<PAGE>
[PHOTO OF DOLLAR AND POCKET WATCH APPEARS HERE]
- -----------------------
Annual Report
November 30, 1997
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Money Market Portfolio
Treasury Money Market Portfolio
Tax-Exempt Money Market Portfolio
Growth & Income Equity Portfolio
Small Cap Equity Portfolio
International Equity Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Equity Portfolio
Balanced Portfolio
Government & Corporate Bond Portfolio
U.S. Government Securities Portfolio
Short-Intermediate Municipal Portfolio
Missouri Tax-Exempt Bond Portfolio
National Municipal Bond Portfolio [LOGO OF ARCH
Intermediate Corporate Bond Portfolio APPEARS HERE]
Bond Index Portfolio The ARCH Funds
<PAGE>
THE ARCH FUND, INC.
MESSAGE FROM YOUR CHAIRMAN
Dear Shareholders,
We are pleased to present this report for the ARCH Fund, Inc. for the 12
months ended November 30, 1997. During the period, the ARCH family of mutual
funds saw its assets increase to nearly $3.8 billion.
We also introduced five new portfolios, bringing our total number of
offerings to 17. The new portfolios are the Intermediate Corporate Bond
Portfolio, Bond Index Portfolio, Equity Income Portfolio, Equity Index
Portfolio, and our newest addition, the Growth Equity Portfolio. These new
portfolios offer shareholders exposure to an even wider range of segments of
the financial markets.
If you are a customer of the ARCH Asset Adviser program, you are aware that
your investment adviser, Mississippi Valley Advisors Inc., rebalanced and
reallocated its growth model portfolio during the recent period. It increased
slightly the portfolio's allocation to the ARCH Small Cap Equity Portfolio and
reduced the allocation to the Arch Growth & Income Equity Portfolio. We will
continue to monitor the financial markets and to allocate shareholder assets
according to market conditions and opportunities.
While its impossible to predict the future direction of the markets with any
degree of certainty, there are certain basic principals that can help you as
an investor to plan for your future needs.
First, we encourage investors to take a long-term view of their portfolios.
If you can afford to leave the money invested through the inevitable up and
down cycles of the financial markets, you will greatly reduce your
vulnerability to any single decline. We know from experience, for example,
that stock prices have gone up over longer periods of time, have significantly
outperformed other types of investments and have stayed ahead of inflation. Of
course past performance is no guarantee of future results.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it invests
in many different companies. You can increase your diversification further by
investing in a number of different stock funds, or in such other investment
categories as bonds. If you have a short time horizon, you might want to
consider investments such as money market mutual funds, which seek income and
a stable share price by investing in high-quality, short-term instruments.
Finally, no matter what your time horizon, tolerance for risk, or portfolio
diversity, it makes good sense to follow a regular investing plan. By
investing a certain amount of money in a fund at the same time each month or
quarter, and periodically reviewing your portfolio, you will not get caught up
in the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy--known as dollar cost averaging--will not
assure you a profit or protect you from a loss in a declining market,
Investors should consider his/her financial ability to continue purchases
through periods of low price levels, it should help you lower the average cost
of your purchases over time.
The ARCH family of mutual funds offers a broad spectrum of mutual fund
investments to meet almost any investment need, including stock, bond, and
money market funds. Using the ARCH funds, you can build a well diversified
portfolio that can help you towards your future savings and investment goals.
You will find detailed discussions of each Portfolio of the ARCH Fund, Inc.
in the following pages. These discussions will help you understand your
investments and their current prospects. If you would like any more
information about any of the Portfolios, please call your investment
representative or the ARCH Shareholder Servicing Center at 1-800-452-ARCH.
THE ARCH FUNDS ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL
AGENCY, ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, THE DISTRIBUTOR OR ANY OF THEIR AFFILIATES, AND INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
-1-
<PAGE>
MESSAGE FROM YOUR INVESTMENT ADVISER, MISSISSIPPI VALLEY ADVISERS INC.
During the recent 12-month period, the U.S. economy was characterized by
strong growth, increased consumer spending, a shrinking federal deficit and
low unemployment and inflation. The stock and bond markets benefited from this
combination of positive economic conditions.
Shares of large domestic firms continued to perform well during the recent
period. For example, the 20 largest stocks in the Standard and Poor's 500
Stock Index accounted for 40% of the index's price movement. Large-company
stocks have dominated the stock market for a long time, and we believe that
such shares are very fully valued relative to stocks of smaller firms. Shares
of small or midsized companies eventually will catch up. Meanwhile, there
continues to be large inflows of money into stocks from individuals and
through 401(k) plans.
The bond markets fluctuated early in the period due to inflation concerns,
and the Federal Reserve Board raised short-term interest rates in late March.
However, inflation remained low and bond prices rallied during much of the
period. The recent return on bonds is attractive relative to the rate of
inflation, and we believe that bonds offer good opportunities for investors in
the current low-inflation environment.
Going forward, the economy's growth rate likely will decline from around
3.6% in 1997 to a healthy and more sustainable rate of 1.5% to 2.5%. We expect
corporate profits to grow by 6.5% annually in 1998. Recent economic troubles
in many Asian countries could contribute to a slowdown in the U.S. economy, as
Asian manufacturers export more goods to the United States. We also believe
that the current strong level of consumer spending is unsustainable. Real
after-tax income has risen only 2.6% over the past year, while the savings
rate is 3.7%, near the record low. At the same time, consumers continue to
take on high levels of personal installment loan debt. However, productivity
improvements that have helped fuel a strong-growth, low-inflation economy
likely will continue. As a result, the Federal Reserve is unlikely to raise
interest rates in the near term.
Even in a relatively positive environment for financial assets, investors
should not be complacent about their savings. There is some risk in that
shares of the largest companies are somewhat overvalued. Shares of small or
medium-sized firms have lagged shares of larger firms for some time and may
perform well in the months ahead. Regardless of what type of stock does best
in the short-term, investors' portfolios should be well diversified among
several types of assets, including stocks, bonds and cash reserves. Such
portfolios offer investors the best chance for good returns without
unnecessary risk.
The stock market in 1997 posted its third consecutive year of gains of 20%
or more. In that environment, we urge investors to keep realistic expectations
about the potential for stock market gains. For example, the average one-year
return for stocks since 1945 is 13.8%. Remember that we will not always
experience the level of returns that we've seen during the last three years.
That said, we believe stocks still offer investors the best chance of any type
of asset for long-term growth.
THE ARCH MONEY MARKET PORTFOLIO+
Q. What is the objective of this Portfolio?
A. The ARCH Money Market Portfolio seeks current income with liquidity and
stability of principal. The Portfolio's net assets on November 30, 1997, were
approximately $1.2 billion.
- ------
+ An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the
portfolio will be able to maintain a stable Net Asset Value of $1.00 per
share.
-2-
<PAGE>
Q. What were the conditions in the money markets during the 12 months ended
November 30, 1997?
A. It was a mostly uneventful year in the money markets. The Federal Reserve
raised rates in late March from 5.25% to 5.50%. Since then, short-term
interest rates have remained relatively stable. Economic problems in Asia late
in the period caused many buyers of Japanese securities to shift their money
to U.S. issues. That helped support prices of U.S. money market securities.
Q. How did you manage the Portfolio in that environment?
A. In general, the Portfolio's average maturity remained around 40 days
during most of the period. We did lengthen that average maturity to around 50
days on occasion to take advantage of opportunities. Specifically, we
lengthened when the Fed raised rates in March. We also extended the
Portfolio's average maturity near the end of each fiscal quarter. At those
times, many issuers clean up their balance sheets and offered securities with
relatively high yields. The average maturity as of November 30, 1997, was 37
days.
Q. What types of securities constituted the Portfolio's largest holdings
during the period?
A. Commercial paper, the Portfolio's largest holding, accounted for
approximately 60% of the Portfolio. Such securities were the most readily
available issues during the period. Bank certificates of deposit, floating
rate notes and government agency issues made up the remainder of the
Portfolio.
Q. What is your strategy going forward?
A. We expect that problems in Asian markets will dampen growth in the United
States and that short-term interest rates likely will remain somewhat stable
as a result. We will therefore maintain our current strategy of extending the
Portfolio's average maturity near the end of each quarter to take advantage of
yield opportunities.
THE ARCH TREASURY MONEY MARKET PORTFOLIO+
Q. What is the Portfolio's objective?
A. The ARCH Treasury Money Market Portfolio seeks a high level of current
income exempt from state income tax, consistent with liquidity and security of
principal. The Portfolio's net assets on November 30, 1997 were roughly $292
million.
Q. What was your strategy during the 12 months ended November 30, 1997?
A. The Portfolio maintained an average maturity of 45 to 50 days during the
first few months of the period. We then extended that average maturity to the
mid-50 day range later in the period to take advantage of higher interest
rates. The Portfolio is rated AAA managed by Standard and Poor's, and
therefore has a maximum average maturity restriction of 59 days. We continued
to structure the Portfolio using a laddered approach to provide adequate
liquidity.
Q. How was the Portfolio divided between different Treasury securities?
A. Treasury bills made up 78% of the Portfolio's assets at the end of the
period. We tend to prefer Treasury bills, as they are easier to trade than
Treasury notes and provide a greater opportunity for gains when we sell them.
Those opportunities occur because many municipalities are required to buy
bills with certain maturities. That demand typically boosts those bills'
prices.
- ------
+ An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the
portfolio will be able to maintain a stable Net Asset Value of $1.00 per
share.
-3-
<PAGE>
Q. How will you manage the Portfolio during the coming months?
A. We expect the Portfolio's average maturity to remain between the mid-40-
to mid-50-day range going forward. We also will structure the Portfolio with a
laddered maturity to accommodate cash flows in and out of the Portfolio.
THE ARCH TAX-EXEMPT MONEY MARKET PORTFOLIO+
Q. How did the tax-exempt money markets perform during the 12-month period
ended November 30, 1997?
A. Yields on tax-exempt money market securities declined during the period,
due in part to a lack of supply. When supply is low, issuers can get away with
paying relatively low rates to investors. Those low yields during the period
made short-term tax-exempt issues less attractive relative to taxable
securities such as Treasury bills.
Q. How did you manage the Portfolio in that environment?
A. The ARCH Tax-Exempt Money Market Portfolio seeks as high a level of
current interest income exempt from federal income tax as is consistent with
liquidity and stability of principal. The Portfolio attempts to achieve this
objective while maintaining strict credit quality standards.
The Portfolio's average maturity primarily was in the 30-day range during
the period. That is shorter than the Portfolio's Comparison index, which has
an average maturity of 40 to 50 days. We were able to deliver competitive
performance while taking less risk than the index. The Portfolio invested
mainly in daily and weekly securities that offered attractive yields and
liquidity.
Q. How will you manage the Portfolio in the months ahead?
A. We intend to increase our position in tax-exempt commercial paper and
notes to guard against interest rate fluctuations brought on by changes in
daily and weekly securities. But we do not intend to alter the Portfolios'
current strategy significantly, as long as inflation remains in check and the
economy grows at a reasonable pace.
- ------
+ An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the
portfolio will be able to maintain a stable Net Asset Value of $1.00 per
share.
-4-
<PAGE>
THE ARCH SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Municipal
Investor A Investor A Bond Index
(No Load) (Load)* 3 year
---------- ---------- ----------
<S> <C> <C> <C>
7/95 10,000 9,747 10,000
11/95 10,080 9,825 10,220
11/96 10,485 10,220 10,713
11/97 10,918 10,641 11,229
</TABLE>
*Reflects 2.50% sales charge.
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (7/10/95)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 4.12% 3.74%
- --------------------------------------------------------------
Investor A* 1.51% 2.63%
- --------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Municipal
Bond Index
Trust 3 year
------- ----------
<S> <C> <C>
7/95 10,000 10,000
11/95 10,213 10,220
11/96 10,636 10,713
11/97 11,103 11,229
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (7/10/95)
- --------------------------------------------------------------
<S> <C> <C>
Trust 4.39% 4.47%
- --------------------------------------------------------------
</TABLE>
The ARCH Short-Intermediate Municipal Portfolio is measured against the
Lehman Brothers Municipal Bond Index-3 year, an unmanaged Index representative
of the total return of municipal bonds with remaining maturities of 3 years or
less. Investors are unable to purchase the Index directly, although they can
invest in the underlying securities. The performance of the Index does not
reflect the deduction of expenses associated with a mutual fund, such as sales
charges, investment-management and fund-accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of these
value-added services, as well as the deduction of a 2.50% sales charge on
Investor A shares. The Portfolio may be subject to certain state and local
taxes and, depending on an investor's tax status, the federal alternative
minimum tax.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q. What were the conditions in the municipal bond market during the 12 months
ended November 30, 1997?
A. A limited supply of municipal issues helped boost prices of municipal
bonds during the period. Municipal bonds with relatively long maturities
outperformed both comparable longer term Treasuries and municipal bonds with
shorter maturities.
Q. How did you manage the Portfolio in that environment?
A. The Portfolio remained fully invested during the period to participate in
the strong tax-exempt market. The Portfolio's average maturity was
approximately four years at the beginning of the period and declined to around
3.25 years at the end of the period.
Q. What was the Portfolio's average credit rating during the period?
A. We continued to maintain a high-quality, AA2-rated Portfolio. Yields on
lower-quality issues were not high enough to justify their additional risk.
Q. How will you manage the Portfolio going forward?
A. We expect the economy to continue to grow at a steady pace and the supply
of municipal issues to remain low relative to taxable Treasuries. Those factors
likely will benefit the municipal market in the year ahead.
We intend to increase the Portfolio's average maturity closer to 4.5 years,
to take advantage of positive conditions in the municipal market. Of course, we
will continue to favor issues with high credit quality to help protect
shareholders against market declines.
-5-
<PAGE>
THE ARCH NATIONAL MUNICIPAL BOND PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Municipal
Investor A Investor A Investor B Investor B Bond Index
(No Load) (Load)* (No CDSC) (CDSC)** 10 year
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
11/18/96 10,000 9,551 10,000 9,500 10,000
11/30/96 10,073 9,620 10,070 9,570 10,566
11/30/97 10,839 10,352 10,775 10,275 11,311
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (11/18/96)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 7.61% 8.09%
- --------------------------------------------------------------
Investor A* 2.80% 3.40%
- --------------------------------------------------------------
Investor B (No CDSC) 7.01% 7.47%
- --------------------------------------------------------------
Investor B (CDSC)** 3.01% 2.65%
- --------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Municipal
Bond Index
Trust 10 year
------- ----------
<S> <C> <C>
11/18/96 10,000 10,000
11/30/96 10,074 10,566
11/30/97 10,876 11,311
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (11/18/96)
- --------------------------------------------------------------
<S> <C> <C>
Trust 7.97% 8.45%
- --------------------------------------------------------------
</TABLE>
The Arch National Municipal Bond Portfolio is measured against the Lehman
Municipal Bond Index-10 year, an unmanaged Index representative of the total
return of municipal bonds with remaining maturities of 10 years or less.
Investors are unable to purchase the Index directly, although they can invest
in the underlying securities. The performance of the Index does not reflect
the deduction of expenses associated with a mutual fund, such as sales
charges, investment-management and fund-accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of
these value-added services, as well as the deduction of a 4.50% sales charge
on Investor A shares. The portfolio may be subject to certain state and local
taxes and, depending on an Investors's tax status, the federal alternative
minimum tax.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original costs.
Investor B shares were initially offered on November 18, 1996. The
performance figures for Investor B shares for periods prior to such date
represent the performance for Investor A shares of the Portfolio, which has
been restated to reflect the continent deferred sales charges payable by
holders of Investor B shares who redeem within six years of the date of
purchase. Investor B shares are also subject to distribution and service fees
at a maximum annual rate of 1.00%. Had these distribution and service fees
been reflected, performance would have been reduced.
Q. How did municipal bonds perform during the 12 months ended November 30,
1997?
A. The low supply of municipal issues during the period boosted municipal
bond prices. Demand was especially strong for municipal bonds with maturities
of around 18 years. Municipal bonds with relatively long maturities
outperformed Treasuries with comparable maturity dates.
Q. What was your strategy in that environment?
A. We increased the Portfolio's average maturity during the period to around
ten years. We did so by purchasing securities that mature in 15 to 20 years to
take advantage of opportunities in that portion of the yield curve.
Q. How did you manage credit risk during the period?
A. The average credit rating of the Portfolio remained AA1. As a rule, the
Portfolio invests in issues with high credit quality. The credit risk
associated with lower rated bonds was too great to warrant purchasing them.
During the period, we were able to replace some lower rated issues with higher
quality bonds.
-6-
<PAGE>
Q. How will you manage the Portfolio during the months ahead?
A. We will continue to hold a significant portion of the Portfolio's assets
in securities that mature in roughly 18 years, since those issues offer
investors attractive yields given their risk. However, we likely will avoid
most issues that mature in longer than 18 years. The yields on such longer term
bonds are not high enough to justify taking on the additional risk inherent in
long-term bonds.
THE ARCH MISSOURI TAX-EXEMPT BOND PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Brothers
Investor A Investor A Investor B Investor B Municipal
(No Load) (Load)* (No CDSC) (CDSC)** Bond Index
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
7/88 10,000 9,551 10,000 9,500 10,000
11/88 10,523 10,050 10,523 10,023 10,341
11/89 11,622 11,100 11,622 11,222 11,480
11/90 12,320 11,767 12,320 12,020 12,363
11/91 13,493 12,887 13,493 13,193 13,632
11/92 14,833 14,166 14,760 14,560 14,999
11/93 16,393 15,657 16,313 16,213 16,662
11/94 15,387 14,696 15,312 15,312 15,787
11/95 18,221 17,403 18,007 18,007 18,770
11/96 19,024 18,170 18,634 18,634 19,874
11/97 20,217 19,309 19,645 19,645 21,299
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year 5 Year (7/15/88)
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 6.27% 6.39% 7.79%
- ----------------------------------------------------------------------
Investor A* 1.49% 5.41% 7.26%
- ----------------------------------------------------------------------
Investor B (No CDSC) 5.43% 5.88% 7.46%
- ----------------------------------------------------------------------
Investor B (CDSC)** 1.43% 5.73% 7.46%
- ----------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Brothers
Municipal
Trust Bond Index
------- ----------
<S> <C> <C>
7/88 10,000 10,000
11/88 10,523 10,341
11/89 11,622 11,480
11/90 12,353 12,363
11/91 13,546 13,632
11/92 14,915 14,999
11/93 16,517 16,662
11/94 15,535 15,787
11/95 18,430 18,770
11/96 19,281 19,874
11/97 20,531 21,299
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------
Average Annual Total Return
as of 11/30/97
-----------------------------------------------------
Since
Inception
1 Year 5 Year (7/15/88)
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Trust 6.48% 6.60% 7.97%
- ---------------------------------------------------------------------
</TABLE>
The ARCH Missouri Tax-Exempt Bond Portfolio is measured against the Lehman
Brothers Municipal Bond Index, an unmanaged Index representative of the total
return of municipal bonds. Investors are unable to purchase the Index directly,
although they can invest in the underlying securities. The performance of the
Index does not reflect the deduction of expenses associated with a mutual fund,
such as sales charges, investment-management and fund-accounting fees. By
contrast, the performance of the Portfolio shown on the graph reflects the
deduction of these value-added services, as well as the deduction of a 4.50%
sales charge on Investor A shares and the applicable contingent deferred sales
charge (CDSC) on Investor B shares. The Portfolio may be subject to certain
state and local taxes and, depending on an investor's tax status, the federal
alternative minimum tax.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q. What were conditions like in the Missouri municipal bond market during the
12 months ended November 30, 1997?
A. There was a relatively low supply of large bond issuances in the Missouri
market during the period, causing strong demand for those bonds. Nevertheless,
we were able to find good issues trading at attractive prices.
Q. How did you position the Portfolio to take advantage of those conditions?
A. The lack of available securities and a significant increase in the
Portfolio's assets caused the Portfolio's average maturity to decrease slightly
during the first half of the period. The Portfolio's average maturity stood at
6.01 years at the end of the period.
We purchased general obligation bonds and revenue bonds that mature in 15 to
18 years. Those securities typically offered investors the most attractive
returns without exposing them to excess risk.
-7-
<PAGE>
Q. What is the average credit quality of the Portfolio's holdings?
A. The Portfolio's average credit rating was AA1 at the end of the period. We
favored issues with high credit quality because lower quality issues did not
offer enough extra yield to justify their credit risk.
Q. What is your outlook for the Missouri municipal bond market?
A. We feel that the lack of supply of large issues will continue. However, if
interest rates continue to decline, we may see more new bonds issued in
Missouri.
We will continue to invest new cash in longer term issues and increase the
Portfolio's average maturity. As always, we will focus on securities with high
credit quality, since we feel it is as important to protect shareholders
against down markets as it is to participate in up markets.
THE ARCH INTERNATIONAL EQUITY PORTFOLIO+
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Morgan Stanley
Europe,
Investor A Investor A Investor B Investor B Australia &
(No Load) (Load)* (CDSC)** (No CDSC) Far East Index
---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
4/94 10,000 9,551 10,000 10,000 10,000
11/94 9,900 9,456 9,405 9,900 10,370
11/95 10,780 10,296 10,330 10,730 11,189
11/96 12,072 11,530 11,622 11,922 12,543
11/97 12,384 11,828 11,838 12,138 12,528
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (4/4/94)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 2.58% 6.01%
- --------------------------------------------------------------
Investor A* -2.05% 4.69%
- --------------------------------------------------------------
Investor B (No CDSC) 1.82% 5.43%
- --------------------------------------------------------------
Investor B (CDSC)** -2.14% 4.71%
- --------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Morgan Stanley
Europe,
Australia &
Trust Institutional Far East Index
------- --------------- ---------------
<S> <C> <C> <C>
4/94 10,000 10,000 10,000
11/94 9,920 9,900 10,370
11/95 10,810 10,770 11,189
11/96 12,142 12,052 12,543
11/97 12,495 12,364 12,528
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (4/4/94)
- --------------------------------------------------------------
<S> <C> <C>
Trust 2.91% 6.27%
- --------------------------------------------------------------
Institutional 2.59% 5.96%
- --------------------------------------------------------------
</TABLE>
- ------
+ International investing involves increased risk and volatility.
The ARCH International Equity Portfolio is measured against the unmanaged
Morgan Stanley EAFE (Europe, Australia and Far East) Index, which generally is
representative of the performance of international stocks. Investors are unable
to purchase the Index directly, although they can invest in the underlying
securities. The performance of the Index does not reflect the deduction of
expenses associated with a mutual fund, such as sales charges, investment-
management and fund-accounting fees. By contrast, the performance of the
Portfolio shown on the graph reflects the deduction of these value-added
services, as well as the deduction of a 4.50% sales charge on Investor A shares
and the applicable contingent deferred sales charge (CDSC) on Investor B
shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
-8-
<PAGE>
Q. What were the conditions like for global equity investors during the 12-
month period ended November 30, 1997?
A. Overall, the global markets were quite volatile during the period, with
the Morgan Stanley EAFE Index down 0.1%. The biggest story was economic
turmoil in Asia, which caused many stock markets in that region to vastly
underperform the index. Japan, in particular, had problems, from a drop in
consumer spending, to a national banking crisis. As a result, the Japanese
portion of the EAFE lost 24.5% of its value during the period.
Not all markets, however, were plagued by economic and market turmoil. In
particular, the United Kingdom, Holland and Switzerland maintained strong
economies, and their stock markets rewarded investors with impressive gains.
For example, Swiss stocks were up 34.5% during the period.
Q. How did you manage the Portfolio in that environment?
A. We decreased the Portfolio's exposure to troubled Asian markets during
the period. For example, we reduced the fund's holdings in Japanese stocks
from approximately 26.4% to 19.8%. We reduced the Portfolio's holdings
elsewhere in the Far East from 11% to around 4.0%.
We increased the Portfolio's holdings in other parts of the world to take
advantage of good opportunities. For example, the Scandinavian countries
looked promising for investors, so we upped our allocation from 5.2% to 7.4%
of the Portfolio's assets.
We established positions in the emerging markets of Europe, such as Hungary,
Poland and Russia; our exposure represented 2% of the Portfolio.
Q. How did those regional and country allocations help the Portfolio's
performance?
A. We emphasize careful stock selection in each region of the world,
targeting shares of large, well-established firms with above-average growth
potential. This disciplined approach helped the Portfolio outperform the EAFE
index in many sectors. For example, we were rewarded by our careful stock
picks in Japanese electronics makers such as Canon and Sony. As a result, the
Portfolio's Japanese holdings delivered a positive return of 1.8%
Our investments in other regions of the world also performed well. The
Portfolio's investments in the United Kingdom, for example, returned 27%
versus 22% for the U.K. stocks represented in the index. Good performance from
stocks such as the Swedish (CK) life insurance company Skandia helped the
Portfolio's Scandinavian investments gain 28.6%, versus 22% for that portion
of the index. Our stock picks in the emerging markets of Hungary, Poland and
Russia also helped the Portfolio outperform the index, with a 4.6% gain,
versus a 0.4% gain for that portion of the index.
Q. What is your outlook for overseas markets and the Portfolio during the
next several months?
A. Although problems persist in Japan and other Asian countries, we will
cautiously look for opportunities in those markets. On the other hand, we are
generally enthusiastic about investment prospects in Europe, particularly the
Nordic countries, United Kingdom and Ireland. Other European markets we feel
positive about include Spain, Italy and Portugal.
Our method of stock selection will remain the same. We will continue to
emphasize shares of large, well-positioned firms that trade at attractive
valuations.
-9-
<PAGE>
THE ARCH GROWTH & INCOME EQUITY PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Investor A Investor A Investor B Investor B S&P 500
(No Load) (Load)* (CDSC)** (No CDSC) Index
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
6/88 10,000 9,551 10,000 10,000 10,000
11/88 10,346 9,882 9,846 10,346 10,620
11/89 13,151 12,561 12,751 13,151 13,912
11/90 12,973 12,390 12,673 12,973 13,439
11/91 15,228 14,545 14,928 15,228 16,167
11/92 18,364 17,539 18,164 18,364 19,142
11/93 20,135 19,267 20,035 20,135 21,075
11/94 20,176 19,305 20,176 20,176 21,307
11/95 26,622 25,473 26,472 26,472 29,188
11/96 32,743 31,274 32,371 32,371 37,366
11/97 40,569 38,748 39,829 39,829 48,019
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 23.90% 17.18% 15.88%
- ----------------------------------------------------------------------------
Investor A* 18.32% 16.11% 15.32%
- ----------------------------------------------------------------------------
Investor B (No CDSC) 23.04% 16.75% 15.65%
- ----------------------------------------------------------------------------
Investor B (CDSC)** 19.04% 16.64% 15.65%
- ----------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S&P 500
Trust Institutional Index
--------------- --------------- ---------------
<S> <C> <C> <C>
6/88 10,000 10,000 10,000
11/88 10,345 10,346 10,620
11/89 13,150 13,151 13,912
11/90 12,971 12,973 13,439
11/91 15,227 15,228 16,167
11/92 18,362 18,364 19,142
11/93 20,134 20,135 21,075
11/94 20,206 20,173 21,307
11/95 26,727 26,604 29,188
11/96 32,994 32,745 37,366
11/97 41,093 40,571 48,019
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust 24.55% 17.48% 16.03%
- ----------------------------------------------------------------------------
Institutional 23.90% 17.18% 15.88%
- ----------------------------------------------------------------------------
</TABLE>
The performance of the ARCH Growth & Income Equity Portfolio is measured
against the Standard & Poor's 500 Index, an unmanaged Index generally
representative of the U.S. stock market. Investors are unable to purchase the
Index directly, although they can invest in the underlying securities. The
performance of the Index does not reflect the deduction of expenses associated
with a mutual fund, such as sales charges, investment management and fund-
accounting fees. By contrast, the performance of the Portfolio shown on the
graph reflects the deduction of these value-added services, as well as the
deduction of a 4.50% sales charge on Investor A shares and the applicable
contingent deferred sales charge (CDSC) on Investor B shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What were the conditions in the stock market during the 12 months ended
November 30, 1997?
A. Stocks continued to perform well, despite a market correction in October
and increased volatility late in the period due to problems in many Asian
markets. Shares of large company stocks posted the strongest gains during the
period. Those gains did broaden out somewhat during the period to include
shares of some smaller firms.
Q. How did you manage the Portfolio in that environment?
A. We continued to take a bottom-up approach to stock selection, looking for
good values. We also took a very diversified approach toward managing the
Portfolio. We did not bet on the fortunes of any particular sector.
Our Portfolio is broadly diversified across eight market sectors: 24% in
consumer growth stocks; 21% in interest-rate sensitive stocks such as banks and
financial institutions; 15% in industrial cyclicals; 14% in technology stocks;
13% in consumer staples stocks; 6% in energy stocks; 4% in capital goods
stocks; and 3% in consumer cyclicals.
-10-
<PAGE>
Q. What changes did you make to the Portfolio during the period?
A. We purchased shares of select technology companies that traded at
attractive prices. We also found opportunities among certain consumer staples
stocks, as well as shares of drug makers and industrial cyclical companies. We
reduced the Portfolio's exposure to energy stocks and capital goods stocks.
Those sectors performed very well recently and appeared to be overvalued
relative to the market.
Q. How will you manage the Portfolio going forward?
A. We will continue to carefully select stocks that appear undervalued.
Currently, such stocks include medical and drug stocks, financial services
companies and technology firms. We also will continue to maintain a broadly
diversified portfolio, giving investors exposure to various sectors of the
stock market without taking excessive or unnecessary risks.
THE ARCH EQUITY INCOME PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Russell
Investor A Investor A Investor B Investor B 1000 Value
(No Load) (Load)* (No CDSC)** (CDSC) Index
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
2/26/97 10,000 9,551 10,000 9,500 10,000
11/30/97 11,742 11,215 11,675 11,175 12,013
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (2/27/97)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) N/A 17.42%
- --------------------------------------------------------------
Investor A* N/A 12.15%
- --------------------------------------------------------------
Investor B (No CDSC) N/A 16.75%
- --------------------------------------------------------------
Investor B (CDSC)** N/A 11.75%
- --------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Russell
1000
Trust Institutional Index
------------ ------------- ------------
<S> <C> <C> <C>
2/26/97 10,000 10,000 10,000
11/30/97 11,764 11,764 12,013
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (2/27/97)
- --------------------------------------------------------------
<S> <C> <C>
Trust N/A 17.64%
- --------------------------------------------------------------
Institutional N/A 17.64%
- --------------------------------------------------------------
</TABLE>
The Arch Equity Income Portfolio is measured against the Russell 1000 Value
Index, generally representative of those securities in The Russell 1000 Index
with a less than average growth orientation. Companies in this index generally
have low price to book and price-earnings ratios, higher dividend yields and
lower forecasted growth values. Investors are unable to purchase the Index
directly, although they can invest in the underlying securities. The
performance of the Index does not reflect the deduction of expenses associated
with a mutual fund, such as sales charges, investment-management and fund-
accounting fees. By contrast, the performance of the Portfolio shown on the
graph reflects the deduction of these value-added services, as well as the
deduction of a 4.50% sales charge on Investor A shares.
The portfolio may be subject to certain state and local taxes and, depending
on an Investor's tax status, the federal alternative minimum tax.
Past performance is not Predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q. Describe the overall environment for stocks since the Portfolio's February
27, 1997, inception.
A. The overall stock market environment was generally very favorable during
the period. Factors contributing to stocks' strong performance were continued
corporate earnings growth, low interest rates and low inflation. The flow of
money into the stock market was also steady during the period, driven primarily
by individuals contributing to their 401(k) plans.
-11-
<PAGE>
Q. How did you manage the Portfolio in that environment?
A. We take a disciplined, value-oriented approach to stock selection,
focusing on shares that offer attractive yields and are selling at low prices
relative to the stock's actual worth. The Russell 1000 Value Index is our
benchmark, so the Portfolio consists primarily of high-quality, large-company
stocks.
The financial services sector offered some of the best investment
opportunities during the period, as these stocks benefited from low interest
rates and consolidation within the banking industry. For example, we bought
shares of Core States Financial, a regional bank that has since received buyout
offers from other institutions. Those offers helped boost the stock's price.
We also have increased the Portfolio's weighting in utility stocks, from 5%
to 10%, to take advantage of these stocks' higher yields. Two recent purchases
in this sector were Baltimore Gas & Electric and Union Electric (Ameren Corp.).
We were underweighted in the telecommunications sector during the period
because we felt that competition in the industry might hurt corporate profits.
However, we found good values in shares of SBC Communications, Bell Atlantic
and U.S. West.
Q: What is your outlook going forward?
A. We anticipate continuing low inflation and low interest rates, making for
predictable corporate earnings growth. In that favorable environment, we will
continue to focus on individual stock selection, looking for value in stocks
that haven't taken part in group moves.
