARCH Treasury Money Market
Portfolio, dated September 27, 1991.(2)
(c) Addendum No. 2 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the ARCH Small Cap Equity
(formerly Emerging Growth) Portfolio, dated
April 1, 1992.(2)
(d) Addendum No. 3 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the ARCH Balanced Portfolio dated
April 1, 1993.(2)
(e) Addendum No. 4 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. dated March
15, 1994.(2)
(f) Addendum No. 5 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the Short-Intermediate Municipal
Portfolio dated July 10, 1995.(2)
(g) Addendum No. 6 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the Tax-Exempt Money Market,
Missouri Tax-Exempt Bond and Kansas
Tax-Exempt Bond Portfolios dated September 29,
1995.(2)
(h) Addendum No. 7 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the Equity Income, National
Municipal Bond and Intermediate Corporate
Bond (formerly Short-Intermediate Corporate
Bond) Portfolios dated November 15, 1996.(5)
(i) Addendum No. 8 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the Equity Index and Bond Index
Portfolios dated February 14, 1997.(6)
(j) Addendum No. 9 to Amended and Restated
Advisory Agreement between Registrant and
Mississippi Valley Advisors Inc. with
respect to the Growth Equity Portfolio dated
November 21, 1997.(11)
- 3 -
<PAGE> 71
(k) Form of Addendum No. 10 to Amended and
Restated Advisory Agreement between
Registrant and Mississippi Valley Advisors
Inc. with respect to the Small Cap Equity
Index Portfolio.(11)
(l) Sub-Advisory Agreement between Mississippi
Valley Advisors Inc. and Clay Finlay Inc.
dated August 29, 1996.(4)
(m) Form of Addendum No. 11 to Amended and Restated
Advisory Agreement between the Registrant and
Mississippi Valley Advisors Inc. with respect
to the Conning Money Market Portfolio.(14)
(n) Form of Sub-Advisory Agreement between
Mississippi Valley Advisors Inc. and Conning
Asset Management Co. with respect to the
Conning Money Market Portfolio.(14)
(6) (a) Distribution Agreement between Registrant
and The Winsbury Company Limited Partnership
dated October 1, 1993. (13)
(b) Addendum No. 1 to Distribution Agreement
between Registrant and The Winsbury Company
Limited Partnership with respect to the ARCH
International Equity Portfolio dated March
15, 1994.(13)
(c) Addendum No. 2 to Distribution Agreement
between Registrant and The Winsbury Company
Limited Partnership with respect to Investor
B Shares of the non-money market Portfolios
dated March 1, 1995.(13)
(d) Addendum No. 3 to Distribution Agreement
between Registrant and The Winsbury Company
Limited Partnership with respect to the
Short-Intermediate Municipal Portfolio and
Investor B Shares of the Money Market
Portfolio.(13)
(e) Addendum No. 4 to Distribution Agreement
between Registrant and The Winsbury Company
Limited Partnership with respect to the
Tax-Exempt Money Market, Missouri Tax-Exempt
Bond and Kansas Tax-Exempt Bond Portfolios
dated September 29, 1995.(2)
(f) Addendum No. 5 to Distribution Agreement
between Registrant and BISYS Fund Services
with respect to the Equity Income, National
Municipal Bond and Intermediate Corporate
Bond (formerly Short-Intermediate Corporate
Bond) Portfolios dated November 15, 1996.(5)
- 4 -
<PAGE> 72
(g) Addendum No. 6 to Distribution Agreement
between Registrant and BISYS Fund Services
with respect to the Equity Index and Bond
Index Portfolios dated February 14, 1997.(6)
(h) Addendum No. 7 to Distribution Agreement
between Registrant and BISYS Fund Services
with respect to the Growth Equity and Small
Cap Equity Index Portfolios dated November
21, 1997.(11)
(i) Form of Addendum No. 8 to Distribution
Agreement between Registrant and BISYS Fund
Services with respect to S Shares.(12)
(j) Amendment No. 1 to Distribution Agreement
between Registrant and The Winsbury Company
Limited Partnership dated as of September
29, 1995.(1)
(k) Form of Addendum No. 9 to Distribution
Agreement between the Registrant and BISYS
Fund Services with respect to the Conning
Money Market Portfolio.(14)
(7) None.
(8) (a) Custodian Agreement between Registrant and
Mercantile Bank of St. Louis National
Association dated as of April 1, 1992.(13)
(b) Custody Fee Agreement between Registrant and
Mercantile Bank of St. Louis National
Association dated April 1, 1995.(13)
(c) Custody Fee Agreement between Registrant and
Mercantile Bank of St. Louis National
Association dated July 10, 1995.(13)
(d) Custody Fee Agreement between Registrant and
Mercantile Bank of St. Louis National
Association dated September 29, 1995.(2)
(e) Custody Fee Agreement between Registrant and
Mercantile Bank National Association dated
November 15, 1996.(5)
(f) Custody Fee Agreement between Registrant and
Mercantile Bank National Association dated
February 14, 1997.(6)
(g) Custody Fee Agreement between Registrant and
Mercantile Bank of St. Louis National
Association dated November 21, 1997.(11)
(h) Global Sub-Custodian Agreement among Bankers
Trust Company of New York, Registrant and
Mercantile Bank of St. Louis National
Association dated as of April 1, 1994.(13)
- 5 -
<PAGE> 73
(i) Securities Lending Amendment dated August 4,
1994 to Custodian Agreement dated April 1,
1992 between Registrant and Mercantile Bank
of St. Louis National Association.(13)
(j) Form of Custody Fee Agreement between
Registrant and Mercantile Bank National
Association.(14)
(9) (a) Administration Agreement between Registrant
and The Winsbury Service Corporation dated
October 1, 1993.(13)
(b) Addendum No. 1 to Administration Agreement
between Registrant and The Winsbury Service
Corporation with respect to the ARCH
International Equity Portfolio dated March
15, 1994.(13)
(c) Addendum No. 2 to Administration Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. (formerly known as The Winsbury
Service Corporation) with respect to
Investor B Shares of the non-money market
Portfolios dated as of March 1, 1995.(13)
(d) Addendum No. 3 to Administration Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the
Short-Intermediate Municipal Portfolio and
Investor B Shares of the Money Market
Portfolio dated July 10, 1995.(13)
(e) Addendum No. 4 to Administration Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Tax-Exempt
Money Market, Missouri Tax-Exempt Bond and
Kansas Tax-Exempt Bond Portfolios dated
September 29, 1995.(2)
(f) Addendum No. 5 to Administration Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Equity
Income, National Municipal Bond and
Intermediate Corporate bond (formerly
Short-Intermediate Corporate Bond) Portfolios
dated November 15, 1996.(5)
(g) Addendum No. 6 to Administration Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Equity Index
and Bond Index Portfolios dated February 14,
1997.(6)
(h) Addendum No. 7 to Administration Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Growth Equity
and Small Cap Equity Index Portfolios dated
November 21, 1997.(11)
- 6 -
<PAGE> 74
(i) Form of Addendum No. 8 to Administration
Agreement between Registrant and BISYS Fund
Services Ohio, Inc. with respect to S
Shares.(12)
(j) Form of Addendum No. 9 to Administration
Agreement between Registrant and BISYS Fund
Services Ohio, Inc. with respect to the
Conning Money Market Portfolio.(14)
(k) Transfer Agency Agreement between Registrant
and The Winsbury Service Corporation dated
October 1, 1993. (13)
(l) Addendum No. 1 to Transfer Agency Agreement
between Registrant and The Winsbury Service
Corporation with respect to the ARCH
International Equity Portfolio dated March
15, 1994.(13)
(m) Addendum No. 2 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. (formerly known as The Winsbury
Service Corporation) with respect to
Investor B Shares of the non-money market
Portfolios dated as of March 1, 1995.(13)
(n) Addendum No. 3 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the
Short-Intermediate Municipal Portfolio and
Investor B Shares of the Money Market
Portfolio dated July 10, 1995.(13)
(o) Addendum No. 4 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Tax-Exempt
Money Market, Missouri Tax-Exempt Bond and
Kansas Tax-Exempt Bond Portfolios dated
September 29, 1995.(2)
(p) Addendum No. 5 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Equity
Income, National Municipal Bond and
Intermediate Corporate Bond (formerly
Short-Intermediate Corporate Bond) Portfolios
dated November 15, 1996.(5)
(q) Addendum No. 6 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Equity Index
and Bond Index Portfolios dated February 14,
1997.(6)
(r) Addendum No. 7 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. with respect to the Growth Equity
and Small Cap Equity Index Portfolios dated
November 21, 1997.(10)
- 7 -
<PAGE> 75
(s) Form of Addendum No. 8 to Transfer Agency
Agreement between Registrant and BISYS Fund
Services Ohio, Inc. with respect to S
shares.(12)
(t) Form of Addendum No. 9 to Transfer Agency
Agreement between Registrant and BISYS Fund
Services Ohio, Inc. with respect to the
Conning Money Market Portfolio.(14)
(u) Amendment No. 1 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. dated as of September 29, 1995.(1)
(v) Amendment No. 2 to Transfer Agency Agreement
between Registrant and BISYS Fund Services
Ohio, Inc. dated October 1, 1995.(2)
(w) (1) Administrative Services Plan (Trust
Shares) and Form of Agreement.(8)
(2) Administrative Services Plan
(Institutional Shares) and Form of
Agreement.(8)
(x) Form of Shareholder Services Plan and Form of
Servicing Agreement with respect to the Conning
Money Market Porfolio.(14)
(y) Agreement and Plan of Reorganization between
Registrant and Arrow Funds.(9)
(10) Opinion and consent of counsel. (14)
(11) (a) Consent of KMPG Peat Marwick LLP.(14)
(b) Consent of Drinker Biddle & Reath LLP.(14)
(12) None.
(13) (a) Purchase Agreement between Registrant and
Shearson/American Express Inc. dated
November 23, 1982.(13)
(b) Purchase Agreement between Registrant and
The Winsbury Service Corporation dated April
1, 1994.(13)
(c) Purchase Agreements between Registrant and
BISYS Fund Services Ohio, Inc. dated as of
February 28, 1995.(13)
- 8 -
<PAGE> 76
(d) Purchase Agreements between Registrant and
BISYS Fund Services Ohio, Inc. dated as of
July 7, 1995.(13)
(e) Purchase Agreements between Registrant and
BISYS Fund Services Ohio, Inc. dated
September 29, 1995.(2)
(f) Purchase Agreement between Registrant and
BISYS Fund Services Ohio, Inc. dated
November 14, 1996.(5)
(g) Purchase Agreements between Registrant and
BISYS Fund Services Ohio, Inc. dated
February 6, 1997.(6)
(h) Purchase Agreement between Registrant and
BISYS Fund Services Ohio, Inc. dated
February 27, 1997.(6)
(i) Purchase Agreement between Registrant and
BISYS Fund Services Ohio, Inc. dated April
30, 1997.(7)
(j) Purchase Agreements between Registrant and
BISYS Fund Services Ohio, Inc. dated
November 21, 1997.(11)
(k) Form of Purchase Agreement between Registrant
and BISYS Fund Services Ohio, Inc.(14)
(14) None.
(15) (1) Distribution and Services Plan (Investor A
Shares) under Rule 12b-1 and Form of
Agreement.(8)
(2) Distribution and Services Plan (Investor B
Shares) under Rule 12b-1 and Form of
Agreement.(8)
(16) (a) Schedule of Computation of Performance
Calculations for Investor A (formerly
Investor) Shares and Trust Shares of the
Money Market, Treasury Money Market,
Government & Corporate Bond, Growth & Income
Equity, U.S. Government Securities, Emerging
Growth and Balanced Portfolio.(13)
(b) Schedule of Computation of Performance
Calculations for Investor A (formerly
Investor), Trust and Institutional Shares of
the International Equity Portfolio.(13)
- 9 -
<PAGE> 77
(c) Schedule of Computation of Performance
Calculations for Institutional Shares of the
Money Market, Treasury Money Market,
Government & Corporate Bond, Growth & Income
Equity, U.S. Government Securities, Emerging
Growth, Balanced and International Equity
Portfolios.(13)
(d) Schedule of Computation of Performance
Calculations for Investor B Shares of the
Government & Corporate Bond, Growth & Income
Equity, U.S. Government Securities, Emerging
Growth, Balanced and International Equity
Portfolios.(13)
(e) Schedule of Computation of Performance
Calculations for Trust Shares and Investor A
Shares of the Short-Intermediate Municipal
Portfolio.(1)
(f) Schedule of Computation of Performance
Calculations for Trust and Investor A Shares
of the Tax-Exempt Money Market, Missouri
Tax-Exempt Bond and Kansas Tax-Exempt Bond
Portfolios and for Investor B Shares of the
Missouri Tax-Exempt Bond and Kansas
Tax-Exempt Bond Portfolios.(2)
(g) Schedule of Computation of Performance
Calculations for Trust, Investor A and
Investor B Shares of the National Municipal
Bond Portfolio.(5)
(h) Schedule of Computation of Performance
Calculations for Trust, Investor A and
Investor B Shares of the National Municipal
Bond Portfolio.(7)
(i) Schedule of Computation of Performance
Calculations for Trust, Institutional and
Investor A Shares of the Intermediate
Corporate Bond Portfolio.(10)
(j) Schedule of Computation of Performance
Calculations for Trust, Institutional and
Investor A Shares of the Bond Index
Portfolio.(10)
(k) Schedule of Computation of Performance
Calculations for Trust, Institutional,
Investor A and Investor B Shares of the
Equity Income Portfolio.(10)
(l) Schedule of Computation of Performance
Calculations for Trust, Institutional and
Investor A Shares of the Equity Index
Portfolio.(10)
(18) Amended and Restated Plan Pursuant to Rule 18f-3
for Operation of a Multi-Class System.(12)
- 10 -
<PAGE> 78
(27) Not applicable.