THE ARCH BALANCED PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Brothers
Investor A Investor A Investor B Investor B S&P 500 Aggregate
(No Load) (Load)* (CDSC)** (No CDSC) Index Bond Index
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
4/93 10,000 9,551 10,000 10,000 10,000 10,000
11/93 10,386 9,920 10,174 10,674 10,421 10,529
11/94 10,188 9,730 9,950 10,335 10,536 10,207
11/95 12,719 12,148 12,506 12,806 14,433 12,007
11/96 14,640 13,983 14,134 14,434 18,477 12,736
11/97 16,892 16,134 16,339 16,537 23,745 13,698
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (4/1/93)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 15.38% 11.88%
- --------------------------------------------------------------
Investor A* 10.21% 10.78%
- --------------------------------------------------------------
Investor B (No CDSC) 14.57% 11.37%
- --------------------------------------------------------------
Investor B (CDSC)** 10.57% 11.08%
- --------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Brothers
S&P 500 Aggregate
Trust Institutional Index Bond Index
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
4/93 10,000 10,000 10,000 10,000
11/93 10,387 10,386 10,421 10,529
11/94 10,199 10,179 10,536 10,207
11/95 12,744 12,690 14,433 12,007
11/96 14,727 14,601 18,477 12,736
11/97 17,054 16,868 23,745 13,698
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (4/1/93)
- --------------------------------------------------------------
<S> <C> <C>
Trust 15.81% 12.11%
- --------------------------------------------------------------
Institutional 15.52% 11.84%
- --------------------------------------------------------------
</TABLE>
The performance of the ARCH Balanced Portfolio is measured against the
Standard & Poor's 500 Index, an unmanaged index generally representative of the
U.S. stock market, and the Lehman Brothers Aggregate Bond Index, an unmanaged
Index comprised of the Lehman Brothers Government/Corporate Bond Index and two
Lehman Brothers asset-backed securities indices. Investors are unable to
purchase the Indices directly, although they can invest in the underlying
securities. The performance of the Indices does not reflect the deduction of
expenses associated with a mutual fund, such as sales charges, investment-
management and fund-accounting fees. By contrast, the performance of the
Portfolio shown on the graph reflects the deduction of these value-added
services, as well as the deduction of a 4.50% sales charge on Investor A shares
and the applicable contingent deferred sales charge (CDSC) on Investor B
Shares.
-12-
<PAGE>
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What market conditions influenced the Portfolio's performance during the
12 months ended November 30, 1997?
A. The Portfolio is designed for investors who want exposure to both
equities and fixed-income securities, and its performance was affected by
trends in both the stock and bond markets. Stocks continued to perform well
during the period, with shares of large-company stocks posting the biggest
gains.
In the fixed-income markets, prices of longer-term bonds declined through
March due to concerns that strong economic growth could lead to rising
inflation. Bond prices rose during most of the rest of the period, however, as
such concerns diminished.
Q. How did you manage the Portfolio to address those conditions?
A. The Portfolio typically invests about 50% to 60% of its assets in stocks,
with the remainder in bonds. During the period, we reduced the Portfolio's
stock allocation from around 60% of assets to roughly 57%. That decision was
based largely on the possibility of declining corporate profits going forward.
Approximately 34% of the Portfolio's assets were invested in bonds, while cash
equivalents made up the remaining 9%.
Q. What types of stocks did you favor during the period?
A. The Portfolio's stock investments are similar to those in the ARCH Growth
& Income Equity Portfolio. They include undervalued shares of companies with
strong earnings growth potential.
High valuations in the stock market caused us to take a relatively defensive
position in stocks. We emphasized shares of industrial cyclical stocks and
consumer staples stocks. These sectors of the market typically hold up well
when overall stock prices decline. We also reduced the Portfolio's holdings in
oil and energy services stocks.
Q. What types of bonds did the Portfolio hold?
A. The bond portion of the Portfolio is based on the Lehman Brothers
Aggregate Bond Index, an unmanaged index comprised of the Lehman Brothers
Government/Corporate Bond Index and two Lehman Brothers asset-backed
securities indices. The Portfolio invested mainly in high-quality Treasury
securities and mortgage-backed securities, as well as some bonds issued by
corporations.
Q. How will you manage the Portfolio going forward?
A. We remain cautiously optimistic about the stock market's prospects, and
we may increase the Portfolio's equity holdings to around 60% of assets in the
months ahead. Whatever happens, the Investment Adviser's investment management
committee will carefully monitor the financial markets and make any necessary
changes to the Portfolio that may help to enhance returns or reduce risk.
-13-
<PAGE>
THE ARCH SMALL CAP EQUITY PORTFOLIO+
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Russell
Investor A Investor A Investor B Investor B 2000
(No Load) (Load)* (CDSC)** (No CDSC) Index
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
5/92 10,000 9,551 10,000 10,000 10,000
11/92 11,255 10,750 10,755 11,255 11,032
11/93 13,478 12,873 13,078 13,478 13,128
11/94 14,473 13,823 14,172 14,472 12,981
11/95 17,579 16,790 17,187 17,487 16,680
11/96 19,049 18,193 18,622 18,822 19,434
11/97 22,754 21,733 22,226 22,326 23,984
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year 5 Year (5/6/92)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 19.45% 15.12% 15.89%
- -----------------------------------------------------------------------------
Investor A* 14.09% 14.06% 14.94%
- -----------------------------------------------------------------------------
Investor B (No CDSC) 18.62% 14.68% 15.50%
- -----------------------------------------------------------------------------
Investor B (CDSC)** 14.62% 16.64% 15.40%
- -----------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Russell
2000
Trust Institutional Index
--------------- --------------- ---------------
<S> <C> <C> <C>
5/92 10,000 10,000 10,000
11/92 11,255 11,255 11,032
11/93 13,478 13,478 13,128
11/94 14,497 14,436 12,981
11/95 17,642 17,531 16,680
11/96 19,181 19,002 19,434
11/97 22,973 22,691 23,984
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year 5 Year (5/6/92)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust 19.77% 15.34% 16.09%
- -----------------------------------------------------------------------------
Institutional 19.41% 15.05% 15.83%
- -----------------------------------------------------------------------------
</TABLE>
The ARCH Small Cap Equity Portfolio is measured against the Russell 2000
Index, an unmanaged index generally representative of the total return of small
to mid-sized companies. Investors cannot purchase the Index directly, although
they can invest in the underlying securities. The performance of the Index does
not reflect the deduction of expenses associated with a mutual fund, such as
sales charges, investment-management and fund-accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of these
value-added services, as well as the deduction of a 4.50% sales charge on
Investor A shares and the applicable contingent deferred sales charge (CDSC) on
Investor B shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What was the overall environment for small-company stocks during the 12-
month period ended November 30, 1997?
A. Small-company shares underperformed large-company stocks during the first
few months of the period. In April, however, a strengthening dollar and
earnings disappointments by large companies such as Coca-Cola and Gillette
contributed to a shift in favor of small-company stocks. From April 25 to
September 30, 1997, small-company shares gained 35% versus 24% for the Standard
& Poor 500.
But in the fourth quarter, uncertainty over economic turmoil in Asia caused
investors to seek safety in shares of large, well-established companies. As a
result, small-company stocks underperformed again. Overall, 1997 marked the
third straight year that small-company stocks underperformed large-company
stocks.
- ------
+ Small-capital companies typically carry additional risks, since smaller
companies generally have a higher risk of failure and by definition, are not as
well established as "blue chip" companies. Historically, small-company stocks
have experienced a greater degree of market volatility than Large-Company
stocks on average.
-14-
<PAGE>
Q. How did those factors affect the Portfolio's performance during the
period?
A. The Portfolio outperformed the small-cap universe in the first half of
1997, thanks to our bottom-up, individual-company approach to stock selection.
We were able to find excellent values in several areas of the market. For
instance, we acquired shares of broadcasting companies SFX (since sold) and
Evergreen Media (since sold), whose stock prices climbed more than 50% in the
third quarter. The Portfolio also benefited when two of our technology
holdings were acquired by larger companies: Verifone was bought by Hewlett-
Packard and Network General was acquired by McAfee Associates.
The market's shift away from small-company stocks in the fourth quarter
created more buying opportunities for the Portfolio. Technology stocks in
particular were hit very hard in the fourth quarter, allowing us to add shares
of carefully selected companies such as software maker SPSS, semiconductor and
capital goods manufacturer CFM Technology and computer-based systems company
SBS Technology.
Q. What is your outlook for small-company stocks going forward?
A. We believe that small-company stocks will continue to provide excellent
values. They offer lower price-to-earnings ratios, lower price-to-book values
and more growth potential than large-company stocks. What's more, we expect
the three-year trend of small-company stocks' underperformance to reverse
itself at some point. This means the values we find now have good potential
for price appreciation going forward.
We will continue to seek out the best values in the small-cap universe,
using careful bottom-up, stock-by-stock security analysis.
THE ARCH EQUITY INDEX PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Investor A Investor A S&P 500
(No Load) (Load)* Trust Institutional Index
---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
5/1/97 10,000 9,747 10,000 10,000 10,000
11/30/97 12,014 11,710 12,040 12,040 11,964
</TABLE>
* Reflects 2.50% sales charge.
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (5/1/97)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) N/A 20.14%
- --------------------------------------------------------------
Investor A* N/A 17.10%
- --------------------------------------------------------------
Trust N/A 20.40%
- --------------------------------------------------------------
Institutional N/A 20.40%
- --------------------------------------------------------------
</TABLE>
The ARCH Equity Index Portfolio is measured against the Standard & Poor's
500 Index, an unmanaged index generally representative of the U.S. Stock
Market. Investors are unable to purchase the Index directly, although they can
invest in the underlying securities. The performance of the Index does not
reflect the deduction of expenses associated with a mutual fund, such as sales
charges, investment-management and fund-accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of
these value-added services, as well as the deduction of a 2.50% sales charge
on Investor A shares. The portfolio may be subject to certain state and local
taxes and, depending on an Investor's tax status, the federal alternative
minimum tax.
-15-
<PAGE>
Past performance is not Predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q. Discuss the Portfolio's performance during the recent period?
A. As an index fund, the ARCH Equity Index Portfolio attempts to mirror the
performance of the Standard & Poor's 500 Index, the domestic stock market's
most widely used performance benchmark. The Portfolio's net assets increased
from $25 million to around $32 million during the period
Q. What accounts for differences between the Portfolio's return and the
return of the index?
A. Index funds tend to lag their benchmarks by a small margin. The Funds'
transaction costs are one reason for that difference. Another reason: The
funds generally hold a small amount of cash unless they rebalance their
portfolios every day, and that cash can act as a slight anchor on performance
when the market is rising. Going forward, the Portfolio's performance should
be very close to that of its benchmark index.
THE ARCH BOND INDEX PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Investor A Investor A Aggregate
(No Load) (Load)* Trust Institutional Bond Index
---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
2/10/97 10,000 9,747 10,000 10,000 10,000
11/30/97 10,693 10,422 10,715 10,720 10,823
</TABLE>
* Reflects 4.50% sales charge.
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (2/10/97)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) N/A 6.93%
- --------------------------------------------------------------
Investor A* N/A 4.22%
- --------------------------------------------------------------
Trust N/A 7.15%
- --------------------------------------------------------------
Institutional N/A 7.20%
- --------------------------------------------------------------
</TABLE>
The ARCH Bond Index Portfolio is measured against the Lehman Brothers
Aggregate Bond Index, an unmanaged Index comprised of the Lehman Brothers
Government/Corporate Bond Index and two Lehman Brothers asset-backed
securities indices. Investors are unable to purchase the Index directly,
although they can invest in the underlying securities. The performance of the
Index does not reflect the deduction of expenses associated with a mutual
fund, such as sales charges, investment-management and fund-accounting fees.
By contrast, the performance of the Portfolio shown on the graph reflects the
deduction of these value-added services, as well as the deduction of a 2.50%
sales charge on Investor A shares.
The portfolio may be subject to certain state and local taxes and, depending
on an Investor's tax status, the federal alternative minimum tax.
Past performance is not Predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q. What were the conditions in the bond market during the period from this
Portfolio's inception on February 10, 1997, through November 30, 1997?
A. Interest rates rose initially during the period. Investors suspected that
the Federal Reserve would raise interest rates, which did occur in March. But
rates peaked in April and then declined throughout the remainder of the
period.
-16-
<PAGE>
Q. How did you manage the Portfolio during the period?
A. This Portfolio holds 125 securities in roughly the same percentage
weightings as the Lehman Brothers Aggregate Bond Index across market sectors
and average maturities. The Portfolio tracked the index very well during the
period.
Q. What is the Portfolio's average credit rating?
A. The Portfolio's average credit rating remains AAA, since a large
percentage of the Portfolio is U.S. Treasury and government agency securities.
Q. What is your outlook for the markets and the Portfolio?
A. We don't anticipate any significant interest rate moves--perhaps a change
of one-half to one percentage point in either direction. We will continue to
maintain a broadly diversified Portfolio that attempts to track the performance
of our benchmark.
THE ARCH GOVERNMENT & CORPORATE BOND PORTFOLIO
[LINE GRAPH APPEARS HERE]
Value of a $10,000 Investment
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Lehman
Brothers
Investor A Investor A Investor B Investor B Aggregate Bond
(No Load) (Load)* (CDSC)** (No CDSC) Index
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
6/88 10,000 9,551 10,000 10,000 10,000
11/88 10,266 9,805 9,770 10,266 10,265
11/89 11,476 10,960 11,076 11,476 11,738
11/90 12,045 11,504 11,754 12,045 12,627
11/91 13,586 12,976 13,286 13,586 14,447
11/92 14,647 13,989 14,447 14,647 15,727
11/93 16,145 15,367 16,045 16,145 17,441
11/94 15,609 14,857 15,609 15,609 16,907
11/95 18,104 17,232 17,994 17,994 19,889
11/96 18,920 18,070 18,675 18,675 21,096
11/97 20,013 19,114 19,658 19,658 22,689
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
(Maximum 5.00%)
<TABLE>
<CAPTION>
Average Annual Total Return
as of 11/30/97
- ----------------------------------------------------------------------
Since
Inception
1 Year 5 Year (11/18/88)
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 5.78% 6.44% 7.60%
- ----------------------------------------------------------------------
Investor A* 0.99% 5.47% 7.08%
- ----------------------------------------------------------------------
Investor B (No CDSC) 5.76% 6.06% 7.40%
- ----------------------------------------------------------------------
Investor B (CDSC)** 1.26% 9.90% 7.40%
- ----------------------------------------------------------------------
</TABLE>
[LINE GRAPH APPEARS HERE]
Value of a $10,000 Investment
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Lehman
Brothers
Aggregate
Trust Institutional Bond Index
---------- ------------- ----------
<S> <C> <C> <C>
6/88 10,000 10,000 10,000
11/88 10,266 10,266 10,265
11/89 11,476 11,476 11,738
11/90 12,045 12,045 12,627
11/91 13,616 13,586 14,447
11/92 14,724 14,647 15,727
11/93 16,278 16,145 17,441
11/94 15,785 15,609 16,907
11/95 18,359 18,104 19,889
11/96 19,244 18,920 21,096
11/97 20,460 20,055 22,689
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
as of 11/30/97
- ---------------------------------------------------------------------
Since
Inception
1 Year 5 Year (6/15/88)
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Trust 6.37% 6.80% 7.85%
- ---------------------------------------------------------------------
Institutional 6.00% 6.49% 7.63%
- ---------------------------------------------------------------------
</TABLE>
The Arch National Municipal Bond Portfolio is measured against the Lehman
Municipal Bond Index-10 year, an unmanaged Index representative of the total
return of municipal bonds with remaining maturities of 10 years or less.
Investors are unable to purchase the Index directly, although they can invest
in the underlying securities. The performance of the Index does not reflect
the deduction of expenses associated with a mutual fund, such as sales
charges, investment-management and fund-accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of
these value-added services, as well as the deduction of a 4.50% sales charge
on Investor A shares. The portfolio may be subject to certain state and local
taxes and, depending on an Investors's tax status, the federal alternative
minimum tax.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original costs.
Investor B shares were initially offered on November 18, 1996. The
performance figures for Investor B shares for periods prior to such date
represent the performance for Investor A shares of the Portfolio, which has
been restated to reflect the continent deferred sales charges payable by
holders of Investor B shares who redeem within six years of the date of
purchase. Investor B shares are also subject to distribution and service fees
at a maximum annual rate of 1.00%. Had these distribution and service fees
been reflected, performance would have been reduced.
-17-
<PAGE>
Q. What were the conditions in the taxable bond markets during the period
ended November 30, 1997?
A. Interest rates rose during the first several months of the period, due to
investors' fears of potential rising inflation. But the Federal Reserve raised
short-term interest rates in March, after which the bond market rallied and
rates began to decline. The yield on the 10-year Treasury began the period at
6.06%, rose to a high of 7% in April, and then fell to 5.85% at the end of
November.
Q. How did you manage the Portfolio in that environment?
A. We shortened the Portfolio's average maturity from 9.8 years to 8.1 years
as interest rates fell during the period. We also decreased the Portfolio's
duration from 5.3 years to 4.6 years to bring it more in line with the
duration of our new benchmark, the Lehman Brothers Aggregate Bond Index.
We chose this index because it includes government agency and mortgage-
backed securities, which made up 41% of the Portfolio at the end of the
period. Corporate securities now make up about 5% of the Portfolio, up from 0%
at the beginning of the period. Treasuries accounted for the remaining 54% of
the Portfolio.
Q. What was the Portfolio's average credit quality?
A. The corporate securities we added to the Portfolio generally had high
credit ratings, allowing us to maintain an average credit rating of AAA.
Q. What's your outlook for the bond market and your strategy going forward?
A. We anticipate a stable or slightly rising interest rate environment next
year. We also are looking to add more corporate securities to the Portfolio as
they become cheaper and their yields become more attractive.
THE ARCH INTERMEDIATE CORPORATE BOND PORTFOLIO
[LINE GRAPH APPEARS HERE]
Value of a $10,000 Investment
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Lehman
Intermediate
Investor A Investor A Corporate
(No Load) (Load)* Trust Institutional Bond Index
---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
2/10/97 10,000 9,551 10,000 10,000 10,000
11/30/97 10,648 10,170 10,665 10,660 10,711
</TABLE>
* Reflects 4.50% sales charge.
<TABLE>
<CAPTION>
- --------------------------------------------------------------
Average Annual Total Return
as of 11/30/97
- --------------------------------------------------------------
Since
Inception
1 Year (2/10/97)
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) N/A 6.48%
- --------------------------------------------------------------
Investor A* N/A 1.70%
- --------------------------------------------------------------
Trust N/A 6.65%
- --------------------------------------------------------------
Institutional N/A 6.60%
- --------------------------------------------------------------
</TABLE>
The ARCH Bond Index Portfolio is measured against the Lehman Brothers
Intermediate Corporate Bond Index, an unmanaged Index comprised of the Lehman
Brothers Intermediate Index including intermediate and long term components,
and sub indices covering AAA Corporates, AA Corporates, A Corporates and BAA
Corporates each of which also include intermediate and long term components.
Investors are unable to purchase the Index directly, although they can invest
in the underlying securities. The performance of the Index does not reflect
the deduction of expenses associated with a mutual fund, such as sales
charges, investment-management and fund-accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of
these value-added services, as well as the deduction of a 2.50% sales charge
on Investor A shares. The portfolio may be subject to certain state and local
taxes and, depending on an Investor's tax status, the federal alternative
minimum tax.
-18-
<PAGE>
Past performance is not Predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q. What economic or market conditions affected intermediate-term bonds during
the period?
A. The yield curve has flattened considerably since the Portfolio's February
10, 1997, inception. In particular, long-term interest rates declined during
the period, which made the intermediate-term securities that the Portfolio
holds more attractive for income investors.
Q. How did you structure the Portfolio in that environment?
A. The Portfolio has 70% of its assets invested in corporate debt. We invest
for as high a level of current income as is consistent with preservation of
capital. During this period, we focused on bonds in the five- to ten-year
maturity range, where yields were most attractive relative to risk.
The Portfolio's average maturity finished the period at 6.7 years, which is
in between the average maturities of the U.S. Government Securities Portfolio
and the longer term Government & Corporate Bond Portfolio.
Q. Where did you find the best opportunities in the corporate markets during
the period?
A. We found the best investments in bonds issued by strong industrial
corporations, and this area accounted for approximately 34% of the Portfolio's
assets. For example, we added bonds issued by Campbell's Soup.
Q. What is the average credit rating of the Portfolio's holdings?
A. The Portfolio's average credit rating is AA2, which is fairly high for
this Portfolio. We feel that higher rated corporate issues offer more value at
this time, and therefore have been concentrating our investments in such
securities.
Q. What is your outlook for the bond markets and the Portfolio going forward?
A. We are looking to add to the Portfolio's investments in the corporate
sector as opportunities arise. We can hold up to 100% of the Portfolio's assets
in corporate securities. We expect that we will continue to buy bonds in the
five to ten year maturity range, as longer maturity bonds still do not offer a
yield advantage to justify their additional risk.
THE ARCH U.S. GOVERNMENT SECURITIES PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Intermediate
Investor A Investor A Investor B Investor B Government
(No Load) (Load)* (CDSC)** (No CDSC) Bond Index
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
6/88 10,000 9,551 10,000 10,000 10,000
11/88 10,305 9,842 9,808 10,305 10,374
11/89 11,339 10,830 10,939 11,339 11,666
11/90 12,435 11,877 12,135 12,435 12,644
11/91 13,972 13,345 13,672 13,972 14,281
11/92 14,978 14,306 14,778 14,978 15,442
11/93 16,480 15,699 16,380 16,480 16,849
11/94 15,962 15,205 15,962 15,962 16,512
11/95 18,302 17,434 18,012 18,012 18,833
11/96 19,138 18,279 18,705 18,705 19,899
11/97 20,133 19,230 19,541 19,541 21,149
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charges.
(Maximum 5.00%)
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Investor A (No Load) 5.20% 6.09% 7.64%
- -----------------------------------------------------------------------
Investor A* 2.60% 5.55% 7.35%
- -----------------------------------------------------------------------
Investor B (No CDSC) 4.47% 5.46% 7.30%
- -----------------------------------------------------------------------
Investor B (CDSC)** 0.49% 5.30% 7.30%
- -----------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
Intermediate
Government
Trust Institutional Bond Index
------- ------------- ----------
<S> <C> <C> <C>
6/88 10,000 10,000 10,000
11/88 10,305 10,305 10,374
11/89 11,339 11,339 11,666
11/90 12,435 12,435 12,644
11/91 14,004 13,972 14,281
11/92 15,056 14,978 15,442
11/93 16,616 16,480 16,849
11/94 16,142 15,910 16,512
11/95 18,564 18,247 18,833
11/96 19,469 19,077 19,899
11/97 20,543 20,050 21,149
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year 5 Year (6/2/88)
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Trust 5.51% 6.41% 7.87%
- ----------------------------------------------------------------------
Institutional 5.10% 6.01% 7.59%
- ----------------------------------------------------------------------
</TABLE>
-19-
<PAGE>
The ARCH U.S. Government Securities Portfolio is measured against the
unmanaged Lehman Brothers Intermediate Government Bond Index, which is
generally representative of the total return of intermediate-term U.S.
Government securities. Investors are unable to purchase the Index directly,
although they can invest in the underlying securities. The performance of the
Index does not reflect the deduction of expenses associated with a mutual
fund, such as sales charges, investment management and fund accounting fees.
By contrast, the performance of the Portfolio shown on the graph reflects the
deduction of these value-added services, as well as the deduction of a 2.50%
sales charge on Investor A shares and the applicable contingent deferred sales
charge (CDSC) on Investor B Shares.
Past performance is not predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Investor B shares were initially offered on March 1, 1995. The performance
figures for Investor B shares for periods prior to such date represent the
performance for Investor A shares of the Portfolio, which has been restated to
reflect the contingent deferred sales charges payable by holders of Investor B
shares who redeem within six years of the date of purchase. Investor B shares
are also subject to distribution and service fees at a maximum annual rate of
1.00%. Had these distribution and service fees been reflected, performance
would have been reduced.
Q. What were the conditions in the Treasury market during the 12-month
period ended November 30, 1997?
A. Interest rates are lower now than at the start of the period, but that
rally didn't start until midway though the year. The yield on the five-year
Treasury rose from 5.88% in December to 6.49% in May 1997, as a result of the
Federal Reserve raising interest rates in March. In the second half of the
period, though, rates began falling and haven't stopped since. The yield on
the five-year Treasury dropped to 5.84% by the end of the period.
Q. How did you structure the Portfolio to address those conditions?
A. We have shortened the Portfolio's average duration, from 2.91 years to
2.30 years. Its average maturity declined from 4.3 years to 3.5 years. As the
yield curve flattened out during the period, there wasn't much yield incentive
to take on the additional risk that longer term securities carry.
We increased our exposure to mortgage-backed securities slightly during the
second half of the year, from 40% to 41% of the Portfolio, because they
offered better income than other government issues did. Treasuries accounted
for 57% of the Portfolio at the end of the period, with the remaining 2% in
mutual funds and Corporate Bonds.
Q. Did the Portfolio's credit quality change?
A. No. The Portfolio's average credit rating remains AAA, since we invest in
Treasuries and high-quality government agency securities.
Q. What is your outlook for the Treasury market and the Portfolio?
A. We expect interest rates to remain stable or rise slightly, since they
currently stand close to their 20-year lows. In that environment we will try
to increase income while avoiding additional risk. Since there is currently no
real yield advantage in longer term securities, we likely will keep the
Portfolio's average maturity toward the short end of its historical range.
-20-
<PAGE>
THE ARCH GROWTH EQUITY PORTFOLIO
- ---------------------------------------------------------
Value of a $10,000 Investment
- ---------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Investor A Investor A
(No Load) (Load)* Trust S&P 500
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1/4/93 10,000 9,551 10,000 10,000
11/30/93 9,870 9,427 9,870 10,421
11/30/94 9,643 9,287 9,724 10,536
11/30/95 14,179 13,655 14,297 14,433
11/30/96 17,086 16,455 17,228 18,477
11/30/97 20,440 19,685 20,610 23,745
</TABLE>
* Reflects 4.50% sales charge.
+ Prior to the commencement of operations on 11/24/97. The performance for the
Class A shares and Trust Shares was the performance of the arrow equity
Portfolio.
<TABLE>
<CAPTION>
----------------------------------------------
Average Annual Total Return
as of 11/30/97
----------------------------------------------
Since
Inception
1 Year (11/24/97)+
- --------------------------------------------------------------
<S> <C> <C>
Investor A (No Load) 19.63% 15.68%
- --------------------------------------------------------------
Investor A* 14.28% 14.80%
- --------------------------------------------------------------
Trust 19.63% 16.10%
- --------------------------------------------------------------
</TABLE>
GROWTH EQUITY
The ARCH Growth Equity Portfolio is measured against the Standard & Poor's
500 Index, an unmanaged Index generally representative of the U.S. stock
market. Investors are unable to purchase the Index directly, although they can
invest in the underlying securities. The performance of the Index does not
reflect the deduction of expenses associated with a mutual fund, such as sales
charges, investment-management and fund-accounting fees. By contrast, the
performance of the Portfolio shown on the graph reflects the deduction of
these value-added services, as well as the deduction of a 4.50% sales charge
on Investor A shares. The portfolio may be subject to certain state and local
taxes and, depending on an Investors's tax status, the federal alternative
minimum tax.
Past performance is not Predictive of future results. Investment return and
principal value will fluctuate, so that shares of a particular class, when
redeemed, may be worth more or less than their original cost.
Q. What is the Portfolio's objective?
A. As the name implies, this new Portfolio's objective is growth of
principal. We pursue that goal by maintaining a diversified approach to stock
selection, looking to buy shares of high-quality companies that we believe are
well positioned to provide above-average returns to investors.
Q. How are you managing the Portfolio?
A. The Portfolio will have larger weightings in high-growth sectors of the
stock market. For example, we will favor the technology sector, investing in
shares of electrical components makers and software companies. We also will
emphasize the financial services sector by holding stocks of banks, investment
firms and consumer finance companies. The medical sector is another high-
growth area--particularly shares of pharmaceutical companies. We will
underweight utility stocks, since they do not offer as much potential for
growth.
Q. What type of investor should consider this Portfolio?
This Portfolio is best suited for an aggressive investor with a higher risk
profile who is willing to take a long-term approach for the potential to
achieve above-average returns.
-21-
<PAGE>
TABLE OF CONTENTS
Independent Auditors Report
Page 23
Statements of Assets and Liabilities
Page 24
Statements of Operations
Page 34
Statements of Changes in Net Assets
Page 39
Schedules of Portfolio Investments
Page 47
Notes to Financial Statements
Page 108
Financial Highlights
Page 132
-22-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors of
The ARCH Fund, Inc.
We have audited the accompanying statements of assets and liabilities of The
ARCH Fund, Inc.--Money Market Portfolio, Treasury Money Market Portfolio, Tax-
Exempt Money Market Portfolio, Growth & Income Equity Portfolio, Growth Equity
Portfolio, Small Cap Equity Portfolio, International Equity Portfolio, Equity
Income Portfolio, Equity Index Portfolio, Balanced Portfolio, Government &
Corporate Bond Portfolio, U.S. Government Securities Portfolio, Short-
Intermediate Municipal Portfolio, Missouri Tax-Exempt Bond Portfolio, National
Municipal Bond Portfolio, Intermediate Corporate Bond Portfolio, and Bond
Index Portfolio including the schedules of portfolio investments, as of
November 30, 1997, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of The ARCH Fund, Inc.'s management. Our responsibility is
to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification of securities
owned as of November 30, 1997, by examination and other appropriate audit
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned portfolios comprising The ARCH Fund, Inc. at
November 30, 1997, the results of their operations, the changes in their net
assets and the financial highlights for each of the periods indicated herein,
in conformity with generally accepted accounting principles.
Columbus, Ohio
January 23, 1998
-23-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
TREASURY TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Amortized cost
$1,237,715,387; $292,336,676; and
$158,971,414; respectively)......... $1,237,715,387 $292,336,676 $158,971,414
Cash................................. 5,107 418 948
Interest and dividends receivable.... 6,686,700 1,048,286 816,622
Receivable for capital shares issued. 818 -- --
Prepaid expenses and other assets.... 22,251 28,243 5,662
-------------- ------------ ------------
Total Assets...................... 1,244,430,263 293,413,623 159,794,646
-------------- ------------ ------------
LIABILITIES:
Dividends payable.................... 4,878,762 1,025,628 419,368
Payable for investments purchased.... 10,000,000 -- --
Payable for capital shares redeemed.. 5,052 -- --
Accrued expenses and other payables:
Investment advisory fees............ 243,868 56,601 46,197
Administration fees................. 33,996 7,911 2,177
Distribution and services fees, In-
vestor A Shares.................... 31,746 1,551 3,353
Distribution and services fees, In-
vestor B Shares.................... 67 -- --
Administrative services fees, Trust
Shares............................. 99,606 17,601 5,929
Administrative services fees, In-
stitutional Shares................. 4,596 48 --
Directors' fees..................... 7,646 1,228 1,260
Accounting and custodian fees....... 31,630 5,616 4,170
Other liabilities................... 70,115 2,695 6,119
-------------- ------------ ------------
Total Liabilities................. 15,407,084 1,118,879 488,573
-------------- ------------ ------------
NET ASSETS:
Capital.............................. 1,229,020,635 292,274,278 159,293,913
Accumulated undistributed net invest-
ment income......................... 7,451 6,076 12,160
Accumulated undistributed net real-
ized gains (losses) from investment
transactions........................ (4,907) 14,390 --
-------------- ------------ ------------
Net Assets........................ $1,229,023,179 $292,294,744 $159,306,073
============== ============ ============
</TABLE>
Continued
-24-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
TREASURY TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ------------
<S> <C> <C> <C>
Net Assets:
Investor A Shares.................... $ 164,776,975 $ 8,408,870 $ 15,788,710
Investor B Shares.................... 72,695 -- --
Trust Shares......................... 1,042,151,260 283,653,158 143,517,363
Institutional Shares................. 22,022,249 232,716 --
-------------- ------------ ------------
Total.............................. $1,229,023,179 $292,294,744 $159,306,073
============== ============ ============
Outstanding Shares of Common Stock:
Investor A Shares.................... 164,776,758 8,408,569 15,788,672
Investor B Shares.................... 72,696 -- --
Trust Shares......................... 1,042,148,999 283,635,416 143,517,330
Institutional Shares................. 22,022,182 232,709 --
-------------- ------------ ------------
Total.............................. 1,229,020,635 292,276,694 159,306,002
============== ============ ============
Net Asset Value:
Investor A Shares (a)................ $ 1.00 $ 1.00 $ 1.00
Investor B Shares (a)................ 1.00 -- --
Trust Shares (a)..................... 1.00 1.00 1.00
Institutional Shares (a)............. 1.00 1.00 --
============== ============ ============
</TABLE>
- ------
(a) Offering price and redemption price are the same.
See notes to financial statements
-25-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GROWTH &
INCOME SMALL CAP INTERNATIONAL
EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$341,113,405; $229,123,387;
and $56,404,049; respectively)....... $467,321,522 $261,841,715 $62,450,160
Cash.................................. 214 659 479
Foreign currency, at value (Cost 0; 0;
and $2,512,983; respectively)........ -- -- 2,475,299
Interest and dividends receivable..... 469,778 120,025 34,484
Receivable for capital shares issued.. 301,408 11,523 --
Receivable for investments sold....... -- -- 589,076
Tax reclaim receivable................ -- -- 98,821
Unamortized organization costs........ -- -- 7,404
Prepaid expenses and other assets..... 19,246 10,637 3,136
------------ ------------ -----------
Total Assets....................... 468,112,168 261,984,559 65,658,859
------------ ------------ -----------
LIABILITIES:
Dividends payable..................... 237,052 -- --
Payable for investments purchased..... -- -- 287,424
Payable for capital shares redeemed... 18,111 8,675 220
Accrued expenses and other payables:
Investment advisory fees............. 209,558 163,339 53,996
Administration fees.................. 6,388 3,590 889
Distribution and services fees, In-
vestor A Shares..................... 11,286 3,681 707
Distribution and services fees, In-
vestor B Shares..................... 5,073 1,246 473
Administrative services fees, Insti-
tutional Shares..................... 22,462 8,535 1,695
Directors' fees...................... 2,338 2,088 504
Accounting and custodian fees........ 21,488 14,288 53,137
Other liabilities.................... 38,524 25,220 7,458
------------ ------------ -----------
Total Liabilities.................. 572,280 230,662 406,503
------------ ------------ -----------
NET ASSETS:
Capital............................... 263,643,901 208,276,335 56,800,419
Accumulated undistributed net invest-
ment income (loss)................... 63,954 -- 113,227
Accumulated undistributed net realized
gains (losses) from investment
transactions......................... 77,623,916 20,759,234 730,807
Net unrealized appreciation
(depreciation) from translation of
assets and liabilities in foreign
currencies........................... -- -- (2,462,967)
Net unrealized appreciation (deprecia-
tion) from investments............... 126,208,117 32,718,328 8,468,980
Accumulated undistributed net realized
gains (losses) from foreign currency
transactions......................... -- -- 1,601,890
------------ ------------ -----------
Net Assets......................... $467,539,888 $261,753,897 $65,252,356
============ ============ ===========
</TABLE>
Continued
-26-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GROWTH &
INCOME SMALL CAP INTERNATIONAL
EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------
<S> <C> <C> <C>
Net Assets:
Investor A Shares.................. $ 46,371,949 $ 14,213,142 $ 2,853,914
Investor B Shares.................. 6,349,091 1,503,048 561,707
Trust Shares....................... 322,303,707 211,642,698 55,038,329
Institutional Shares............... 92,515,141 34,395,009 6,798,406
------------ ------------ -----------
Total............................ $467,539,888 $261,753,897 $65,252,356
============ ============ ===========
Outstanding Shares of Common Stock:
Investor A Shares.................. 2,195,391 945,598 238,056
Investor B Shares.................. 303,265 101,938 47,740
Trust Shares....................... 15,211,749 13,949,792 4,552,299
Institutional Shares............... 4,379,638 2,295,362 567,936
------------ ------------ -----------
Total............................ 22,090,043 17,292,690 5,406,031
============ ============ ===========
Net Asset Value:
Investor A Shares -- redemption
price per share................... $ 21.12 $ 15.03 $ 11.99
Investor B Shares -- offering
price per share*.................. 20.94 14.74 11.77
Trust Shares -- offering and re-
demption price per share.......... 21.19 15.17 12.09
Institutional Shares -- offering
and redemption price per share.... 21.12 14.98 11.97
============ ============ ===========
Maximum Sales Charge: Investor A
Shares............................. 4.50% 4.50% 4.50%
============ ============ ===========
Maximum Offering Price (100%/(100% -
Maximum Sales Charge) of net asset
value adjusted to nearest cent) per
share:
Investor A Shares.................. $ 22.12 $ 15.74 $ 12.55
============ ============ ===========
</TABLE>
- ------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-27-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
EQUITY EQUITY GROWTH
INCOME INDEX EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$91,177,252; $27,126,890;
$45,927,466; and
$108,707,400; respectively). $132,214,090 $31,972,943 $67,211,688 $127,236,430
Cash......................... 823 837 202 114
Interest and dividends
receivable.................. 287,631 57,733 57,747 632,336
Receivable for capital shares
issued...................... -- -- -- 32,679
Unamortized organization
costs....................... 28,264 23,443 -- 1,899
Prepaid expenses and other
assets...................... 3,718 511 -- 1,248
------------ ----------- ----------- ------------
Total Assets.............. 132,534,526 32,055,467 67,269,637 127,904,706
------------ ----------- ----------- ------------
LIABILITIES:
Dividends payable............ 290,797 38,725 -- 235,711
Payable for investments
purchased................... -- -- -- 1,152,826
Payable for capital shares
redeemed.................... -- 220 -- --
Accrued expenses and other
payables:
Investment advisory fees.... -- -- 9,654 76,789
Administration fees......... 996 437 1,287 1,729
Distribution and services
fees, Investor A Shares.... 42 44 1,248 2,432
Distribution and services
fees, Investor B Shares.... 57 -- -- 414
Administrative services
fees, Trust Shares......... -- -- 2,614 --
Administrative services
fees, Institutional
Shares..................... -- -- -- 15,058
Directors' fees............. 846 171 28 946
Accounting and custodian
fees....................... 2,433 9,825 514 6,837
Other liabilities........... 14,668 5,497 1,283 12,587
------------ ----------- ----------- ------------
Total Liabilities......... 309,839 54,919 16,628 1,505,329
------------ ----------- ----------- ------------
NET ASSETS:
Capital...................... 64,928,315 27,085,850 45,968,787 93,867,682
Accumulated undistributed net
investment income (loss).... 87,616 11,748 -- 52,975
Accumulated undistributed net
realized gains (losses) from
investment transactions..... 26,171,918 56,897 -- 13,949,690
Net unrealized appreciation
(depreciation) from
investments................. 41,036,838 4,846,053 21,284,222 18,529,030
------------ ----------- ----------- ------------
Net Assets................ $132,224,687 $32,000,548 $67,253,009 $126,399,377
============ =========== =========== ============
</TABLE>
Continued
-28-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
EQUITY EQUITY GROWTH
INCOME INDEX EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net Assets:
Investor A Shares...... $ 173,410 $ 205,851 $ 3,467,455 $ 9,922,872
Investor B Shares...... 131,473 -- 10 522,202
Trust Shares........... 131,918,630 31,786,716 63,785,534 54,299,482
Institutional Shares... 1,174 7,981 10 61,654,821
------------ ----------- ----------- ------------
Total................ $132,224,687 $32,000,548 $67,253,009 $126,399,377
============ =========== =========== ============
Outstanding Shares of
Common Stock:
Investor A Shares...... 15,004 17,248 213,232 748,059
Investor B Shares...... 11,383 -- 1 39,698
Trust Shares........... 11,410,190 2,662,668 3,922,003 4,092,138
Institutional Shares... 102 669 1 4,660,917
------------ ----------- ----------- ------------
Total................ 11,436,679 2,680,585 4,135,237 9,540,812
============ =========== =========== ============
Net Asset Value:
Investor A Shares --
redemption price per
share................. $ 11.56 $ 11.93 $ 16.26 $ 13.26
Investor B Shares --
offering price per
share *............... 11.55 -- 16.27 13.15
Trust Shares --
offering and
redemption price per
share................. 11.56 11.94 16.26 13.27
Institutional
Shares -- offering
and redemption price
per share............. 11.56 11.94 16.27 13.23
============ =========== =========== ============
Maximum Sales Charge:
Investor A Shares...... 4.50% 2.50% 4.50% 4.50%
============ =========== =========== ============
Maximum Offering Price
(100%/(100% -- Maximum
Sales Charge) of net
asset value adjusted to
nearest cent) per
share:
Investor A Shares...... $ 12.10 $ 12.24 $ 17.03 $ 13.88
============ =========== =========== ============
</TABLE>
- ------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-29-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GOVERNMENT & U.S. SHORT-
CORPORATE GOVERNMENT INTERMEDIATE
BOND SECURITIES MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$188,285,105; $84,305,561; and
$29,899,826; respectively)........... $193,799,372 $84,973,584 $30,172,193
Cash.................................. 450 212 868
Interest and dividends receivable..... 2,045,306 915,871 409,448
Receivable for capital shares issued.. 11,753 -- --
Prepaid expenses and other assets..... 5,803 3,652 --
------------ ----------- -----------
Total Assets....................... 195,862,684 85,893,319 30,582,509
------------ ----------- -----------
LIABILITIES:
Dividends payable..................... 849,629 398,707 94,900
Payable for capital shares redeemed... 2,137 -- --
Accrued expenses and other payables:
Investment advisory fees............. 67,538 31,496 --
Administration fees.................. 2,671 1,171 417
Distribution and services fees, In-
vestor A Shares..................... 1,571 1,282 --
Distribution and services fees, In-
vestor B Shares..................... 479 383 --
Administrative services fees, Insti-
tutional Shares..................... 4,165 1,736 --
Directors' fees...................... 671 572 353
Accounting and custodian fees........ 9,164 4,434 3,334
Other liabilities.................... 14,783 4,901 13,358
------------ ----------- -----------
Total Liabilities.................. 952,808 444,682 112,362
------------ ----------- -----------
NET ASSETS:
Capital............................... 190,767,939 85,127,376 30,197,780
Accumulated undistributed net invest-
ment income.......................... 75,019 258,001 --
Accumulated undistributed net realized
gains (losses) from investment
transactions......................... (1,447,349) (604,763) --
Net unrealized appreciation (deprecia-
tion) from investments............... 5,514,267 668,023 272,367
------------ ----------- -----------
Net Assets......................... $194,909,876 $85,448,637 $30,470,147
============ =========== ===========
</TABLE>
Continued
-30-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GOVERNMENT & U.S. SHORT-
CORPORATE GOVERNMENT INTERMEDIATE
BOND SECURITIES MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------
<S> <C> <C> <C>
Net Assets:
Investor A Shares.................... $ 4,773,548 $ 5,180,865 $ 16,337
Investor B Shares.................... 545,335 466,051 --
Trust Shares......................... 172,636,534 72,752,723 30,453,810
Institutional Shares................. 16,954,459 7,048,998 --
------------ ----------- -----------
Total.............................. $194,909,876 $85,448,637 $30,470,147
============ =========== ===========
Outstanding Shares of Common Stock:
Investor A Shares.................... 461,121 488,002 1,617
Investor B Shares.................... 52,581 43,923 --
Trust Shares......................... 16,650,349 6,852,567 3,015,862
Institutional Shares................. 1,635,202 666,200 --
------------ ----------- -----------
Total.............................. 18,799,253 8,050,692 3,017,479
============ =========== ===========
Net Asset Value:
Investor A Shares -- redemption
price per share..................... $ 10.35 $ 10.62 $ 10.11
Investor B Shares -- offering price
per share *......................... 10.37 10.61 --
Trust Shares -- offering and redemp-
tion price per share................ 10.37 10.62 10.10
Institutional Shares -- offering and
redemption price per share.......... 10.37 10.58 --
============ =========== ===========
Maximum Sales Charge: Investor A
Shares............................... 4.50% 2.50% 2.50%
============ =========== ===========
Maximum Offering Price (100%/(100% --
Maximum Sales Charge) of net asset
value adjusted to nearest cent) per
share:
Investor A Shares..................... $ 10.84 $ 10.89 $ 10.37
============ =========== ===========
</TABLE>
- ------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-31-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
MISSOURI NATIONAL INTERMEDIATE
TAX-EXEMPT MUNICIPAL CORPORATE BOND
BOND BOND BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value
(Cost $95,215,701;
$362,674,799;
$43,752,063; and
$133,282,321; respec-
tively)................ $ 99,516,311 $374,468,781 $44,901,302 $137,808,197
Cash.................... 709 993 193 91
Interest and dividends
receivable............. 1,465,217 5,883,163 651,548 1,365,058
Receivable for capital
shares issued.......... -- 19,907 -- --
Unamortized organization
costs.................. -- 27,732 18,241 14,385
Prepaid expenses and
other assets........... 3,239 20,474 -- 8,832
------------ ------------ ----------- ------------
Total Assets......... 100,985,476 380,421,050 45,571,284 139,196,563
------------ ------------ ----------- ------------
LIABILITIES:
Dividends payable....... 377,867 1,479,306 244,416 752,082
Payable for investments
purchased.............. -- 10,874,790 540,265 --
Accrued expenses and
other payables:
Investment advisory
fees.................. 36,807 -- -- --
Administration fees.... 1,377 2,772 1,081 6,467
Distribution and serv-
ices fees, Investor A
Shares................ 3,896 346 66 12
Distribution and serv-
ices fees, Investor B
Shares................ 1,146 313 -- --
Directors' fees........ 677 2,567 418 1,056
Accounting and custo-
dian fees............. 5,144 887 694 4,962
Other liabilities...... 8,187 45,983 37,123 30,913
------------ ------------ ----------- ------------
Total Liabilities.... 435,101 12,406,964 824,063 795,492
------------ ------------ ----------- ------------
NET ASSETS:
Capital................. 96,368,333 343,664,623 43,089,915 133,587,174
Accumulated undistrib-
uted net investment in-
come (loss)............ -- -- 7,399 (184,726)
Accumulated
undistributed net
realized gains (losses)
from investment
transactions........... (118,568) 12,555,481 500,668 472,747
Net unrealized apprecia-
tion (depreciation)
from investments....... 4,300,610 11,793,982 1,149,239 4,525,876
------------ ------------ ----------- ------------
Net Assets........... $100,550,375 $368,014,086 $44,747,221 $138,401,071
============ ============ =========== ============
</TABLE>
Continued
-32-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
MISSOURI NATIONAL INTERMEDIATE
TAX-EXEMPT MUNICIPAL CORPORATE BOND
BOND BOND BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Assets:
Investor A Shares...... $ 23,721,870 $ 716,757 $ 276,844 $ 54,696
Investor B Shares...... 1,397,932 408,107 -- --
Trust Shares........... 75,430,573 366,889,222 44,442,957 138,318,895
Institutional Shares... -- -- 27,420 27,480
------------ ------------ ----------- ------------
Total................ $100,550,375 $368,014,086 $44,747,221 $138,401,071
============ ============ =========== ============
Outstanding Shares of
Common Stock:
Investor A Shares...... 1,998,194 69,821 27,384 5,377
Investor B Shares...... 117,871 39,675 -- --
Trust Shares........... 6,353,207 35,691,518 4,398,020 13,614,389
Institutional Shares... -- -- 2,713 2,703
------------ ------------ ----------- ------------
Total................ 8,469,272 35,801,014 4,428,117 13,622,469
============ ============ =========== ============
Net Asset Value:
Investor A Shares --
redemption price per
share................. $ 11.87 $ 10.27 $ 10.11 $ 10.17
Investor B Shares --
offering price per
share *............... 11.86 10.29 -- -
Trust Shares -- offer-
ing and redemption
price per share....... 11.87 10.28 10.11 10.16
Institutional
Shares -- offering
and redemption price
per share............. -- -- 10.11 10.17
------------ ------------ ----------- ------------
Maximum Sales Charge:
Investor A Shares...... 4.50% 4.50% 4.50% 2.50%
============ ============ =========== ============
Maximum Offering Price
(100%/(100% -- Maximum
Sales Charge) of net
asset value adjusted to
nearest cent) per
share:
Investor A Shares...... $ 12.43 $ 10.75 $ 10.59 $ 10.43
============ ============ =========== ============
</TABLE>
- ------
* Redemption price of Investor B Shares varies based on length of time held.
See notes to financial statements
-33-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
TREASURY TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income......................... $55,195,674 $8,808,910 $5,312,741
Dividend income......................... -- -- 42,442
----------- ---------- ----------
Total income......................... 55,195,674 8,808,910 5,355,183
----------- ---------- ----------
EXPENSES:
Investment advisory fees................ 3,940,122 677,129 592,523
Administration fees..................... 1,970,078 338,568 148,129
Distribution and services fees, Investor
A Shares............................... 288,584 15,941 42,161
Distribution and services fees, Investor
B Shares............................... 718 -- --
Administrative services fees, Trust
Shares................................. 2,119,401 406,388 328,165
Administrative services fees, Institu-
tional Shares.......................... 54,407 871 --
Accounting and custodian fees........... 142,902 23,663 22,071
Legal and audit fees.................... 108,465 13,860 15,411
Directors' fees and expenses............ 27,678 3,917 4,097
Transfer agent fees..................... 240,018 31,846 33,731
Registration and filing fees............ 49,990 11,923 19,580
Printing costs.......................... 94,969 14,147 15,385
Amortization of organization costs...... -- 105 --
Other expenses.......................... 24,851 25,567 2,157
----------- ---------- ----------
Total expenses before voluntary fee re-
ductions............................... 9,062,183 1,563,925 1,223,410
Expenses voluntarily reduced............ (2,546,244) (526,499) (330,884)
----------- ---------- ----------
Net expenses......................... 6,515,939 1,037,426 892,526
----------- ---------- ----------
Net Investment Income................... 48,679,735 7,771,484 4,462,657
----------- ---------- ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from invest-
ment transactions...................... 1,631 14,390 --
----------- ---------- ----------
Change in net assets resulting from op-
erations............................... $48,681,366 $7,785,874 $4,462,657
=========== ========== ==========
</TABLE>
See notes to financial statements
-34-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GROWTH & SMALL CAP INTERNATIONAL
INCOME EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income......................... $ 629,528 $ 584,420 $ 123,947
Dividend income......................... 6,437,875 1,548,239 813,569
Income from securities lending.......... 69,842 151,231 --
Foreign tax withholding................. -- -- (39,832)
----------- ----------- ----------
Total income......................... 7,137,245 2,283,890 897,684
----------- ----------- ----------
EXPENSES:
Investment advisory fees................ 2,392,991 1,783,322 641,772
Administration fees..................... 870,355 475,558 130,263
Distribution and services fees, Investor
A Shares............................... 125,783 41,732 8,598
Distribution and services fees, Investor
B Shares............................... 49,370 13,863 5,161
Administrative services fees, Trust
Shares................................. 919,816 569,663 165,438
Administrative services fees, Institu-
tional Shares.......................... 245,299 97,893 19,844
Accounting and custodian fees........... 134,705 78,332 112,961
Legal and audit fees.................... 48,300 27,114 12,323
Directors' fees and expenses............ 11,982 7,045 1,824
Transfer agent fees..................... 114,862 61,107 19,585
Registration and filing fees............ 14,385 30,331 12,676
Printing costs.......................... 37,516 25,571 8,030
Amortization of organization costs...... -- 5,634 5,475
Other expenses.......................... 12,642 6,088 2,104
----------- ----------- ----------
Total expenses before voluntary fee re-
ductions............................... 4,978,006 3,223,253 1,146,054
Expenses voluntarily reduced............ (1,354,985) (807,438) (272,966)
----------- ----------- ----------
Net expenses......................... 3,623,021 2,415,815 873,088
----------- ----------- ----------
Net Investment Income................... 3,514,224 (131,925) 24,596
----------- ----------- ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from invest-
ment transactions...................... 78,993,806 20,891,156 2,787,030
Net realized gains (losses) from foreign
currency transactions.................. -- -- (170,822)
Net change in unrealized
appreciation/depreciation from invest-
ments.................................. 9,568,676 21,069,188 238,656
Net change in unrealized
appreciation/depreciation from transla-
tion of assets and liabilities in for-
eign currencies........................ -- -- (1,301,985)
----------- ----------- ----------
Net realized/unrealized gains (losses)
from investments and foreign currency.. 88,562,482 41,960,344 1,552,879
----------- ----------- ----------
Change in net assets resulting from op-
erations............................... $92,076,706 $41,828,419 $1,577,475
=========== =========== ==========
</TABLE>
See notes to financial statements
-35-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
EQUITY EQUITY GROWTH
INCOME INDEX EQUITY BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------------------- ------------
FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, SEPTEMBER 30, NOVEMBER 30,
1997 (A) 1997 (B) 1997 (C) 1997(D) 1997
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........... $ 266,612 $ 18,949 $ 3,395 $ 35,267 $ 3,463,618
Dividend income........... 2,148,185 300,983 102,217 954,331 1,027,528
Income from securities
lending.................. 12,047 144 -- -- 31,285
Foreign tax withholding... -- (1,150) -- -- --
----------- ---------- ---------- ----------- -----------
Total income........... 2,426,844 318,926 105,612 989,598 4,522,431
----------- ---------- ---------- ----------- -----------
EXPENSES:
Investment advisory fees.. 681,294 51,115 86,057 468,080 885,481
Administration fees....... 181,680 34,077 17,897 90,965 236,131
Distribution and services
fees, Investor A Shares.. 221 110 26,716 156,027 28,732
Distribution and services
fees, Investor B Shares.. 170 -- -- -- 4,308
Administrative services
fees, Trust Shares....... 272,243 50,999 2,614 -- 148,419
Administrative services
fees, Institutional
Shares................... 3 7 -- -- 175,784
Accounting and custodian
fees..................... 33,220 28,973 10,867 70,426 46,505
Legal and audit fees...... 11,930 7,474 4,813 16,477 12,241
Directors' fees and
expenses................. 2,511 478 878 1,475 3,520
Transfer agent fees....... 30,968 5,325 7,834 35,707 31,611
Registration and filing
fees..................... 19,997 6,680 1,501 16,223 23,247
Printing costs............ 13,062 3,254 2,312 5,591 11,581
Amortization of
organization costs....... 2,216 1,704 132 -- 5,110
Other expenses............ 1,800 904 999 9,422 2,975
----------- ---------- ---------- ----------- -----------
Total expenses before
voluntary fee reductions. 1,251,315 191,100 162,620 870,393 1,615,645
Expenses voluntarily
reduced.................. (1,112,607) (124,298) (26,755) (156,027) (266,482)
----------- ---------- ---------- ----------- -----------
Net expenses........... 138,708 66,802 135,865 714,366 1,349,163
----------- ---------- ---------- ----------- -----------
Net Investment Income..... 2,288,136 252,124 (30,253) 275,232 3,173,268
----------- ---------- ---------- ----------- -----------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM
INVESTMENTS:
Net realized gains
(losses) from investment
transactions............. 26,171,918 56,897 3,407,020 4,917,751 14,346,475
Net change in unrealized
appreciation/depreciation
from investments......... (7,875,618) 4,846,053 (4,228,822) 13,265,621 (420,214)
----------- ---------- ---------- ----------- -----------
Net realized/unrealized
gains (losses) from
investments.............. 18,296,300 4,902,950 (821,802) 18,183,372 13,926,261
----------- ---------- ---------- ----------- -----------
Change in net assets
resulting from
operations............... $20,584,436 $5,155,074 $ (852,055) $18,458,604 $17,099,529
=========== ========== ========== =========== ===========
</TABLE>
- ------
(a) Period commenced on February 27, 1997.
(b) Period commenced on May 1, 1997.
(c) Period commenced on October 1, 1997.
(d) Formerly the Arrow Equity Portfolio.
See notes to financial statements
-36-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GOVERNMENT & U.S. SHORT-
CORPORATE GOVERNMENT INTERMEDIATE
BOND SECURITIES MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ---------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income............................ $10,578,072 $5,098,539 $1,249,165
Dividend income............................ 79,691 51,851 27,476
Income from securities lending............. 77,095 28,078 --
----------- ---------- ----------
Total income............................ 10,734,858 5,178,468 1,276,641
----------- ---------- ----------
EXPENSES:
Investment advisory fees................... 743,332 357,824 160,035
Administration fees........................ 330,385 159,034 58,195
Distribution and services fees, Investor A
Shares.................................... 14,222 17,483 161
Distribution and services fees, Investor B
Shares.................................... 5,572 4,349 --
Administrative services fees, Trust Shares. 432,811 203,924 87,151
Administrative services fees, Institutional
Shares.................................... 46,967 15,879 --
Accounting and custodian fees.............. 60,528 32,252 19,280
Legal and audit fees....................... 18,349 9,179 14,718
Directors' fees and expenses............... 4,084 2,246 943
Transfer agent fees........................ 43,735 21,475 9,563
Registration and filing fees............... 14,004 15,448 15,511
Printing costs............................. 16,334 9,639 10,197
Amortization of organization costs......... -- -- 10,585
Other expenses............................. 4,876 2,326 1,356
----------- ---------- ----------
Total expenses before voluntary fee reduc-
tions..................................... 1,735,199 851,058 387,695
Expenses voluntarily reduced............... (598,000) (283,439) (276,310)
----------- ---------- ----------
Net expenses............................ 1,137,199 567,619 111,385
----------- ---------- ----------
Net Investment Income...................... 9,597,659 4,610,849 1,165,256
----------- ---------- ----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM IN-
VESTMENTS:
Net realized gains (losses) from investment
transactions.............................. (18,762) (202,303) --
Change in unrealized
appreciation/depreciation from invest-
ments..................................... 653,623 17,120 64,888
----------- ---------- ----------
Net realized/unrealized gains (losses) from
investments............................... 634,861 (185,183) 64,888
----------- ---------- ----------
Change in net assets resulting from opera-
tions..................................... $10,232,520 $4,425,666 $1,230,144
=========== ========== ==========
</TABLE>
See notes to financial statements
-37-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
MISSOURI NATIONAL INTERMEDIATE
TAX-EXEMPT MUNICIPAL CORPORATE BOND
BOND BOND BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1997 1997 (A) 1997 (A)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.............. $4,858,572 $18,070,484 $2,245,472 $7,328,295
Dividend income.............. 136,991 123,440 27,650 43,106
Income from securities lend-
ing......................... -- -- 5,025 25,824
---------- ----------- ---------- ----------
Total income.............. 4,995,563 18,193,924 2,278,147 7,397,225
---------- ----------- ---------- ----------
EXPENSES:
Investment advisory fees..... 414,195 1,812,782 175,432 312,722
Administration fees.......... 184,088 659,337 63,794 208,482
Distribution and services
fees, Investor A Shares..... 72,543 1,456 332 76
Distribution and services
fees, Investor B Shares..... 9,737 652 -- --
Administrative services fees,
Trust Shares................ 200,722 987,353 95,336 312,619
Administrative services fees,
Institutional Shares........ -- -- 23 28
Accounting and custodian
fees........................ 38,559 119,192 16,350 45,634
Legal and audit fees......... 10,939 43,706 10,244 19,278
Directors' fees and expenses. 2,486 11,380 968 2,904
Transfer agent fees.......... 22,573 64,660 32,762 18,908
Registration and filing fees. 11,751 89,636 15,132 22,264
Printing costs............... 11,463 43,040 5,486 23,480
Amortization of organization
costs....................... -- 6,270 2,352 4,116
Other expenses............... 2,567 7,032 1,262 2,922
---------- ----------- ---------- ----------
Total expenses before volun-
tary fee reductions......... 981,623 3,846,496 419,473 973,433
Expenses voluntarily reduced. (316,956) (3,377,581) (326,643) (739,782)
---------- ----------- ---------- ----------
Net expenses.............. 664,667 468,915 92,830 233,651
---------- ----------- ---------- ----------
Net Investment Income........ 4,330,896 17,725,009 2,185,317 7,163,574
========== =========== ========== ==========
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized/unrealized gains
(losses) from investment
transactions................ (31) 12,555,443 502,907 279,085
Change in unrealized
appreciation/depreciation
from investments............ 1,604,104 (4,335,052) (131,490) 1,574,992
---------- ----------- ---------- ----------
Net realized/unrealized gains
(losses) from investments... 1,604,073 8,220,391 371,417 1,854,077
---------- ----------- ---------- ----------
Change in net assets result-
ing from operations......... $5,934,969 $25,945,400 $2,556,734 $9,017,651
========== =========== ========== ==========
</TABLE>
- ------
(a) Period commenced February 10, 1997.
See notes to financial statements
-38-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET TREASURY MONEY
PORTFOLIO MARKET PORTFOLIO
-------------------------------- ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES:
Operations:
Net investment income.. $ 48,679,735 $ 41,477,587 $ 7,771,484 $ 11,384,162
Net realized gains
(losses) from
investment
transactions.......... 1,631 234 14,390 11,653
--------------- --------------- ------------- ---------------
Change in net assets re-
sulting from opera-
tions.................. 48,681,366 41,477,821 7,785,874 11,395,815
--------------- --------------- ------------- ---------------
DISTRIBUTIONS TO IN-
VESTOR A SHAREHOLDERS:
From net investment in-
come.................. (5,589,497) (3,378,057) (282,566) (214,227)
From net realized
gains................. -- (21) (469) (132)
In excess of net real-
ized gains............ -- (368) -- --
DISTRIBUTIONS TO IN-
VESTOR B SHAREHOLDERS:
From net investment in-
come.................. (2,942) (1,099) -- --
DISTRIBUTIONS TO TRUST
SHAREHOLDERS:
From net investment in-
come.................. (42,036,602) (37,166,284) (7,473,431) (11,150,554)
From net realized
gains................. -- (205) (8,023) (11,519)
In excess of net real-
ized gains............ -- (4,060) -- (527)
DISTRIBUTIONS TO INSTI-
TUTIONAL SHAREHOLDERS:
From net investment in-
come.................. (1,050,694) (932,147) (15,487) (19,381)
From net realized
gains................. -- (8) (18) (2)
In excess of net real-
ized gains............ -- (71) -- --
--------------- --------------- ------------- ---------------
Change in net assets
from shareholder
distributions.......... (48,679,735) (41,482,320) (7,779,994) (11,396,342)
--------------- --------------- ------------- ---------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 4,493,292,615 2,299,943,459 994,133,011 919,067,677
Dividends reinvested... 20,572,814 14,874,622 3,497,675 3,510,783
Cost of shares re-
deemed................ (4,109,236,440) (2,266,756,713) (844,629,782) (1,038,874,963)
--------------- --------------- ------------- ---------------
Change in net assets
from capital
transactions........... 404,628,989 48,061,368 153,000,904 (116,296,503)
--------------- --------------- ------------- ---------------
Change in net assets.... 404,630,620 48,056,869 153,006,784 (116,297,030)
NET ASSETS:
Beginning of period.... 824,392,559 776,335,690 139,287,960 255,584,990
--------------- --------------- ------------- ---------------
End of period.......... $ 1,229,023,179 $ 824,392,559 $ 292,294,744 $ 139,287,960
=============== =============== ============= ===============
SHARE TRANSACTIONS:
Issued................. 4,493,292,615 2,299,943,459 994,133,011 919,067,677
Reinvested............. 20,572,814 14,874,622 3,497,675 3,510,783
Redeemed............... (4,109,236,440) (2,266,756,713) (844,629,782) (1,038,874,963)
--------------- --------------- ------------- ---------------
Change in shares........ 404,628,989 48,061,368 153,000,904 (116,296,503)
=============== =============== ============= ===============
</TABLE>
See notes to financial statements
-39-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-EXEMPT GROWTH & INCOME
MONEY MARKET PORTFOLIO EQUITY PORTFOLIO
---------------------------- ---------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
Operations:
Net investment income.... $ 4,462,657 $ 2,853,695 $ 3,514,224 $ 5,818,734
Net realized gains
(losses) from investment
transactions............ -- -- 78,993,806 36,039,992
Net change in unrealized
appreciation/depreciation
investments............. -- -- 9,568,676 45,449,749
------------- ------------- ------------- ------------
Change in net assets re-
sulting from operations.. 4,462,657 2,853,695 92,076,706 87,308,475
------------- ------------- ------------- ------------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
From net investment
income.................. (476,137) (265,973) (285,613) (375,855)
In excess of net
investment income....... -- -- (66,559) (1,697)
From net realized gains.. -- -- (2,994,148) (1,443,632)
In excess of net realized
gains................... -- (250) -- --
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
From net investment
income.................. -- -- -- (11,083)
In excess of net
investment income....... -- -- (19,623) (2,688)
From net realized gains.. -- -- (278,321) (49,605)
DISTRIBUTIONS TO TRUST
SHAREHOLDERS:
From net investment
income.................. (3,986,520) (2,587,722) (3,247,480) (4,795,604)
In excess of net
investment income....... -- -- -- (49,002)
From net realized gains.. -- -- (27,210,627) (16,436,950)
In excess of net realized
gains................... -- (3,631) -- --
DISTRIBUTIONS TO
INSTITUTIONAL
SHAREHOLDERS:
From net investment
income.................. -- -- (539,466) (636,192)
In excess of net
investment income....... -- -- (149,417) (1,490)
From net realized gains.. -- -- (5,714,817) (2,330,241)
------------- ------------- ------------- ------------
Change in net assets from
shareholder
distributions............ (4,462,657) (2,857,576) (40,506,071) (26,134,039)
------------- ------------- ------------- ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 377,981,080 213,251,311 93,672,278 92,320,506
Dividends reinvested..... 841,226 562,557 32,712,133 22,057,938
Cost of shares redeemed.. (333,226,212) (183,534,633) (173,314,237) (65,290,328)
------------- ------------- ------------- ------------
Change in net assets from
capital transactions..... 45,596,094 30,279,235 (46,929,826) 49,088,116
------------- ------------- ------------- ------------
Change in net assets...... 45,596,094 30,275,354 4,640,809 110,262,552
NET ASSETS:
Beginning of period...... 113,709,979 83,434,625 462,899,079 352,636,527
------------- ------------- ------------- ------------
End of period............ $ 159,306,073 $ 113,709,979 $ 467,539,888 $462,899,079
============= ============= ============= ============
SHARE TRANSACTIONS:
Issued................... 377,981,080 213,251,311 5,129,079 5,578,024
Reinvested............... 841,226 562,557 1,904,973 1,403,626
Redeemed................. (333,226,212) (183,534,633) (9,699,793) (3,843,934)
------------- ------------- ------------- ------------
Change in shares.......... 45,596,094 30,279,235 (2,665,741) 3,137,716
============= ============= ============= ============
</TABLE>
See notes to financial statements
-40-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL
EQUITY PORTFOLIO EQUITY PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES:
OPERATIONS:
Net investment income
(loss).................. $ (131,925) $ 232,304 $ 24,596 $ 248,827
Net realized gains (loss-
es) from investment
transactions............ 20,891,156 13,981,122 2,787,030 (931,659)
Net realized gains
(losses) from foreign
currency transactions... -- -- (170,822) 3,133,420
Net change in unrealized
appreciation/depreciation
from investments........ 21,069,188 3,579,525 238,656 4,679,792
Net change in unrealized
appreciation
(depreciation) from
translation of assets
and liabilities in
foreign currencies...... -- -- (1,301,985) (1,058,982)
------------ ------------ ----------- -----------
Change in net assets re-
sulting from operations.. 41,828,419 17,792,951 1,577,475 6,071,398
------------ ------------ ----------- -----------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
In excess of net invest-
ment income............. (4,444) (6,160) (11,517) --
From net realized gains.. (848,322) (1,177,710) (67,022) --
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
In excess of net invest-
ment income............. -- -- (1,047) --
From net realized gains.. (78,682) (51,148) (11,381) --
DISTRIBUTIONS TO TRUST
SHAREHOLDERS:
From net investment in-
come.................... (128,362) (214,557) (156,995) --
In excess of net invest-
ment income............. -- -- (109,629) --
From net realized gains.. (10,472,317) (11,321,459) (1,335,713) --
DISTRIBUTIONS TO INSTITU-
TIONAL SHAREHOLDERS:
In excess of net invest-
ment income............. (2,874) (13,982) (26,541) --
From net realized gains.. (1,844,024) (1,397,709) (156,272) --
------------ ------------ ----------- -----------
Change in net assets from
shareholder distribu-
tions.................... (13,379,025) (14,182,725) (1,876,117) --
------------ ------------ ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares is-
sued.................... 47,775,524 79,498,432 11,479,086 23,675,008
Dividends reinvested..... 11,927,072 12,406,113 1,101,785 --
Cost of shares redeemed.. (42,935,629) (51,937,381) (8,279,933) (8,420,843)
------------ ------------ ----------- -----------
Change in net assets from
capital transactions..... 16,766,967 39,967,164 4,300,938 15,254,165
------------ ------------ ----------- -----------
Change in net assets...... 45,216,361 43,577,390 4,002,296 21,325,563
NET ASSETS:
Beginning of period...... 216,537,536 172,960,146 61,250,060 39,924,497
------------ ------------ ----------- -----------
End of period............ $261,753,897 $216,537,536 $65,252,356 $61,250,060
============ ============ =========== ===========
SHARE TRANSACTIONS:
Issued................... 3,321,786 6,245,178 935,064 2,083,892
Reinvested............... 937,465 1,012,913 93,796 --
Redeemed................. (3,053,206) (4,004,332) (681,990) (724,654)
------------ ------------ ----------- -----------
Change in shares.......... 1,206,045 3,253,759 346,870 1,359,238
============ ============ =========== ===========
</TABLE>
See notes to financial statements
-41-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY EQUITY GROWTH
INCOME INDEX EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -----------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 (A) 1997 (B) 1997 (C) 1997 (D) 1996 (D)
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss).................. $ 2,288,136 $ 252,124 $ (30,253) $ 275,232 $ 423,781
Net realized gains
(losses) from investment
transactions............ 26,171,918 56,897 3,407,020 4,917,751 4,612,534
Net change in unrealized
appreciation/depreciation
from investments........ (7,875,618) 4,846,053 (4,228,822) 13,265,621 (11,835)
------------ ----------- ----------- ----------- -----------
Change in net assets
resulting from
operations............... 20,584,436 5,155,074 (852,055) 18,458,604 5,024,480
------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
From net investment
income.................. (1,695) (378) -- (330,048) (381,222)
In excess of net
investment income....... (68) (81) -- -- --
From net realized gains.. -- -- (8,120,294) (3,886,419) (218,057)
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
From net investment
income.................. (267) -- -- -- --
In excess of net
investment income....... (200) -- -- -- --
DISTRIBUTIONS TO TRUST
SHAREHOLDERS:
From net investment
income.................. (2,205,201) (243,890) -- -- --
DISTRIBUTIONS TO
INSTITUTIONAL
SHAREHOLDERS:
From net investment
income.................. (19) (31) -- -- --
------------ ----------- ----------- ----------- -----------
Change in net assets from
shareholder
distributions............ (2,207,450) (244,380) (8,120,294) (4,216,467) (599,279)
------------ ----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 125,452,086 26,938,358 1,137,408 15,587,127 12,339,545
Dividends reinvested..... 41,672 204,469 8,110,971 407,045 47,007
Cost of shares redeemed.. (11,646,057) (52,973) (1,988,138) (16,843,944) (4,946,669)
------------ ----------- ----------- ----------- -----------
Change in net assets from
capital transactions..... 113,847,701 27,089,854 7,260,241 (849,772) 7,439,883
------------ ----------- ----------- ----------- -----------
Change in net assets...... 132,224,687 32,000,548 (1,712,108) 13,392,365 11,865,084
NET ASSETS:
Beginning of period...... -- -- 68,965,117 55,572,752 43,707,668
------------ ----------- ----------- ----------- -----------
End of period............ $132,224,687 $32,000,548 $67,253,009 $68,965,117 $55,572,752
============ =========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued................... 12,546,857 2,667,117 62,618 993,820 867,438
Reinvested............... 3,877 18,022 502,850 26,717 3,298
Redeemed................. (1,114,055) (4,554) (108,433) (1,032,878) (346,978)
------------ ----------- ----------- ----------- -----------
Change in shares.......... 11,436,679 2,680,585 457,035 (12,341) 523,758
============ =========== =========== =========== ===========
</TABLE>
- ------
(a) Period commenced February 27, 1997.