- ------------------
1. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 33 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on January 2, 1996.
2. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 34 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on February 28, 1996.
3. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on March 28, 1996.
4. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 36 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on October 8, 1996.
5. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 37 to
Registrant's Registration Statement on Form N-1A (File
No. 2-79285) on January 30, 1997.
6. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 38 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on March 31, 1997.
7. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 39 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on May 28, 1997.
8. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 40 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on June 18, 1997.
9. Filed electronically as an Exhibit and incorporated herein
by reference to Registrant's Registration Statement on Form
N-14 (File No. 333-33423) on August 12, 1997.
10. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on August 29, 1997.
11. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 42 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on January 29, 1998.
- 11 -
<PAGE> 79
12. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 43 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on January 30, 1998.
13. Filed electronically as an Exhibit and incorporated herein
by reference to Post-Effective Amendment No. 44 to
Registrant's Registration Statement on Form N-1A (File No.
2-79285) on March 31, 1998.
14. A copy of such Exhibit is filed electronically herein.
Item 25. Persons Controlled By or Under Common Control with Registrant
Not Applicable.
Item 26. Number of Holders of Securities
As of October 28, 1998:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Class A Common Stock (The ARCH
Money Market Portfolio)............................................... 162
Class A - Special Series 1 Common Stock
(The ARCH Money Market
Portfolio)............................................................. 18
Class A - Special Series 2 Common Stock
(The ARCH Money Market Portfolio)...................................... 4
Class A - Special Series 3 Common Stock
(The ARCH Money Market
Portfolio)............................................................. 51
Class B Common Stock (The ARCH
(Treasury Money Market
Portfolio)............................................................. 10
Class B - Special Series 1 Common Stock
(The ARCH Treasury Money Market
Portfolio)............................................................. 10
Class B - Special Series 2 Common Stock
(The ARCH Treasury Money Market
Portfolio)............................................................. 2
Class C Common Stock (The ARCH
Growth & Income Equity
Portfolio)............................................................. 2855
Class C -Special Series 1 Common Stock
(The ARCH Growth & Income Equity
</TABLE>
- 12 -
<PAGE> 80
<TABLE>
<S> <C>
Portfolio)............................................................. 17
Class C -Special Series 2 Common Stock
(The ARCH Growth & Income Equity
Portfolio)............................................................. 7
Class C -Special Series 3 Common Stock
(The ARCH Growth & Income Equity
Portfolio)............................................................. 877
Class D Common Stock (The ARCH
Government & Corporate Bond
Portfolio)............................................................. 242
Class D - Special Series 1 Common Stock
(The ARCH Government & Corporate Bond
Portfolio)............................................................. 10
Class D - Special Series 2 Common Stock
(The ARCH Government & Corporate Bond
Portfolio)............................................................. 4
Class D - Special Series 3 Common Stock
(The ARCH Government & Corporate Bond
Portfolio)............................................................. 65
Class E Common Stock (The ARCH
U.S. Government Securities
Portfolio)............................................................. 202
Class E - Special Series 1 Common Stock
(The ARCH U.S. Government Securities
Portfolio)............................................................. 8
Class E - Special Series 2 Common Stock
(The ARCH U.S. Government Securities
Portfolio)............................................................. 4
Class E - Special Series 3 Common Stock
(The ARCH U.S. Government Securities
Portfolio)............................................................. 25
Class F Common Stock (The ARCH Small
Cap Equity Portfolio).................................................. 1508
Class F - Special Series 1 Common Stock
(The ARCH Small Cap Equity
Portfolio)............................................................. 24
Class F - Special Series 2 Common Stock
(The ARCH Small Cap Equity
Portfolio)............................................................. 4
Class F - Special Series 3 Common Stock
(The ARCH Small Cap Equity
Portfolio)............................................................. 299
Class G Common Stock (The ARCH Balanced
Portfolio)............................................................. 380
</TABLE>
- 13 -
<PAGE> 81
<TABLE>
<S> <C>
Class G - Special Series 1 Common Stock
Common Stock (The ARCH Balanced
Portfolio)............................................................. 5
Class G - Special Series 2 Common Stock
Stock (The ARCH Balanced
Portfolio)............................................................. 4
Class G Common Stock - Special Series 3
Common Stock (The ARCH Balanced
Portfolio)............................................................. 128
Class H Common Stock (The ARCH
International Equity
Portfolio)............................................................. 506
Class H - Special Series 1 Common
Stock - (The ARCH International Equity
Portfolio)............................................................. 10
Class H - Special Series 2 Common Stock
(The ARCH International Equity
Portfolio)............................................................. 3
Class H - Special Series 3 Common Stock
(The ARCH International Equity
Portfolio)............................................................. 170
Class I Common Stock (The ARCH
Short-Intermediate Municipal
Portfolio)............................................................. 3
Class I - Special Series 1 Common Stock
(The ARCH Short-Intermediate
Municipal Portfolio).................................................. 3
Class J Common Stock (The ARCH Tax-Exempt
Money Market Portfolio)............................................... 13
Class J - Special Series 1
Common Stock (The ARCH Tax-Exempt Money
Market Portfolio)...................................................... 6
Class K Common Stock (The ARCH Missouri
Tax-Exempt Bond Portfolio)............................................ 666
Class K - Special Series 1
Common Stock (The ARCH Missouri
Tax-Exempt Bond Portfolio)............................................. 7
Class K - Special Series 2
Common Stock (The ARCH Missouri
Tax-Exempt Bond Portfolio)............................................. 85
Class L Common Stock (The ARCH Kansas
Tax-Exempt Bond Portfolio)............................................. N/A
Class L - Special Series 1
Common Stock (The ARCH Kansas
Tax-Exempt Bond Portfolio)............................................. N/A
</TABLE>
- 14 -
<PAGE> 82
<TABLE>
<S> <C>
Class L - Special Series 2
Common Stock (The ARCH Kansas
Tax-Exempt Bond Portfolio)............................................. N/A
Class M - Common Stock (The ARCH Equity
Income Portfolio)...................................................... 110
Class M - Special Series 1
Common Stock (The ARCH Equity Income Portfolio)........................ 5
Class M - Special Series 2
Common Stock (The ARCH Equity Income Portfolio)........................ 2
Class M - Special Series 3
Common Stock (The ARCH Equity Income Portfolio)........................ 31
Class N - Common Stock (The ARCH National
Municipal Bond Portfolio).............................................. 50
Class N - Special Series 1
Common Stock (The ARCH National
Municipal Bond Portfolio).............................................. 10
Class N - Special Series 2
Common Stock (The ARCH National
Municipal Bond Portfolio).............................................. 16
Class O - Common Stock (The ARCH Intermediate
Corporate Bond Portfolio).............................................. 14
Class O - Special Series 1
Common Stock (The ARCH Intermediate
Corporate Bond Portfolio).............................................. 4
Class O - Special Series 2
Common Stock (The ARCH Intermediate
Corporate Bond Portfolio).............................................. 2
Class P - Common Stock (The ARCH Equity
Index Portfolio)....................................................... 104
Class P - Special Series 1
Common Stock (The ARCH Equity Index
Portfolio)............................................................. 3
Class P - Special Series 2
Common Stock (The ARCH Equity Index
Portfolio)............................................................. 3
Class Q - Common Stock (The ARCH Bond Index
Portfolio)............................................................. 16
Class Q - Special Series 1
Common Stock (The ARCH Bond Index Portfolio)........................... 9
Class Q - Special Series 2
Common Stock (The ARCH Bond Index Portfolio)........................... 2
Class R - Common Stock (The ARCH Small Cap Equity Index
Portfolio)............................................................. N/A
Class R - Special Series 1
(The ARCH Small Cap Equity Index Portfolio)............................ N/A
</TABLE>
- 15 -
<PAGE> 83
<TABLE>
<S> <C>
Class R - Special Series 2
(The ARCH Small Cap Equity Index Portfolio)............................ N/A
Class S - Common Stock (The ARCH Growth Equity
Portfolio)............................................................. 203
Class S - Special Series 1
(The ARCH Growth Equity Portfolio)..................................... 6
Class S - Special Series 2
(The ARCH Growth Equity Portfolio)..................................... 2
Class S - Special Series 3
(The ARCH Growth Equity Portfolio)..................................... 40
</TABLE>
Item 27. Indemnification
Indemnification of Registrant's principal underwriter,
custodian and transfer agent against certain losses is provided
for, respectively, in Section 7 of the Distribution Agreement,
incorporated herein by reference as Exhibit (6)(a), in Section
24 of the Custodian Agreement, incorporated herein by reference
as Exhibit (8)(a) and in Section 18 of the Transfer Agency
Agreement incorporated herein by reference as Exhibit (9)(k).
The Registrant has obtained from a major insurance carrier a
directors' and officers' liability policy covering certain types
of errors and omissions. In no event will the Registrant
indemnify any of its directors, officers, employees or agents
against any liability to which such person would otherwise be
subject by reason of his willful misfeasance, bad faith or gross
negligence in the performance of his duties, or by reason of his
reckless disregard of the duties involved in the conduct of his
office or under his agreement with the Registrant. Registrant
will comply with Rule 484 under the Securities Act of 1933 and
Release 11330 under the Investment Company Act of 1940 in
connection with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a director,
officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
- 16 -
<PAGE> 84
Item 28. Business and Other Connections of Investment Adviser
A. Mississippi Valley Advisors Inc. is registered as an
investment adviser with the Securities and Exchange Commission
and is responsible for providing advisory services to each of
Registrant's investment portfolios.
B. The information required by this Item 28 with respect
to each Director and Officer of Mississippi Valley Advisors Inc.
is incorporated by reference to Form ADV and Schedules A and D
filed by Mississippi Valley Advisors Inc. with the Securities
and Exchange Commission pursuant to the Securities Exchange Act
of 1934 (File No. 801-28897).
C. Clay Finlay Inc. is registered as an investment
adviser with the Securities and Exchange Commission and provides
sub-advisory services to the Registrant's International Equity
Portfolio.
D. The information required by this Item 28 with respect
to each Director and Officer of Clay Finlay Inc. is included in
Form ADV and Schedules A and D filed by Clay Finlay Inc. with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (File No. 801-17316).
Item 29. Principal Underwriter
A. BISYS Fund Services Limited Partnership d/b/a BISYS Fund
Services (formerly The Winsbury Company Limited
Partnership) acts as distributor and its affiliate, BISYS
Fund Services Ohio, Inc., acts as administrator and
transfer agent for the Registrant. BISYS Fund Services
also distributes the securities of Alpine Equity Trust,
American Performance Funds, AmSouth Mutual Funds, The BB&T
Mutual Funds Group, The Coventry Group, The Eureka Funds,
Fountain Square Funds, Hirtle Callaghan Trust, HSBC Family
of Funds, INTRUST Funds Trust, The Infinity Mutual Funds,
Inc., The Kent Funds, Magna Funds, Meyers Investment Trust,
MMA Praxis Mutual Funds, M.S.D.&T. Funds, Pacific Capital
Funds, Parkstone Group of Funds, The Parkstone Advantage
Funds, Pegasus Funds, The Republic Advisors Funds Trust,
Puget Sound Asset Management, The Republic Funds Trust, The
Riverfront Funds, Inc., SBSF Funds, Inc. d/b/a Key Mutual
Funds, Sefton Funds, The Sessions Group, Summit Investment
Trust, Variable Insurance Funds, The Victory Portfolios,
The Victory Variable Funds and Vintage Funds, Inc.
B. To the best of Registrant's knowledge, the partners of
BISYS Fund Services are as follows:
- 17 -
<PAGE> 85
<TABLE>
<CAPTION>
====================================================================================================
Positions and Offices
Name and Principal with BISYS Positions and Offices
Business Address Fund Services with Registrant
---------------- ------------- ---------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
BISYS Fund Services, Inc. Sole General Partner None
3435 Stelzer Road
Columbus, Ohio
43219-3035
- ----------------------------------------------------------------------------------------------------
WC Subsidiary Corporation Sole Limited Partner None
3435 Stelzer Road
Columbus, Ohio
43219-3035
====================================================================================================
</TABLE>
C. None.
Item 30. Location of Accounts and Records
(1) Mercantile Bank National Association, One Mercantile
Center, 8th and Locust Streets, St. Louis, MO 63101
(records relating to its functions as custodian).
(2) BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as distributor).
(3) Mississippi Valley Advisors Inc., 7th and Washington
Streets, 21st Floor, St. Louis, MO 63101 (records relating
to its functions as investment adviser).
(4) BISYS Fund Services Ohio, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219 (records relating to its function as
administrator).
(5) BISYS Fund Services Ohio, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219 (records relating to its function as
transfer agent and dividend disbursing agent).
(6) Drinker Biddle & Reath LLP, Philadelphia National Bank
Building, 1345 Chestnut Street, Philadelphia, PA 19107-3496
(Registrant's Articles of Incorporation, By-Laws and Minute
Books).