(b) Period commenced May 1, 1997.
(c) Period commenced October 1, 1997.
(d) Formerly the Arrow Equity Portfolio.
See notes to financial statements
-42-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GOVERNMENT & CORPORATE
BALANCED PORTFOLIO BOND PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES:
OPERATIONS:
Net investment income
(loss).................. $ 3,173,268 $ 3,743,265 $ 9,597,659 $ 9,481,729
Net realized gains (loss-
es) from investment
transactions............ 14,346,475 7,057,146 (18,762) 1,012,372
Net change in unrealized
appreciation/depreciation
from investments........ (420,214) 7,234,948 653,623 (2,852,662)
------------ ------------ ------------ ------------
Change in net assets re-
sulting from operations.. 17,099,529 18,035,359 10,232,520 7,641,439
------------ ------------ ------------ ------------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
From net investment in-
come.................... (303,011) (235,477) (259,040) (325,323)
In excess of net invest-
ment income............. (1,886) -- -- --
From net realized gains.. (528,296) (306,345) -- (10,112)
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
From net investment in-
come.................... (8,541) (4,068) (26,993) (18,810)
In excess of net invest-
ment income............. (1,786) -- -- --
From net realized gains.. (18,182) (1,338) -- (207)
DISTRIBUTIONS TO TRUST
SHAREHOLDERS:
From net investment in-
come.................... (1,722,814) (2,248,807) (8,442,748) (8,420,741)
From net realized gains.. (3,475,261) (2,656,748) -- (232,344)
DISTRIBUTIONS TO INSTITU-
TIONAL SHAREHOLDERS:
From net investment in-
come.................... (1,749,881) (1,181,916) (868,878) (716,855)
In excess of net invest-
ment income............. (126,370) -- -- --
From net realized gains.. (3,086,347) (1,351,994) -- (17,276)
------------ ------------ ------------ ------------
Change in net assets from
shareholder distribu-
tions.................... (11,022,375) (7,986,693) (9,597,659) (9,741,668)
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares is-
sued.................... 26,138,331 25,923,740 82,490,117 42,646,634
Dividends reinvested..... 10,530,259 7,792,122 5,247,903 5,921,069
Cost of shares redeemed.. (42,547,536) (35,443,035) (55,203,906) (27,482,599)
------------ ------------ ------------ ------------
Change in net assets from
capital transactions..... (5,878,946) (1,727,173) 32,534,114 21,085,104
------------ ------------ ------------ ------------
Change in net assets...... 198,208 8,321,493 33,168,975 18,984,875
NET ASSETS:
Beginning of period...... 126,201,169 117,879,676 161,740,901 142,756,026
------------ ------------ ------------ ------------
End of period............ $126,399,377 $126,201,169 $194,909,876 $161,740,901
============ ============ ============ ============
SHARE TRANSACTIONS:
Issued................... 2,107,878 2,238,696 8,017,350 4,197,687
Reinvested............... 883,349 684,060 516,545 580,294
Redeemed................. (3,496,906) (3,006,390) (5,379,742) (2,689,747)
------------ ------------ ------------ ------------
Change in shares.......... (505,679) (83,634) 3,154,153 2,088,234
============ ============ ============ ============
</TABLE>
See notes to financial statements
-43-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. GOVERNMENT SHORT-INTERMEDIATE
SECURITIES PORTFOLIO MUNICIPAL PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES:
OPERATIONS:
Net investment income
(loss).................. $ 4,610,849 $ 3,774,130 $ 1,165,256 $ 1,094,106
Net realized gains
(losses) from investment
transactions............ (202,303) (408,957) -- --
Net change in unrealized
appreciation/depreciation
from investments........ 17,120 (197,452) 64,888 (16,660)
----------- ----------- ----------- -----------
Change in net assets
resulting from
operations............... 4,425,666 3,167,721 1,230,144 1,077,446
----------- ----------- ----------- -----------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
From net investment
income.................. (323,804) (445,187) (2,039) (1,458)
In excess of net realized
gains................... -- (27,732) -- --
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
From net investment
income.................. (21,080) (12,608) -- --
In excess of net realized
gains................... -- (165) -- --
DISTRIBUTIONS TO TRUST
SHAREHOLDERS:
From net investment
income.................. (3,973,203) (3,231,786) (1,163,217) (1,092,648)
In excess of net realized
gains................... -- (154,647) -- --
DISTRIBUTIONS TO
INSTITUTIONAL
SHAREHOLDERS:
From net investment
income.................. (292,762) (84,549) -- --
In excess of net realized
gains................... -- (2,281) -- --
----------- ----------- ----------- -----------
Change in net assets from
shareholder
distributions............ (4,610,849) (3,958,955) (1,165,256) (1,094,106)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 29,671,357 20,374,470 5,447,634 9,484,969
Dividends reinvested..... 2,589,224 2,512,482 44,343 64,963
Cost of shares redeemed.. (16,450,421) (6,672,311) (4,609,803) (3,763,873)
----------- ----------- ----------- -----------
Change in net assets from
capital transactions..... 15,810,160 16,214,641 882,174 5,786,059
----------- ----------- ----------- -----------
Change in net assets...... 15,624,977 15,423,407 947,062 5,769,399
NET ASSETS:
Beginning of period...... 69,823,660 54,400,253 29,523,085 23,753,686
----------- ----------- ----------- -----------
End of period............ $85,448,637 $69,823,660 $30,470,147 $29,523,085
=========== =========== =========== ===========
SHARE TRANSACTIONS:
Issued................... 2,824,987 1,922,232 541,891 944,068
Reinvested............... 245,427 236,847 4,418 6,499
Redeemed................. (1,564,985) (627,360) (460,336) (377,354)
----------- ----------- ----------- -----------
Change in shares.......... 1,505,429 1,531,719 85,973 573,213
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
-44-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MISSOURI TAX-EXEMPT NATIONAL MUNICIPAL
BOND PORTFOLIO BOND PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996 (A)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income
(loss).................. $ 4,330,896 $ 3,550,097 $ 17,725,009 $ 735,988
Net realized gains
(losses) from investment
transactions............ (31) 70,177 12,555,443 115,325
Net change in unrealized
appreciation/depreciation
from investments........ 1,604,104 (87,057) (4,335,052) 1,278,075
------------ ------------ ------------ ------------
Change in net assets
resulting from
operations............... 5,934,969 3,533,217 25,945,400 2,129,388
------------ ------------ ------------ ------------
DISTRIBUTIONS TO INVESTOR
A SHAREHOLDERS:
From net investment
income.................. (1,104,237) (1,169,732) (22,941) (4)
From net realized gains.. -- -- (183) --
DISTRIBUTIONS TO INVESTOR
B SHAREHOLDERS:
From net investment
income.................. (36,663) (25,005) (2,703) (3)
From net realized gains.. -- -- (25) --
DISTRIBUTIONS TO TRUST
SHAREHOLDERS:
From net investment
income.................. (3,189,996) (2,355,360) (17,699,373) (735,973)
From net realized gains.. -- -- (115,079) --
------------ ------------ ------------ ------------
Change in net assets from
shareholder
distributions............ (4,330,896) (3,550,097) (17,840,304) (735,980)
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 26,218,164 18,205,943 74,899,754 314,008,996
Dividends reinvested..... 1,140,970 1,325,915 15,632 --
Cost of shares redeemed.. (10,136,557) (10,722,765) (25,421,039) (4,987,761)
------------ ------------ ------------ ------------
Change in net assets from
capital transactions..... 17,222,577 8,809,093 49,494,347 309,021,235
------------ ------------ ------------ ------------
Change in net assets...... 18,826,650 8,792,213 57,599,443 310,414,643
NET ASSETS:
Beginning of period...... 81,723,725 72,931,512 310,414,643 --
------------ ------------ ------------ ------------
End of period............ $100,550,375 $ 81,723,725 $368,014,086 $310,414,643
============ ============ ============ ============
SHARE TRANSACTIONS:
Issued................... 2,250,051 1,584,195 7,407,726 31,400,289
Reinvested............... 97,885 114,877 1,545 --
Redeemed................. (870,226) (921,381) (2,510,363) (498,183)
------------ ------------ ------------ ------------
Change in shares.......... 1,477,710 777,691 4,898,908 30,902,106
============ ============ ============ ============
</TABLE>
- ------
(a) Period commenced November 18, 1996.
See notes to financial statements
-45-
<PAGE>
THE ARCH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE
CORPORATE BOND INDEX
BOND PORTFOLIO PORTFOLIO
-------------- ------------
FOR THE FOR THE
PERIOD ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
1997 (A) 1997 (A)
-------------- ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss)..................... $ 2,185,317 $ 7,163,574
Net realized gains (losses) from investment
transactions.................................... 502,907 279,085
Net change in unrealized
appreciation/depreciation from investments...... (131,490) 1,574,992
----------- ------------
Change in net assets resulting from operations.... 2,556,734 9,017,651
----------- ------------
DISTRIBUTIONS TO INVESTOR A SHAREHOLDERS:
From net investment income....................... (7,181) (1,698)
DISTRIBUTIONS TO TRUST SHAREHOLDERS:
From net investment income....................... (2,177,609) (7,161,244)
DISTRIBUTIONS TO INSTITUTIONAL SHAREHOLDERS:
From net investment income....................... (527) (632)
----------- ------------
Change in net assets from shareholder
distributions.................................... (2,185,317) (7,163,574)
----------- ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...................... 47,887,842 142,252,314
Dividends reinvested............................. 98,815 65,878
Cost of shares redeemed.......................... (3,610,853) (5,771,198)
----------- ------------
Change in net assets from capital transactions.... 44,375,804 136,546,994
----------- ------------
Change in net assets.............................. 44,747,221 138,401,071
NET ASSETS:
Beginning of period.............................. -- --
----------- ------------
End of period.................................... $44,747,221 $138,401,071
=========== ============
SHARE TRANSACTIONS:
Issued........................................... 4,782,066 14,193,040
Reinvested....................................... 9,948 6,605
Redeemed......................................... (363,897) (577,176)
----------- ------------
Change in shares.................................. 4,428,117 13,622,469
=========== ============
</TABLE>
- ------
(a) Period commenced February 10, 1997.
See notes to financial statements
-46-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- --------------- ------------------------------------- -----------------
<S> <C>
Certificates of Deposit (16.1%):
$20,000,000 Bayerische Landesbank Co.,
5.78%, 7/27/98.................. $ 19,992,124
20,000,000 Deutsche Bank, 6.21%, 4/20/98...... 20,011,541
15,000,000 Dresdner Bank, 5.95%, 4/13/98...... 15,008,185
12,000,000 Morgan Guaranty, 5.71%, 1/6/98..... 11,999,706
25,000,000 Old Kent Bank & Trust, 5.66%,
3/31/98......................... 25,000,000
30,000,000 U.S. Bancorp, 5.61%, 12/17/97...... 30,000,000
31,350,000 West Landing Giron, 5.64%,
12/19/97........................ 31,350,662
20,000,000 Wilmington Trust, 5.55%,
12/31/97........................ 20,000,000
25,000,000 Wilmington Trust, 5.77%, 2/17/98... 25,000,000
-----------------
Total Certificates of Deposit
(Amortized cost $198,362,218) 198,362,218
-----------------
Commercial Paper (61.2%):
Aerospace (2.9%):
35,860,000 Rockwell International, 5.55%*,
12/3/97......................... 35,848,943
-----------------
Automotive (1.7%):
6,252,000 Ford Motor Credit, 5.60%*,
12/17/97........................ 6,236,439
15,000,000 General Motors Acceptance
Corp., 5.58%*, 3/23/98.......... 14,739,600
-----------------
20,976,039
-----------------
Beverages (2.0%):
25,000,000 Anheuser-Busch Cos., Inc.,
5.63%*, 12/17/97................ 24,937,444
-----------------
Chemical (2.3%):
14,937,000 Monsanto, 5.52%*,
12/1/97 (b)..................... 14,937,000
12,802,000 Monsanto, 5.70%*,
12/1/97 (b)..................... 12,802,000
-----------------
27,739,000
-----------------
Electrical & Electronic (6.0%):
15,000,000 CSC Enterprises, 5.53%*, 12/4/97... 14,993,088
$14,000,000 CSC Enterprises, 5.72%*, 2/10/98... $ 13,842,064
45,000,000 Panasonic, 5.68%*, 12/1/97 (b)..... 45,000,000
-----------------
73,835,152
-----------------
Finance (14.0%):
31,254,000 AES Barbers Point, Inc.,
5.57%*, 12/5/97................. 31,234,657
4,406,000 AI Credit, 5.72%*, 12/1/97......... 4,406,000
30,000,000 AIG Funding, 5.50%*, 12/1/97....... 30,000,000
10,000,000 Bank of New York, 5.51%*,
12/15/97........................ 9,978,572
25,042,000 General Electric Capital,
5.50%*, 12/31/97................ 24,927,224
5,000,000 General Electric Capital Corp.,
5.56%*, 12/31/97................ 4,976,833
25,000,000 New Center Asset Trust, 5.68%*,
2/17/98......................... 24,692,333
22,037,000 PHH Corp., 5.75%*, 12/1/97......... 22,037,000
20,000,000 PHH Corp., 5.65%*, 12/11/97........ 19,968,611
-----------------
172,221,230
-----------------
Financial Services (4.8%):
30,000,000 Dean Witter, Discover & Co.,
5.65%*, 2/13/98................. 29,651,583
29,008,000 Household Finance, 5.76%,
12/1/97......................... 29,008,000
-----------------
58,659,583
-----------------
Food Products (0.7%):
8,950,000 General Mills, 5.70%*, 12/1/97..... 8,950,000
-----------------
Food Service (1.1%):
13,849,000 McDonalds, 5.52%*, 12/1/97......... 13,849,000
-----------------
Insurance (0.6%):
8,000,000 Aetna Services, 5.50%*, 12/1/97.... 8,000,000
-----------------
</TABLE>
-47-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- --------------- ---------------------------------- ---------------
<S> <C>
Commercial Paper, continued:
Oil & Gas Exploration Production & Services (5.7%):
$25,000,000 Consolidated Natural Gas,
5.54%*, 12/11/97............. $ 24,961,528
10,000,000 Michigan Consolidated Gas,
5.66%*, 2/18/98.............. 9,875,794
35,000,000 Texaco, 5.56%*, 12/17/97........ 34,913,511
---------------
69,750,833
---------------
Oil & Gas Transmission (1.1%):
13,600,000 Colonial Pipeline, 5.50%*,
12/8/97...................... 13,585,456
---------------
Printing & Publishing (3.6%):
23,000,000 McGraw-Hill, 5.50%*, 12/2/97.... 22,996,486
21,500,000 McGraw-Hill, 5.50%*, 12/31/97... 21,401,458
---------------
44,397,944
---------------
Retail-Merchandise (3.0%):
37,100,000 Dillard Investments, 5.50%*,
12/22/97..................... 36,980,971
---------------
Retail Stores (3.7%):
45,000,000 Sears Roebuck Acceptance,
5.59%*, 12/18/97............. 44,881,213
---------------
Telecommunications (3.6%):
25,000,000 Bell Atlantic Finance, 5.53%*,
12/8/97...................... 24,973,118
19,581,000 Bell Atlantic Finance, 5.56%*,
12/30/97..................... 19,493,299
---------------
44,466,417
---------------
Toys, Games, Children Vehicles (2.8%):
34,000,000 Hasbro Corp., 5.50%*, 12/15/97.. 33,927,278
---------------
Transportation & Shipping (1.6%):
19,208,000 Matson Navigation, 5.51%*,
12/11/97..................... 19,178,601
---------------
Total Commercial Paper
(Amortized cost $752,185,104) 752,185,104
---------------
Corporate Bonds (7.7%):
Banking (2.0%):
25,000,000 Bank of America National Trust,
5.61%**, 12/1/97............. 24,988,179
---------------
Finance (4.1%):
25,000,000 IBM Credit Corp., 5.60%**,
12/1/97...................... 24,990,765
25,000,000 Merrill Lynch & Co., 5.68%**,
12/1/97...................... 24,997,966
---------------
49,988,731
---------------
Insurance (1.6%):
20,000,000 General American Life Insurance
Co., 5.86%**, 12/1/97........ 20,000,000
---------------
Total Corporate Bonds
(Amortized cost $94,976,910) 94,976,910
---------------
Medium Term Notes (3.3%):
Banking (1.7%):
20,000,000 Lasalle National Bank, 5.73%,
4/24/98...................... 20,005,876
---------------
Finance (1.6%):
20,000,000 Federal National Mortgage
Association, 5.71%, 3/18/98.. 19,993,258
---------------
Total Medium Term Notes
(Amortized cost $39,999,134) 39,999,134
---------------
U.S. Government Agencies (12.4%):
Federal Farm Credit Bank:
20,000,000 5.51%, 12/1/97 ................ 20,000,000
10,000,000 5.60%, 6/1/98 ................. 10,000,000
Federal Home Loan Bank:
20,000,000 Series 9597, 5.47%**, 12/3/97... 19,999,810
14,450,000 5.88%, 3/18/98 ................ 14,436,474
Federal Home Loan Mortgage Corp. Discount Note:
48,000,000 5.50%, 12/31/97 ............... 47,780,000
Federal National Mortgage Association:
30,000,000 5.52%**, 12/1/97 .............. 29,986,090
</TABLE>
Continued
-48-
<PAGE>
THE ARCH FUND, INC.
Money Market Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- --------------- ---------------------------------- -----------------
<S> <C>
U.S. Government Agencies, continued:
Federal National Mortgage Association, continued:
$10,000,000 5.71%, 9/9/98 ................. $ 9,989,647
-----------------
Total U.S. Government Agencies
(Amortized cost $152,192,021) 152,192,021
-----------------
Total Investments (Amortized
cost--$1,237,715,387) (a) (100.7%) 1,237,715,387
Liabilities in Excess of Other
Assets (-0.7%) (8,692,208)
-----------------
Total Net Assets (100.0%) $ 1,229,023,179
=================
</TABLE>
- -------------
* Effective yield at date of purchase.
** Variable rate investments. The rate presented on the Schedule of Portfolio
Investments is the rate in effect at November 30, 1997. The date presented
reflects the next rate change date.
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) Rule 144A, Section 4(2) or other security which is restricted as to resale
to institutional investors.
See notes to financial statements
-49-
<PAGE>
THE ARCH FUND, INC.
Treasury Money Market Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- ----------------- ----------------------------------- ------------
<S> <C>
U.S. Treasury Bills (77.8%):
$29,125,000 12/4/97........................... $ 29,113,017
25,437,000 12/11/97.......................... 25,402,401
32,555,000 12/26/97.......................... 32,442,985
10,773,000 1/2/98............................ 10,724,982
25,725,000 1/8/98............................ 25,590,461
14,601,000 1/15/98........................... 14,508,772
35,998,000 1/22/98........................... 35,727,180
27,231,000 1/29/98........................... 27,002,036
27,065,000 2/5/98............................ 26,810,411
------------
Total U.S. Treasury Bills (Amortized cost
$227,322,245) 227,322,245
------------
U.S. Treasury Notes (22.2%):
$35,019,000 5.25%, 12/31/97................... $ 35,016,590
20,000,000 5.13%, 3/31/98.................... 19,976,902
10,000,000 6.13%, 3/31/98.................... 10,020,939
------------
Total U.S. Treasury Notes (Amortized cost
$65,014,431) 65,014,431
------------
Total Investments (Amortized
cost--$292,336,676)(a) (100.0%) 292,336,676
Liabilities in Excess of Other Assets (0.0%) (41,932)
============
Total Net Assets (100.0%) $292,294,744
============
</TABLE>
- -------------
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements
-50-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- -------------- -------------------------------------- -----------------
<S> <C>
Commercial Paper (7.9%):
Minnesota (2.5%):
$4,000,000 Becker, Pollution Control Revenue,
Northern States Power Co., Series
A, 3.75%, 5/20/98** .............. $ 4,000,000
Texas (2.3%):
3,600,000 Houston Texas, Series B, 3.75%,
3/26/98 .......................... 3,600,000
-----------------
Washington (3.1%):
5,000,000 King County Washington, 3.75%*,
3/25/98 .......................... 5,000,000
-----------------
Total Commercial Paper
(Amortized cost--$12,600,000) 12,600,000
-----------------
Municipal Bonds (91.5%):
Alabama (7.3%):
7,000,000 Parrish Industrial Development
Board, Pollution Control Revenue,
Alabama Power Co. Project,
3.80%*, 12/1/97 .................. 7,000,000
4,650,000 Phenix County, Industrial
Development Board, Environmental
Improvement Revenue, Geogra Kraft
Project, 3.80%*, 12/1/97
(LOC-Deutsche Bank A.G.).......... 4,650,000
-----------------
11,650,000
-----------------
Arizona (4.1%):
975,000 Chandler Industrial Development
Authority, Multifamily Housing
Revenue, Southpark Apartments
Project, 3.90%*, 12/3/97,
Callable on 7/1/08 @ 100
(LOC-CitiBank N.A.)............... 975,000
5,600,000 Maricopa County, Pollution Control
Corporation, Pollution Control
Revenue, Arizona Public Service,
Co., Series F, 3.85%*, 12/1/97
(LOC-Bank of America
NT & SA).......................... 5,600,000
-----------------
6,575,000
-----------------
Delaware (4.9%):
7,800,000 Delaware State Economic Development
Authority, Solid Waste Disposal
and Sewage Facility Revenue,
Ciba-Geigy, Series A, 4.00%*,
12/1/97 (AMT) (LOC-Union Bank of
Switzerland)...................... 7,800,000
-----------------
Georgia (7.5%):
5,000,000 Burke County Development Authority,
Pollution Control Revenue,
Georgia Power Co. Plant Vogtle
Project, 3.80%*, 12/1/97,
Callable on 4/1/06 @ 100 ......... 5,000,000
7,000,000 Monroe County Development Authority,
Pollution Control Revenue,
Georgia Power Co., Scherer, 1st
Series, 3.80%*, 12/1/97 .......... 7,000,000
-----------------
12,000,000
-----------------
Idaho (1.9%):
3,000,000 Idaho State, Tax Anticipation Notes,
G.O., 4.63%,
6/30/98 .......................... 3,012,434
-----------------
Illinois (3.6%):
5,800,000 Chicago, O'Hare International
Airport, Revenue, American
Airlines, Inc., 3.85%*, 12/1/97
(LOC-Royal Bank of Canada)........ 5,800,000
-----------------
Iowa (7.5%):
4,000,000 Iowa Finance Authority, Solid Waste
Disposal Revenue, Cedar River
Paper Co., Series A, 4.00%*,
12/1/97 (AMT) (LOC-Swiss Bank
Corp.)............................ 4,000,000
</TABLE>
Continued
-51-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- -------------- -------------------------------------- -----------------
<S> <C>
Municipal Bonds, continued:
Iowa, continued:
$3,400,000 Iowa Finance Authority, Solid Waste
Disposal Revenue, Cedar River
Paper Co., Series A, 4.00%*,
12/1/97 (AMT) (LOC-Swiss Bank
Corp.)............................ $ 3,400,000
4,500,000 Iowa State School, Series B, 4.25%,
1/30/98 (FSA Insured) ............ 4,504,275
-----------------
11,904,275
-----------------
Kentucky (4.5%):
700,000 Daviess County, Solid Waste Disposal
Facilities Revenue, Scott Paper
Co., Series A, 3.90%*, 12/1/97
(LOC-Kimberly Clark Corp.) ....... 700,000
4,250,000 Daviess County, Solid Waste Disposal
Facilities Revenue, Scott Paper
Co., Series B, 3.90%*, 12/1/97,
(AMT), Callable on 4/1/06 @ 100
(LOC-Kimberly Clark Corp.)........ 4,250,000
2,200,000 Daviess County, Solid Waste Disposal
Facilities Revenue, Scott Paper
Co., 3.90%*, 12/1/97
(LOC-Kimberly Clark Corp.) ....... 2,200,000
-----------------
7,150,000
-----------------
Louisiana (6.9%):
5,300,000 Calcasieu Parish Industrial
Development Board, Industrial
Revenue, Olin Corp. Project,
Series B, 3.90%*, 12/1/97
(LOC-Wachovia Bank)............... 5,300,000
500,000 West Feliciana Parish, Pollution
Control Revenue, Gulf States
Utilities Co., Series D, 3.95%*,
12/1/97 (LOC-Canadian Imperial
Bank of Commerce)................. 500,000
5,300,000 Calcasieu Parish Industrial
Development Board, Industrial
Revenue, Olin Corp. Project,
Series B, 3.90%*, 2/1/16
(LOC-Wachovia Bank)............... 5,300,000
5,200,000 West Feliciana Parish, Pollution
Control Revenue, Gulf States
Utilities, 3.95%*, 12/1/97
(LOC-Canadian Imperial Bank of
Commerce)......................... 5,200,000
-----------------
11,000,000
-----------------
Minnesota (1.5%):
2,450,000 Minneapolis Community Development
Agency, Pollution Control
Revenue, Northern States Power
Co., 3.95%*, 12/3/97 ............. 2,450,000
-----------------
Missouri (9.7%):
3,000,000 Missouri State Health & Educational
Facilities Authority, Health
Facilities Revenue, St. Anthony
Medical Center, Series B, 3.85%*,
12/2/97 (ABN AMRO Bank Insured) .. 3,000,000
5,000,000 Missouri State Health & Educational
Facilities Authority, Health
Facilities Revenue, Barnes
Hospital Project, 3.85%*, 12/3/97
(LOC-Morgan Guaranty Trust)....... 5,000,000
1,900,000 Missouri Health & Educational
Facilities Authority, Health
Facilities Revenue, SSM
Healthcare Project, Series A,
3.90%*, 12/2/97 (LOC-Rabobank
Nederland)........................ 1,900,000
</TABLE>
Continued
-52-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
- -------------- -------------------------------------- -----------------
<S> <C>
Municipal Bonds, continued:
Missouri, continued:
$3,500,000 Missouri State Environmental
Improvement and Energy Resource
Authority, Pollution Control,
Union Electric Co., Series B,
3.95%, 6/1/98**, Callable 6/1/98
@ 100 (LOC-Union Bank of
Switzerland)...................... $ 3,504,375
1,000,000 Missouri State Health & Educational
Facilities Authority, Educational
Facilities Revenue, Washington
University Project, Series B,
3.90%*, 12/3/97 .................. 1,000,000
1,000,000 Missouri State Environmental
Improvement and Energy Resource
Authority, Pollution Control
Revenue, Monsanto Co. Project,
3.95%*, 12/3/97 .................. 1,000,000
-----------------
15,404,375
-----------------
Montana (2.4%):
2,200,000 Forsyth, Pollution Control Revenue,
Portland General Electric, Series
B, 3.85%*, 12/3/97 (LOC-Swiss
Bank Corp.)....................... 2,200,000
1,600,000 Forsyth, Pollution Control Revenue,
Portland General Electric, Series
D, 3.90%*, 12/3/97 (LOC-Swiss
Bank Corp.)....................... 1,600,000
-----------------
3,800,000
-----------------
Oregon (0.9%):
1,500,000 Oregon State, Series 73 G, G.O.,
3.85%*, 12/3/97 (LOC-Morgan
Guaranty Trust)................... 1,500,000
-----------------
Pennsylvania (4.6%):
7,300,000 Pennsylvania State Higher Education
Facilities Authority Revenue,
Carnegie Mellon University,
Series C, 3.85%*, 12/1/97 ........ 7,300,000
-----------------
Tennessee (7.3%):
7,000,000 Bradley County Industrial
Development Board, Industrial
Revenue, Olin Corp Project,
Series C, 3.90%*, 12/1/97
(LOC-Wachovia Bank)............... 7,000,000
4,600,000 Memphis, Series A, G.O., 3.90%*,
12/3/97........................... 4,600,000
-----------------
11,600,000
-----------------
Texas (12.5%):
7,000,000 Harris County, Health Facilities
Development Corp., Hospital
Revenue, Methodist Hospital,
3.85%*, 12/1/97................... 7,000,000
3,800,000 North Central Texas Health
Facilities Development Corp.