(7) Clay Finlay Inc., 200 Park Avenue, 56th Floor, New York,
New York 10166 (records relating to its function as
sub-adviser to the International Equity Portfolio).
(8) Bankers Trust Company, 16 Wall Street, New York, New York
10005 (records relating to its function as sub-custodian
for the International Equity Portfolio).
(9) Conning Asset Management Co., 700 Market Street, St. Louis,
Missouri 63101 (records relating to its function as
sub-adviser to the Conning Money Market Portfolio).
- 18 -
<PAGE> 86
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered a copy of the Registrant's latest
annual report to shareholders upon request and without
charge.
- 19 -
<PAGE> 87
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this Post-Effective Amendment No. 45 to its Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of St. Louis and the State of
Missouri, on the 5th day of November, 1998.
THE ARCH FUND, INC.
(Registrant)
/s/ Jerry V. Woodham
--------------------
Jerry V. Woodham
President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 45 to Registrant's Registration
Statement on Form N-1A has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Jerry V. Woodham Chairman of the Board, November 5, 1998
- ----------------------- Director and President
Jerry V. Woodham
/s/* James C. Jacobsen Director November 5, 1998
- -----------------------
James C. Jacobsen
/s/* Joseph J. Hunt Director November 5, 1998
- -----------------------
Joseph J. Hunt
/s/* Robert M. Cox, Jr. Director November 5, 1998
- -----------------------
Robert M. Cox, Jr.
/s/* Ronald D. Winney Director & Treasurer November 5, 1998
- -----------------------
Ronald D. Winney
/s/* Donald E. Brandt Director November 5, 1998
- -----------------------
Donald E. Brandt
/s/* Patrick J. Moore Director November 5, 1998
- -----------------------
Patrick J. Moore
*By: /s/ Jerry V. Woodham
--------------------
Jerry V. Woodham
Attorney-in-fact
</TABLE>
<PAGE> 88
THE ARCH FUND(R), INC.
Power of Attorney
Donald E. Brandt, whose signature appears below, does hereby constitute
and appoint Jerry V. Woodham and W. Bruce McConnel, III, and either of them, his
true and lawful attorneys and agents, with full power of substitution and
resubstitution, to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The ARCH Fund, Inc.
(the "Fund") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended, and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Fund's Registration
Statement and of any and all amendments (including post-effective amendments) to
the Fund's Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned on behalf of
the Fund and/or as a director and/or officer of the Fund any and all amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
/s/ Donald E. Brandt
-------------------------------
Donald E. Brandt
Date: January 30, 1998
<PAGE> 89
THE ARCH FUND(R), INC.
Power of Attorney
Robert M. Cox, Jr., whose signature appears below, does hereby
constitute and appoint Jerry V. Woodham and W. Bruce McConnel, III, and either
of them, his true and lawful attorneys and agents, with full power of
substitution and resubstitution, to do any and all acts and things and execute
any and all instruments which said attorneys and agents, or either of them, may
deem necessary or advisable or which may be required to enable The ARCH Fund,
Inc. (the "Fund") to comply with the Investment Company Act of 1940, as amended,
and the Securities Act of 1933, as amended, and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Fund's Registration
Statement and of any and all amendments (including post-effective amendments) to
the Fund's Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned on behalf of
the Fund and/or as a director and/or officer of the Fund any and all amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
/s/ Robert M. Cox, Jr.
-------------------------------
Robert M. Cox, Jr.
Date: January 28, 1998
<PAGE> 90
THE ARCH FUND(R), INC.
Power of Attorney
Patrick J. Moore, whose signature appears below, does hereby constitute
and appoint Jerry V. Woodham and W. Bruce McConnel, III, and either of them, his
true and lawful attorneys and agents, with full power of substitution and
resubstitution, to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The ARCH Fund, Inc.
(the "Fund") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended, and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Fund's Registration
Statement and of any and all amendments (including post-effective amendments) to
the Fund's Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned on behalf of
the Fund and/or as a director and/or officer of the Fund any and all amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
/s/ Patrick J. Moore
-------------------------------
Patrick J. Moore
Date: January 30, 1998
<PAGE> 91
THE ARCH FUND(R), INC.
Power of Attorney
Ronald D. Winney, whose signature appears below, does hereby constitute
and appoint Jerry V. Woodham and W. Bruce McConnel, III, and either of them, his
true and lawful attorneys and agents, with full power of substitution and
resubstitution, to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The ARCH Fund, Inc.
(the "Fund") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended, and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Fund's Registration
Statement and of any and all amendments (including post-effective amendments) to
the Fund's Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned on behalf of
the Fund and/or as a director and/or officer of the Fund any and all amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
/s/ Ronald D. Winney
-------------------------------
Ronald D. Winney
Date: January 20, 1998
<PAGE> 92
THE ARCH FUND(R), INC.
Power of Attorney
James C. Jacobsen, whose signature appears below, does hereby
constitute and appoint Jerry V. Woodham and W. Bruce McConnel, III, and either
of them, his true and lawful attorneys and agents, with full power of
substitution and resubstitution, to do any and all acts and things and execute
any and all instruments which said attorneys and agents, or either of them, may
deem necessary or advisable or which may be required to enable The ARCH Fund,
Inc. (the "Fund") to comply with the Investment Company Act of 1940, as amended,
and the Securities Act of 1933, as amended, and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Fund's Registration
Statement and of any and all amendments (including post-effective amendments) to
the Fund's Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned on behalf of
the Fund and/or as a director and/or officer of the Fund any and all amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
/s/ James C. Jacobsen
-------------------------------
James C. Jacobsen
Date: January 20, 1998
<PAGE> 93
THE ARCH FUND(R), INC.
Power of Attorney
Joseph J. Hunt, whose signature appears below, does hereby constitute
and appoint Jerry V. Woodham and W. Bruce McConnel, III, and either of them, his
true and lawful attorneys and agents, with full power of substitution and
resubstitution, to do any and all acts and things and execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable The ARCH Fund, Inc.
(the "Fund") to comply with the Investment Company Act of 1940, as amended, and
the Securities Act of 1933, as amended, and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing and effectiveness of the Fund's Registration
Statement and of any and all amendments (including post-effective amendments) to
the Fund's Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned on behalf of
the Fund and/or as a director and/or officer of the Fund any and all amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue hereof.
/s/ Joseph J. Hunt
-------------------------------
Joseph J. Hunt
Date: January 20, 1998
<PAGE> 94
EXHIBIT INDEX
Exhibit No. Description Page No.
(1)(v) Articles Supplementary to Registrant's Articles of
Incorporation dated March 23, 1998.
(1)(w) Articles Supplementary to Registrant's
Articles of Incorporation dated September 17, 1998.
(5)(m) Form of Addendum No. 11 to Amended and Restated Advisory
Agreement between the Registrant and Mississippi
Valley Advisors Inc. with respect to the Conning Money
Market Portfolio.
(5)(n) Form of Sub-Advisory Agreement between Mississippi
Valley Advisors Inc. and Conning Asset Management Co.
with respect to the Conning Money Market Portfolio.
(6)(k) Form of Addendum No. 9 to Distribution Agreement
between the Registrant and Bisys Fund Services with
respect to the Conning Money Market Portfolio.
(8)(j) Form of Custody Fee Agreement between Registrant and
Mercantile Bank National Association.
(9)(j) Form of Addendum No. 9 to Administration Agreement
between the Registrant and Bisys Fund Services Ohio, Inc.
with respect to the Conning Money Market Portfolio.
(9)(t) Form of Addendum No. 9 to Transfer Agency Agreement
between the Registrant and Bisys Fund Services Ohio, Inc.
with respect to the Conning Money Market Portfolio.
(9)(x) Form of Shareholder Services Plan and Form of Servicing
Agreement with respect to the Conning Money Market
Portfolio.
(10) Opinion and consent of counsel.
(11)(a) Consent of KPMG Peat Marwick LLP.
(11)(b) Consent of Drinker Biddle & Reath LLP.
(13)(k) Form of Purchase Agreement between Registrant and BISYS
Fund Services Ohio, Inc.
<PAGE> 1
Exhibit (1)(v)
THE ARCH FUND, INC.
ARTICLES SUPPLEMENTARY
THE ARCH FUND, INC., a Maryland corporation having its
principal office in Maryland in the City of Baltimore, Maryland (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The total number of shares of capital stock
which the Corporation was heretofore authorized to issue was
Seven Billion (7,000,000,000) shares (of the par value of One
Mill ($.001) each) and of the aggregate par value of Seven
Million Dollars ($7,000,000) of Common Stock classified as
follows:
Number of Shares
Classification Authorized
-------------- ----------
Class A 550,000,000
Class A-Special Series 1 1,800,000,000
Class A-Special Series 2 300,000,000
Class A-Special Series 3 50,000,000
Class B 100,000,000
Class B-Special Series 1 1,000,000,000
Class B-Special Series 2 300,000,000
Class C 5,000,000
Class C-Special Series 1 50,000,000
Class C-Special Series 2 20,000,000
Class C-Special Series 3 50,000,000
Class D 5,000,000
Class D-Special Series 1 50,000,000
Class D-Special Series 2 20,000,000
Class D-Special Series 3 50,000,000
Class E 5,000,000
Class E-Special Series 1 15,000,000
Class E-Special Series 2 20,000,000
Class E-Special Series 3 50,000,000
Class F 5,000,000
Class F-Special Series 1 35,000,000
Class F-Special Series 2 20,000,000
Class F-Special Series 3 50,000,000
Class G 5,000,000
Class G-Special Series 1 15,000,000
Class G-Special Series 2 20,000,000
Class G-Special Series 3 50,000,000
Class H 10,000,000
Class H-Special Series 1 10,000,000
Class H-Special Series 2 10,000,000
Class H-Special Series 3 50,000,000
Class I 25,000,000
Class I-Special Series 1 25,000,000
Class J 50,000,000
Class J-Special Series 1 300,000,000
Class K 25,000,000
Class K-Special Series 1 25,000,000
Class K-Special Series 2 10,000,000
<PAGE> 2
Number of Shares
Classification Authorized
-------------- ----------
Class L 25,000,000
Class L-Special Series 1 25,000,000
Class L-Special Series 2 10,000,000
Class M 25,000,000
Class M-Special Series 1 50,000,000
Class M-Special Series 2 25,000,000
Class M-Special Series 3 25,000,000
Class N 25,000,000
Class N-Special Series 1 50,000,000
Class N-Special Series 2 25,000,000
Class O 25,000,000
Class O-Special Series 1 50,000,000
Class O-Special Series 2 25,000,000
Class P 25,000,000
Class P-Special Series 1 50,000,000
Class P-Special Series 2 25,000,000
Class Q 25,000,000
Class Q-Special Series 1 50,000,000
Class Q-Special Series 2 25,000,000
Class R 25,000,000
Class R-Special Series 1 50,000,000
Class R-Special Series 2 25,000,000
Class S 25,000,000
Class S-Special Series 1 50,000,000
Class S-Special Series 2 25,000,000
Class S-Special Series 3 25,000,000
Unclassified 1,010,000,000
-------------
TOTAL 7,000,000,000
SECOND: Pursuant to Article VI of the Corporation's
Articles of Incorporation (the "Charter") and Section 2-105(c) of the
Maryland General Corporation Law, the Board of Directors of the
Corporation has increased the total number of authorized shares of
capital stock of the Corporation to Twenty Billion (20,000,000,000)
shares of Common Stock of the par value of One Mill ($.001) each and of
the aggregate par value of Twenty Million Dollars ($20,000,000) and has
classified Two Billion (2,000,000,000) shares of the Corporation's
newly authorized, unclassified and unissued Common Stock as follows:
Number of Shares
Classification Classified
-------------- ----------
Class A-Special Series 4 2,000,000,000
Class B-Special Series 3 2,000,000,000
Class J-Special Series 2 2,000,000,000
pursuant to resolutions unanimously adopted by the Board of Directors
of the Corporation on January 20, 1998.
THIRD: Pursuant to Article VI, Section (5) of the
Charter, the shares of Common Stock newly classified
-2-
<PAGE> 3
hereby shall have the following preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption:
1. Assets Belonging to a Class. All consideration received by
the Corporation for the issue and sale of such Class A - Special Series
4, Class B - Special Series 3 and Class J - Special Series 2 shares
(collectively, the "New Special Series" shares with respect to the
initial Class A, Class B or Class J shares; such Class A, Class B and
Class J shares formerly classified referred to herein collectively, as
the "Initial Class" shares of Common Stock and such Classes
collectively, the "Initial Classes")) shall be invested and reinvested
with the consideration received by the Corporation for the issue and
sale of all other shares now or hereafter classified as shares of
Initial Class A (including Class A - Special Series 1 shares, Class A -
Special Series 2 shares and Class A - Special Series 3 shares), Initial
Class B (including Class B - Special Series 1 shares and Class B -
Special Series 2 shares) and Initial Class J (including Class J -
Special Series 1 shares) (such Class A Special Series 1, Class B -
Special Series 1 and Class J - Special Series 1 shares formerly
classified collectively, the "Special Series 1" shares with respect to
such Initial Class shares, such Class A Special Series 2 and Class B -
Special Series 2 shares formerly classified collectively, the "Special
Series 2" shares with respect to such Initial Class shares, and such
Class A - Special Series 3 shares formerly classified the "Special
Series 3" shares with respect to such Initial Class shares),
respectively, of Common Stock (irrespective of whether said shares have
been classified as a part of a series of said Class and, if so
classified as a part of a series, irrespective of the particular series
classification), together with all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale,
exchange, or liquidation thereof, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be
and any general assets of the Corporation allocated to an Initial Class
(including the respective Initial Class shares, Special Series 1
shares, Special Series 2 shares, if any, and Special Series 3 shares,
if any, formerly classified, the New Special Series shares herein
classified or such other shares with respect to such Class) by the
Board of Directors in accordance with the Corporation's Charter. All
income, earnings, profits, and proceeds, including any proceeds derived
from the sale, exchange or liquidation of such shares of an Initial
Class, and any assets derived from any reinvestment of such proceeds in
whatever form shall be allocated to the New Special Series
-3-
<PAGE> 4
shares in the proportion that the net asset value of such New Special
Series shares of such Initial Class bear to the total net asset value
of all shares of such Initial Class, respectively (irrespective of
whether said shares have been classified as a part of a series of said
Class and, if so classified as a part of a series, irrespective of the
particular series classification).
2. Liabilities Belonging to a Class. All the liabilities
(including expenses) of the Corporation in respect of an Initial Class
shall be allocated to the New Special Series shares of such Initial
Class hereby classified in the proportion that the net asset value of
such New Special Series shares of such Initial Class bears to the total
net asset value of all shares of such Initial Class (irrespective of
whether said shares have been classified as a part of a series of said
Class and, if so classified as a part of a series, irrespective of the
particular series classification), except that to the extent that the
Board of Directors may determine from time to time for such respective
New Special Series shares (or any other series of shares of such
Class):
(a) With respect to Initial Class A, Initial Class B
and Initial Class J to the extent that may be from
time to time determined by the Board of Directors to
allocate the following expenses to such respective
New Special Series shares:
(1) only the New Special Series shares of an
Initial Class of Common Stock shall bear: (i) the
expenses and liabilities of payments to institutions
under any agreements entered into by or on behalf of
the Corporation which provide for services by the
institutions exclusively for their customers who own
of record or beneficially such New Special Series
shares; and (ii) such other expenses and liabilities
as the Board of Directors may from time to time
determine are directly attributable to such shares
and which therefore should be borne solely by the New
Special Series shares of an Initial Class of Common
Stock; and
(2) No New Special Series shares of an
Initial Class of Common Stock shall bear (i) the
expenses and liabilities of payments to institutions
under any agreements entered into by or on behalf of
the Corporation which provide for services by the
institutions exclusively for their customers who own
of record or beneficially shares of an Initial Class
other than the New Special
-4-
<PAGE> 5
Series shares of such Class; and (ii) such other
expenses and liabilities as the Board of Directors
may from time to time determine are directly
attributable to shares of an Initial Class other than
the New Special Series shares of such Class and which
therefore should be borne solely by such other shares
of an Initial Class and not by the New Special Series
shares of such Class of Common Stock.
3. Preferences, Conversion and other Rights, Voting Powers,
Restrictions, Limitations as to Dividends, Qualifications, and Terms
and Conditions of Redemption. Except as provided hereby, each New
Special Series share of an Initial Class of shares of Common Stock
shall have the same preferences, conversion, and other rights, voting
powers, restrictions, limitation as to dividends, qualifications, and
terms and conditions of redemption applicable to all other shares of
Common Stock as set forth in the Charter and shall also have the same
preferences, conversion, and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions
of redemption as each other share formerly, now or hereafter classified
as a share of an Initial Class of Common Stock (irrespective of whether
said share has been classified as a part of a series of said Class and,
if so classified as a part of a series, irrespective of the particular
series classification) except that: on any matter that pertains to the
agreements or expenses and liabilities described in Section 2, clause a
(1) (or to any plan or other document adopted by the Corporation
relating to said agreements, expenses, or liabilities) and is submitted
to a vote of shareholders of the Corporation, only the New Special
Series shares of an Initial Class of Common Stock (excluding the other
shares classified as a series of such Class other than the New Special
Series shares) shall be entitled to vote, except that:
(a) if said matter affects shares of capital stock in
the Corporation other than the New Special Series
shares of an Initial Class, such other affected
shares of capital stock in the Corporation shall also
be entitled to vote, and in such case, such New
Special Series shares of such Class of Common Stock
shall be voted in the aggregate together with such
other affected shares and not by class or series
except where otherwise required by law or permitted
by the Board of Directors of the Corporation; and
(b) if said matter does not affect the New
-5-
<PAGE> 6
Special Series shares of an Initial Class of Common
Stock, such shares shall not be entitled to vote
(except where required by law or permitted by the
Board of Directors) even though the matter is
submitted to a vote of the holders of shares of
capital stock in the Corporation other than said New
Special Series shares of such Class of Common Stock.
FOURTH: The total number of shares of capital stock
which the Corporation is presently authorized to issue is Twenty
Billion (20,000,000,000) shares (of the par value of One Mill ($.001)
each) of Common Stock classified as follows:
Number of Shares
Classification Authorized
-------------- ----------
Class A 550,000,000
Class A-Special Series 1 1,800,000,000
Class A-Special Series 2 300,000,000
Class A-Special Series 3 50,000,000
Class A-Special Series 4 2,000,000,000
Class B 100,000,000
Class B-Special Series 1 1,000,000,000
Class B-Special Series 2 300,000,000
Class B-Special Series 3 2,000,000,000
Class C 5,000,000
Class C-Special Series 1 50,000,000
Class C-Special Series 2 20,000,000
Class C-Special Series 3 50,000,000
Class D 5,000,000
Class D-Special Series 1 50,000,000
Class D-Special Series 2 20,000,000
Class D-Special Series 3 50,000,000
Class E 5,000,000
Class E-Special Series 1 15,000,000
Class E-Special Series 2 20,000,000
Class E-Special Series 3 50,000,000
Class F 5,000,000
Class F-Special Series 1 35,000,000
Class F-Special Series 2 20,000,000
Class F-Special Series 3 50,000,000
Class G 5,000,000
Class G-Special Series 1 15,000,000
Class G-Special Series 2 20,000,000
Class G-Special Series 3 50,000,000
Class H 10,000,000
Class H-Special Series 1 10,000,000
Class H-Special Series 2 10,000,000
Class H-Special Series 3 50,000,000
Class I 25,000,000
Class I-Special Series 1 25,000,000
Class J 50,000,000
Class J-Special Series 1 300,000,000
Class J-Special Series 2 2,000,000,000
Class K 25,000,000
Class K-Special Series 1 25,000,000
-6-
<PAGE> 7
Number of Shares
Classification Authorized
-------------- ----------
Class K-Special Series 2 10,000,000
Class L 25,000,000
Class L-Special Series 1 25,000,000
Class L-Special Series 2 10,000,000
Class M 25,000,000
Class M-Special Series 1 50,000,000
Class M-Special Series 2 25,000,000
Class M-Special Series 3 25,000,000
Class N 25,000,000
Class N-Special Series 1 50,000,000
Class N-Special Series 2 25,000,000
Class O 25,000,000
Class O-Special Series 1 50,000,000
Class O-Special Series 2 25,000,000
Class P 25,000,000
Class P-Special Series 1 50,000,000
Class P-Special Series 2 25,000,000
Class Q 25,000,000
Class Q-Special Series 1 50,000,000
Class Q-Special Series 2 25,000,000
Class R 25,000,000
Class R-Special Series 1 50,000,000
Class R-Special Series 2 25,000,000
Class S 25,000,000
Class S-Special Series 1 50,000,000
Class S-Special Series 2 25,000,000
Class S-Special Series 3 25,000,000
Unclassified 8,010,000,000
--------------
TOTAL 20,000,000,000
The aggregate par value of all shares having par value is Twenty
Million Dollars ($20,000,000).
-7-
<PAGE> 8
FIFTH: The Corporation is registered as an open-end company
under the Investment Company Act of 1940.
IN WITNESS WHEREOF, The ARCH Fund, Inc. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested to by its Secretary as of March 23, 1998.
THE ARCH FUND, INC.
Attest:
By: /s/ Jerry V. Woodham
------------------------------
Jerry V. Woodham, President
/s/ W. Bruce McConnel, III
- --------------------------
W. Bruce McConnel, III
Secretary
-8-
<PAGE> 9
CERTIFICATE
THE UNDERSIGNED, Chairman of the Board and President of THE ARCH FUND,
INC., who executed on behalf of said Corporation the attached Articles
Supplementary of said Corporation, of which this Certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the attached
Articles Supplementary to be the corporate act of said Corporation, and
certifies that to the best of his knowledge, information and belief the matters
and facts set forth in the attached Articles Supplementary with respect to
authorization and approval are true in all material respects, under the
penalties for perjury.
/s/ Jerry V. Woodham
---------------------------------------
Jerry V. Woodham, President
Dated: March 23, 1998
<PAGE> 1
EXHIBIT 1(w)
THE ARCH FUND, INC.
ARTICLES SUPPLEMENTARY
THE ARCH FUND, INC., a Maryland corporation having its principal office
in Maryland in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The total number of shares of capital stock which the
Corporation was heretofore authorized to issue was Twenty Billion
(20,000,000,000) shares (of the par value of One Mill ($.001) each) and of the
aggregate par value of Twenty Million Dollars ($20,000,000) of Common Stock
classified as follows:
<TABLE>
<CAPTION>
Number of Shares
Classification Authorized
-------------- ----------
<S> <C>
Class A 550,000,000
Class A-Special Series 1 1,800,000,000
Class A-Special Series 2 300,000,000
Class A-Special Series 3 50,000,000
Class A-Special Series 4 2,000,000,000
Class B 100,000,000
Class B-Special Series 1 1,000,000,000
Class B-Special Series 2 300,000,000
Class B-Special Series 3 2,000,000,000
Class C 5,000,000
Class C-Special Series 1 50,000,000
Class C-Special Series 2 20,000,000
Class C-Special Series 3 50,000,000
Class D 5,000,000
Class D-Special Series 1 50,000,000
Class D-Special Series 2 20,000,000
Class D-Special Series 3 50,000,000
Class E 5,000,000
Class E-Special Series 1 15,000,000
Class E-Special Series 2 20,000,000
Class E-Special Series 3 50,000,000
Class F 5,000,000
Class F-Special Series 1 35,000,000
Class F-Special Series 2 20,000,000
Class F-Special Series 3 50,000,000
Class G 5,000,000
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Number of Shares
Classification Authorized
-------------- ----------
<S> <C>
Class G-Special Series 1 15,000,000
Class G-Special Series 2 20,000,000
Class G-Special Series 3 50,000,000
Class H 10,000,000
Class H-Special Series 1 10,000,000
Class H-Special Series 2 10,000,000
Class H-Special Series 3 50,000,000
Class I 25,000,000
Class I-Special Series 1 25,000,000
Class J 50,000,000
Class J-Special Series 1 300,000,000
Class J-Special Series 2 2,000,000,000
Class K 25,000,000
Class K-Special Series 1 25,000,000
Class K-Special Series 2 10,000,000
Class L 25,000,000
Class L-Special Series 1 25,000,000
Class L-Special Series 2 10,000,000
Class M 25,000,000
Class M-Special Series 1 50,000,000
Class M-Special Series 2 25,000,000
Class M-Special Series 3 25,000,000
Class N 25,000,000
Class N-Special Series 1 50,000,000
Class N-Special Series 2 25,000,000
Class O 25,000,000
Class O-Special Series 1 50,000,000
Class O-Special Series 2 25,000,000
Class P 25,000,000
Class P-Special Series 1 50,000,000
Class P-Special Series 2 25,000,000
Class Q 25,000,000
Class Q-Special Series 1 50,000,000
Class Q-Special Series 2 25,000,000
Class R 25,000,000
Class R-Special Series 1 50,000,000
Class R-Special Series 2 25,000,000
Class S 25,000,000
Class S-Special Series 1 50,000,000
Class S-Special Series 2 25,000,000
Class S-Special Series 3 25,000,000
</TABLE>
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Number of Shares
Classification Authorized
-------------- ----------
<S> <C>
Unclassified 8,010,000,000
--------------
TOTAL 20,000,000,000
</TABLE>
SECOND: Pursuant to Article VI of the Corporation's Articles of
Incorporation (the "Charter"), the Board of Directors of the Corporation has
classified Two Billion (2,000,000,000) authorized and unissued shares of
previously unclassified Common Stock as follows:
<TABLE>
<CAPTION>
Number of Shares
Classification Classified
-------------- ----------
<S> <C>
Class T 2,000,000,000
</TABLE>
pursuant to resolutions unanimously adopted by the Board of Directors of the
Corporation on October 20, 1998:
THIRD: Pursuant to Article VI, Section (5) of the Charter, the shares
of Common Stock newly classified hereby shall have all of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption that are set
forth in the Charter with respect to its shares of capital stock.