Revenue, Methodist Hospital
Dallas, Series B, 3.95%*, 12/1/97
(MBIA Insured) ................... 3,800,000
2,200,000 Port Corpus Christi, Nueces County
Marine Terminal Revenue, Reynolds
Metals Company, 4.10%*, 12/3/97
(LOC-Westdeutsche Landesbank)..... 2,200,000
5,000,000 Texas State, Tax Revenue
Anticipation Notes, Series A,
4.75%, 8/31/98 ................... 5,032,414
1,825,000 Trinity River Authority, 7.00%,
2/1/98 (AMBAC Insured) ........... 1,834,916
-----------------
19,867,330
-----------------
</TABLE>
Continued
-53-
<PAGE>
THE ARCH FUND, INC.
Tax-Exempt Money Market Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Amortized
Amount Description Cost
- -------------- -------------------------------------- -----------------
<S> <C>
Municipal Bonds, continued:
Utah (4.4%):
$7,000,000 Salt Lake County, Pollution
Control Revenue, SVC
Station Holdings Project,
British Petroleum Co.,
Series B, 3.85%*, 12/1/97 .......... $ 7,000,000
-----------------
Total Municipal Bonds
(Amortized cost--$158,413,414) 145,813,414
-----------------
Investment Companies (0.4%):
557,000 Federated Tax-Free Fund................. 557,000
1,000 Nuveen Tax-Exempt Fund.................. 1,000
-----------------
Total Investment Companies
(Amortized cost--$558,000) 558,000
-----------------
Total Investments
(Amortized cost--$158,971,414)(a) (99.8%) 158,971,414
Other Assets in Excess of Liabilities (0.2%) 334,659
-----------------
Total Net Assets (100.0%) $ 159,306,073
=================
</TABLE>
- -------------
* Variable rate investments. The rate presented on the Schedule of Portfolio
Investments is the rate in effect at November 30, 1997. The date presented
reflects the next rate change date.
** Put and demand features exist allowing the fund to require the repurchase
of the investment within variable time periods ranging from daily, weekly,
monthly or semi-annually. Maturity date reflects the next put date.
(a) Cost for federal income tax and financial reporting purposes are the same.
AMBAC AMBAC Indemnity Corp.
AMT Alternative Minimum Tax
FSA Financial Securities Assurance, Inc.
G.O. General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
See notes to financial statements
-54-
<PAGE>
THE ARCH FUND, INC.
Growth & Income Equity Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------- ------------------------------------- -----------------
<S> <C>
Commercial Paper (0.9%):
Financial Services (0.9%):
$4,359,000 Household Finance, 5.76%, 12/1/97.... $ 4,359,000
-----------------
Total Commercial Paper
(Cost $4,359,000) 4,359,000
-----------------
Common Stocks (98.5%):
Automotive (0.9%):
129,600 Echlin, Inc.......................... 4,106,700
-----------------
Banking (7.1%):
183,096 Banc One Corp........................ 9,406,557
80,100 Chase Manhattan Corp................. 8,700,862
100,900 Crestar Financial Corp............... 5,183,737
185,850 First Union Corp.(b)................. 9,060,187
16,000 Southtrust Corp...................... 872,000
-----------------
33,223,343
-----------------
Beverages (2.1%):
261,200 PepsiCo, Inc......................... 9,631,750
-----------------
Building Products (1.8%):
300,000 Sherwin-Williams Co.................. 8,568,750
-----------------
Chemicals (6.8%):
113,300 Ecolab, Inc.......................... 5,778,300
197,374 Millipore Corp....................... 7,648,243
166,950 Praxair, Inc......................... 7,335,366
481,000 Solutia, Inc......................... 10,972,813
-----------------
31,734,722
-----------------
Computer Software (6.1%):
213,300 Computer Associates International,
Inc................................ 11,104,931
94,000 McAfee Associates, Inc.(b)(c)........ 4,300,500
35,800 Microsoft, Inc.(c)................... 5,065,700
235,825 Oracle Corp.(c)...................... 7,855,920
-----------------
28,327,051
-----------------
Consumer Goods & Services (2.0%):
321,600 CUC International Inc.(c)............ 9,246,000
-----------------
Containers & Packaging (4.1%):
236,804 Avery Dennison Corp.................. 9,916,167
<CAPTION>
Security Market
Shares Description Value
- ------------- ------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Containers & Packaging, continued:
190,350 Crown Cork & Seal Co., Inc........... $ 9,291,459
-----------------
19,207,626
-----------------
Cosmetics (1.1%):
100,000 Estee Lauder Cos., Class A........... 5,356,250
-----------------
Electrical Equipment/Instruments (4.5%):
149,200 General Electric Co.................. 11,003,500
105,252 Grainger (W.W.), Inc................. 9,854,218
-----------------
20,857,718
-----------------
Electronic Products (2.0%):
148,150 Motorola, Inc........................ 9,314,931
Financial Services (3.8%):
198,200 Green Tree Financial Corp............ 6,069,875
58,208 SLM Holding Corp..................... 7,516,108
198,700 United Cos. Financial Corp.(b)....... 4,309,306
-----------------
17,895,289
-----------------
Food & Related (1.8%):
372,400 IBP, Inc............................. 8,495,375
-----------------
Food Wholesale Distribution (2.3%):
237,235 Sysco Corp........................... 10,571,785
-----------------
Health Care-Drugs (11.8%):
114,700 American Home Products Corp.......... 8,014,663
116,716 Bristol-Myers Squibb Co.............. 10,927,536
97,900 Eli Lilly & Co....................... 6,173,819
97,000 Merck & Co., Inc..................... 9,172,563
183,756 Schering-Plough Corp................. 11,519,204
186,200 SmithKline Beecham PLC, ADR.......... 9,240,175
-----------------
55,047,960
-----------------
Insurance (2.2%):
159,335 PMI Group, Inc.(b)................... 10,356,775
Manufacturing-Consumer Goods (2.1%):
240,627 Newell Co............................ 9,820,589
-----------------
Medical Equipment & Supplies (1.9%):
142,550 Allergan, Inc........................ 4,828,881
139,600 Bard (C.R.), Inc..................... 4,179,275
-----------------
9,008,156
-----------------
</TABLE>
Continued
-55-
<PAGE>
THE ARCH FUND, INC.
Growth & Income Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- -------------- -------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Metals & Mining (0.9%):
111,500 UCAR International, Inc.(c).......... $ 4,453,031
Office Equipment (2.6%):
177,800 Automatic Data Processing, Inc....... 10,001,250
75,000 First Data Corp...................... 2,123,437
-----------------
12,124,687
-----------------
Oil & Gas Exploration, Production & Services (6.8%):
248,700 Dresser Industries, Inc.............. 9,295,163
76,750 Tidewater, Inc.(b)................... 4,302,797
435,750 Union Texas Petroleum Holdings, Inc.. 9,504,797
225,100 Vastar Resources..................... 8,750,763
-----------------
31,853,520
-----------------
Paper & Related (1.0%):
71,400 Mead Corp............................ 4,609,763
-----------------
Restaurants (1.0%):
141,620 Tricon Global Restaurants, Inc.(c)... 4,788,526
-----------------
Retail Stores (5.6%):
145,817 Consolidated Stores(c)............... 7,090,352
164,600 J.C. Penney, Inc..................... 10,575,550
348,000 Pep Boys Manny Moe & Jack............ 8,743,500
-----------------
26,409,402
-----------------
Retail Stores - Discount (2.1%):
241,463 Wal-Mart Stores, Inc................. 9,643,429
-----------------
Retail Stores - Grocery (2.3%):
247,750 Albertson's Inc...................... 10,993,906
-----------------
Telecommunications (1.2%):
233,000 Frontier Corp........................ 5,708,500
-----------------
Telecommunications-Services & Equipment (1.4%):
124,900 Tellabs, Inc.(c)..................... 6,494,800
-----------------
Tire & Rubber (1.0%):
74,650 Goodyear Tire & Rubber Co............ 4,530,322
-----------------
Tobacco (2.0%):
211,200 Philip Morris Cos., Inc.............. 9,187,200
-----------------
Transportation & Shipping (1.9%):
96,500 Burlington Northern Santa Fe......... 8,829,750
-----------------
Trucking & Leasing (1.1%):
198,400 Republic Industries, Inc.(b)(c)...... 5,170,800
-----------------
Utilities - Gas & Electric (3.2%):
245,600 Baltimore Gas & Electric............. 7,536,850
197,050 Western Resources, Inc.(b)........... 7,697,266
-----------------
15,234,116
-----------------
Total Common Stocks
(Cost $334,594,404) 460,802,522
-----------------
Investment Companies (0.5%):
2,160,000 Cash Assets Trust Money Market Fund.. $ 2,160,000
-----------------
Total Investment Companies
(Cost $2,160,000) 2,160,000
-----------------
Total Investments (Cost--$341,113,405) (a) (99.9%) 467,321,522
Other Assets in Excess of Liabilities (0.1%) 218,366
=================
Total Net Assets (100.0%) $ 467,539,888
=================
</TABLE>
- -------------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$1,180,777. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
Unrealized appreciation ....................... $ 129,543,702
Unrealized depreciation ....................... (4,516,362)
-----------------
Net unrealized appreciation ................... $ 125,027,340
=================
(b) A portion of this security was loaned as of November 30, 1997.
(c) Represents non-income producing securities.
ADR -- American Depositary Receipt
PLC -- Public Limited Company
See notes to financial statements
-56-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
Commercial Paper (3.7%):
Financial Services (1.8%):
$4,719,000 Household Finance, 5.76%, 12/1/97.. $ 4,719,000
-----------------
Oil & Gas Exploration Production & Services (1.9%):
5,000,000 Petrofina, 5.57%, 12/4/97.......... 4,997,679
-----------------
Total Commercial Paper (Cost $9,716,679) 9,716,679
-----------------
Common Stocks (95.9%):
Banking (6.7%):
61,200 Associated Banc-Corp. ............. 3,044,700
30,000 CCB Financial Corp. ............... 2,880,000
105,843 Charter One Financial, Inc. ....... 6,271,198
45,000 First Commerce Corp. .............. 2,885,625
105,000 St. Paul Bancorp, Inc. ............ 2,572,500
-----------------
17,654,023
-----------------
Beverages (2.2%):
120,767 Canandaigua Wine, Inc., Class A(b). 5,781,720
-----------------
Building Products (0.6%):
30,000 Rayonier, Inc. .................... 1,466,250
-----------------
Business Services (7.3%):
7,624 Cotelligent Group, Inc.(b)......... 146,762
90,431 Hub Group, Inc., Class A(b)........ 2,893,792
162,500 Intelliquest Information Group,
Inc.(b)......................... 2,417,188
130,000 Interim Services, Inc.(b).......... 3,680,625
133,500 National Data Corp. ............... 4,722,562
202,000 SunGard Data Systems, Inc.(b)(c)... 5,226,750
-----------------
19,087,679
-----------------
Chemicals (7.9%):
55,200 Cytec Industries, Inc.(b).......... 2,525,400
202,135 Hanna (M.A.) Co. .................. 4,990,208
140,000 International Specialty Products,
Inc. ........................... 2,073,750
120,736 Minerals Technologies Inc. ........ 5,282,200
64,500 OM Group Inc. ..................... 2,475,187
160,000 RPM, Inc.(c)....................... 3,200,000
-----------------
20,546,745
-----------------
Coal (0.9%):
144,000 Zeigler Coal Holding Co. ............ $ 2,286,000
-----------------
Commercial Services (0.8%):
95,200 Unitog Co. .......................... 2,189,600
-----------------
Computer Hardware (3.0%):
113,510 Komag, Inc.(b)(c).................... 2,277,294
172,088 Zebra Technologies Corp.(b)(c)....... 5,485,305
-----------------
7,762,599
-----------------
Computer Software (5.9%):
100,000 Active Voice Corp.(b)(c)............. 1,375,000
187,000 Cognos, Inc.(b)(c)................... 3,319,250
100,000 Discreet Logic, Inc.(b).............. 1,900,000
110,000 H.T.E., Inc.(b)...................... 2,007,500
209,973 Network General Corp.(b)............. 3,963,240
55,366 SPSS, Inc.(b)........................ 1,391,071
204,036 Systemsoft Corp.(b).................. 1,466,509
-----------------
15,422,570
-----------------
Consumer Goods & Services (1.2%):
86,000 Samsonite Corp.(b)(c)................ 3,117,500
-----------------
Containers (1.2%):
78,000 Ball Corp. .......................... 3,003,000
-----------------
Electrical & Electronic (1.4%):
120,000 CFM Technologies, Inc.(b)............ 2,220,000
54,142 SBS Technologies, Inc.(b)............ 1,556,582
-----------------
3,776,582
-----------------
Electrical Equipment (1.0%):
60,000 Hubbell, Inc., Class B............... 2,726,250
-----------------
Financial Services (7.8%):
132,500 Aames Financial Corp.(c)............. 1,788,750
60,000 Bank United Corp., Class A........... 2,520,000
68,000 CMAC Investment Corp. ............... 3,531,750
76,000 Finova Group, Inc. .................. 3,581,500
127,000 Resource Bancshares Mortgage Group,
Inc. ............................. 1,746,250
174,500 Southern Pacific Funding Corp.(b)(c). 2,159,437
140,000 The Money Store Inc.(c).............. 3,508,750
</TABLE>
Continued
-57-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- -------------- -------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Financial Services, continued:
72,370 United Cos. Financial Corp.(c)....... $ 1,569,524
-----------------
20,405,961
-----------------
Food & Related (2.5%):
115,000 Hormel Foods Corp.(c)................ 3,507,500
146,754 Performance Food Group(b)............ 3,081,834
-----------------
6,589,334
-----------------
Home Furnishings (0.8%):
109,509 Furniture Brands International,
Inc.(b)........................... 2,142,270
-----------------
Insurance (0.9%):
125,600 HCC Insurance Holdings Inc.(c)....... 2,355,000
-----------------
Machinery & Equipment (3.2%):
137,000 Albany International Corp. .......... 3,330,812
65,000 DT Industries, Inc. ................. 1,803,750
83,340 Rental Service Corp.(b).............. 2,093,917
24,000 Tecumseh Products Co.,
Class A........................... 1,182,000
-----------------
8,410,479
-----------------
Manufacturing - Consumer Goods (3.5%):
42,928 AptaraGroup, Inc. ................... 2,446,896
120,000 Blyth Industries, Inc.(b)(c)......... 3,082,500
50,000 Libbey, Inc. ........................ 1,975,000
75,000 Lydall, Inc.(b)...................... 1,518,750
-----------------
9,023,146
-----------------
Medical Equipment & Supplies (8.5%):
125,000 Allergan, Inc. ...................... 4,234,375
136,000 Dentsply International, Inc. ........ 3,689,000
93,000 Fisher Scientfic International(c).... 4,464,000
129,650 Hanger Orthopedic Group, Inc.(b)..... 1,604,419
34,000 Lunar Corp.(b)....................... 769,250
160,000 Penederm, Inc.(b).................... 1,860,000
60,100 ResMed, Inc.(b)...................... 1,803,000
63,500 Scherer (R.P.) Corp.(b).............. 3,893,344
-----------------
22,317,388
-----------------
Medical Services (7.4%):
75,020 Alternative Living Services,
Inc.(b)(c)........................ $ 1,997,408
213,000 Apria Healthcare Group, Inc.(b)...... 3,354,750
210,000 Beverly Enterprises, Inc.(b)......... 3,570,000
66,000 Emeritus Corp.(b)(c)................. 866,250
114,000 Integrated Health(c)................. 3,469,875
285,032 Sun Healthcare Group, Inc.(b)(c)..... 6,128,188
-----------------
19,386,471
-----------------
Oil & Gas Equipment/Services (1.2%):
139,983 Swift Energy Co.(b)(c)............... 3,044,624
-----------------
Oil & Gas Exploration, Production & Services (3.5%):
54,000 Ocean Energy, Inc.(b)................ 3,020,625
158,000 Union Texas Petroleum Holdings, Inc. 3,446,375
88,567 United Meridian Corp.(b)............. 2,662,545
-----------------
9,129,545
-----------------
Paper & Related (0.7%):
60,000 Caraustar Industries Inc.(c)......... 1,938,750
-----------------
Pharmaceuticals (1.4%):
92,500 ChiRex Inc.(b)(c).................... 2,254,688
45,000 Zonagen, Inc.(b)(c).................. 1,395,000
-----------------
3,649,688
-----------------
Printing & Publishing (0.8%):
150,000 Primedia Inc.(b)(c).................. 1,996,875
-----------------
Restaurants (1.4%):
150,000 Brinker International, Inc.(b)....... 2,212,500
174,000 Ryan's Family Steak Houses, Inc.(b).. 1,544,250
-----------------
3,756,750
-----------------
Retail Stores (3.2%):
101,000 Cole National Corp.,
Class A(b)........................ 3,484,500
83,000 Discount Auto Parts, Inc.(b)......... 1,551,063
115,000 Marks Bros. Jewelers, Inc.(b)........ 1,725,000
330,072 The Bombay Company, Inc.(b).......... 1,712,249
-----------------
8,472,812
-----------------
</TABLE>
Continued
-58-
<PAGE>
THE ARCH FUND, INC.
Small Cap Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- -------------- -------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Steel (1.6%):
144,000 AK Steel Holding Corp. .............. $ 2,835,000
130,000 J&L Specialty Steel, Inc. ........... 1,267,500
-----------------
4,102,500
-----------------
Telecommunications (4.2%):
288,900 Arch Communications Group, Inc.(b)... 2,004,244
144,000 IXC Communications, Inc.(b)(c)....... 4,995,000
234,425 Mobile Telecom Tech Corp.(b)......... 4,073,134
-----------------
11,072,378
-----------------
Transportation & Shipping (1.7%):
75,000 Simon Transportation Services,
Inc.(b)........................... 1,725,000
91,000 U.S. Freightways Corp. .............. 2,798,250
-----------------
4,523,250
-----------------
Utilities - Gas & Electric (0.8%):
75,000 Central Louisiana Electric........... $ 2,179,688
-----------------
Wholesale Distribution (0.7%):
88,717 Barnett, Inc.(b)(c).................. 1,807,609
-----------------
Total Common Stocks
(Cost $218,406,707) 251,125,036
-----------------
Investment Companies (0.4%):
1,000,000 Cash Assets Trust Money Market Fund.. 1,000,000
-----------------
Total Investment Companies
(Cost $1,000,000) 1,000,000
-----------------
Total Investments (Cost--$229,123,387)
(a) (100.0%) 261,841,715
Liabilities in Excess of Other Assets (0.0%) (87,818)
----------------
Total Net Assets (100.0%) $ 261,753,897
=================
</TABLE>
- -------------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$341,625. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
Unrealized appreciation ....................... $ 48,711,387
Unrealized depreciation ....................... (16,334,684)
----------------
Net unrealized appreciation ................... $ 32,376,703
================
(b) Represents non-income producing securities.
(c) A portion of this security was loaned as of November 30, 1997.
See notes to financial statements
-59-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Market Value
Security in U.S.
Shares Description Dollars
- ------------- --------------------------------------- ------------------
<S> <C>
Common Stocks (89.1%):
Australia (1.2%):
Diversified Operations (0.7%):
159,000 Southcorp Holdings, Ltd............... $ 490,687
----------------
Telecommunications (0.5%):
157,000 Telstra Corp. Ltd. (b)................ 295,436
----------------
Total Australia 786,123
----------------
Finland (1.3%):
Banking (0.4%):
48,000 Merita Ltd............................ 243,102
----------------
Telecommunications (0.9%):
7,200 Nokia Oyj (b)......................... 579,393
----------------
Total Finland 822,495
----------------
France (8.3%):
Building Products (1.2%):
5,550 Compagnie de Saint-Gobain............. 753,976
----------------
Construction (1.1%):
7,250 SocieteTechnip SA..................... 751,588
----------------
Electrical & Electronic (2.0%):
1,900 Le Carbone-Lorraine................... 511,086
15,000 Schneider SA.......................... 802,914
----------------
1,314,000
----------------
Health Care-Drugs (1.4%):
20,000 Rhone-Poulenc, Class A (b)............ 899,128
----------------
Oil & Gas Exploration, Production & Services (1.2%):
6,750 Elf Aquitaine SA...................... 783,222
----------------
Oil Companies - Integrated (1.4%):
9,000 Total SA, Class B..................... 945,202
----------------
Total France 5,447,116
----------------
Germany (7.8%):
Automotive (1.2%):
11,400 Daimler-Benz AG....................... 807,223
----------------
Banking (1.3%):
12,900 Deutsche Bank AG...................... 827,139
----------------
Chemicals (0.6%):
3,200 SGL Carbon AG......................... 412,722
----------------
Computer Software (2.0%):
4,150 SAP Preference XIG AG................. 1,277,538
----------------
Diversified Operations (1.4%):
15,700 VEBA AG(b)............................ 932,797
----------------
Machinery & Equipment (1.3%):
1,840 Mannesmann AG......................... 856,420
----------------
Total Germany 5,113,839
----------------
Hong Kong (2.6%):
Banking (0.4%):
102,000 Dao Heng Bank Group Ltd............... 241,465
----------------
Construction (0.7%):
208,000 Cheung Kong Infrastructure Holdings... 484,328
----------------
Diversified Operations (0.4%):
51,000 Swire Pacific Ltd., Class A........... 255,320
----------------
Financial Services (0.6%):
418,200 Peregrine Investments Holdings Ltd.... 411,151
----------------
Real Estate (0.5%):
45,000 Cheung Kong (Holdings) Ltd............ 317,258
----------------
Total Hong Kong 1,709,522
----------------
Italy (1.6%):
Telecommunications (1.6%):
265,000 Telecom Italia Mobile SpA............. 1,072,698
----------------
Total Italy 1,072,698
----------------
Japan (18.1%):
Business Services (0.7%):
7,000 Secom Co. Ltd......................... 438,786
----------------
Computer Services (0.8%):
17,600 CSK Corp.............................. 515,761
----------------
Computer Software (1.2%):
12,100 Meitec................................ 374,496
</TABLE>
Continued
-60-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Market Value
Security in U.S.
Shares Description Dollars
- ------------- ---------------------------------------- ------------------
<S> <C>
Common Stocks, continued:
Japan, continued:
Computer Software, continued:
9 NTT Data Corp......................... $ 437,218
----------------
811,714
----------------
Construction (0.4%):
13,000 Sho-bond Corp......................... 252,615
----------------
Consumer Goods & Services (1.2%):
18,700 Amway Japan Ltd....................... 303,303
34,000 Yamaha Corp........................... 476,866
----------------
780,169
----------------
Cosmetics & Toiletries (0.8%):
21,000 ADERANS Co. Ltd....................... 498,570
----------------
Diversified Operations (1.3%):
33,000 Minebea Co. Ltd....................... 367,169
68,000 Mitsui & Co........................... 472,603
----------------
839,772
----------------
Electrical & Electronic (4.5%):
3,000 Keyence Corp.......................... 437,218
24,000 Mitsumi Electric Co. Ltd.............. 404,310
6,000 Rohm Co. Ltd.......................... 592,360
6,400 Sony Corp............................. 546,601
32,000 Taiyo Yuden Co. Ltd................... 305,896
5,000 TDK Corp.............................. 407,444
6,000 Tokyo Electron Ltd.................... 229,892
----------------
2,923,721
----------------
Financial Services (1.9%):
3,200 Nichiei Co. Ltd....................... 351,028
6,200 Orix Corp............................. 416,329
1,600 Shohkoh Fund & Co. Ltd................ 455,083
----------------
1,222,440
----------------
Machinery - Electrical (0.4%):
3,200 SMC Corp.............................. 283,330
----------------
Medical Equipment & Supplies (0.7%):
29,000 Terumo Corp........................... 454,456
----------------
Office Automation & Equipment (0.8%):
21,000 Canon, Inc............................ 506,797
----------------
Paper Products (0.7%):
13,600 Uni-Charm Corp........................ 460,349
----------------
Real Estate (0.7%):
37,000 Mitsubishi Estate Co. Ltd............. 429,070
7,000 Sumitomo Realty & Development Co. Ltd. 46,895
----------------
475,965
----------------
Recreation (0.6%):
3,800 Nintendo Co. Ltd...................... 393,026
----------------
Retail Stores (0.7%):
7,400 Ryohin Keikaku Co. Ltd................ 481,254
----------------
Telecommunications (0.7%):
55 Nippon Telegraph & Telephone Corp..... 452,498
----------------
Total Japan 11,791,223
----------------
Netherlands (8.8%):
Consumer Goods & Services (0.8%):
9,680 PolyGram NV........................... 489,356
----------------
Financial Services (1.2%):
19,400 ING Groep NV.......................... 788,491
----------------
Food Products (0.9%):
40,800 Koninklijke Bols Wessanen NV.......... 617,746
----------------
Machinery & Equipment (1.1%):
19,500 Stork NV.............................. 714,085
----------------
Office Furnishings (1.3%):
27,158 Koninklijke Ahrend Groep
NV (b)............................. 840,149
----------------
Paper Products (1.2%):
35,500 Koninklijke KNP BT.................... 766,071
----------------
Retail Stores (1.2%):
15,500 Vendex International N.V.............. 809,306
----------------
Warehousing & Transportation Services (1.1%):
25,700 Koninklijke Pakhoed NV................ 698,089
----------------
Total Netherlands 5,723,293
----------------
Norway (1.2%):
Oil & Gas Exploration, Production & Services (1.2%):
42,000 Saga Petroleum ASA, Class A........... 753,358
----------------
Total Norway 753,358
----------------
</TABLE>
Continued
-61-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Market Value
Security in U.S.
Shares Description Dollars
- ------------- ---------------------------------------- ------------------
<S> <C>
Common Stocks, continued:
Portugal (1.8%):
Telecommunications (1.8%):
25,300 Portugal Telecom SA, Registered....... $ 1,165,252
----------------
Total Portugal 1,165,252
----------------
Singapore (1.3%):
Banking (0.8%):
54,000 Development Bank of Singapore Ltd..... 508,602
----------------
Real Estate (0.5%):
185,000 DBS Land Ltd.......................... 314,800
----------------
Total Singapore 823,402
----------------
Spain (4.2%):
Banking (1.4%):
49,000 Banco Central Hispanoamericano SA..... 939,748
----------------
Oil Companies - Integrated (1.3%):
20,300 Repsol SA............................. 878,022
----------------
Telecommunications (1.5%):
33,100 Telefonica de Espana.................. 954,434
----------------
Total Spain 2,772,204
----------------
Sweden (4.4%):
Appliances (1.4%):
11,500 Electrolux AB, Series B............... 905,582
----------------
Insurance (1.6%):
19,400 Skandia Forsakrings AB................ 1,022,640
----------------
Telecommunications (1.4%):
22,500 Ericsson (L.M.), Class B(b)........... 917,951
----------------
Total Sweden 2,846,173
----------------
Switzerland (6.4%):
Health Care-Drugs (3.3%):
200 Ares-Serono Group, Class B............ 347,198
590 Novartis AG Registered................ 942,709
101 Roche Holding AG...................... 903,949
----------------
2,193,856
----------------
Insurance (3.1%):
1,400 Swiss Life, Bearer.................... 930,911
655 Swiss Re, Registered.................. 1,069,997
----------------
2,000,908
----------------
Total Switzerland 4,194,764
----------------
United Kingdom (15.0%):
Automotive Parts & Equipment (1.7%):
50,400 GKN PLC............................... 1,096,317
----------------
Banking (1.4%):
58,000 Abbey National PLC.................... 919,596
----------------
Business Services (1.2%):
233,000 Corporate Services Group PLC.......... 810,691
----------------
Computer Software (1.5%):
43,300 SEMA Group PLC........................ 961,209
----------------
Computer Software & Services (1.9%):
43,800 Misys PLC............................. 1,232,452
----------------
Diversified Operations (1.4%):
223,000 Rentokil Initial PLC.................. 939,343
----------------
Electrical & Electronic (1.1%):
98,400 Electrocomponents PLC................. 692,199
----------------
Financial Services (1.2%):
67,200 Lloyds TSB Group PLC.................. 766,544
----------------
Retail Stores (1.5%):
84,500 Dixons Group PLC...................... 961,036
----------------
Telecommunications (1.3%):
99,200 Cable & Wireless PLC.................. 883,356
----------------
Transportation & Shipping (0.8%):
21,100 FirstBus PLC.......................... 83,013
35,600 Stagecoach Holdings PLC............... 459,771
----------------
542,784
----------------
Total United Kingdom 9,805,527
----------------
United States (5.1%):
Healthcare (1.4%):
17,800 Elan Corp. PLC, Sponsored ADR (b)..... 938,950
----------------
Investment Companies (1.7%):
4,100 Brazilian Investment Co. (b).......... 173,922
16,100 Mexico Fund........................... 304,894
</TABLE>
Continued
-62-
<PAGE>
THE ARCH FUND, INC.
International Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Market Value
Security in U.S.
Shares Description Dollars
- ------------- ---------------------------------------- ------------------
<S> <C>
Common Stocks, continued:
United States, continued:
Investment Companies, continued:
30,000 Polish Investment Co. (b)............. $ 333,600
20,300 Russian Investment Co. Sicav (b)...... 318,913
----------------
1,131,329
----------------
Telecommunications (1.1%):
23,600 Matav RT, Sponsored ADR (b)........... 477,900
2,100 Telebras ADR.......................... 221,550
----------------
699,450
----------------
Transportation & Shipping (0.9%):
45,000 Laidlaw, Inc. (b)..................... 585,000
----------------
Total United States 3,354,729
----------------
Total Common Stocks (Cost $52,039,567) 58,181,718
----------------
U.S. Government Agencies (4.5%):
Student Loan Marketing Assoc:
$2,943,000 5.60%, 12/1/97 ....................... $ 2,942,542
----------------
Total U.S. Government Agencies
(Cost $2,941,627) 2,942,542
----------------
Closed End Investment Companies (2.0%):
18,400 Argentinian Investment Co. (b)........ 450,800
13,600 Genesis Chile Fund.................... 520,200
8,450 India Magnum Fund..................... 354,900
----------------
Total Closed End Investment Companies
(Cost $1,421,482) 1,325,900
----------------
Total Investments (Cost--$56,404,049)(a) (95.6%)
62,450,160
Other Assets in Excess of Liabilities (4.4%) 2,802,196
----------------
Total Net Assets (100.0%) $ 65,252,356
================
</TABLE>
- -------------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of $415
and by the amount of mark to market adjustment for passive foreign
investment companies of $196,786. Cost for federal income tax purposes
differs from value by net unrealized appreciation of securities as follows:
Unrealized appreciation .............$ 9,919,612
Unrealized depreciation ............. (4,070,702)
----------------
Net unrealized appreciation $ 5,848,910
================
(b) Represents non-income producing securities.
ADR -- American Depositary Receipt
PLC -- Public Limited Company
See notes to financial statements
-63-
<PAGE>
THE ARCH FUND, INC.
Equity Income Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
Commercial Paper (5.0%):
Financial Services (5.0%):
$3,599,000 AI Credit, 5.72%, 12/1/97.............. $ 3,599,000
3,000,000 Household Finance, 5.76%, 12/1/97...... 3,000,000
-----------------
6,599,000
-----------------
Total Commercial Paper (Cost $6,599,000) 6,599,000
-----------------
Common Stocks (91.3%):
Automotive (2.4%):
33,000 Chrysler Corp.......................... 1,132,312
62,000 Echlin, Inc............................ 1,964,625
-----------------
3,096,937
-----------------
Banking (22.6%):
50,152 Banc One Corp. ........................ 2,576,559
24,500 Chase Manhattan Corp. ................. 2,661,312
24,000 Comerica, Inc.(b)...................... 2,044,500
41,000 CoreStates Financial Corp. ............ 3,169,813
29,725 Crestar Financial Corp. ............... 1,527,122
40,000 First Union Corp. ..................... 1,950,000
40,000 KeyCorp. .............................. 2,697,500
53,400 Mellon Bank Corp. ..................... 3,027,112
28,900 National City Corp. ................... 1,929,075
50,000 PNC Financial Corp. ................... 2,690,625
27,500 U.S. Bancorp........................... 2,957,969
35,000 Wachovia Corp.(b)...................... 2,695,000
-----------------
29,926,587
-----------------
Building Products (0.9%):
43,000 Sherwin-Williams Co. .................. 1,228,188
-----------------
Chemicals (5.6%):
19,000 Dow Chemical Co. ...................... 1,876,250
27,000 Ecolab Inc. ........................... 1,377,000
32,500 Millipore Corp. ....................... 1,259,375
16,200 Praxair, Inc. ......................... 711,787
39,000 RPM, Inc. ............................. 780,000
63,000 Solutia, Inc. ......................... 1,437,187
-----------------
7,441,599
-----------------
Containers & Packaging (2.1%):
40,000 Avery Dennison Corp. .................. 1,675,000
22,200 Crown Cork & Seal Co., Inc. ........... 1,083,638
-----------------
2,758,638
-----------------
Electrical Equipment (1.1%):
15,970 Grainger (W.W.), Inc. ................. $ 1,495,191
-----------------
Financial Services (6.9%):
61,400 Fannie Mae............................. 3,242,687
52,000 Green Tree Financial Corp. ............ 1,592,500
63,562 MBNA Corp. ............................ 1,688,366
26,600 PMI Group, Inc.(b)..................... 1,729,000
6,987 SLM Holding Corp. ..................... 902,196
-----------------
9,154,749
-----------------
Food & Related (3.1%):
71,000 IBP, Inc. ............................. 1,619,688
47,400 Sara Lee Corp. ........................ 2,506,275
-----------------
4,125,963
-----------------
Health Care (10.2%):
31,300 Abbott Laboratories.................... 2,034,500
36,300 American Home Products Corp. .......... 2,536,463
28,600 Bristol-Myers Squibb Co. .............. 2,677,675
52,400 Schering-Plough Corp. ................. 3,284,825
59,000 SmithKline Beecham PLC, ADR............ 2,927,875
-----------------
13,461,338
-----------------
Industrial Goods & Services (1.5%):
34,000 PPG Industries, Inc. .................. 1,969,875
-----------------
Manufacturing-Consumer Goods (2.0%):
64,900 Newell Co. ............................ 2,648,731
-----------------
Medical Equipment & Supplies (1.9%):
39,700 Allergan, Inc. ........................ 1,344,838
40,000 Bard (C.R.), Inc. ..................... 1,197,500
-----------------
2,542,338
-----------------
Medical-Hospital Services (0.8%):
35,000 Columbia/HCA Healthcare Corp. ......... 1,032,500
-----------------
Oil & Gas Exploration Products & Services (2.7%):
83,100 Dresser Industries, Inc. .............. 3,105,863
20,100 Union Texas Petroleum Holdings, Inc. .. 438,431
-----------------
3,544,294
-----------------
</TABLE>
Continued
-64-
<PAGE>
THE ARCH FUND, INC.