FOURTH: The total number of shares of capital stock which the
Corporation is presently authorized to issue is Twenty Billion (20,000,000,000)
shares (of the par value of One Mill ($.001) each) of Common Stock classified as
follows:
<TABLE>
<CAPTION>
Number of Shares
Classification Authorized
-------------- ----------
<S> <C>
Class A 550,000,000
Class A-Special Series 1 1,800,000,000
Class A-Special Series 2 300,000,000
Class A-Special Series 3 50,000,000
Class A-Special Series 4 2,000,000,000
Class B 100,000,000
Class B-Special Series 1 1,000,000,000
Class B-Special Series 2 300,000,000
Class B-Special Series 3 2,000,000,000
Class C 5,000,000
Class C-Special Series 1 50,000,000
</TABLE>
-3-
<PAGE> 4
<TABLE>
<CAPTION>
Number of Shares
Classification Authorized
-------------- ----------
<S> <C>
Class C-Special Series 2 20,000,000
Class C-Special Series 3 50,000,000
Class D 5,000,000
Class D-Special Series 1 50,000,000
Class D-Special Series 2 20,000,000
Class D-Special Series 3 50,000,000
Class E 5,000,000
Class E-Special Series 1 15,000,000
Class E-Special Series 2 20,000,000
Class E-Special Series 3 50,000,000
Class F 5,000,000
Class F-Special Series 1 35,000,000
Class F-Special Series 2 20,000,000
Class F-Special Series 3 50,000,000
Class G 5,000,000
Class G-Special Series 1 15,000,000
Class G-Special Series 2 20,000,000
Class G-Special Series 3 50,000,000
Class H 10,000,000
Class H-Special Series 1 10,000,000
Class H-Special Series 2 10,000,000
Class H-Special Series 3 50,000,000
Class I 25,000,000
Class I-Special Series 1 25,000,000
Class J 50,000,000
Class J-Special Series 1 300,000,000
Class J-Special Series 2 2,000,000,000
Class K 25,000,000
Class K-Special Series 1 25,000,000
Class K-Special Series 2 10,000,000
Class L 25,000,000
Class L-Special Series 1 25,000,000
Class L-Special Series 2 10,000,000
Class M 25,000,000
Class M-Special Series 1 50,000,000
Class M-Special Series 2 25,000,000
Class M-Special Series 3 25,000,000
Class N 25,000,000
Class N-Special Series 1 50,000,000
Class N-Special Series 2 25,000,000
Class O 25,000,000
</TABLE>
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Number of Shares
Classification Authorized
-------------- ----------
<S> <C>
Class O-Special Series 1 50,000,000
Class O-Special Series 2 25,000,000
Class P 25,000,000
Class P-Special Series 1 50,000,000
Class P-Special Series 2 25,000,000
Class Q 25,000,000
Class Q-Special Series 1 50,000,000
Class Q-Special Series 2 25,000,000
Class R 25,000,000
Class R-Special Series 1 50,000,000
Class R-Special Series 2 25,000,000
Class S 25,000,000
Class S-Special Series 1 50,000,000
Class S-Special Series 2 25,000,000
Class S-Special Series 3 25,000,000
Class T 2,000,000,000
Unclassified 6,010,000,000
--------------
TOTAL 20,000,000,000
</TABLE>
The aggregate par value of all shares having par value is Twenty Million Dollars
($20,000,000).
FIFTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
-5-
<PAGE> 6
IN WITNESS WHEREOF, The ARCH Fund, Inc. has caused these presents to be
signed in its name and on its behalf by its President and its corporate seal to
be hereunto affixed and attested to by its Secretary as of September 17, 1998.
THE ARCH FUND, INC.
Attest:
By: /s/ Jerry V. Woodham
--------------------------------
Jerry V. Woodham, President
/s/ W. Bruce Mcconnel, III
- ----------------------------------
W. Bruce McConnel, III
Secretary
-6-
<PAGE> 7
CERTIFICATE
THE UNDERSIGNED, Chairman of the Board and President of THE ARCH FUND,
INC., who executed on behalf of said Corporation the attached Articles
Supplementary of said Corporation, of which this Certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the attached
Articles Supplementary to be the corporate act of said Corporation, and
certifies that to the best of his knowledge, information and belief the matters
and facts set forth in the attached Articles Supplementary with respect to
authorization and approval are true in all material respects, under the
penalties for perjury.
/s/ Jerry V. Woodham
----------------------------------
Jerry V. Woodham, President
Dated:
<PAGE> 1
EXHIBIT 5(m)
ADDENDUM NO. 11 TO AMENDED AND RESTATED ADVISORY AGREEMENT
This Addendum, dated as of _______, 1998, is entered into between
THE ARCH FUND, INC., a Maryland corporation (the "Fund"), and MISSISSIPPI VALLEY
ADVISORS INC., a Missouri corporation ("MVA").
WHEREAS, the Fund and MVA have entered into an Amended and Restated
Advisory Agreement dated as of April 1, 1991, which was extended to additional
investment portfolios of the Fund (pursuant to Section 1(b) of the Agreement) by
Addenda dated September 27, 1991, April 1, 1992, April 1, 1993, March 15, 1994,
July 10, 1995, September 29, 1995, November 15, 1996, February 14, 1997 and
November 21, 1997 (the "Advisory Agreement"), pursuant to which the Fund
appointed MVA to act as investment adviser to the Fund for the ARCH Money
Market, Treasury Money Market, Growth & Income Equity, Small Cap Equity
(formerly Emerging Growth), Government & Corporate Bond, U.S. Government
Securities, Balanced, International Equity, Short-Intermediate Municipal,
Tax-Exempt Money Market, Missouri Tax-Exempt Bond, Kansas Tax-Exempt Bond,
Equity Income, National Municipal Bond, Intermediate Corporate Bond (formerly
Short-Intermediate Corporate Bond), Equity Index, Bond Index, Small Cap Equity
Index and Growth Equity Portfolios;
WHEREAS, Section 1(b) of the Advisory Agreement provides that in the
event the Fund establishes one or more additional investment portfolios with
respect to which it desires to retain MVA to act as the investment adviser under
the Advisory Agreement, the Fund shall so notify MVA in writing, and if MVA is
willing to render such services it shall notify the Fund in writing, and the
compensation to be paid to MVA shall be that which is agreed to in writing by
the Fund and MVA; and
WHEREAS, the Fund has notified MVA that it has established a new
portfolio, namely, the ARCH Conning Money Market Portfolio (the "New
Portfolio"), and that it desires to retain MVA to act as the investment adviser
therefor, and MVA has notified the Fund that it is willing to serve as
investment adviser for the New Portfolio;
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. APPOINTMENT. The Fund hereby appoints MVA to act as investment
adviser to the Fund for the New Portfolio for the period and on the terms set
forth in the Advisory Agreement. With respect to the New Portfolio only, MVA is
authorized to contract with other investment advisory or management firms or
persons to assist MVA in the performance of the duties of the Advisory Agreement
(a "Sub-Adviser"); provided, however, that the retention of a Sub-Adviser shall
be approved as may be required by the 1940 Act. A Sub-Adviser may perform under
MVA's supervision any or all services described under Section 3 of the
Agreement. The fees or other compensation of any Sub-Adviser shall be paid by
MVA. In the event that MVA appoints a Sub-Adviser, MVA will review, monitor, and
report to the Fund's Board of Directors on the performance and investment
procedures of the Sub-Adviser; and assist
<PAGE> 2
and consult with the Sub-Adviser in connection with the New Portfolio's
continuous investment program.
2. COMPENSATION. For the services provided and expenses assumed
pursuant to the Advisory Agreement with respect to the New Portfolio, the Fund
will pay MVA from the assets belonging to the New Portfolio, and MVA will accept
as full compensation therefor, a fee, computed daily and payable monthly (in
arrears), at the annual rate of .40% of the first $1.5 billion of the New
Portfolio's average daily net assets, plus .35% of the next $1 billion of
average daily net assets, plus .25% of average daily net assets in excess of
$2.5 billion.
The fee attributable to the New Portfolio shall be the obligation of
the New Portfolio and not the obligation of any other Portfolio of the Fund.
3. CAPITALIZED TERMS. From and after the date hereof, the term
"Portfolios" as used in the Advisory Agreement shall be deemed to include the
New Portfolio. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Advisory Agreement.
4. MISCELLANEOUS. Except to the extent supplemented hereby, the
Advisory Agreement shall remain unchanged and in full force and effect and is
hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as
of the date and year first above written.
THE ARCH FUND, INC.
By:______________________________
Jerry V. Woodham
President
MISSISSIPPI VALLEY ADVISORS INC.
By:______________________________
John H. Blixen
President
<PAGE> 1
EXHIBIT 5(n)
SUB-ADVISORY AGREEMENT
(CONNING MONEY MARKET PORTFOLIO)
AGREEMENT made as of ______ __, 1998 between Mississippi Valley
Advisors Inc., a Missouri corporation (the "Adviser"), and Conning Asset
Management Co., a Missouri corporation ("Sub-Adviser").
WHEREAS, The ARCH Fund, Inc. (the "Fund") is registered as an open-end,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to the
Fund's Conning Money Market Portfolio (the "Portfolio"); and
WHEREAS, the Adviser desires to retain Sub-Adviser to assist it in the
provision of a continuous investment program for the Portfolio and Sub-Adviser
is willing to do so;
WHEREAS, the Board of Directors of the Fund has approved this
Agreement, subject to approval by the shareholders of the Portfolio, and
Sub-Adviser is willing to furnish such services upon the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Adviser hereby appoints Sub-Adviser to act as sub-
adviser to the Portfolio as permitted by the Adviser's Advisory Agreement with
the Fund pertaining to the Portfolio. Intending to be legally bound, Sub-Adviser
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Sub-Advisory Services. Subject to the supervision of the Fund's
Board of Directors, Sub-Adviser will assist the Adviser in providing a
continuous investment program for the Portfolio, including investment research
and management with respect to all securities and investments and cash
equivalents in the Portfolio. Sub-Adviser will provide services under this
Agreement in accordance with the Portfolio's investment objective, policies and
restrictions as stated in the Portfolio's prospectus and resolutions of the
Fund's Board of Directors applicable to the Portfolio.
Without limiting the generality of the foregoing, Sub-Adviser further
agrees that it:
(a) will determine from time to time in consultation with the
Advisor what securities and other investments will be purchased, retained or
sold for the Portfolio;
<PAGE> 2
(b) will place orders pursuant to its investment
determinations for the Portfolio either directly with the issuer or
with any broker or dealer;
(c) will manage the Portfolio's over cash position;
(d) will attend regular business and investment-related
meetings with the Fund's Board of Directors and the Adviser if
requested to do so by the Fund and/or the Adviser; and
(e) will maintain books and records with respect to the
securities transactions for the Portfolio, furnish to the Adviser and
the Fund's Board of Directors such periodic and special reports as they
may request with respect to the Portfolio, and provide in advance to
the Adviser all reports to the Board of Directors for examination and
review within a reasonable time prior to the Fund's Board meetings.
3. Covenants by Sub-Adviser. Sub-Adviser agrees with respect to the
services provided to the Portfolio that it:
(a) will conform with all Rules and Regulations of the
Securities and Exchange Commission;
(b) will telecopy trade information to the Adviser on the
first business day following the day of the trade and cause broker
confirmations to be sent directly to the Adviser; and
(c) will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund and
prior, present or potential shareholders, and will not use such records
and information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior notification
to and approval in writing by the Fund, which approval shall not be
unreasonably withheld and may not be withheld and will be deemed
granted where Sub-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by
the Fund).
4. Services Not Exclusive. The services furnished by Sub-Adviser
hereunder are deemed not to be exclusive, and nothing in this Agreement shall
(i) prevent Sub-Adviser or any affiliated person (as defined in the 1940 Act) of
Sub-Adviser from acting as investment adviser or manager for any other person or
persons, including other management investment
-2-
<PAGE> 3
companies with investment objectives and policies the same as or similar to
those of the Portfolio or (ii) limit or restrict Sub-Adviser or any such
affiliated person from buying, selling or trading any securities or other
investments (including any securities or other investments which the Portfolio
is eligible to buy) for its or their own accounts or for the accounts of others
for whom it or they may be acting; provided, however, that Sub-Adviser agrees
that it will not undertake any activities which, in its reasonable judgment,
will adversely affect the performance of its obligations to the Portfolio under
this Agreement.
5. Portfolio Transactions. Investment decisions for the Portfolio shall
be made by Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by Sub-Adviser. The Portfolio and such
investment companies and accounts may, however, invest in the same securities.
When a purchase or sale of the same security is made at substantially the same
time on behalf of the Portfolio and/or another investment company or account,
the transaction will be averaged as to price, and available investments
allocated as to amount, in a manner which Sub-Adviser believes to be equitable
to the Portfolio and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by the Portfolio or the size of the position obtained or sold by the
Portfolio. To the extent permitted by law, Sub-Adviser may aggregate the
securities to be sold or purchased for the Portfolio with those to be sold or
purchased for other investment companies or accounts in order to obtain best
execution.
Sub-Adviser shall place orders for the purchase and sale of portfolio
securities and will solicit broker-dealers to execute transactions in accordance
with the Portfolio's policies and restrictions regarding brokerage allocations.
Sub-Adviser shall place orders pursuant to its investment determinations for the
Portfolio either directly with the issuer or with any broker or dealer selected
by Sub-Adviser. In executing portfolio transactions and selecting brokers or
dealers, Sub-Adviser shall use its reasonable best efforts to seek the most
favorable execution of orders, after taking into account all factors Sub-Adviser
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. Consistent with this obligation,
Sub-Adviser may, to the extent permitted by law, purchase and sell portfolio
securities to and from brokers and dealers who provide brokerage and research
services (within the meaning of Section 28(e) of the Securities Exchange Act of
1934) to or for the benefit of the Portfolio and/or other accounts over which
Sub-Adviser or any of its affiliates exercises investment discretion.