Equity Income Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- -------------- -------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Oil Companies - Integrated (2.7%):
22,600 Amoco Corp. ......................... $ 2,034,000
1,000 Atlantic Richfield Co. .............. 81,500
20,000 Mobil Corp. ......................... 1,438,750
-----------------
3,554,250
-----------------
Paper Products (1.7%):
42,500 Consolidated Papers, Inc. ........... 2,289,688
-----------------
Retail Stores (4.1%):
43,900 J.C. Penney, Inc. ................... 2,820,575
26,000 May Department Stores Co. ........... 1,397,500
45,000 Pep Boys Manny Moe & Jack............ 1,130,625
-----------------
5,348,700
-----------------
Retail Stores - Grocery (0.9%):
27,000 Albertson's, Inc. ................... 1,198,125
-----------------
Technology (1.2%):
25,900 Motorola, Inc. ...................... 1,628,462
-----------------
Telecommunications (4.6%):
126,000 Frontier Corp. ...................... 3,087,000
67,000 US West, Inc. ....................... 3,027,562
-----------------
6,114,562
-----------------
Tire & Rubber (1.8%):
38,000 Goodyear Tire & Rubber Co. .......... 2,306,125
-----------------
Tobacco (2.0%):
60,000 Philip Morris Cos., Inc. ............ 2,610,000
-----------------
Transportation & Shipping (1.1%):
16,200 Burlington Northern Santa Fe......... 1,482,300
-----------------
Utilities - Gas & Electric (7.4%):
62,000 Baltimore Gas & Electric Co. ........ 1,902,625
57,000 Central & South West Corp. .......... 1,425,000
80,000 PacifiCorp........................... 1,865,000
73,000 Scana Corp. ......................... 2,016,625
36,000 Union Electric Co.(b)................ 1,433,250
30,000 Western Resources, Inc.(b). ......... 1,171,875
-----------------
9,814,375
-----------------
Total Common Stocks
(Cost $81,262,624) 120,773,515
-----------------
Convertible Bonds (0.7%):
Financial Services (0.7%):
$1,000,000 Southern Pacific Funding, 6.75%,
10/15/06........................ 857,500
-----------------
Total Convertible Bonds
(Cost $1,010,643) 857,500
-----------------
Convertible Preferred Stock (1.7%):
Banking (1.7%):
30,000 Union Planters Corp. ................ 2,272,500
-----------------
Total Convertible Preferred Stock
(Cost $768,125) 2,272,500
-----------------
Real Estate Investment Trust (1.3%):
Health Care (1.1%):
60,400 Nationwide Health Properties, Inc. .. 1,426,950
-----------------
Office Property (0.2%):
11,000 Prentiss Properties Trust............ 284,625
-----------------
Total Real Estate Investment Trust
(Cost $1,536,860) 1,711,575
-----------------
Total Investments
(Cost--$91,177,252)(a)(100.0%) 132,214,090
Assets in Excess
of Other Liabilities (0.0%) 10,597
-----------------
Total Net Assets (100.0%) $ 132,224,687
=================
</TABLE>
- -------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ................... $ 42,113,091
Unrealized depreciation ................... (1,076,253)
----------------
Net unrealized appreciation ............... $ 41,036,838
================
(b) A portion of this security was loaned as of November 30, 1997.
ADR -- American Depositary Receipt
PLC -- Public Limited Company
See notes to financial statements
-65-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------- --------------------------------------- -----------------
<S> <C>
Commercial Paper (0.6%):
Financial Services (0.6%):
$184,000 Household Finance, 5.76%, 12/1/97....... $ 184,000
----------------
Total Commercial Paper (Cost $184,000) 184,000
----------------
Common Stocks (99.3%):
Aerospace/Defense (1.5%):
4,301 Boeing Co. ............................. 228,490
258 General Dynamics Corp................... 22,349
812 Lockheed Martin Corp.................... 79,221
286 Northrop Grumman Corp................... 32,247
1,014 Raytheon Co. ........................... 56,721
994 United Technologies Corp................ 74,488
----------------
493,516
----------------
Aircraft Engines & Engine Parts (0.3%):
2,460 AlliedSignal............................ 91,328
----------------
Airlines (0.4%):
397 AMR Corp(b)............................. 48,111
299 Delta Air Lines......................... 33,320
925 Southwest Airlines Co................... 22,617
387 US Airways Group, Inc.(b)............... 21,333
----------------
125,381
----------------
Apparel/Shoes (0.6%):
314 Fruit of the Loom(b).................... 7,320
1,140 Gap, Inc. .............................. 61,204
292 Liz Claiborne, Inc. .................... 14,673
1,228 Nike, Inc. ............................. 59,788
227 Reebok International Ltd.(b)............ 8,924
156 Russell Corp. .......................... 4,768
520 VF Corp................................. 24,018
----------------
180,695
----------------
Automotive (1.9%):
2,919 Chrysler Corp........................... 100,158
161 Cummins Engine Co. ..................... 10,364
441 Dana Corp............................... 20,617
255 Echlin, Inc............................. 8,080
5,117 Ford Motor Co. ......................... 220,031
3,137 General Motors Corp. ................... 191,357
763 Genuine Parts Co........................ 24,416
300 Navistar International Corp.(b)......... 6,600
318 PACCAR, Inc............................. 17,490
----------------
599,113
----------------
Banking (6.9%):
2,520 Banc One Corp........................... 129,465
1,652 Bank of New York, Inc................... 88,795
3,005 BankAmerica Corp........................ 219,365
625 BankBoston Corp. ....................... 55,703
434 Bankers Trust New York Corp............. 51,456
852 Barnett Banks, Inc. .................... 59,960
1,842 Chase Manhattan Corp.................... 200,087
1,992 Citicorp................................ 238,915
439 Comerica, Inc........................... 37,397
648 Fifth Third Bancorp..................... 45,684
1,252 First Chicago NBD Corp.................. 97,969
2,468 First Union Corp........................ 120,315
799 Huntington BancShares, Inc.............. 27,166
921 KeyCorp................................. 62,110
2,172 MBNA Corp............................... 57,694
1,108 Mellon Bank Corp........................ 62,810
912 National City Corp...................... 60,876
2,998 NationsBank Corp........................ 180,067
226 Republic New York Corp.................. 24,578
683 State Street Corp....................... 40,639
911 Sun Trust Banks, Inc.................... 64,681
1,039 U.S. Bancorp............................ 111,757
725 Wachovia Corp. ......................... 55,825
378 Wells Fargo Co.......................... 116,141
----------------
2,209,455
----------------
Beverages (3.4%):
155 Adolph Coors Co. ....................... 5,580
2,139 Anheuser-Busch Co....................... 92,378
282 Brown-Forman Corp....................... 14,488
10,662 Coca-Cola Co............................ 666,374
6,595 PepsiCo, Inc............................ 243,190
1,614 Seagram Co. Ltd......................... 52,152
----------------
1,074,162
----------------
Building Products (0.2%):
705 Masco Corp. ............................ 33,223
238 Owens Corning........................... 8,747
</TABLE>
Continued
-66-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ---------- ---------------------------------------- ----------------
<S> <C>
Common Stocks, continued:
Building Products, continued:
726 Sherwin-Williams Co..................... $ 20,736
----------------
62,706
----------------
Business Services (0.7%):
1,243 Automatic Data Processing, Inc.......... 69,919
332 Ceridian Corp.(b)....................... 14,567
337 Computer Science Corp.(b)............... 26,686
720 Dun & Bradstreet Corp. ................. 20,160
638 Equifax, Inc. .......................... 21,772
1,928 First Data Corp......................... 54,586
521 Interpublic Group Cos., Inc............. 24,975
----------------
232,665
----------------
Capital Equipment (0.2%):
1,062 Illinois Tool Works, Inc................ 58,211
----------------
Chemicals (2.1%):
456 Air Products & Chemicals, Inc. ......... 34,970
4,848 E. I. duPont de Nemours & Co............ 293,606
342 Eastman Chemical Co. ................... 20,648
264 Ecolab, Inc. ........................... 13,464
612 Engelhard Corp.......................... 10,901
246 Great Lakes Chemical Corp............... 11,039
418 Hercules, Inc........................... 20,299
2,552 Monsanto Co. ........................... 111,491
606 Morton International Inc................ 20,642
275 Nalco Chemical Co....................... 10,673
664 Praxair, Inc............................ 29,175
261 Rohm & Haas Co. ........................ 23,996
433 Sigma-Aldrich Corp. .................... 15,642
520 Union Carbide Corp...................... 22,945
314 W.R. Grace & Co......................... 22,844
----------------
662,335
----------------
Commercial Services (0.1%):
845 Browning-Ferris Industries, Inc......... 30,156
450 H & R Block............................. 18,450
----------------
48,606
----------------
Computer Software (3.3%):
300 Adobe Systems, Inc...................... 12,600
2,375 Computer Associates International, Inc. 123,622
5,139 Microsoft, Inc.(b)...................... 727,168
1,488 Novell, Inc.(b)......................... 13,764
4,204 Oracle Corp.(b)......................... 140,046
546 Parametric Technology Corp.(b).......... 27,607
1 Siebel Systems, Inc.(b)................. 42
----------------
1,044,849
----------------
Computers (5.0%):
1,519 3Com Corp.(b)........................... 55,064
534 Apple Computer, Inc.(b)................. 9,479
661 Cabletron Systems(b).................... 15,203
2,885 Cisco Systems Inc.(b)................... 248,830
3,306 Compaq Computer Corp.................... 206,418
213 Data General Corp.(b)................... 3,821
1,405 Dell Computer Corp.(b).................. 118,283
642 Digital Equipment Corp.(b).............. 31,619
2,108 EMC Corp/Mass(b)........................ 63,899
4,567 Hewlett-Packard Co. .................... 278,871
4,203 IBM Corp. .............................. 460,490
1,035 Seagate Technology, Inc.(b)............. 23,482
745 Silicon Graphics, Inc.(b)............... 9,778
1,603 Sun Microsystems, Inc.(b)............... 57,708
739 Unisys Corp.(b)......................... 10,577
----------------
1,593,522
----------------
Construction (0.3%):
169 Armstrong World Industries, Inc......... 11,650
118 Centex Corp. ........................... 7,478
695 Ingersoll-Rand Co....................... 28,408
159 Kaufman & Broad Home Corp............... 3,448
749 PPG Industries, Inc..................... 43,395
95 Pulte Corp.............................. 3,853
----------------
98,232
----------------
Consumer Goods & Services (2.0%):
410 Black & Decker.......................... 15,068
447 Clorox Co............................... 34,698
1,250 Colgate-Palmolive....................... 83,516
1,745 CUC International, Inc.(b).............. 50,169
158 Jostens, Inc............................ 3,792
5,825 Procter & Gamble Co..................... 444,519
</TABLE>
Continued
-67-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ---------- ---------------------------------------- ----------------
<S> <C>
Common Stocks, continued:
Consumer Goods & Services, continued:
637 Rubbermaid, Inc. ....................... $ 15,447
----------------
647,209
----------------
Containers & Packaging (0.3%):
426 Avery Dennison Corp..................... 17,839
125 Ball Corp. ............................. 4,813
214 Bemis Co................................ 9,015
549 Crown Cork & Seal Co., Inc.............. 26,798
585 Owens-Illinois, Inc.(b)................. 19,817
430 Stone Container Corp.(b)................ 5,375
----------------
83,657
----------------
Cosmetics & Toiletries (0.9%):
228 Alberto-Culver Co. ..................... 7,111
568 Avon Products, Inc. .................... 32,838
2,416 Gillette Co. ........................... 223,027
451 International Flavors & Fragrances...... 21,733
----------------
284,709
----------------
Diversified Operations (2.6%):
115 Aeroquip-Vickers, Inc. ................. 5,872
695 Cognizant Corp.......................... 29,798
516 Coopers Industries, Inc................. 26,639
984 Corning Glass........................... 41,759
188 Crane Co................................ 7,920
967 Dow Chemical Co......................... 95,491
83 Eastern Enterprises..................... 3,341
340 Eaton Corp.............................. 32,109
152 FMC Corp.(b)............................ 11,106
500 ITT Corp.(b)............................ 37,938
508 ITT Industries, Inc. ................... 16,129
1,807 Minnesota Mining & Manufacturing........ 176,070
185 National Service Industries, Inc........ 8,660
182 Raychem Corp............................ 17,210
722 Tenneco, Inc. .......................... 31,272
701 Textron, Inc............................ 41,447
2,766 Unilever NV New York Shares............. 160,601
3,092 Westinghouse Electric Corp. ............ 92,760
424 Whitman Corp............................ 11,157
----------------
847,279
----------------
Electrical & Electronic (3.9%):
922 Amp, Inc................................ 40,049
1,926 Emerson Electric........................ 105,930
14,073 General Electric Co..................... 1,037,883
204 General Signal Corp..................... 8,326
217 Grainger (W.W.), Inc.................... 20,317
344 KLA-Tencor Corp.(b)..................... 13,330
451 Tandy Corp. ............................ 19,393
202 Tektronix, Inc. ........................ 8,471
242 Thomas & Betts Corp. ................... 10,981
----------------
1,264,680
----------------
Engineering (0.1%):
368 Fluor Corp.............................. 13,225
166 Foster Wheeler Corp..................... 5,115
----------------
18,340
----------------
Entertainment (1.8%):
427 Brunswick Corp. ........................ 14,278
420 Harrah's Entertainment Inc.(b).......... 8,426
343 Harris Corp. ........................... 16,271
840 HBO & Co. .............................. 37,695
153 King World Productions, Inc............. 8,319
219 Meredith Corp........................... 7,638
2,907 The Walt Disney Co. .................... 275,982
2,422 Time Warner, Inc. ...................... 141,082
1,495 Viacom, Inc.(b)......................... 52,325
----------------
562,016
----------------
Environmental Services (0.2%):
238 Safety-Kleen Corp....................... 6,605
1,975 Waste Management, Inc................... 48,634
----------------
55,239
----------------
Financial Services (5.5%):
2,035 American Express Co. ................... 160,511
221 Beneficial Corp. ....................... 17,155
863 CoreStates Financial Corp. ............. 66,721
455 Countrywide Credit Industries, Inc...... 18,627
</TABLE>
Continued
-68-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------- --------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Financial Services, continued:
4,560 Fannie Mae.............................. $ 240,824
2,996 Freddie Mac............................. 123,585
1,021 Fleet Financial Group, Inc.............. 67,450
234 Golden West Financial Corp.............. 20,972
586 Green Tree Financial Corp............... 17,946
406 H.F. Ahmanson & Co. .................... 24,157
496 Household International................. 62,496
756 J. P. Morgan & Co., Inc................. 86,326
379 MBIA, Inc. ............................. 23,830
1,446 Merrill Lynch & Co...................... 101,491
482 MGIC Investment Corp.................... 28,167
2,615 Morgan Stanley Dean Witter
Discover & Co........................ 142,027
3,224 Norwest Corp............................ 120,699
1,345 PNC Financial Corp. .................... 72,378
408 Providian Financial Corp................ 17,978
1,121 Schwab (Charles) Corp................... 43,229
4,892 Travelers Group, Inc. .................. 247,059
1,055 Washington Mutual, Inc. ................ 72,927
----------------
1,776,555
----------------
Food & Related (2.5%):
2,428 Archer-Daniels Midland Co............... 51,899
1,958 Campbell Soup Co........................ 109,648
2,012 ConAgra, Inc. .......................... 72,306
612 CPC International, Inc.................. 63,266
154 Fleming Cos., Inc....................... 2,560
685 General Mills, Inc. .................... 50,690
1,604 H. J. Heinz Co.......................... 80,300
602 Hershey Foods........................... 36,948
1,797 Kellogg Co. ............................ 83,336
286 Pioneer Hi-Bred International, Inc. .... 29,208
580 Quaker Oats Co. ........................ 30,740
459 Ralston Purina Group.................... 42,687
2,090 Sara Lee Corp........................... 110,509
248 SUPERVALU, Inc. ........................ 9,750
500 Wrigley (Wm) Jr Co. .................... 39,563
----------------
813,410
----------------
Funeral Services (0.1%):
1,063 Service Corp. International............. 38,866
----------------
Health Care (9.1%):
3,323 Abbott Laboratories..................... 215,995
2,808 American Home Products Corp............. 196,209
227 Bausch & Lomb, Inc...................... 8,995
4,266 Bristol-Myers Squibb Co. ............... 399,403
4,758 Eli Lilly & Co. ........................ 300,050
1,686 HEALTHSOUTH Corp.(b).................... 44,258
689 Humana, Inc.(b)......................... 15,287
5,739 Johnson & Johnson....................... 361,197
282 Manor Care, Inc. ....................... 9,941
5,223 Merck & Co., Inc. ...................... 493,899
5,541 Pfizer, Inc. ........................... 403,107
2,200 Pharmacia & UpJohn, Inc. ............... 74,250
3,168 Schering-Plough Corp. .................. 198,594
802 United Healthcare Corp.................. 41,754
1,158 Warner-Lambert Co....................... 161,975
----------------
2,924,914
----------------
Hotels & Lodging (0.4%):
668 HFS, Inc.(b)............................ 45,842
1,059 Hilton Hotels Corp. .................... 32,961
548 Marriott International, Inc............. 39,696
753 Mirage Resorts(b)....................... 17,884
----------------
136,383
----------------
Household--Major Appliances (0.1%):
409 Maytag.................................. 13,216
304 Whirlpool Corp.......................... 16,663
----------------
29,879
----------------
Instrumentation (0.3%):
193 EG&G, Inc. ............................. 3,788
543 Honeywell, Inc. ........................ 35,567
365 Johnson Controls, Inc................... 16,722
177 Millipore Corp. ........................ 6,859
481 Parker-Hannifin Corp.................... 21,405
178 Perkin-Elmer Corp. ..................... 12,382
----------------
96,723
----------------
Insurance (3.9%):
641 Aetna Services, Inc. ................... 48,315
</TABLE>
Continued
-69-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------- --------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Insurance, continued:
1,891 Allstate Corp. ......................... $ 162,390
1,060 American General Corp. ................. 57,108
3,027 American International Group, Inc. ..... 305,158
713 Aon Corp................................ 37,744
736 Chubb Corp. ............................ 52,210
307 Cigna Corp.............................. 51,346
794 Conseco Inc............................. 36,971
336 General Re Corp. ....................... 66,696
505 Hartford Financial Services Group....... 42,294
289 Jefferson-Pilot Corp. .................. 22,054
426 Lincoln National Corp. ................. 30,406
495 Loews Corp.............................. 52,532
718 March & McLennan Cos., Inc. ............ 53,446
309 Progressive Corp. ...................... 31,518
590 SAFECO Corp............................. 28,836
364 Saint Paul Companies, Inc............... 29,120
885 SunAmerica Inc.......................... 35,843
599 Torchmark Corp.......................... 24,447
271 Transamerica Corp. ..................... 29,420
598 UNUM Corp. ............................. 28,368
472 USF&G Corp. ............................ 9,529
----------------
1,235,751
----------------
Iron/Steel (0.2%):
737 Alleghany Teledyne, Inc................. 18,978
460 Armco, Inc.(b).......................... 2,444
481 Bethlehem Steel Corp.(b)................ 4,930
200 Inland Steel............................ 3,825
383 Nucor Corp. ............................ 19,150
371 USX-US Steel Group, Inc................. 11,617
419 Worthington Industries.................. 7,594
----------------
68,538
----------------
Machinery & Equipment (0.8%):
325 Case Corp............................... 20,150
1,639 Caterpillar, Inc........................ 78,570
163 Cincinnati Milacron, Inc. .............. 4,819
1,070 Deere & Co.............................. 58,649
459 Dover Corp.............................. 30,782
201 Harnischfeger Industries, Inc........... 7,676
224 McDermott International, Inc. .......... 7,056
33 Nacco Industries, Inc................... 3,593
249 Snap-on, Inc. .......................... 10,940
388 Stanley Works........................... 17,096
635 Thermo Electron(b)...................... 23,376
----------------
262,707
----------------
Manufacturing (0.5%):
118 Briggs & Stratton....................... 6,033
145 Fleetwood Enterprises................... 5,175
674 Newell Co............................... 27,508
539 Pall Corp. ............................. 11,386
254 Tupperware Corp......................... 6,064
2,312 Tyco International Ltd.................. 90,746
219 Western Atlas Inc.(b)................... 15,234
----------------
162,146
----------------
Medical Equipment & Supplies (1.0%):
267 Allergan, Inc. ......................... 9,045
370 Alza Corp.(b)........................... 9,874
233 Bard (C.R.), Inc........................ 6,975
1,190 Baxter International, Inc............... 60,244
527 Becton Dickinson & Co................... 27,173
467 Biomet, Inc............................. 11,150
817 Boston Scientific Corp.(b).............. 36,918
631 Guidant Corp. .......................... 40,542
302 Mallinckrodt, Inc. ..................... 11,174
2,035 Medtronic, Inc.......................... 97,171
381 St. Jude Medical, Inc. ................. 11,287
311 US Surgical Corp. ...................... 8,203
----------------
329,756
----------------
Medical Services (0.6%):
1,130 Amgen, Inc.(b).......................... 57,771
456 Beverly Enterprises, Inc.(b)............ 7,752
2,817 Columbia/HCA Healthcare Corp............ 83,102
96 Shared Medical Systems Corp............. 6,144
1,280 Tenet Healthcare Corp.(b)............... 40,560
----------------
195,329
----------------
Metals & Mining (0.5%):
974 Alcan Aluminum Ltd...................... 26,237
</TABLE>
Continued
-70-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------- --------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Metals & Mining, continued:
733 Aluminum Co. of America................. $ 49,294
175 Asarco, Inc............................. 4,353
406 Cyprus Amax Minerals Co................. 7,435
839 Freeport McMoRan........................ 17,567
712 Inco Ltd................................ 13,573
265 Phelps Dodge Corp. ..................... 17,556
322 Reynolds Metals......................... 18,334
----------------
154,349
----------------
Office Equipment & Supplies (0.6%):
361 Deluxe Corp. ........................... 12,748
575 IKON Office Solutions Inc............... 17,502
126 John H. Harland Co. .................... 2,607
383 Moore Corp. Ltd. ....................... 5,960
606 Pitney Bowes, Inc. ..................... 50,942
1,376 Xerox Corp.............................. 106,898
----------------
196,657
----------------
Oil & Gas Equipment/Services (0.4%):
719 Baker Hughes, Inc. ..................... 30,108
743 Dresser Industries, Inc................. 27,770
1,072 Halliburton Co.......................... 57,821
----------------
115,699
----------------
Oil & Gas Exploration, Production & Services (2.6%):
243 Anadarko Petroleum Corp. ............... 15,795
392 Apache Corp............................. 14,406
748 Burlington Resources.................... 33,286
455 Coastal Corp............................ 26,646
198 Kerr-McGee Corp. ....................... 13,130
453 Oryx Energy Co.(b)...................... 12,231
374 Rowan Cos., Inc.(b)..................... 12,716
9,231 Royal Dutch Petroleum-NY Shares......... 486,357
2,137 Schlumberger Ltd. ...................... 175,902
352 Sonat, Inc.............................. 15,334
1,070 Union Pacific Resources................. 26,616
----------------
832,419
----------------
Oil Companies - Integrated (5.8%):
380 Amerada Hess Corp. ..................... 21,280
2,131 Amoco Corp. ............................ 191,790
328 Ashland, Inc. .......................... $ 15,314
1,366 Atlantic Richfield Co................... 111,329
2,815 Chevron Corp............................ 225,727
1,339 Enron Corp.............................. 51,886
10,643 Exxon Corp. ............................ 649,222
102 Helmerich & Payne, Inc.................. 7,758
3,393 Mobil Corp. ............................ 244,083
1,443 Occidental Petroleum Corp. ............. 42,839
190 Pennzoil Co............................. 12,659
1,125 Phillips Petroleum Co................... 54,492
298 Sun Co., Inc. .......................... 12,050
2,285 Texaco, Inc. ........................... 129,103
1,048 Unocal Corp............................. 41,724
1,224 USX-Marathon Group...................... 41,922
----------------
1,853,178
----------------
Paper & Related Products (1.3%):
248 Boise Cascade Corp. .................... 8,355
415 Champion International Corp. ........... 22,228
802 Fort James Corp. ....................... 31,378
398 Georgia Pacific Corp.................... 33,979
1,326 International Paper Co.................. 62,902
2,408 Kimberly-Clark Corp. ................... 125,367
469 Louisiana-Pacific Corp. ................ 9,468
213 Mead Corp. ............................. 13,752
118 Potlatch Corp. ......................... 5,738
251 Temple-Inland, Inc. .................... 14,338
284 Union Camp Corp. ....................... 17,058
441 Westvaco Corp. ......................... 14,388
835 Weyerhaeuser Co. ....................... 44,098
477 Williamette Industries, Inc. ........... 16,755
----------------
419,804
----------------
Photography (0.3%):
1,386 Eastman Kodak........................... 84,026
186 Polaroid Corp........................... 7,905
----------------
91,931
----------------
Precious Metals (0.2%):
1,584 Barrick Gold Corp....................... 26,235
967 Battle Mountain Gold Co. ............... 4,895
594 Echo Bay Mines Ltd...................... 1,374
</TABLE>
Continued
-71-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------- --------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Precious Metals, continued:
624 Homestake Mining Co. ................... $ 6,552
661 Newmont Mining Corp..................... 19,871
1,053 Placer Dome, Inc. ...................... 12,899
----------------
71,826
----------------
Printing & Publishing (0.8%):
331 American Greetings Class A.............. 12,164
395 Dow Jones & Co., Inc. .................. 19,972
1,202 Gannett Co., Inc........................ 69,791
383 Knight-Ridder, Inc...................... 19,198
431 McGraw-Hill Cos., Inc................... 29,497
395 New York Times Co....................... 23,453
616 R.R. Donnelley Co. ..................... 21,714
407 Times Mirror Co. ....................... 24,166
528 Tribune Co. ............................ 29,766
----------------
249,721
----------------
Restaurants (0.6%):
653 Darden Restaurants, Inc. ............... 7,754
2,975 McDonald's Corp......................... 144,288
654 Tricon Global Restaurants, Inc.(b)...... 22,113
553 Wendy's International, Inc. ............ 11,613
----------------
185,768
----------------
Retail General Merchandise (0.1%):
899 Federated Department Stores(b).......... 40,961
-----------------
Retail Stores (4.4%):
1,050 Albertson's, Inc........................ 46,594
1,165 American Stores Co...................... 23,082
639 AutoZone, Inc.(b)....................... 19,170
455 Charming Shoppes(b)..................... 2,232
425 Circuit City Stores, Inc................ 13,945
732 CVS Corp................................ 48,587
961 Dayton Hudson Corp...................... 63,846
464 Dillard Department Stores............... 16,965
245 Giant Food, Inc. ....................... 8,269
156 Great Atlantic & Pacific Tea Co......... 4,817
290 Harcourt General, Inc................... 15,878
3,155 Home Depot, Inc......................... 176,483
1,059 J.C. Penney, Inc........................ 68,041
2,103 KMart Corp.(b).......................... 26,419
1,080 Kroger Co.(b)........................... 37,193
1,157 Limited, Inc. .......................... 27,840
159 Longs Drug Stores, Inc.................. 4,651
732 Lowe's Cos.............................. 33,626
1,025 May Department Stores Co................ 55,094
150 Mercantile Stores Co., Inc. ............ 9,694
328 Nordstrom, Inc.......................... 19,352
272 Pep Boys-Manny Moe & Jack............... 6,834
526 Rite-Aid Corp. ......................... 34,585
1,699 Sears, Roebuck & Co. ................... 77,835
684 TJX Cos., Inc. ......................... 23,598
1,211 Toys 'R' Us, Inc.(b).................... 41,325
9,743 Wal-Mart Stores, Inc. .................. 389,110
2,135 Walgreen Co. ........................... 68,720
638 Winn-Dixie Stores, Inc. ................ 25,799
572 Woolworth Corp.(b)...................... 12,370
----------------
1,401,954
----------------
Semiconductors (2.5%):
608 Advanced Micro Devices(b)............... 13,262
1,553 Applied Materials, Inc.(b).............. 51,249
7,027 Intel Corp. ............................ 545,470
599 LSI Logic Corp.(b)...................... 13,927
931 Micron Technology, Inc. (b)............. 23,159
620 National Semiconductor Corp.(b)......... 20,538
894 Rockwell International Corp. ........... 43,583
1,606 Texas Instruments, Inc. ................ 79,096
----------------
790,284
----------------
Technology (0.5%):
195 Autodesk, Inc........................... 7,495
2,571 Motorola, Inc........................... 161,652
----------------
169,147
----------------
Telecommunications (3.3%):
2,173 AirTouch Communication, Inc.(b)......... 85,290
371 Andrew Corp.(b)......................... 9,832
931 Bay Networks, Inc.(b)................... 27,988
415 Clear Channel Communications, Inc.(b)... 28,116
1,483 Comcast Corp. .......................... 41,524
504 DSC Communications Corp.(b)............. 11,372
694 Frontier Corp. ......................... 17,003
</TABLE>
Continued
-72-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------- --------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Telecommunications, continued:
2,781 Lucent Technologies, Inc................ $ 222,828
2,972 MCI Communications...................... 130,582
634 NextLevel Systems, Inc.(b).............. 8,401
1,105 Northern Telecom Ltd.................... 99,243
341 Scientific-Atlanta, Inc................. 6,820
2,203 Tele-Communications - TCI Class A(b).... 50,462
757 Tellabs, Inc............................ 39,364
2,083 US West Communications Group............ 94,126
2,626 U.S. West Media Group(b)................ 69,753
3,935 WorldCom, Inc.(b)....................... 125,920
----------------
1,068,624
----------------
Textile Products (0.0%):
82 Springs Industries, Inc. ............... 4,136
-----------------
Tire & Rubber (0.3%):
219 B. F. Goodrich Co....................... 9,746
336 Cooper Tire & Rubber.................... 7,518
660 Goodyear Tire & Rubber Co. ............. 40,054
519 TRW, Inc. .............................. 29,453
----------------
86,771
----------------
Tobacco (1.6%):
720 Fortune Brands, Inc. ................... 26,055
10,428 Philip Morris Cos., Inc................. 453,617
785 UST, Inc. .............................. 24,237
----------------
503,909
----------------
Toys (0.2%):
528 Hasbro, Inc. ........................... 15,345
1,230 Mattel, Inc. ........................... 49,277
----------------
64,622
----------------
Transportation & Shipping (0.9%):
650 Burlington Northern Santa Fe............ 59,475
961 CSX Corp................................ 50,272
491 Federal Express Corp.(b)................ 32,928
1,432 Laidlaw, Inc............................ 18,616
1,608 Norfolk Southern Corp................... 51,155
256 Timken Co............................... 9,072
1,050 Union Pacific Corp...................... 63,000
----------------
284,518
----------------
Trucking & Leasing (0.1%):
160 Caliber System, Inc..................... 8,550
335 Ryder Systems, Inc...................... 12,165
----------------
20,715
----------------
Utilities - Gas & Electric (2.9%):
790 American Electric Power, Inc. .......... 39,154
628 Baltimore Gas & Electric................ 19,272
643 Carolina Power & Light.................. 24,032
911 Central & South West Corp. ............. 22,775
669 CINergy Corp. .......................... 23,833
225 Columbia Gas System, Inc. .............. 16,369
1,035 Consolidated Edison Co. of New York,
Inc. ................................ 39,071
412 Consolidated Natural Gas Co. ........... 24,875
786 Dominion Resources Inc/VA............... 30,556
618 DTE Energy Co. ......................... 20,278
1,567 Duke Power Co. ......................... 81,484
1,694 Edison International.................... 45,420
1,018 Entergy Corp. .......................... 26,468
1,000 FirstEnergy Corp.(b).................... 27,000
772 FPL Group, Inc. ........................ 43,184
517 GPU, Inc. .............................. 20,422
1,302 Houston Industries Inc. ................ 30,841
615 Niagara Mohawk Power Corp.(b)........... 5,881
203 NICOR, Inc. ............................ 8,171
282 Northern States Power Co. .............. 15,475
112 Oneok Inc. ............................. 4,186
347 Pacific Enterprises..................... 12,275
1,253 PacifiCorp. ............................ 29,211
934 Peco Energy Co. ........................ 22,708
143 People's Energy Corp. .................. 5,237
1,909 PG & E Corp. ........................... 53,929
688 PP & L Resources, Inc. ................. 16,168
974 Public Service Enterprise Group, Inc.... 28,429
2,951 Southern Co. ........................... 70,824
</TABLE>
Continued
-73-
<PAGE>
THE ARCH FUND, INC.
Equity Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------- --------------------------------------- -----------------
<S> <C>
Common Stocks, continued:
Utilities - Gas & Electric, continued:
1,030 Texas Utilities Co. .................... $ 41,200
956 Unicom Corp............................. 27,844
442 Union Electric Co. ..................... 17,597
666 Williams Cos., Inc. .................... 35,589
----------------
929,758
----------------
Utilities--Telephone (5.4%):
790 Alltel Corp. ........................... 31,403
2,369 Ameritech Corp. ........................ 182,561
6,992 AT&T Corp. ............................. 390,677
3,343 Bell Atlantic Corp. .................... 298,362
4,248 BellSouth Corp. ........................ 232,577
4,103 GTE Corp. .............................. 207,458
3,920 SBC Communications, Inc. ............... 285,424
1,833 Sprint Corp. ........................... 107,345
----------------
1,735,807
----------------
Wholesale Distribution (0.3%):
450 Cardinal Health, Inc. .................. $ 34,088
907 Costo Companies, Inc.(b)................ 40,191
746 Sysco Corp. ............................ 33,244
----------------
107,523
----------------
Total Common Stocks (Cost $26,942,890) 31,788,943
----------------
Total Investments (Cost--$27,126,890)(a) (99.9%) 31,972,943
Other Assets in
Excess of Liabilities (0.1%) 27,605
----------------
Total Net Assets (100.0%) $ 32,000,548
================
</TABLE>
- -------------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of $861.
Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
Unrealized appreciation .......................... $ 5,246,119
Unrealized depreciation .......................... (400,927)
--------------
Net unrealized appreciation ...................... $ 4,845,192
==============
(b) Represents non-income producing securities.
See notes to financial statements
-74-
<PAGE>
THE ARCH FUND, INC.
Growth Equity Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
----------- -------------------------------------- -----------
<S> <C>
Commercial Paper (4.7%):
Financial Services (4.7%):
$3,134,000 Household Finance, 5.76%, 12/1/97..... $ 3,134,000
------------
Total Commercial Paper
(Cost $3,134,000) 3,134,000
------------
Common Stocks (95.3%):
Banking (12.4%):
34,000 BankAmerica Corp. .................... 2,482,000
13,000 Citicorp.............................. 1,559,187
78,000 MBNA Corp. ........................... 2,071,875
25,000 NationsBank Corp. .................... 1,501,562
20,000 Norwest Corp. ........................ 748,750
------------
8,363,374
------------
Beverages (1.4%):
25,000 PepsiCo, Inc. ........................ 921,875
------------
Business Services (2.9%):
22,000 Automatic Data Processing, Inc. ...... 1,237,500
25,000 First Data Corp. ..................... 707,813
------------
1,945,313
------------
Capital Equipment (2.8%):
34,000 Illinois Tool Works, Inc. ............ 1,863,625
------------
Computer Software (6.1%):
30,000 Computer Associates
International, Inc. ............... 1,561,875
25,000 McAfee Associates, Inc.(b)............ 1,143,750
10,000 Microsoft, Inc.(b).................... 1,415,000
------------
4,120,625
------------
Computers (2.5%):
7,500 Compaq Computer Corp. ................ 468,281
10,000 EMC Corp.(b).......................... 303,125
15,000 Hewlett Packard Co. .................. 915,938
------------
1,687,344
------------
Containers & Packaging (2.6%):
14,000 Avery Dennison Corp. ................. 586,250
40,000 CUC International Inc.(b)............. 1,150,000
------------
1,736,250
------------
<CAPTION>
Security Market
Shares Description Value
- ------------------ ------------------------------------- ------------
<S> <C>
Common Stocks, continued:
Electrical & Electronic (3.5%):
32,000 General Electric Co. ............... $ 2,360,000
------------
Financial Services (12.4%):
22,000 Fannie Mae.......................... 1,161,875
46,000 Freddie Mac......................... 1,897,500
44,000 Green Tree Financial Corp. ......... 1,347,500
15,000 Household International, Inc. ...... 1,890,000
40,500 Travelers Group, Inc. .............. 2,045,250
------------
8,342,125
------------
Food Products & Services (2.4%):
25,000 Kroger Co.(b)....................... 860,938
12,000 Safeway, Inc.(b).................... 729,000
------------
1,589,938
------------
Health Care (16.5%):
25,000 Abbott Laboratories................. 1,625,000
15,000 Bristol-Myers Squibb Co. ........... 1,404,375
15,000 Eli Lilly & Co. .................... 945,938
14,000 Merck & Co., Inc. .................. 1,323,875
25,000 Pfizer, Inc. ....................... 1,818,750
42,000 Schering-Plough Corp. .............. 2,632,875
27,000 SmithKline Beecham PLC, ADR......... 1,339,875
------------
11,090,688
------------
Industrial Goods & Services (0.7%):
15,000 U.S. Filter Corp.(b)................ 470,625
------------
Insurance--Property & Casualty (1.4%):
9,000 American International Group, Inc. 907,312
------------
Medical Equipment & Supplies (2.8%):
40,000 Medtronic, Inc. .................... 1,910,000
------------
Medical Services (1.9%):
25,000 Amgen, Inc.(b)...................... 1,278,125
------------
Oil & Gas Equipment/Services (1.4%):
25,000 Dresser Industries, Inc. ........... 934,375
------------
</TABLE>
Continued
-75-
<PAGE>
THE ARCH FUND, INC.
Growth Equity Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------------ --------------------------------------- -----------
<S> <C>
Common Stocks, continued:
Oil Field Services (2.4%):
30,000 Halliburton Co. ...................... $ 1,618,125
------------
Restaurants (0.1%):
2,500 Tricon Global Restaurants, Inc.(b).... 84,531
------------
Retail Stores (5.1%):
7,000 Dayton Hudson Corp. .................. 465,063
12,500 Dollar General Corp. ................. 470,313
20,000 Home Depot Inc. ...................... 1,118,750
35,000 Wal-Mart Stores, Inc. ................ 1,397,812
------------
3,451,938
------------
Semiconductors (3.5%):
30,000 Intel Corp. .......................... 2,328,750
------------
Telecommunications (3.6%):
15,000 Lucent Technologies, Inc. ............ $ 1,201,875
24,000 Tellabs, Inc.(b)...................... 1,248,000
------------
2,449,875
------------
Tobacco (3.3%):
51,000 Philip Morris Cos., Inc. ............. 2,218,500
------------
Trucking & Leasing (1.6%):
40,000 Republic Industries, Inc.(b).......... 1,067,500
------------
Wholesale Distribution (2.0%):
30,000 Sysco Corp. .......................... 1,336,875
------------
Total Common Stocks (Cost $42,793,466) 64,077,688
------------
Total Investments
(Cost--$45,927,466)(a) (100.0%) 67,211,688
Other Assets in
Excess of Liabilities (0.0%) 41,321
------------
Total Net Assets (100.0%) $ 67,253,009
============
</TABLE>
- ----------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ........................... $ 21,712,618
Unrealized depreciation ........................... (428,396)
--------------
Net unrealized appreciation ....................... $ 21,284,222
==============
(b) Represents non-income producing securities.
ADR -- American Depositary Receipt
PLC -- Public Limited Company
See notes to financial statements
-76-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
Commercial Paper (9.2%):
Financial Services (4.4%):
$5,596,000 Household Finance, 5.76%, 12/1/97.. $ 5,596,000
Oil & Gas Exploration Production & Services (4.8%):
6,000,000 Petrofina, 5.57%, 12/4/97.......... 5,997,215
-----------------
Total Commercial Paper
(Cost $11,593,215) 11,593,215
-----------------
Common Stocks (57.1%):
Automotive (0.6%):
22,000 Echlin, Inc........................ 697,125
-----------------
Banking (4.4%):
31,376 Banc One Corp. .................... 1,611,942
13,000 Chase Manhattan Corp. ............. 1,412,125
15,600 Crestar Financial Corp. ........... 801,450
28,324 First Union Corp. ................. 1,380,795
7,200 Southtrust Corp. .................. 392,400
-----------------
5,598,712
-----------------
Beverages (1.1%):
36,200 PepsiCo, Inc. ..................... 1,334,875
-----------------
Building Products (1.1%):
49,650 Sherwin-Williams Co. .............. 1,418,128
-----------------
Business Services (2.1%):
28,856 Automatic Data Processing, Inc. ... 1,623,150
38,200 First Data Corp. .................. 1,081,538
-----------------
2,704,688
-----------------
Chemicals (3.9%):
15,700 Ecolab, Inc. ...................... 800,700
32,300 Millipore Corp. ................... 1,251,625
28,300 Praxair, Inc. ..................... 1,243,431
73,000 Solutia, Inc. ..................... 1,665,313
-----------------
4,961,069
-----------------
Computer Software (3.9%):
37,500 Computer Associates International,
Inc. ........................... 1,952,344
15,500 McAfee Associates, Inc.(b)......... 709,125
6,400 Microsoft Corp.(b)................. 905,600
40,500 Oracle Corp.(b)(c)................. 1,349,156
-----------------
4,916,225
-----------------
Consumer Goods & Services (1.0%):
45,000 CUC International, Inc.(b)......... 1,293,750
-----------------
Containers & Packaging (2.0%):
34,252 Avery Dennison Corp. .............. 1,434,303
23,700 Crown Cork & Seal Co., Inc. ....... 1,156,856
-----------------
2,591,159
-----------------
Cosmetics (0.6%):
15,000 Estee Lauder Cos., Class A......... 803,438
-----------------
Electrical Equipment (2.5%):
21,880 General Electric Co. .............. 1,613,650
16,300 Grainger (W.W.), Inc. ............. 1,526,088
-----------------
3,139,738
-----------------
Financial Services (2.6%):
41,200 Green Tree Financial Corp. ........ 1,261,750
10,889 SLM Holding Corp. ................. 1,406,042
28,000 United Cos. Financial Corp.(c) .... 607,250
-----------------
3,275,042
-----------------
Food & Related (1.1%):
62,000 IBP, Inc. ......................... 1,414,375
-----------------
Health Care (7.0%):
18,700 American Home Products Corp. ...... 1,306,663
16,940 Bristol Myers Squibb Co. .......... 1,586,008
19,200 Eli Lilly & Co. ................... 1,210,800
14,500 Merck & Co., Inc. ................. 1,371,156
29,644 Schering-Plough Corp. ............. 1,858,308
30,726 SmithKline Beecham PLC, ADR........ 1,524,778
-----------------
8,857,713
-----------------
Insurance (1.2%):
22,377 PMI Group, Inc.(c) ................ 1,454,505
-----------------
Manufacturing-Consumer Goods (1.1%):
35,000 Newell Co. ........................ 1,428,438
-----------------
Medical Equipment & Supplies (1.1%):
23,000 Allergan, Inc. .................... 779,125
20,400 Bard (C.R.), Inc. ................. 610,725
-----------------
1,389,850
-----------------
</TABLE>
Continued
-77-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- -------------- ------------------------------------ ------------------
<S> <C>
Common Stocks, continued:
Medical-Hospital Services (0.8%):
32,000 Columbia/HCA Healthcare Corp....... $ 944,000
-----------------
Metals & Mining (0.5%):
15,000 UCAR International, Inc.(b)........ 599,063
-----------------
Oil & Gas Exploration, Production & Services (3.4%):
40,000 Dresser Industries, Inc. .......... 1,495,000
62,900 Union Texas Petroleum Holdings,
Inc. ........................... 1,372,006
36,800 Vastar Resources................... 1,430,600
-----------------
4,297,606
-----------------
Paper & Related (0.6%):
11,000 Mead Corp. ........................ 710,188
-----------------
Restaurants (0.7%):
26,245 Tricon Global Restaurants, Inc.(b). 887,409
-----------------
Retail Stores (3.2%):
22,750 Consolidated Stores(b)............. 1,106,219
25,000 J.C. Penney, Inc. ................. 1,606,250
53,000 Pep Boys Manny Moe & Jack.......... 1,331,625
-----------------
4,044,094
-----------------
Retail Stores - Discount (1.3%):
40,193 Wal-Mart Stores, Inc. ............. 1,605,208
-----------------
Retail Stores - Grocery (0.7%):
18,250 Albertson's, Inc. ................. 809,844
-----------------
Technology (1.0%):
21,000 Motorola, Inc. .................... 1,320,375
-----------------
Telecommunications (1.8%):
34,500 Frontier Corp...................... 845,250
28,277 Tellabs, Inc.(b)................... 1,470,404
-----------------
2,315,654
-----------------
Tobacco (1.1%):
32,800 Philip Morris Cos., Inc. .......... 1,426,800
-----------------
Transportation & Shipping (1.1%):
15,300 Burlington Northern Santa Fe....... 1,399,950
-----------------
Trucking & Leasing (0.6%):
30,000 Republic Industries, Inc.(b)....... 781,875
-----------------
Utilities - Gas & Electric (1.7%):
39,500 Baltimore Gas & Electric........... 1,212,156
35,500 Central & South West Corp.......... 887,500
-----------------
2,099,656
-----------------
Wholesale Distribution (1.3%):
35,669 Sysco Corp. ....................... 1,589,500
-----------------
Total Common Stocks
(Cost $56,237,262) 72,110,052
-----------------
Corporate Bonds (0.9%):
Brokerage (0.9%):
$ 1,100,000 Merrill Lynch & Co., Inc., Series
B, 7.15%, 7/30/12............... 1,135,750
-----------------
Total Corporate Bonds
(Cost $1,100,000) 1,135,750
-----------------
Medium Term Notes (2.4%):
Automotive (0.8%):
1,000,000 General Motors Acceptance Corp.,
6.60%, 1/17/01.................. 1,010,000
-----------------
Finance (1.6%):
2,000,000 Federal Home Loan Bank, 5.35%,
2/7/01.......................... 1,964,340
-----------------
Total Medium Term Notes
(Cost $2,792,693) 2,974,340
-----------------
U.S. Government Agencies (11.1%):
Federal Home Loan Mortgage Corp.(2.0%):
23,896 9.50%, 2/1/98, Pool #N99054........ 24,688
130,230 7.00%, 3/1/98, Pool #M19097........ 132,020
254,059 6.00%, 4/1/98, Pool #M17829........ 252,550
68,951 6.50%, 4/1/98, Pool #M90173........ 69,317
326,947 6.50%, 4/1/98, Pool #M17834........ 328,683
</TABLE>
Continued
-78-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
U.S. Government Agencies, continued:
Federal Home Loan Mortgage Corp., continued
$ 80,725 7.00%, 4/1/98, Pool #690033........ $ 81,835
503,534 6.50%, 4/1/08, Pool #E00225........ 502,431
240,977 7.00%, 4/1/08, Pool #E46044........ 243,912
219,562 7.00%, 4/1/08, Pool #E46076........ 222,236
690,369 6.50%, 1/1/09, Pool #E55696........ 688,857
-----------------
2,546,529
-----------------
Government National Mortgage Assoc. (9.1%):
353,572 7.00%, 7/15/09, Pool #364246....... 358,763
440,739 6.50%, 10/20/10, Pool #2108....... 438,394
2,036,702 6.50%, 7/15/11, Pool #436630....... 2,041,142
11,273 8.50%, 6/15/17, Pool #217380....... 11,802
402,211 8.00%, 7/15/22, Pool #328848....... 416,289
251,241 7.00%, 11/15/22, Pool #337961...... 252,183
343,538 7.00%, 11/15/22, Pool #341287...... 344,826
589,513 7.50%, 3/15/23, Pool #331533....... 601,669
6,595 8.50%, 3/15/23, Pool #350083....... 6,904
321,524 7.50%, 4/15/23, Pool #343195....... 328,154
550,574 8.50%, 8/15/24, Pool #365113....... 576,380
503,527 8.50%, 9/15/24, Pool #353354....... 527,127
134,724 8.50%, 9/15/24, Pool #375056....... 141,039
131,322 8.50%, 1/15/25, Pool #400165....... 137,477
101,491 8.50%, 2/15/25, Pool #406286....... 106,248
370,618 8.50%, 3/15/25, Pool #384593....... 387,989
161,609 8.50%, 4/15/25, Pool #346295....... 169,184
334,575 8.00%, 8/15/25, Pool #389312....... 346,285
23,158 7.50%, 9/15/25, Pool #394485....... 23,635
23,630 7.50%, 10/15/25, Pool #384783...... 24,118
32,720 7.50%, 10/15/25, Pool #400096...... 33,395
872,088 7.50%, 10/15/25, Pool #409725...... 890,070
25,307 7.50%, 10/15/25, Pool #416975...... 25,829
894,659 7.50%, 10/15/25, Pool #246633...... 913,107
143,622 6.50%, 1/15/26, Pool #385123....... 141,421
668,803 6.50%, 1/15/26, Pool #417525....... 658,557
23,794 6.50%, 3/15/26, Pool #417294....... 23,430
484,899 6.50%, 4/15/26, Pool #408279....... 477,471
476,755 6.50%, 4/15/26, Pool #421399....... 469,451
468,372 6.50%, 4/15/26, Pool #422323....... 461,196
182,396 6.50%, 5/15/26, Pool #430798....... 179,602
-----------------
11,513,137
-----------------
Total U.S. Government Agencies
(Cost $12,393,821) 14,059,666
-----------------
U.S. Treasury Bonds (7.8%):
300,000 10.75%, 8/15/05(c)................. 388,779
2,750,000 12.00%, 8/15/13(c)................. 4,030,619
1,000,000 8.13%, 5/15/21..................... 1,246,420
1,000,000 8.13%, 8/15/21..................... 1,247,520
1,200,000 8.00%, 11/15/21(c)................. 1,478,064
</TABLE>
Continued
-79-
<PAGE>
THE ARCH FUND, INC.
Balanced Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
U.S. Treasury Bonds, continued:
$ 1,500,000 6.25%, 8/15/23(c).................. $ 1,526,865
-----------------
Total U.S. Treasury Bonds
(Cost $9,408,690) 9,918,267
-----------------
U.S. Treasury Notes (11.8%):
2,000,000 5.00%, 2/15/99(c).................. 1,983,020
3,000,000 5.88%, 2/28/99(c).................. 3,005,159
3,000,000 7.50%, 5/15/02(c).................. 3,192,749
3,000,000 6.38%, 8/15/02(c).................. 3,064,829
1,000,000 6.25%, 2/15/03(c).................. 1,017,610
2,500,000 7.00%, 7/15/06(c).................. 2,681,775
-----------------
Total U.S. Treasury Notes
(Cost $14,681,719) 14,945,142
-----------------
Investment Companies (0.4%):
500,000 Cash Assets Trust Money Market Fund 500,000
-----------------
Total Investment Companies
(Cost $500,000) 500,000
-----------------
Total Investments
(Cost--$108,707,400)(a) (100.7%) 127,236,430
Liabilities in Excess
of Other Assets (-0.7%) (837,053)
-----------------
Total Net Assets (100.0%) $ 126,399,377
=================
</TABLE>
- -------------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$47,426. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
Unrealized appreciation ...................... $ 19,994,961
Unrealized depreciation ...................... (1,513,357)
----------------
Net unrealized appreciation .................. $ 18,481,604
================
(b) Represents non-income producing securities.
(c) A portion of this security was loaned as of November 30, 1997.
ADR -- American Depositary Receipt
PLC -- Public Limited Company
See notes to financial statements
-80-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
Corporate Bonds (3.9%):
Automotive (2.1%):
$ 3,000,000 Ford Motor Credit Co., Global
Bond, 6.50%, 2/28/02(b)......... $ 3,018,750
1,000,000 General Motors Acceptance Corp.,
6.85%, 4/17/01, MTN............. 1,017,500
-----------------
4,036,250
-----------------
Banking (0.5%):
500,000 BankAmerica Corp., 7.50%,
10/15/02........................ 522,500
500,000 MBNA Corp., 6.88%, 10/1/99 ........ 505,625
-----------------
1,028,125
-----------------
Governments (Foreign) (0.3%):
500,000 Province of Ontario, Global Bond,
7.38%, 1/27/03.................. 525,000
-----------------
Industrial Goods & Services (0.8%):
500,000 Rockwell International, 6.75%,
9/15/02 ........................ 509,375
1,000,000 WMX Technologies, Inc., 7.13%,
6/15/01 ........................ 1,015,000
-----------------
1,524,375
-----------------
Telecommunications (0.2%):
500,000 United Telephone - Florida, 7.25%,
12/15/04........................ 523,125
-----------------
Total Corporate Bonds
(Cost $7,450,175) 7,636,875
-----------------
U.S. Government Agencies (42.0%):
Federal Home Loan Bank (0.3%):
500,000 6.32%, 2/1/00 ..................... 504,760
-----------------
Federal Home Loan Mortgage Corp. (10.1%):
1,164,487 6.50%, 2/1/98, Gold Pool #M90166 .. 1,170,670
721,074 6.50%, 3/1/98, Gold Pool #M17556 .. 724,903
46,566 8.50%, 5/1/01, Pool
#200034 ........................ 48,123
$ 101,908 8.50%, 11/1/01, Pool #200058 ...... $ 104,933
83,396 8.00%, 3/1/02, Pool
#215507 ........................ 85,507
18,733 8.00%, 3/1/02, Pool
#215727 ........................ 19,207
108,539 7.50%, 4/1/02, Pool
#200070 ........................ 110,336
44,390 8.00%, 5/1/02, Pool
#216910 ........................ 45,513
4,581 8.00%, 6/1/02, Pool
#217366 ........................ 4,697
245,519 8.00%, 6/1/02, Pool
#218101 ........................ 251,734
54,910 8.00%, 6/1/02, Pool
#218582 ........................ 56,300
13,175 8.00%, 6/1/02, Pool
#219187 ........................ 13,509
25,133 8.00%, 7/1/02, Pool
#217891 ........................ 25,769
150,950 8.00%, 7/1/02, Pool
#501214 ........................ 154,771
94,171 8.50%, 3/1/05, Pool
#380084 ........................ 96,966
8,400 8.50%, 4/1/05, Pool
#380085 ........................ 8,649
1,000,000 7.46%, 8/3/05, Callable 8/3/98 @
100............................. 1,004,610
52,328 8.50%, 9/1/05, Pool
#503592 ........................ 53,881
34,793 8.50%, 4/1/06, Gold Pool #E00025 .. 36,162
564,897 6.00%, 2/1/11, Gold Pool #E62600 .. 553,418
1,144,002 7.00%, 7/1/11, Gold Pool #E20252 .. 1,157,936
884,116 6.00%, 8/1/11, Gold Pool #E20268 .. 866,151
</TABLE>
Continued
-81-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
U.S. Government Agencies, continued:
Federal Home Loan Mortgage Corp., continued:
$ 947,453 6.50%, 1/1/12, Gold Pool #E00465 .. $ 945,378
2,656,386 6.00%, 2/1/12, Gold Pool #E00472 .. 2,602,408
486,990 6.50%, 6/1/12, Gold Pool #E67059 .. 485,923
2,095,793 8.00%, 1/1/23, Gold Pool #C00225 .. 2,166,525
516,658 8.00%, 1/1/23, Gold Pool #D29451 .. 534,095
3,645,729 6.00%, 12/1/25, Gold Pool #G00427 . 3,496,473
2,994,658 6.00%, 9/1/27, Gold Pool #C00565 .. 2,872,056
-----------------
19,696,603
-----------------
Federal National Mortgage Assoc. (16.1%):
1,209,099 6.00%, 11/1/00, Pool #190070 ...... 1,192,474
1,000,000 7.55%, 6/10/04, Callable 6/10/99
@ 100........................... 1,024,700
4,628,651 6.00%, 5/1/11, Pool
#345652 ........................ 4,530,292
4,351,691 7.00%, 7/1/11, Pool
#351021 ........................ 4,400,648
895,564 6.50%, 12/1/11, Pool #367178 ...... 892,761
3,757,106 6.50%, 12/1/11, Pool #367838 ...... 3,745,346
965,276 6.00%, 1/1/12, Pool #366788 ...... 944,764
730,455 6.50%, 7/1/12, Pool
#370716 ........................ 728,168
976,920 6.50%, 7/1/12, Pool
#393667 ........................ 973,862
982,354 6.50%, 8/1/12, Pool
#251165 ........................ 979,279
2,886,192 8.00%, 7/1/24, Pool
#190264 ........................ 2,986,286
2,896,595 6.00%, 2/1/26, Pool
#336918 ........................ 2,776,184
2,009,750 6.50%, 8/1/27, Pool
#395219 ........................ 1,971,424
2,005,887 6.50%, 8/1/27, Pool
#397372 ........................ 1,967,635
2,409,702 6.50%, 9/1/27, Pool
#399040 ........................ 2,363,749
-----------------
31,477,572
-----------------
Government National Mortgage Assoc. (15.5%):
14,636 9.50%, 2/15/01, Pool #149206 ...... 15,523
143,672 8.00%, 1/15/02, Pool #188653 ...... 149,105
32,930 8.00%, 3/15/02, Pool #199167 ...... 34,175
165,245 8.00%, 3/15/02, Pool #201708 ...... 171,493
148,315 8.00%, 4/15/02, Pool #180980 ...... 153,923
122,985 8.00%, 7/15/02, Pool #209779 ...... 127,635
82,482 9.50%, 10/15/02, Pool #232514 ..... 87,482
32,138 9.50%, 9/15/05, Pool #290435 ...... 34,086
97,881 9.50%, 1/15/06, Pool #298829 ...... 103,815
144,329 8.00%, 5/15/06, Pool #303851 ...... 149,786
66,398 9.50%, 7/15/07, Pool #331878 ...... 70,423
369,941 8.00%, 11/15/07, Pool #339329 ..... 383,928
374,237 8.00%, 12/15/07, Pool #338551 ..... 388,387
609,622 9.50%, 8/15/09, Pool #400219 ...... 646,577
188,778 9.50%, 9/15/09, Pool #377317 ...... 200,222
593,487 9.50%, 2/15/10, Pool #392932 ...... 629,465
</TABLE>
Continued
-82-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
U.S. Government Agencies, continued:
Government National Mortgage Assoc., continued:
$ 40,818 8.00%, 5/15/10, Pool #398424 ...... $ 42,361
161,215 6.50%, 8/15/10, Pool #387094 ...... 161,566
199,165 8.00%, 9/15/10, Pool #419798 ...... 206,695
231,745 8.00%, 11/15/10, Pool #405524 ..... 240,507
1,001,364 8.00%, 11/15/10, Pool #410294 ..... 1,039,226
311,845 8.00%, 11/15/10, Pool #414827 ..... 323,636
364,213 6.50%, 3/15/11, Pool #390472 ...... 365,007
115,629 6.50%, 3/15/11, Pool #408253 ...... 115,881
360,761 6.50%, 4/15/11, Pool #402546 ...... 361,548
106,793 6.50%, 4/15/11, Pool #418274 ...... 107,025
448,998 6.50%, 4/15/11, Pool #421831 ...... 449,977
565,202 6.50%, 5/15/11, Pool #408304 ...... 566,434
430,340 6.50%, 5/15/11, Pool #422733 ...... 431,278
76,321 6.50%, 5/15/11, Pool #430822 ...... 76,487
590,069 6.50%, 6/15/11, Pool #345631 ...... 591,356
109,917 6.50%, 6/15/11, Pool #421731 ...... 110,157
308,354 6.50%, 6/15/11, Pool #423833 ...... 309,026
738,858 6.50%, 6/15/11, Pool #430820 ...... 740,469
329,270 6.50%, 7/15/11, Pool #345749 ...... 329,988
391,068 6.50%, 8/15/11, Pool #426911 ...... 391,920
2,162,971 8.50%, 4/15/17, Pool #212112 ...... 2,264,350
1,412,449 8.00%, 4/15/22, Pool #320818 ...... 1,461,884
3,579,913 7.50%, 1/15/23, Pool #331839 ...... 3,653,731
2,036,644 8.00%, 1/15/23, Pool #331841 ...... 2,107,927
964,573 7.50%, 4/15/23, Pool #343195 ...... 984,463
1,304,269 9.00%, 3/15/25, Pool #404067 ...... 1,390,677
976,082 6.50%, 4/15/26, Pool #415721 ...... 961,129
999,008 6.50%, 4/15/26, Pool #422323 ...... 983,703
985,870 6.50%, 5/15/26, Pool #417388 ...... 970,767
4,834,836 6.50%, 6/15/26, Pool #423801 ...... 4,760,766
395,304 7.00%, 9/15/27, Pool
#455304 ........................ 396,787
-----------------
30,242,753
-----------------
Total U.S. Government Agencies
(Cost $81,055,171) 81,921,688
-----------------
U.S. Treasury Bonds (18.4%):
1,375,000 9.25%, 2/15/16(b).................. 1,846,996
3,000,000 7.50%, 11/15/16.................... 3,460,530
1,675,000 8.75%, 5/15/17(b).................. 2,171,939
2,865,000 8.88%, 8/15/17..................... 3,761,029
4,150,000 8.88%, 2/15/19(b).................. 5,491,114
2,183,000 8.75%, 8/15/20..................... 2,878,787
7,600,000 6.25%, 8/15/23(b).................. 7,736,116
1,500,000 6.50%, 11/15/26.................... 1,581,015
6,500,000 6.63%, 2/15/27(b).................. 6,971,120
-----------------
Total U.S. Treasury Bonds
(Cost $32,372,764) 35,898,646
-----------------
U.S. Treasury Notes (34.9%):
21,095,000 5.13%, 2/28/98(b).................. 21,074,117
</TABLE>
Continued
-83-
<PAGE>
THE ARCH FUND, INC.
Government & Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------------- ----------------------------------- -----------------
<S> <C>
U.S. Treasury Notes, continued:
$ 1,750,000 6.38%, 5/15/99.................... $ 1,764,490
11,800,000 6.00%, 10/15/99(b)................ 11,856,758
2,189,000 6.75%, 4/30/00.................... 2,236,020
2,338,000 6.38%, 5/15/00.................... 2,368,768
16,000,000 6.13%, 7/31/00(b)................. 16,128,960
250,000 8.00%, 5/15/01.................... 266,745
825,000 7.25%, 5/15/04(b)................. 885,860
1,125,000 6.25%, 2/15/07................... 1,152,517
9,720,000 6.63%, 5/15/07(b)................ 10,231,952
-----------------
Total U.S. Treasury Notes
(Cost $67,031,018) 67,966,187
-----------------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
-------------- ------------------------------------ ------------------
<S> <C>
Investment Company (0.2%):
375,976 Federated Money Market Trust....... $ 375,976
-----------------
Total Investment Company
(Cost $375,976) 375,976
-----------------
Total Investments
(Cost--$188,285,105)(a) (99.4%) 193,799,372
Other Assets in Excess of Liabilities (0.6%) 1,110,505
-----------------
Total Net Assets (100.0%) $ 194,909,877
=================
</TABLE>
- -------------
(a) Represents cost for federal income tax puposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation .................. $ 5,642,409
Unrealized depreciation .................. (128,142)
--------------
Net unrealized appreciation .............. $ 5,514,267
==============
(b) A portion of this security was loaned as of November 30, 1997.
MTN - Medium Term Note
See notes to financial statements
-84-
<PAGE>
THE ARCH FUND, INC.