Sub-Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Sub-Adviser's overall responsibilities to the Portfolio and to the Fund. In no
instance will portfolio securities be purchased from or sold to the Adviser,
Sub-Adviser, or the Portfolio's principal underwriter, or any affiliated person
thereof except as permitted by the Securities and Exchange Commission.
-3-
<PAGE> 4
6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request.
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
7. Expenses. During the term of this Agreement, Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Portfolio.
8. Compensation.
(a) For the services provided and the expenses assumed with
respect to the Portfolio pursuant to this Agreement, Sub-Adviser will be
entitled to a fee, computed daily and payable monthly, from the Adviser,
calculated at the annual rate of .30% of the first $1.5 billion of the
Portfolio's average daily net assets, plus .25% of the next $1 billion of
average daily net assets, plus .15% of average daily net assets in excess of
$2.5 billion.
(b) If the Adviser reimburses the Fund, pursuant to Section
8(b) of the Advisory Agreement, with respect to the Portfolio, the Sub-Adviser
will bear its share of the amount of such reimbursement by waiving fees
otherwise payable to it hereunder on a proportionate basis to be determined by
comparing the aggregate fees otherwise payable to it hereunder with respect to
the Portfolio to the aggregate fees otherwise payable by the Fund to the Adviser
under the Advisory Agreement with respect to the Portfolio.
9. Standard of Care; Limitation of Liability. Sub-Adviser shall
exercise due care and diligence and use the same skill and care in providing its
services hereunder as it uses in providing services to other investment
companies, but shall not be liable for any action taken or omitted by
Sub-Adviser in the absence of bad faith, willful misconduct, gross negligence
or reckless disregard of its duties.
10. Reference to Sub-Adviser. Neither the Adviser nor any affiliate or
agent of it shall make reference to or use the name of Sub-Adviser or any of its
affiliates, or any of their clients, except references concerning the identity
of and services provided by Sub-Adviser to the Portfolio, which references shall
not differ in substance from those included in the current registration
statement pertaining to the Portfolio, this Agreement and the Advisory Agreement
between the Adviser and the Fund with respect to the Portfolio, in any
advertising or promotional materials without the prior approval of Sub-Adviser,
which approval shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause the Fund and any affiliate
thereof to satisfy the foregoing obligation.
11. Duration and Termination. Unless sooner terminated, this Agreement
shall continue until ___________ , 2000, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by the
-4-
<PAGE> 5
Fund's Board of Directors or vote of the lesser of (a) 67% of the shares of the
Portfolio represented at a meeting if holders of more than 50% of the
outstanding shares of the Portfolio are present in person or by proxy or (b)
more than 50% of the outstanding shares of the Portfolio, provided that in
either event its continuance also is approved by a majority of the Fund's
Directors who are not "interested persons" (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable at any time
without penalty, on 60 days' notice, by Adviser, Sub-Adviser or by the Fund's
Board of Directors or by vote of the lesser of (a) 67% of the shares of the
Portfolio represented at a meeting if holders of more than 50% of the
outstanding shares of the Portfolio are present in person or by proxy or (b)
more than 50% of the outstanding shares of the Portfolio. This Agreement will
terminate automatically in the event of its assignment (as defined in the 1940
Act).
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective with respect to the Portfolio until approved in accordance with the
1940 Act.
13. Notice. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To the Sub-Adviser at:
700 Market Street
St. Louis, MO 63101
To the Adviser at:
One Mercantile Center
7th and Washington Streets
Suite 2100
St. Louis, MO 63101
To the Fund at:
1345 Chestnut Street, Suite 1100
Philadelphia, PA 19107
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or
-5-
<PAGE> 6
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by
Maryland law.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
MISSISSIPPI VALLEY ADVISORS INC.
Attest:
___________________________ By:___________________________________
CONNING ASSET MANAGEMENT CO.
Attest:
___________________________ By:___________________________________
-6-
<PAGE> 1
EXHIBIT 6(k)
ADDENDUM NO. 9 TO DISTRIBUTION AGREEMENT
This Addendum, dated as of _____________, 1998, is entered
into between THE ARCH FUND, INC. (the "Fund"), a Maryland corporation, and BISYS
FUND SERVICES ("BISYS"), an Ohio limited partnership formerly known as The
Winsbury Company Limited Partnership.
WHEREAS, the Fund and BISYS have entered into a Distribution
Agreement dated as of October 1, 1993 as amended March 15, 1994, March 1, 1995,
July 10, 1995, September 29, 1995, November 15, 1996, February 14, 1997,
November 21, 1997 and ________, 1998 (the "Distribution Agreement"), pursuant
to which the Fund appointed BISYS to act as Distributor for the Fund's ARCH
Money Market, Treasury Money Market, Growth & Income Equity, Small Cap Equity
(formerly Emerging Growth), Government & Corporate Bond, U.S. Government
Securities, Balanced, International Equity, Short-Intermediate Municipal,
Tax-Exempt Money Market, Missouri Tax-Exempt Bond, Kansas Tax-Exempt Bond,
Equity Income, National Municipal Bond, Intermediate Corporate Bond (formerly
Short-Intermediate Corporate Bond), Equity Index, Bond Index, Growth Equity and
Small Cap Equity Index Portfolios;
WHEREAS, Section 9 of the Distribution Agreement provides that
no provision of the Agreement may be changed, discharged or terminated orally,
but only by an instrument in writing signed by the party against which
enforcement of the change, discharge or termination is sought; and
WHEREAS, the Fund has notified BISYS that it has established
a new portfolio, namely, the Conning Money Market Portfolio (the "New
Portfolio"), and that it desires to retain BISYS to act as the Distributor
therefor, and BISYS has notified the Fund that it is willing to serve as
Distributor for the New Portfolios.
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT. The Fund hereby appoints BISYS to act as
Distributor to the Fund for the New Portfolio for the period and on the terms
set forth in the Distribution Agreement. BISYS hereby accepts such appointment
and agrees to render the services set forth in the Distribution Agreement.
2. TERMS. From and after the date hereof, the term
"Portfolios" as used in the Distribution Agreement shall be deemed to include
the New Portfolio. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Distribution Agreement.
3. APPENDIX A. Appendix A to the Distribution Agreement is
hereby supplemented to read as set forth in Appendix A attached hereto.
<PAGE> 2
4. MISCELLANEOUS. Except to the extent supplemented hereby,
the Distribution Agreement shall remain unchanged and in full force and effect
and is hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date and year first above written.
THE ARCH FUND, INC.
By:
--------------------------------
Jerry V. Woodham
President
BISYS FUND SERVICES
By:
--------------------------------
J. David Huber
President
<PAGE> 3
APPENDIX A
to the
DISTRIBUTION AGREEMENT
between
THE ARCH FUND, INC.
and
BISYS FUND SERVICES
-----------------------------------------------------------------
Money Market Portfolio (Trust shares, Investor A shares, Institutional shares,
Investor B shares and S shares)
Treasury Money Market Portfolio (Trust shares, Investor A shares,
Institutional shares and S shares)
Growth & Income Equity Portfolio (Trust shares, Investor A shares, Institutional
shares and Investor B shares)
Small Cap Equity Portfolio (Trust shares, Investor A shares, Institutional
shares and Investor B shares)
Government & Corporate Bond Portfolio (Trust shares, Investor A shares,
Institutional shares and Investor B shares)
U.S. Government Securities Portfolio (Trust shares, Investor A shares,
Institutional shares and Investor B shares)
Balanced Portfolio (Trust shares, Investor A shares, Institutional shares and
Investor B shares)
International Equity Portfolio (Trust shares, Investor A shares, Institutional
shares and Investor B shares)
Short-Intermediate Municipal Portfolio (Trust Shares and Investor A shares)
Tax-Exempt Money Market Portfolio (Trust shares, Investor A shares and
S shares)
Missouri Tax-Exempt Bond Portfolio (Trust shares, Investor A shares and Investor
B shares)
Kansas Tax-Exempt Bond Portfolio (Trust shares, Investor A shares and Investor B
shares)
Equity Income Portfolio (Trust shares, Investor A shares, Institutional shares
and Investor B shares)
<PAGE> 4
National Municipal Bond Portfolio (Trust shares, Investor A shares and Investor
B shares)
Intermediate Corporate Bond Portfolio (Trust shares, Investor A shares and
Institutional shares)
Equity Index Portfolio (Trust shares, Investor A shares and Institutional
shares)
Bond Index Portfolio (Trust shares, Investor A shares and Institutional shares)
Small Cap Equity Index Portfolio (Trust shares, Investor A shares and
Institutional shares)
Growth Equity Portfolio (Trust shares, Investor A shares, Institutional shares
and Investor B shares)
Conning Money Market Portfolio (shares)
<PAGE> 1
EXHIBIT 8(j)
__________, 1998
Mercantile Bank National Association
One Mercantile Center
St. Louis, Missouri 63101
RE: Custody Fees for the Conning Money Market Portfolio
---------------------------------------------------
Ladies and Gentlemen:
This letter constitutes our agreement with respect to compensation to
be paid to Mercantile Bank National Association ("Mercantile") with respect to
the Conning Money Market Portfolio (the "Portfolio") under the terms of the
Custodian Agreement dated as of April 1, 1992 (the "Custodian Agreement")
between The ARCH Fund, Inc. (the "Fund") and Mercantile. Pursuant to Paragraph
23 of the Custodian Agreement, and in consideration of the services to be
provided by you, we will pay Mercantile the following:
1. An annual custody fee (exclusive of any transaction charges), which
shall be calculated daily and paid monthly (in arrears) for the Portfolio as
follows:
- $.125 for each $1,000.00 of the Portfolio's
average daily net assets.
2. Mercantile's out-of-pocket expenses, including but not limited to
postage, telephone, telex, Federal Express and Federal Reserve wire fees, on
behalf of the Portfolio.
<PAGE> 2
Mercantile Bank National Association
__________, 1998
Page Two
The fee and expenses attributable to the Portfolio shall be the
obligation of the Portfolio and not of any other portfolio of the Fund. The fee
for the period from the day of the year this agreement is entered into until the
end of that fiscal year of the Portfolio, or for any portion of a fiscal year
immediately prior to its termination, shall be pro-rated according to the
proportion which such period bears to the full annual period.
If the foregoing accurately sets forth our agreement and you intend to
be legally bound thereby, please execute a copy of this letter and return it to
us.
Very truly yours,
THE ARCH FUND, INC.
By:____________________________
Jerry V. Woodham, President
ACCEPTED: MERCANTILE BANK
NATIONAL ASSOCIATION
By:____________________________
Dated as of: ___________________, 1998
<PAGE> 1
EXHIBIT 9(j)
ADDENDUM NO. 9 TO ADMINISTRATION AGREEMENT
This Addendum, dated as of _________ __, 1998, is entered into
between THE ARCH FUND, INC. (the "Fund"), a Maryland corporation, and BISYS FUND
SERVICES OHIO, INC. ("BISYS Ohio"), an Ohio corporation formerly known as The
Winsbury Service Corporation.
WHEREAS, the Fund and BISYS Ohio have entered into an
Administration Agreement dated as of October 1, 1993 as amended March 15, 1994,
March 1, 1995, July 10, 1995, September 29, 1995, November 15, 1996, February
14, 1997, November 21, 1997 and _______, 1998 (the "Administration Agreement"),
pursuant to which the Fund appointed BISYS Ohio to act as Administrator for the
Fund's ARCH Money Market, Treasury Money Market, Growth & Income Equity, Small
Cap Equity (formerly Emerging Growth), Government & Corporate Bond, U.S.
Government Securities, Balanced, International Equity, Short-Intermediate
Municipal, Tax-Exempt Money Market, Missouri Tax-Exempt Bond, Kansas Tax-Exempt
Bond, Equity Income, National Municipal Bond, Intermediate Corporate Bond
(formerly Short-Intermediate Corporate Bond), Equity Index, Bond Index, Small
Cap Equity Index and Growth Equity Portfolios;
WHEREAS, Section 10 of the Administration Agreement provides that no
provision of the Agreement may be changed, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, discharge or termination is sought; and
WHEREAS, the Fund has notified BISYS Ohio that it has established a
new portfolio, namely, the Conning Money Market Portfolio (the "New
Portfolio"), and that it desires to retain BISYS Ohio to act as the
Administrator therefor, and BISYS Ohio has notified the Fund that it is willing
to serve as Administrator for the New Portfolio.
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. APPOINTMENT. The Fund hereby appoints BISYS Ohio to act as
Administrator to the Fund for the New Portfolio for the period and on the terms
set forth in the Administration Agreement. BISYS Ohio hereby accepts such
appointment and agrees to render the services set forth in the Administration
Agreement, for the compensation herein provided.
2. COMPENSATION. For the services provided and expenses assumed
pursuant to the Administration Agreement with respect to the New Portfolio, the
Fund will pay BISYS Ohio, as agent for itself, a monthly fee (in arrears) on the
first business day of each month at the annual rate of .20% of the average daily
net assets of the New Portfolio.
The fee attributable to the new Portfolio shall be the obligation of
the New Portfolio and not of any other Portfolio of the Fund.
<PAGE> 2
3. TERMS. From and after the date hereof, the term "Portfolios" as
used in the Administration Agreement shall be deemed to include the New
Portfolio. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Administration Agreement.
4. APPENDIX A. Appendix A to the Administration Agreement is hereby
supplemented to read as set forth in Appendix A attached hereto.
5. MISCELLANEOUS. Except to the extent supplemented hereby, the
Administration Agreement shall remain unchanged and in full force and effect and
is hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as
of the date and year first above written.
THE ARCH FUND, INC.
By:_______________________________
Jerry V. Woodham
President
BISYS FUND SERVICES OHIO, INC.
By:_______________________________
J. David Huber
President
2
<PAGE> 3
APPENDIX A
to the
ADMINISTRATION AGREEMENT
between
THE ARCH FUND, INC.
and
BISYS FUND SERVICES OHIO, INC. (formerly
known as The Winsbury Service Corporation)
Money Market Portfolio (Trust Shares, Investor A Shares, Institutional Shares,
Investor B Shares and S shares)
Treasury Money Market Portfolio (Trust Shares, Investor A Shares,
Institutional Shares and S shares)
Growth & Income Equity Portfolio (Trust Shares, Investor A Shares,
Institutional and Investor B Shares)
Small Cap Equity Portfolio (Trust Shares, Investor A Shares, Institutional and
Investor B Shares)
Government & Corporate Bond Portfolio (Trust Shares, Investor A Shares,
Institutional and Investor B Shares)
U.S. Government Securities Portfolio (Trust Shares, Investor A Shares,
Institutional and Investor B Shares)
Balanced Portfolio (Trust Shares, Investor A Shares, Institutional and Investor
B Shares)
International Equity Portfolio (Trust Shares, Investor A Shares, Institutional
and Investor B Shares)
Short-Intermediate Municipal Portfolio (Trust Shares and Investor A Shares)
Tax-Exempt Money Market Portfolio (Trust Shares, Investor A Shares and
S shares)
Missouri Tax-Exempt Bond Portfolio (Trust Shares, Investor A Shares and
Investor B Shares)
Kansas Tax Exempt Bond Portfolio (Trust Shares, Investor A Shares and Investor
B Shares)
Equity Income Portfolio (Trust Shares, Investor A Shares, Institutional Shares
and Investor B Shares)
<PAGE> 4
National Municipal Bond Portfolio (Trust Shares, Investor A Shares and Investor
B Shares)
Intermediate Corporate Bond Portfolio (Trust Shares, Investor A Shares and
Institutional Shares)
Equity Index Portfolio (Trust Shares, Investor A Shares and Institutional
Shares)
Bond Index Portfolio (Trust Shares, Investor A Shares and Institutional Shares)
Small Cap Equity Index Portfolio (Trust Shares, Investor A Shares and
Institutional Shares)
Growth Equity Portfolio (Trust Shares, Investor A Shares, Institutional Shares
and Investor B Shares)
Conning Money Market Portfolio (Shares)
2
<PAGE> 1
EXHIBIT 9(t)
ADDENDUM NO. 9 TO TRANSFER AGENCY AGREEMENT
This Addendum, dated as of____________, 1998, is entered into between
THE ARCH FUND, INC. (the "Fund"), a Maryland corporation, and BISYS FUND
SERVICES OHIO, INC. ("BISYS Ohio"), an Ohio corporation formerly known as The
Winsbury Service Corporation.
WHEREAS, the Fund and BISYS Ohio have entered into a Transfer Agency
Agreement dated as of October 1, 1993 as amended March 15, 1994, March 1, 1995,
July 10, 1995, September 29, 1995 November 15, 1996, February 14, 1997,
November 21, 1997 and ________, 1998 (the "Transfer Agency Agreement"),
pursuant to which the Fund appointed BISYS Ohio to act as Transfer Agent for
the Fund's ARCH Money Market, Treasury Money Market, Growth & Income Equity,
Small Cap Equity (formerly Emerging Growth), Government & Corporate Bond, U.S.
Government Securities, Balanced, International Equity, Short-Intermediate
Municipal, Tax-Exempt Money Market, Missouri Tax-Exempt Bond, Kansas Tax-Exempt
Bond, Equity Income, National Municipal Bond, Intermediate Corporate Bond
(formerly Short-Intermediate Corporate Bond), Equity Index, Bond Index, Small
Cap Equity Index and Growth Equity Portfolios;
WHEREAS, Section 20 of the Transfer Agency Agreement provides that no
provision of the Agreement may be changed, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the change, discharge or termination is sought; and
WHEREAS, the Fund has notified BISYS Ohio that it has established a
new portfolio, namely, the Conning Money Market Portfolio (the "New
Portfolio"), and that it desires to retain BISYS Ohio to act as the Transfer
Agent therefor, and BISYS Ohio has notified the Fund that it is willing to
serve as Transfer Agent for the New Portfolio.
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. APPOINTMENT. The Fund hereby appoints BISYS Ohio to act as Transfer
Agent for the New Portfolio for the period and on the terms set forth in the
Transfer Agency Agreement. BISYS Ohio hereby accepts such appointment and
agrees to render the services set forth in the Transfer Agency Agreement, for
the compensation herein provided.
2. FEES. For the services provided and expenses assumed pursuant to the
Transfer Agency Agreement with respect to the New Portfolio, the Fund will pay
BISYS Ohio in accordance with, and in the manner set forth in, Appendix C
hereto. Fees for any additional services to be provided by the Transfer Agent
pursuant to an amendment to Appendix B hereto shall be subject to mutual
agreement at the time such amendment to Appendix B is proposed.
3. TERMS. From and after the date hereof, the term "Portfolios" as used
in the Transfer Agency Agreement shall be deemed to include the New Portfolio.
Capitalized terms
<PAGE> 2
used herein and not otherwise defined shall have the meanings ascribed to them
in the Transfer Agency Agreement.
4. APPENDIX A. Appendix A to the Transfer Agency Agreement is hereby
supplemented to read as set forth in Appendix A attached hereto.
5. MISCELLANEOUS. Except to the extent supplemented hereby, the
Transfer Agency Agreement shall remain unchanged and in full force and effect
and is hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of
the date and year first above written.
THE ARCH FUND, INC.
By:______________________________
Jerry V. Woodham
President
BISYS FUND SERVICES OHIO, INC.
By:______________________________
J. David Huber
President
2
<PAGE> 3
APPENDIX A
TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN
THE ARCH FUND, INC.
AND
BISYS FUND SERVICES OHIO, INC. (FORMERLY
KNOWN AS THE WINSBURY SERVICE CORPORATION)
Money Market Portfolio (Trust shares, Investor A shares, Institutional shares,
Investor B shares and S shares)
Treasury Money Market Portfolio (Trust shares, Investor A shares,
Institutional shares and S shares)
Growth & Income Equity Portfolio (Trust shares, Investor A shares, Institutional
shares and Investor B shares)
Small Cap Equity Portfolio (Trust shares, Investor A shares, Institutional
shares and Investor B shares)
Government & Corporate Bond Portfolio (Trust shares, Investor A shares,
Institutional shares and Investor B shares)
U.S. Government Securities Portfolio (Trust shares, Investor A shares,
Institutional shares and Investor B shares)
Balanced Portfolio (Trust shares, Investor A shares, Institutional shares and
Investor B shares)
International Equity Portfolio (Trust shares, Investor A shares, Institutional
shares and Investor B shares)
Short-Intermediate Municipal Portfolio (Trust Shares and Investor A shares)
Tax-Exempt Money Market Portfolio (Trust shares, Investor A shares
and S shares)
Missouri Tax-Exempt Bond Portfolio (Trust shares, Investor A shares and Investor
B shares)
Kansas Tax-Exempt Bond Portfolio (Trust shares, Investor A shares and Investor B
shares)
A-1
<PAGE> 4
Equity Income Portfolio (Trust shares, Investor A shares, Institutional shares
and Investor B shares)
National Municipal Bond Portfolio (Trust shares, Investor A shares and Investor
B shares)
Intermediate Corporate Bond Portfolio (Trust shares, Investor A shares and
Institutional shares)
Equity Index Portfolio (Trust shares, Investor A shares and Institutional
shares)
Bond Index Portfolio (Trust shares, Investor A shares and Institutional shares)
Small Cap Equity Index Portfolio (Trust shares, Investor A shares and
Institutional shares)
Growth Equity Portfolio (Trust shares, Investor A shares, Institutional shares
and Investor B shares)
Conning Money Market Portfolio (shares)
A-2
<PAGE> 5
APPENDIX B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE ARCH FUND, INC. AND BISYS FUND SERVICES OHIO, INC.
(FORMERLY KNOWN AS THE WINSBURY SERVICE CORPORATION)
TRANSFER AGENCY SERVICES
1. SHAREHOLDER TRANSACTIONS
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10 under the
Securities Exchange Act of 1934, as amended, and in accordance
with Section 8-408 of the Maryland Commercial Law Article, as
amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new
shares through dividend reinvestment.
2. SHAREHOLDER INFORMATION SERVICES
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements, or marketing material to
current shareholders.
3. COMPLIANCE REPORTING
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Portfolio and shareholder income and
capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
B-1
<PAGE> 6
4. DEALER/LOAD PROCESSING
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges in connection with purchases and
redemptions of Portfolio shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide
for payment of commissions on direct shareholder purchases in
a load Portfolio.
5. SHAREHOLDER ACCOUNT MAINTENANCE
a. Maintain all shareholder records for each account in the
Company.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
e. Provide sub-accounting services for a record holder upon
request of such record holder.
B-2
<PAGE> 7
APPENDIX C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE ARCH FUND, INC. AND BISYS FUND SERVICES OHIO, INC.
(FORMERLY KNOWN AS THE WINSBURY SERVICE CORPORATION)
FEE SCHEDULE
A. ANNUAL BASE FEE
1. Portfolios which have Investor A Shares shall pay an Annual
Base Fee of $10,000 plus $19 per shareholder per Portfolio.
2. Portfolios which have Investor B Shares shall pay an Annual
Base Fee of $10,000 plus $19 per shareholder per Portfolio.
3. Portfolios which have Trust Shares shall pay an Annual Base
Fee of $8,000 plus $15 per shareholder per Portfolio.
4. Portfolios which have Institutional Shares shall pay an Annual
Base Fee of $8,000 plus $15 per shareholder per Portfolio.
5. Portfolios which have Shares shall pay an Annual Base Fee of
$10,000 plus $19 per shareholder per Portfolio.
B. ANNUAL ADDITIONAL FEES. THESE FEES ARE IN ADDITION TO THE ANNUAL BASE FEES.
1. Portfolios participating in the Asset Advisor (asset
allocation) program shall pay an annual fee of $3,000 per
Portfolio
2. Out of pocket costs, including postage, Tymnet charges,
statement/confirm paper, forms, and microfiche will be added
to the Transfer Agency Fees.
C. ALLOCATION OF FEES. Transfer Agency fees paid under this Agreement
shall be treated as an expense of the Company and shall be accrued and
allocated pro rata each month to the Portfolios on the basis of their
respective net assets at the end of the preceding month and paid
monthly.
C-1
<PAGE> 8
APPENDIX D
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE ARCH FUND, INC. AND BISYS FUND SERVICES OHIO, INC.
(FORMERLY KNOWN AS THE WINSBURY SERVICE CORPORATION)
REPORTS
I. Daily Shareholder Activity Journal
II. Daily Portfolio Activity Summary Report
A. Beginning Balance
B. Dealer Transactions
C. Shareholder Transactions
D. Reinvested Dividends
E. Exchanges
F. Adjustments
G. Ending Balance
III. Daily Wire and Check Registers
IV. Monthly Dealer Processing Reports
V. Monthly Dividend Reports
VI. Sales Data Reports for Blue Sky Registration
VII. Annual report by independent auditors concerning the Transfer Agent's
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Securities Exchange Act of 1934, as amended.
1
<PAGE> 1
EXHIBIT 9(x)
THE ARCH FUND(R), INC.
SHAREHOLDER SERVICES PLAN
CONNING MONEY MARKET PORTFOLIO SHARES
This Shareholder Services Plan (the "Plan") has been adopted by the
Board of Directors of The ARCH Fund, Inc. (the "Fund") with respect to the
Conning Money Market Portfolio (the "Portfolio").
Section 1. Expenses. The Fund may incur expenses under the Plan in an
amount not to exceed 0.75% annually of the Portfolio's average daily net assets.
Section 2. Payments for Shareholder Liaison Services Covered by Plan.
(a) The Fund may pay securities dealers, brokers, financial
institutions or other industry professionals, such as investment advisers,
accountants, and estate planning firms (each a "Service Organization") for
Shareholder Liaison Services (as hereinafter defined) provided with respect to
their customers' Shares in the Portfolio. Shareholder Liaison Services shall be
provided pursuant to an agreement in substantially the form attached hereto
("Servicing Agreement").
(b) Fees paid to a Service Organization under subsection (a) above may
be paid at an annual rate of up to 0.25% of the average daily net assets
attributable to the outstanding Shares of the Portfolio, which Shares are owned
of record or beneficially by that Service Organization's customers for whom such
Service Organization is the dealer of record or shareholder of record or with
whom it has a servicing relationship. Such fees shall be calculated and accrued
daily, paid monthly and computed in the manner set forth in the Servicing
Agreement.
(c) "Shareholder Liaison Services" means "personal service and/or the
maintenance of shareholder accounts" within the meaning of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., such as
responding to customers' inquiries and providing information on their
investments.
Section 3. Payments for Administrative Support Services Covered by
Plan. (a)The Fund may also pay Service Organizations for Administrative Support
Services (as hereinafter defined) provided with respect to their customers'
Shares in the Portfolio. Administrative Support Services shall be provided
pursuant to a Servicing Agreement. Any organization that receives fees under
Section 2 of this Plan may also receive fees pursuant to this Section 3.