U.S. Government Securities Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------- ------------------------------------ ------------
<S> <C>
U.S. Government Agencies (41.4%):
Federal Home Loan Mortgage Corp. (11.2%):
$ 378,796 6.50%, 2/1/98, Gold Pool
#M90166 .......................... $ 380,808
37,581 9.50%, 2/1/98, Gold Pool
#N99054 .......................... 38,826
513,771 6.00%, 5/1/98, Gold Pool
#M17833 .......................... 510,719
16,521 9.50%, 9/1/04, Pool #380053 ........ 17,419
500,000 7.46%, 8/3/05, Callable
8/3/98 @ 100 ..................... 502,305
261,342 8.50%, 3/1/06, Gold Pool
#E00022 .......................... 271,631
445,578 7.50%, 4/1/08, Gold Pool
#E45929 .......................... 456,299
484,197 6.00%, 2/1/11, Gold Pool
#E62600 .......................... 474,359
800,695 6.50%, 2/1/11, Gold Pool
#E00419 .......................... 798,941
759,724 7.00%, 7/1/11, Gold Pool
#E20252 .......................... 768,977
474,050 7.00%, 11/1/11, Gold Pool
E65619 ........................... 479,824
956,927 6.50%, 1/1/12, Gold Pool
#E00465 .......................... 954,832
1,457,477 6.00%, 2/1/12, Gold Pool
#E66284 .......................... 1,427,861
739,001 6.50%, 2/1/12, Gold Pool
#E66172 .......................... 737,383
829,277 6.50%, 2/1/12, Gold Pool
#E66272 .......................... 827,461
978,440 6.00%, 3/1/12, Gold Pool
#E66474 .......................... 958,558
------------
9,596,203
------------
Federal National Mortgage Assoc. (16.6%):
604,549 6.00%, 11/1/00, Pool
#190070 .......................... 596,237
926,128 6.50%, 5/1/11, Pool #335713 ........ 923,229
734,585 6.50%, 5/1/11, Pool #346276 ........ 732,286
1,835,672 6.50%, 7/1/11, Pool #250613 ........ 1,829,926
899,422 6.50%, 7/1/11, Pool #351761 ........ 896,607
354,834 7.00%, 11/1/11, Pool
#250738 .......................... 358,826
336,532 7.00%, 11/1/11, Pool
#349630 .......................... 340,318
241,667 7.00%, 11/1/11, Pool
#351122 .......................... 244,386
1,855,218 6.50%, 12/1/11, Pool
#250781 .......................... 1,849,410
958,854 6.50%, 12/1/11, Pool
#367868 .......................... 955,853
951,103 6.50%, 12/1/11, Pool
#368127 .......................... 948,126
1,443,096 8.00%, 7/1/24, Pool
#190264 .......................... 1,493,143
2,998,342 6.50%, 10/1/27, Pool
#400141 .......................... 2,941,162
------------
14,109,509
------------
Government National Mortgage Assoc. (13.6%):
239,069 8.00%, 1/15/07, Pool
#315126 .......................... 248,109
67,568 6.50%, 5/15/08, Pool
#340791 .......................... 67,715
299,821 9.00%, 7/15/09, Pool
#390782 .......................... 315,091
377,593 9.00%, 11/15/09, Pool
#359559 .......................... 396,824
808,608 8.00%, 10/15/10, Pool
#414750 .......................... 839,182
100,213 6.50%, 11/15/10, Pool
#414786 .......................... 100,431
365,675 6.50%, 2/15/11, Pool
#373569 .......................... 366,472
387,822 6.50%, 3/15/11, Pool
#344973 .......................... 388,667
396,851 6.50%, 3/15/11, Pool
#406466 .......................... 397,716
428,879 6.50%, 3/15/11, Pool
#408253 .......................... 429,814
656,421 6.50%, 3/15/11, Pool
#410935 .......................... 657,852
</TABLE>
Continued
-85-
<PAGE>
THE ARCH FUND, INC.
U.S. Government Securities Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ------------ ------------------------------------ --------------
<S> <C>
U.S. Government Agencies, continued:
Government National Mortgage Assoc., continued:
$ 57,195 6.50%, 3/15/11, Pool
#416179 .......................... $ 57,320
700,089 6.50%, 4/15/11, Pool
#416060 .......................... 701,616
406,596 6.50%, 4/15/11, Pool
#422652 .......................... 407,482
327,897 6.50%, 5/15/11, Pool
#408304 .......................... 328,612
57,511 6.50%, 5/15/11, Pool
#422814 .......................... 57,636
145,613 6.50%, 5/15/11, Pool
#433036 .......................... 145,931
258,829 6.50%, 6/15/11, Pool
#421731 .......................... 259,393
113,735 6.50%, 6/15/11, Pool
#432993 .......................... 113,983
382,223 6.50%, 7/15/11, Pool
#424521 .......................... 383,056
800,274 6.50%, 7/15/11, Pool
#433088 .......................... 802,019
159,389 8.50%, 5/15/17, Pool
#219152 .......................... 166,860
173,695 8.50%, 6/15/21, Pool
#307921 .......................... 181,836
1,097,652 7.50%, 12/15/22, Pool
#347332 .......................... 1,120,286
562,276 8.00%, 5/15/23, Pool
#352469 .......................... 581,956
256,179 9.50%, 1/15/25, Pool
#384421 .......................... 277,393
573,484 9.50%, 2/15/25, Pool
#365292 .......................... 620,974
10,310 9.50%, 2/15/25, Pool
#392967 .......................... 11,164
409,250 9.50%, 2/15/25, Pool
#401796 .......................... 443,140
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ------------ ----------------------------------- --------------
<S> <C>
U.S. Government Agencies, continued:
Government National Mortgage Assoc., continued:
$ 263,876 9.50%, 3/15/25, Pool
#407257 ......................... $ 285,728
181,763 9.50%, 4/15/25, Pool
#386741 ......................... 196,815
296,478 7.00%, 9/15/27, Pool
#455304 ......................... 297,590
--------------
11,648,663
--------------
Total U.S. Government Agencies
(Cost $34,598,876) 35,364,375
--------------
U.S. Treasury Notes (56.5%):
1,400,000 7.25%, 2/15/98...................... 1,404,648
16,100,000 5.13%, 2/28/98...................... 16,084,060
3,300,000 7.13%, 10/15/98(b).................. 3,339,368
3,600,000 7.00%, 4/15/99...................... 3,658,643
6,750,000 6.38%, 5/15/99(b)................... 6,805,889
6,650,000 7.75%, 11/30/99(b).................. 6,894,918
1,250,000 7.75%, 12/31/99..................... 1,297,838
2,650,000 6.13%, 7/31/00(b)................... 2,671,358
500,000 6.25%, 8/31/02(b)................... 508,125
350,000 7.25%, 5/15/04(b)................... 375,820
4,960,000 6.63%, 5/15/07(b)................... 5,221,242
--------------
Total U.S. Treasury Notes
(Cost $48,059,386) 48,261,909
--------------
Investment Companies (1.6%):
1,347,300 Federated Trust for U.S. Treasury
Obligations ..................... 1,347,300
--------------
Total Investment Companies
(Cost $1,347,300) 1,347,300
--------------
Total Investments (Cost--$84,305,561)(a) (99.5%) 84,973,584
Other Assets in Excess of Liabilities (0.5%) 475,053
==============
Total Net Assets (100.0%) $ 85,448,637
==============
</TABLE>
- -------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation ..................... $ 827,619
Unrealized depreciation ..................... (159,596)
============
Net unrealized appreciation ................. $ 668,023
============
</TABLE>
(b) A portion of this security was loaned as of November 30, 1997.
See notes to financial statements
-86-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- -------------- --------------------------------------- ----------------
<S> <C>
Municipal Bonds (95.3%):
Alabama (3.3%):
$1,000,000 Alabama State Public School & College
Authority, 4.40%, 12/1/00 ......... $ 1,011,250
----------------
Alaska (1.0%):
300,000 Anchorage, G.O., 5.40%, 8/1/98 (MBIA
Insured) .......................... 303,048
----------------
Colorado (3.7%):
390,000 Aurora-Colorado Springs, Water
Authority Revenue, 5.40%, 6/1/98 .. 393,292
720,000 El Paso County School District No.
020, G.O., 5.15%, 12/15/99 ........ 735,300
----------------
1,128,592
----------------
Hawaii (5.2%):
600,000 Hawaii State Highway Revenue, 4.80%,
7/1/03 ............................ 610,500
1,000,000 Hawaii State, Series CI, G.O., 4.10%,
11/1/01 ........................... 993,750
----------------
1,604,250
----------------
Illinois (8.6%):
500,000 Chicago Metropolitan Water
Reclamation District, G.O., 4.70%,
12/1/99 ........................... 507,500
500,000 Du Page County, Forest Preservation
District, G.O., 5.90%, 11/1/01 .... 529,375
400,000 Illinois State, G.O., 5.60%, 10/1/99 . 410,500
400,000 Illinois State, G.O., 5.25%, 4/1/01 .. 413,000
750,000 Illinois State Toll Highway Authority,
Toll Highway Priority Revenue,
Series A, 4.75%, 1/1/02 ........... 759,375
----------------
2,619,750
----------------
Indiana (1.7%):
500,000 Muncie School Building Corp., 4.95%,
1/15/02 (MBIA Insured) ............ 511,250
----------------
Iowa (1.4%):
425,000 Ottumwa Community School District,
G.O., 5.10%, 6/1/01, (FSA
Insured)........................... 439,875
----------------
Kentucky (1.2%):
380,000 Kenton County Water District No. 001,
Waterworks Revenue, Series B,
5.60%, 2/1/99, (FGIC Insured) ..... 386,650
----------------
Maine (2.7%):
800,000 Maine Municipal Bond Bank, Series A,
4.90%, 11/1/02 .................... 820,000
----------------
Maryland (3.0%):
400,000 Maryland State, Department of
Transportation, 2nd Issue, 4.10%,
12/15/00 .......................... 401,500
500,000 Washington Suburban Sanitation
District, Sewer Disposal Revenue,
G.O., 5.00%, 6/1/00 ............... 511,250
----------------
912,750
----------------
Michigan (9.0%):
400,000 Chelsea School District, G.O., 5.25%,
5/1/01 (FGIC Insured) ............ 414,000
1,000,000 Eaton Rapids Public Schools, G.O.,
5.38%, 5/1/07, Callable on 5/1/04
@ 101, (MBIA Insured) ............. 1,047,499
</TABLE>
Continued
-87-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- -------------- --------------------------------------- ----------------
<S> <C>
Municipal Bonds, continued:
Michigan, continued:
$ 800,000 Kent County, Building Authority,
G.O., 4.50%, 12/1/01 .............. $ 810,000
450,000 Oakland County Building Authority,
4.75%, 4/1/00, Callable on 4/1/99
@ 101.5 ........................... 456,750
----------------
2,728,249
----------------
Minnesota (2.9%):
365,000 Duluth, Series A, G.O., 4.65%, 2/1/02
(FSA Insured) ..................... 371,387
500,000 Minnesota State, G.O., 5.50%, 8/1/98.. 505,600
----------------
876,987
----------------
Mississippi (1.7%):
500,000 Mississippi State, Capital
Improvement, Series B, G.O.,
5.00%, 8/1/99 ..................... 508,750
----------------
Missouri (1.1%):
320,000 Jefferson County School District,
4.70%, 3/1/01, (MBIA Insured) ..... 326,000
----------------
Nebraska (2.5%):
750,000 Nebraska Investment Financial
Authority, Health Facilities
Revenue, Nebraska Methodist Health
System, 4.80%, 11/1/06,
(MBIA Insured) .................... 750,937
----------------
Nevada (4.7%):
900,000 Sparks, G.O., 4.80%, 3/1/04, Callable
on 3/1/01 @ 101 (AMBAC Insured) ... 914,625
500,000 Washoe County School District, G.O.,
5.30%, 8/1/00, (MBIA Insured) ..... 515,000
----------------
1,429,625
----------------
New Mexico (3.5%):
345,000 Albuquerque, Joint Water & Sewer
System Revenue, 4.40%, 7/1/00 ..... 348,019
700,000 New Mexico State, Capital Projects,
G.O., 4.60%, 8/1/00, Callable on
8/1/98 @ 101.5 .................... 710,500
----------------
1,058,519
----------------
New York (1.7%):
500,000 New York State Power Authority
Revenue and General Purpose
Revenue, Series Z, 5.85%, 1/1/00 .. 517,500
----------------
Pennsylvania (3.0%):
500,000 Bucks County, Series A, G.O., 5.60%,
3/1/98 ............................ 502,220
400,000 Delaware County, G.O., 4.35%,
10/1/00, (Municipal Government
Guaranteed)........................ 403,000
----------------
905,220
----------------
Rhode Island (3.0%):
900,000 Rhode Island State, Series A, G.O.,
4.60%, 11/1/03, Callable on
11/1/02 @ 102 ..................... 901,125
----------------
South Carolina (2.8%):
450,000 Charleston County School District,
Series B, G.O., 4.40%, 2/1/98,
(SCSDE Insured) ................... 450,468
400,000 Charleston County School District,
Series B, G.O., 4.50%, 2/1/00
(SCSDE Insured).................... 403,500
----------------
853,968
----------------
</TABLE>
Continued
-88-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- -------------- --------------------------------------- ----------------
<S> <C>
Municipal Bonds, continued:
South Dakota (2.1%):
$ 640,000 South Dakota State Building
Authority, Building Revenue,
Series A, 5.00%, 9/1/02
(FSA Insured) ....................... $ 659,200
----------------
Texas (7.1%):
450,000 Dallas Water Works & Sewer System
Revenue, 4.60%, 4/1/01 .............. 456,750
800,000 Houston, Series C, G.O., 5.50%, 4/1/01.. 833,000
400,000 San Antonio, G.O., 4.88%, 8/1/99........ 405,500
450,000 Tarrant County Water Control and
Improvement District No. 001,
Water Revenue, 5.60%, 3/1/00 ........ 464,625
----------------
2,159,875
----------------
Utah (5.4%):
675,000 Box Elder County School District,
G.O., 4.80%, 6/15/01 (AMBAC
Insured) ............................ 691,031
560,000 North Davis County Sewer District,
G.O., 5.70%, 3/1/02 (FGIC Insured)... 590,800
350,000 North Davis County Sewer District,
G.O., 5.70%, 3/1/03 (FGIC Insured)... 372,750
----------------
1,654,581
----------------
Vermont (0.9%):
270,000 Vermont Municipal Bond Bank,
Series 2, 4.50%, 12/1/01 (AMBAC
Insured)............................. 273,713
----------------
Virginia (2.7%):
400,000 Virginia Beach, G.O., 4.20%, 7/15/98.... 401,072
400,000 Virginia State Public Building
Authority, Building Revenue,
Series A, 5.70%, 8/1/00 ............. 416,000
----------------
817,072
----------------
Washington (7.0%):
500,000 Clark County Public Utilities
District, No. 001, Electric
Revenue, 4.60%, 1/1/01 (FGIC
Insured) ............................ 506,250
500,000 Grant County Public Utilities
District No. 002, Electric
Revenue, Series F, 4.80%, 1/1/04
(MBIA Insured) ...................... 508,125
600,000 Seattle Municipal Light & Power
Revenue, 4.80%, 5/1/02 .............. 612,750
250,000 Seattle Water System, Revenue, 4.70%,
12/1/00 ............................. 254,375
250,000 Washington State, Series R-92C, G.O.,
5.75%, 9/1/02 ....................... 265,938
----------------
2,147,438
----------------
Wisconsin (2.4%):
325,000 Brown County, Series A, G.O.,
4.80%, 11/1/01, Callable on
11/1/00 @ 100........................ 331,094
380,000 Milwaukee County, Series A, G.O.,
5.25%, 9/1/00 ....................... 390,925
----------------
722,019
----------------
Total Municipal Bonds (Cost $26,652,132)............ 29,028,193
----------------
</TABLE>
Continued
-89-
<PAGE>
THE ARCH FUND, INC.
Short-Intermediate Municipal Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- -------------- --------------------------------------- ----------------
<S> <C>
Investment Companies (3.7%):
1,000,000 Federated Tax-Free Fund............... $ 1,000,000
144,000 Nuveen Tax Exempt Fund................ 144,000
Total Investment Companies
(Cost $1,144,000) 1,144,000
----------------
Total Investments (Cost--$29,899,826)
(a) (99.0%) 30,172,193
Other Assets in Excess of Liabilities (1.0%) 297,954
================
Total Net Assets (100.0%) $ 30,470,147
================
</TABLE>
- -------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ...................... $ 293,681
Unrealized depreciation ...................... (21,314)
============
Net unrealized appreciation .................. $ 272,367
============
AMBAC AMBAC Indemnity Corp.
FGIC Financial Guaranty Insurance Corp.
FSA Financial Securities Assurance, Inc.
G.O. General Obligation
MBIA Municipal Bond Insurance Association
SCSDE South Carolina School District Enhancement
See notes to financial statements
-90-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------------------------------------------------------------------ ------------
<S> <C>
Municipal Bonds (94.8%):
Missouri (91.2%):
$ 300,000 Christian County Reorganized School District No. R-6, G.O., 7.05%, 3/1/11, Callable on 3/1/01 @
100 (AMBAC Insured) ............................................................................... $ 323,625
3,325,000 Clayton School District, G.O. 5.00%, 3/1/17, Callable on 3/1/07 @ 101 ............................... 3,291,750
1,255,000 Columbia, G.O., 5.50%, 10/1/03....................................................................... 1,338,144
1,000,000 Columbia, Water & Electrical Revenue, Series A, 6.13%, 10/1/12, Callable on 10/1/02 @ 102 ........... 1,060,000
750,000 Franklin County Reorganized School District, No. R-XI, G.O., 5.75%, 3/1/13, Callable on 3/1/03 @
100 (FGIC Insured) ................................................................................ 782,812
1,000,000 Hazelwood School District, G.O., 5.85%, 3/1/09, Callable on 3/1/04 @ 100 ............................ 1,051,250
1,000,000 Jefferson City School District, Series A, 6.70%, 3/1/11,............................................. 1,182,500
150,000 Kansas City Municipal Assistance Corp., Revenue, Series B-2, 7.15%, 4/15/04, Callable on
4/15/00 @102 (AMBAC Insured) ...................................................................... 163,313
2,230,000 Kansas City School District Building, Capital Improvement Project, 5.00%, 2/1/14, Callable on
2/1/04 @ 102 (FGIC Insured)........................................................................ 2,210,488
2,415,000 Kansas City School District Building, Capital Improvement Project, 5.15%, 2/1/08, Callable on
2/1/04 @ 102 (FGIC Insured) ....................................................................... 2,493,488
1,000,000 Kansas City School District Building, Elementary School Project, Series D, 5.00%, 2/1/14, Callable
on 2/1/04 @ 102 (FGIC Insured)..................................................................... 991,250
1,000,000 Kansas City School District Building, Series C, 5.38%, 7/1/05, Callable on 7/1/03 @ 101 (FGIC
Insured)........................................................................................... 1,050,000
1,000,000 Kansas City Sewer Revenue, 5.75%, 3/1/01 ............................................................ 1,048,750
1,000,000 Kansas City Sewer Revenue, 7.25%, 4/1/03, Prerefunded on 4/1/99 @ 100................................ 1,042,500
2,200,000 Kansas City Water Revenue, Series B, 5.00%, 12/1/16, Callable on 12/1/06 @ 101....................... 2,197,250
700,000 Lincoln County Industrial Development Authority, Industrial Development Revenue, Monsanto Co.
Project, 7.50%, 5/1/05, Callable on 11/1/98 @ 102 ................................................. 735,105
1,500,000 Mehlville School District No. 09, G.O., 6.00%, 2/15/13, Callable on 2/15/03 @ 102 (MBIA Insured) .... 1,642,500
1,000,000 Missouri, Series A, G.O., 5.13%, 8/1/09, Callable on 8/1/02 @ 100 ................................... 1,018,750
750,000 Missouri Southern State College Revenue, 5.25%, 12/1/12, Callable on 12/1/02 @ 100 (MBIA Insured) ... 783,750
1,500,000 Missouri State Board of Public Buildings, 6.40%, 12/1/09, Callable on 12/1/01 @ 100 ................. 1,601,250
200,000 Missouri State Environmental Improvement and Energy Resources Authority, Environmental
Improvement Revenue, Union Electric Company Project, Series A, 7.40%, 5/1/20, Callable on
5/1/00 @ 102 ...................................................................................... 217,250
100,000 Missouri State Environmental Improvement and Energy Resources Authority, Environmental
Improvement Revenue, Union Electric Company Project, Series A, 7.40%, 5/1/20, Callable on
5/1/00 @ 102 (AMBAC-TCRS Insured).................................................................. 108,375
350,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series A, 7.00%, 10/1/10, Callable on 10/1/00 @ 102....................................... 381,500
370,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series A, 7.00%, 10/1/10, Callable on 12/1/08 @ 100, Prerefunded on 10/1/00 @ 102......... 404,225
100,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series A, 7.13%, 12/1/10, Prerefunded on 12/1/00 @ 102 ................................... 110,125
</TABLE>
Continued
-91-
<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------------------------------------------------------------------ ------------
<S> <C>
Municipal Bonds, continued:
Missouri, continued:
$ 100,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series B, 7.12%, 12/1/10, Callable on 12/1/00 @ 102 ...................................... $ 110,125
1,000,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series D, 5.88%, 1/1/15, Callable on 1/1/06 @ 101 ........................................ 1,043,750
1,250,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series E, 5.63%, 7/1/16, Callable on 7/1/06 @ 101 ........................................ 1,298,437
1,000,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series A, 6.45%, 7/1/08, Callable on 7/1/02 @ 102 ........................................ 1,090,000
500,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series A, 6.55%, 7/1/14, Callable on 7/1/02 @ 102 ........................................ 541,875
1,100,000 Missouri State Environmental Improvement & Energy Resources Authority, Water Pollution Control
Revenue, Series A, 6.88%, 6/1/14, Callable on 12/1/01 @ 102 ....................................... 1,201,750
1,000,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, BJC Health
Systems, Series A, 6.75%, 5/15/12 ................................................................. 1,186,250
1,300,000 Missouri State Health & Educational Facilities Authority, Educational Facilities Revenue, St. Louis
University, 3.85%*, 12/1/05 (FGIC Insured)......................................................... 1,300,000
500,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, Barnes
Hospital, 7.13%, 12/15/12, Prerefunded 12/15/00 @ 102, Callable on 12/1/00 @ 102................... 551,250
2,500,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, Barnes-Jewish
Inc., Series A, 5.25%, 5/15/21, Callable on 5/15/03 @ 102 ......................................... 2,518,750
600,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, Bethesda Eye
Institute, 6.63%, 11/1/09, Callable on 11/1/01 @ 102 (LOC-Credit Local de France).................. 663,000
1,200,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, Children's
Mercy Hospital Projects, 5.63%, 5/15/12, Callable on 5/15/03 @ 101 (MBIA Insured).................. 1,234,500
1,000,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, Freeman
Hospital Project, Series A, 5.38%, 2/15/14, Callable on 2/15/04 @ 102 (FSA Insured)................ 1,016,250
2,000,000 Missouri State Health & Educational Facilities Authority, Health Facility Revenue, Series AA, 6.25%,
6/1/16, Callable on 6/1/02 @ 102 (MBIA Insured) ................................................... 2,145,000
750,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, Sisters of Mercy
Health System, Series A, 6.25%, 6/1/15, Callable on 6/1/02 @ 102 (MBIA Insured) ................... 804,375
2,000,000 Missouri State Health & Educational Facilities Authority, Health Facilities Revenue, St. Luke's
Health System, 5.10%, 11/15/13, Callable on 11/15/03 @ 102 (MBIA Insured) ......................... 1,995,000
800,000 Missouri State Health & Educational Facilities Authority, Revenue, St. Louis University, Series A,
7.75%, 6/1/07, Callable on 6/1/98 @ 102 (AMBAC Insured) ........................................... 823,456
1,000,000 Missouri State Higher Education Loan Authority, Student Loan Revenue, Series A, 5.75%, 2/15/02 ...... 1,045,000
500,000 Missouri State Housing Development Revenue, Series B, 7.00%, 9/1/10, Callable on 9/1/01
@ 102 (FHA Insured)................................................................................ 537,500
490,000 Missouri State Housing Development Revenue, Series C, 6.90%, 7/1/18, Callable on 1/1/02
@ 102.............................................................................................. 521,237
980,000 Missouri State Housing Development Revenue, 6.60%, 7/1/24, Callable on 1/1/03 @ 100 (FHA
Insured) .......................................................................................... 1,035,125
</TABLE>
Continued
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<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------------------------------------------------------------------ ------------
<S> <C>
Municipal Bonds, continued:
Missouri, continued:
$1,000,000 Missouri State Water Pollution Control Revenue, Series A, G.O., 5.75%, 8/1/12, Callable on 8/1/02
@ 100 ............................................................................................. $ 1,036,250
2,085,000 Missouri State Water Pollution Control Revenue, Series A, G.O., 5.75%, 8/1/18, Callable on 8/1/06
@ 100 ............................................................................................. 2,176,219
2,000,000 Missouri State, Fourth Street Building, Series A, G.O., 5.40%, 8/1/09, Callable on 8/1/06 @ 100 ..... 2,102,500
1,000,000 Missouri State, Third Street Building, Series A, G.O., 5.25%, 8/1/08, Callable on 8/1/02 @ 100 ...... 1,027,500
1,000,000 Missouri Western State College Revenue, 5.40%, 10/1/16, Callable on 10/1/03 @ 102 (MBIA Insured) .... 1,012,500
570,000 O'Fallon, G.O., 5.75%, 3/1/10, Callable on 3/1/01 @ 100 (MBIA Insured) .............................. 584,962
600,000 Phelps County Hospital Revenue, Phelps County Regional Medical Center, 8.20%, 3/1/05,
Prerefunded on 3/1/00 @ 102 ....................................................................... 663,750
1,000,000 Sikeston Electric Revenue, 5.00%, 6/1/22, Callable on 6/1/06 @ 101 (MBIA Insured) ................... 961,250
1,000,000 Sikeston Electric Revenue, 6.25%, 6/1/22, Prerefunded on 6/1/02 @ 102 (MBIA Insured)................. 1,093,750
500,000 Southeast Missouri Correctional Facilities Revenue, 5.75%, 10/15/08, Callable on 10/15/00 @ 102...... 518,750
500,000 Southeast Missouri Correctional Facilities Revenue, 5.75%, 10/15/16, Callable on 10/15/02 @ 100...... 513,750
2,000,000 Springfield School District No. R-12, Series A, G.O., 5.25%, 3/1/11, Callable on 3/1/03 @ 100
(MBIA Insured) .................................................................................... 2,025,000
400,000 Springfield School District No. R-12, Series A, G.O., 6.75%, 3/1/11, Callable on 3/1/01 @ 100
(FGIC Insured) .................................................................................... 431,000
2,000,000 Springfield Water Works Revenue, Series A, 5.60%, 5/1/23, Callable on 5/1/03 @ 102 .................. 2,037,500
500,000 St. Charles County Community College, G.O., 5.70%, 2/15/05, Callable on 2/15/01 @ 102 (AMBAC
Insured) .......................................................................................... 526,250
1,000,000 St. Charles County Community College, G.O., 6.00%, 2/15/09, Callable on 2/15/01 @ 102 (AMBAC
Insured) .......................................................................................... 1,057,500
500,000 St. Charles County Public Facilities Authority, Leasehold Revenue, 6.38%, 3/15/07, Callable on
3/15/02 @ 102 (FGIC Insured) ...................................................................... 543,750
750,000 St. Louis County, Pattonville R-3 School District, G.O., 6.25%, 2/1/10, Prerefunded on 2/1/02 @
100 (FGIC Insured) ................................................................................ 806,250
1,000,000 St. Louis County, Rockwood School District No. R-6, G.O., 5.00%, 2/1/04, Callable on 2/1/02 @ 101 ... 1,025,000
2,500,000 St. Louis County, Series B, G.O., 5.50%, 2/1/13, Callable on 2/1/03 @ 100 ........................... 2,543,750
800,000 St. Louis County Industrial Development Authority, Health Facility Revenue, Lutheran Health Care
Association, Series A, 7.38%, 2/1/14, Callable on 6/1/07 @ 100 .................................... 905,000
400,000 St. Louis Industrial Development Authority, Pollution Control Revenue, Anheuser-Busch Co.
Project, 6.65%, 5/1/16 ............................................................................ 472,000
500,000 St. Louis Water Revenue, 6.00%, 7/1/14, Callable on 7/1/04 @ 102 (FGIC Insured) ..................... 535,625
1,740,000 St. Peters, G.O., 5.80%, 1/1/09, Callable on 1/1/02 @ 102 ........................................... 1,827,000
1,065,000 St. Peters, G.O., 5.85%, 1/1/13, Callable on 1/1/02 @ 102 ........................................... 1,099,613
3,000,000 University Health Facilities Revenue, University of Missouri Health System, Series A, 5.60%,
11/1/26, Callable on 11/1/06 @ 102 (AMBAC Insured) ................................................ 3,090,000
</TABLE>
Continued
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<PAGE>
THE ARCH FUND, INC.
Missouri Tax-Exempt Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
- ---------- ------------------------------------------------------------------------------------------------------ ------------
<S> <C>
Municipal Bonds, continued:
Missouri, continued:
$1,400,000 University City Industrial Development Authority, Multifamily Housing Revenue, Series A, 5.95%,
12/20/25, Callable on 12/20/05 @ 102 .............................................................. $ 1,463,000
3,000,000 University of Missouri, University Revenue, 5.50%, 11/1/21, Callable on 11/1/07 @ 101 ............... 3,067,500
3,000,000 University of Missouri, University Revenue, 5.80%, 11/1/27, Callable on 11/1/07 @ 101 ............... 3,131,250
925,000 University of Missouri, University Revenue, Series A, 6.50%, 11/1/11, Prerefunded on 11/1/00 @
102 (AMBAC Insured) ............................................................................... 1,001,312
2,000,000 University of Missouri, University Revenue, 5.50%, 11/1/23, Callable on 11/1/03 @ 101 ............... 2,032,500
400,000 Webster Groves, G.O. 6.60%, 2/1/10 .................................................................. 468,000
------------
91,672,562
------------
Puerto Rico (3.6%):
500,000 Puerto Rico Commonwealth, 6.45%, 7/1/17, Callable on 7/1/04 @ 101.5 ................................. 551,250
1,000,000 Puerto Rico Commonwealth, Series A, G.O., 6.00%, 7/1/06, Callable on 7/1/02 @ 101.5 ................. 1,065,000
2,000,000 Puerto Rico Public Buildings Authority, Public Education and Health Facilities Revenue, Series M,
5.50%, 7/1/21, Callable on 7/1/03 @ 101.5 ......................................................... 2,002,500
------------
3,618,750
------------
Total Municipal Bonds (Cost--$90,990,701) 95,291,311
------------
Investment Companies (4.2%):
4,089,000 Federated Tax-Free Fund.............................................................................. 4,089,000
136,000 Nuveen Tax Exempt Fund............................................................................... 136,000
------------
Total Investment Companies (Cost--$4,225,000) 4,225,000
------------
Total Investments (Cost--$95,215,701)(a) (99.0%) 99,516,311
Other Assets in Excess of Liabilities (1.0%) 1,034,064
------------
Total Net Assets (100.0%) $100,550,375
============
</TABLE>
- ------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ................ $4,307,886
Unrealized depreciation ................ (7,276)
----------
Net unrealized appreciation ............ $4,300,610
==========
* Variable rate investments. The rate presented on the Schedule of Portfolio
Investments is the rate in effect at November 30, 1997. The date presented
reflects the next rate change date.
AMBAC AMBAC Indemnity Corp.
FGIC Financial Guaranty Insurance Corp.
FHA Federal Housing Administration
FSA Financial Securities Assurance, Inc.
G.O. General Obligation
MBIA Municipal Bond Insurance Association
TCRS Transferrable Custodial Receipts
See notes to financial statements
-94-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ------------ ---------------------------------------------------- -------------
<S> <C>
Municipal Bonds (101.1%):
Alabama (1.4%):
$2,000,000 Birmingham, Series A, G.O., 5.70%, 6/1/13,
Callable on 6/1/05 @ 102.......................... $ 2,097,500
3,000,000 Birmingham, Series A, G.O., 5.90%, 6/1/18,
Callable on 6/1/05 @ 102.......................... 3,116,250
-------------
5,213,750
-------------
Alaska (0.3%):
1,000,000 Alaska State, Housing Finance Corp., Series A,
5.70%, 12/1/11, Callable on 12/01/05 @ 102
(MBIA Insured).................................... 1,052,500
-------------
Arizona (0.6%):
1,000,000 Mohave County, Unified School District No. 1, Lake
Havasu, Series A, G.O., 5.90%, 7/1/15, Callable
on 7/1/06 @ 101 (FGIC Insured) ................... 1,066,250
1,000,000 Arizona State Transportation Board, Excise Tax
Revenue, Maricopa County Regulated Area, Series B,
5.75%, 7/1/05 (AMBAC Insured) .................... 1,081,250
-------------
2,147,500
-------------
California (6.2%):
1,000,000 California State, G.O., 6.00%, 9/1/09 .............. 1,106,250
9,000,000 Sacramento Municipal Utility District, Electric
Revenue, Series L, 5.10%, 7/1/13, Callable on
7/1/07 @ 102, (AMBAC Insured) .................... 8,966,250
7,000,000 Southern California Public Power Authority, Power
Project Revenue, Palo Verde, Series A, 5.00%,
7/1/15, Callable on 7/1/03 @ 102 (AMBAC-TCRS
Insured) ......................................... 6,860,000
6,000,000 University of California, College and University
Revenue, Series E, 5.13%, 9/1/13, Callable on
9/1/07 @ 101 (MBIA Insured) ...................... 6,000,000
-------------
22,932,500
-------------
Colorado (5.7%):
6,655,000 Adams County School District No. 012, G.O., 5.40%,
12/15/13, Callable on 12/15/07 @ 101 (FGIC
Insured) ......................................... 6,862,969
6,160,000 Colorado Springs, Utilities Revenue, System
Improvement, Series A, 5.25%, 11/15/22, Callable
on 11/15/07 @ 100 ................................ 6,136,900
8,000,000 Jefferson County School District No. R-001, G.O.,
5.00%, 12/15/12, Callable on 12/15/07 @ 101 ...... 8,010,000
-------------
21,009,869
-------------
</TABLE>
Continued
-95-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ------------ ---------------------------------------------------- -------------
<S> <C>
Municipal