(b) Fees paid to a Service Organization under subsection (a) above may
be paid at an annual rate of up to 0.50% of the average daily net assets
attributable to the outstanding Shares of the Portfolio, which Shares are owned
of record or beneficially by that Service Organization's customers for whom such
Service Organization is the dealer of record or
<PAGE> 2
shareholder of record or with whom it has a servicing relationship. Such fees
shall be calculated and accrued daily, paid monthly and computed in the manner
set forth in the Servicing Agreement.
(c) "Administrative Support Services" include but are not limited to:
(i) transfer agent and subtransfer agent services for beneficial owners of
Shares of the Portfolio; (ii) aggregating and processing purchase and
redemption orders; (iii) providing beneficial owners with statements showing
their positions in Shares of the Portfolio; (iv) processing dividend payments;
(v) providing subaccounting services for Shares of the Portfolio held
beneficially; (vi) forwarding shareholder communications, such as proxies,
shareholder reports, dividend and tax notices, and updating prospectuses to
beneficial owners; and (vii) receiving, tabulating, and transmitting proxies
executed by beneficial owners; provided, however, that such term does not
include Shareholder Liaison Services.
Section 4. Expenses Allocated. Amounts paid by the
Portfolio under the Plan must be for services rendered for or on behalf of the
holders of the Portfolio's Shares.
Section 5. Reports to Fund. So long as this Plan is in effect, the
Fund's Administrator shall provide the Fund's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts
expended pursuant to the Plan and the purposes for which such expenditures were
made.
Section 6. Approval of Plan. This Plan will become effective with
respect to the Portfolio on the date the public offering of Shares of the
Portfolio commences upon the approval by a majority of the Board of Directors,
including a majority of those Directors who are not "interested persons" (as
defined in the Investment Company Act of 1940, as amended) and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan (the "Disinterested
Directors"), pursuant to a vote cast in person at a meeting called for purpose
of voting on approval of the Plan.
Section 7. Continuance of Plan. Unless sooner terminated in accordance
with the terms hereof, this Plan shall continue until October 20, 1999, and
thereafter for so long as its continuance is specifically approved at least
annually by the Fund's Board of Directors in the manner described in section 6
hereof.
Section 8. Amendments. This Plan may be amended at any time by the
Board of Directors, provided that any material amendments of the terms of the
Plan shall become effective only upon the approval set forth in section 6
hereof.
Section 9. Termination. This Plan is terminable without penalty at any
time by (a) a vote of a majority of the Board of Directors or (b) a vote by a
majority of the outstanding shares of the Portfolio.
Section 10. Miscellaneous. The captions in this Plan are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
Adopted: October 20, 1998
-2-
<PAGE> 3
THE ARCH FUND(R), INC.
SERVICING AGREEMENT
to
SHAREHOLDER SERVICES PLAN
FOR CONNING MONEY MARKET PORTFOLIO
Ladies and Gentlemen:
We wish to enter into this Servicing Agreement with you concerning the provision
of shareholder liaison and/or administrative support services to your customers
who may from time to time be the record or beneficial owners of shares (such
shares referred to herein as the "Shares") of the Conning Money Market Portfolio
(the "Portfolio").
The terms and conditions of this Servicing Agreement are as follows:
Section 1. You agree to provide Shareholder Liaison Services to your customers
("Clients") who may from time to time own of record or beneficially Shares of
the Portfolio. "Shareholder Liaison Services" means "personal service and/or the
maintenance of shareholder accounts" within the meaning of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., such as
responding to customers' inquiries and providing information on their
investments.
Section 2. You agree to provide Administrative Support Services to Clients who
may from time to time own of record or beneficially Shares of the Portfolio.
"Administrative Support Services" include but are not limited to: (i) transfer
agent and subtransfer agent services for beneficial owners of Shares of the
Portfolio; (ii) aggregating and processing purchase and redemption orders;
(iii) providing beneficial owners with statements showing their positions in
Shares of the Portfolio; (iv) processing dividend payments; (v) providing
subaccounting services for Shares of the Portfolio held beneficially; (vi)
forwarding shareholder communications, such as proxies, shareholder reports,
dividend and tax notices, and updating prospectuses to beneficial owners; and
(vii) receiving, tabulating, and transmitting proxies executed by beneficial
owners; provided, however, that such term does not include Shareholder Liaison
Services.
Section 3. You will provide such office space and equipment, telephone and
personnel (which may be any part of the space, equipment and facilities
currently used in your business, or any personnel employed by you) as may be
reasonably necessary or beneficial in order to provide the aforementioned
services to Clients.
Section 4. Neither you nor any of your officers, employees or agents is
authorized to make any representations concerning us, the Portfolio, or its
Shares except those contained in our then current prospectus for such Portfolio,
copies of which will be supplied by us to you, or in such supplemental
literature or advertising as may be authorized by us in writing.
<PAGE> 4
Section 5. For all purposes of this Agreement you will be deemed to be an
independent contractor, and will have no authority to act as agent for us in any
matter or in any respect. You will not engage in activities pursuant to this
Agreement which constitute acting as a broker or dealer under state law unless
you have obtained the licenses required by law. You and your employees will,
upon request, be available during normal business hours to consult with us or
our designees concerning the performance of your responsibilities under this
Agreement.
Section 6. In consideration of the services and facilities provided by you
pursuant to Section 1 hereof, we will pay to you, and you will accept as full
payment therefor, a fee at the annual rate of [.25%] of the average daily net
asset value of Shares of the Portfolio owned of record or beneficially by
Clients from time to time for whom you are the dealer of record or holder of
record or with whom you have a servicing relationship. In consideration of the
services provided by you pursuant to Section 2 hereof, we will pay to you, and
you will accept as full payment therefor, a fee at the annual rate of [.50%] of
the average daily net asset value of Shares of the Portfolio. Said fees will be
computed daily and payable monthly. For purposes of determining the fees
payable under this Section 6, the average daily net asset value of Clients'
Shares of the Portfolio will be computed in the manner specified in our then
current Registration Statement in connection with the computation of the net
asset value of the Portfolio's Shares for purposes of purchases and
redemptions. The fee rates stated above may be prospectively increased or
decreased by us, in our sole discretion, at any time upon notice to you.
Further, we may, in our discretion and without notice, suspend or withdraw the
sale of Shares of the Portfolio, including the sale of such Shares to you for
the account of any Clients.
Section 7. You acknowledge that you will provide to our Board of Directors, at
least quarterly, separate written reports of the amounts expended pursuant to
this Agreement for Shareholder Liaison Services and for Administrative Support
Services, respectively, and the purposes for which such expenditures were made.
In connection with such reports, you will furnish us or our designees with such
information as we or they may reasonably request (including, without limitation,
periodic certifications confirming the provision to Clients of some or all of
the services described herein), and will otherwise cooperate with us and our
designees (including, without limitation, any auditors designated by us), in
connection with the preparation of reports to our Board of Directors concerning
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.
Section 8. We may enter into other similar Servicing Agreements with any other
person or persons without your consent.
Section 9. By your written acceptance of this Agreement, you represent, warrant
and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of Shares of the
Portfolio; and (ii) the compensation payable to you hereunder, together with
any other compensation you receive from Clients in connection with the
investment of their assets in Shares of the Portfolio, will be disclosed to
Clients, will be authorized by Clients and will not be excessive or
unreasonable.
Section 10. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will
A-2
<PAGE> 5
continue until October 20, 1999, and thereafter will continue automatically for
successive annual periods provided such continuance is specifically approved at
least annually by us in the manner described in Section 13 hereof. This
Agreement is terminable , without penalty, at any time by us (which termination
may be by vote of a majority of our Disinterested Directors, as defined in
Section 13 hereof or by vote of the holders of a majority of the outstanding
shares of the Portfolio) or by you upon notice to us. This Agreement will
terminate in the event of its assignment, as defined in the Investment Company
Act of 1940 (the "Act").
Section 11. All notices and other communications to either you or us will be
duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address shown above.
Section 12. This Agreement will be construed in accordance with the laws of the
State of Maryland without giving effect to principles of conflict of laws.
Section 13. This Agreement has been approved by vote of a majority of (1) our
Board of Directors and (ii) those Directors who are not "interested persons (as
defined in the Act) of us and have no direct or indirect financial interest in
the operation of the Shareholder Services Plan adopted by us regarding the
provision of shareholder liaison and/or administrative support services to the
record or beneficial owners of shares of the Portfolio or in any agreements
related thereto ("Disinterested Directors"), cast in person at a meeting called
for the purpose of voting on such approval.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, c/o BISYS Fund Services Ohio, Inc. 3435 Stelzer Road, Columbus, Ohio
43215.
Very truly yours,
THE ARCH FUND, INC.
By:___________________________________________
Authorized Officer
Accepted and Agreed to:
______________________________________________
Name of Organization
By:___________________________________________
Authorized Officer
Date:_________________________________________
______________________________________________
Taxpayer Identification Number
______________________________________________
Account Number
______________________________________________
Dealer Code
A-3
<PAGE> 1
Exhibit (10)
Law Offices
DRINKER BIDDLE & REATH LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
Fax: (215) 988-2757
October 28, 1998
The ARCH Fund, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Re: Shares Registered by Post-Effective Amendment No. 45 to
Registration Statement on Form N-1A (File Nos. 2-79285 and
811-3567)
Ladies and Gentlemen:
We have acted as counsel to The ARCH Fund, Inc., a Maryland corporation
(the "Fund"), in connection with the preparation and filing with the Securities
and Exchange Commission of Post-Effective Amendment No. 45 (the "Amendment") to
the Fund's Registration Statement on Form N-1A under the Securities Act of 1933,
as amended (the "1933 Act"), registering shares of common stock in a new series
or portfolio of the Fund, i.e. the Conning Money Market Portfolio (the
"Portfolio"). The Amendment seeks to register an indefinite number of shares of
common stock of the Portfolio (the "Shares").
We have reviewed the Fund's Articles of Incorporation, as amended and
supplemented, its Restated and Amended By-Laws, resolutions of its Board of
Directors, and such other legal and factual matters as we have deemed
appropriate. This opinion is based exclusively on the Maryland General
Corporation Law and the federal law of the United States of America.
We assume that, prior to the effectiveness of the Amendment under the
1933 Act, the Fund will have filed with the Maryland State Department of
Assessments and Taxation all necessary documents (the "Documents") to authorize,
classify and establish the Shares.
<PAGE> 2
The ARCH Fund, Inc.
October 28, 1998
Page 2
Based upon and subject to the foregoing, it is our opinion that the
Shares, when issued for payment as described in the Fund's Prospectus relating
to the Portfolio and in accordance with the Fund's Articles of Incorporation and
the Documents for not less than $.001 per share, will be legally issued, fully
paid and non-assessable by the Fund.
We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 45 to the Fund's Registration Statement.
Very truly yours,
/s/ Drinker Biddle & Reath LLP
DRINKER BIDDLE & REATH LLP
<PAGE> 1
EXHIBIT 11(a)
Independent Auditors' Consent
The Board of Directors of
The ARCH Fund, Inc.
We consent to the reference to our firm under the heading "Independent
Auditors" in the Statement of Additional Information included herein.
We also consent to the use of our report dated January 23, 1998 as incorporated
by reference in The ARCH Fund, Inc. -- Statement of Additional Information
dated March 31, 1998 as previously filed with the Securities and Exchange
Commission and to the reference to our firm under the heading "Independent
Auditors" in that Statement of Additional Information which has been
incorporated by reference in its entirety herein.
Columbus, Ohio
October 30, 1998
<PAGE> 1
Exhibit (11)(b)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
Firm under the caption "Counsel" in the Statement of Additional Information that
is included in Post-Effective Amendment No. 45 to the Registration Statement
(No. 2-79285) on Form N-1A under the Securities Act of 1933, as amended, of The
Arch Fund, Inc. This consent does not constitute a consent under Section 7 of
the Securities Act of 1933, and in consenting to the use of our name and the
references to our Firm under such caption we have not certified any part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under Section 7 or the rules and regulations
of the Securities and Exchange Commission thereunder.
/s/ Drinker Biddle & Reath LLP
-------------------------------
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
November 5, 1998
<PAGE> 1
EXHIBIT 13(k)
PURCHASE AGREEMENT
The ARCH Fund, Inc. (the "Fund"), a Maryland corporation with
transferable shares, and BISYS Fund Services Ohio, Inc. ("BISYS Ohio"), an Ohio
corporation, hereby agree with each other as follows:
1. The Fund hereby offers BISYS Ohio and BISYS Ohio hereby purchases
ten (10) shares of Class T common stock representing interests in the Conning
Money Market Portfolio (the "Portfolio") at a price of $1.00 per share (such
shares of common stock in the Portfolio being hereinafter known as the
"Shares"). BISYS Ohio hereby acknowledges the purchase of the Shares and the
Fund hereby acknowledges receipt from BISYS Ohio of funds in the amount of
$10.00 in full payment for the Shares.
2. BISYS Ohio represents and warrants to the Fund that the Shares are
being acquired for investment purposes and not with a view to the distribution
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ____ day of ___________, 1998.
THE ARCH FUND, INC.
By:___________________________
Title: President
BISYS FUND SERVICES OHIO, INC.
By:___________________________
Title: President
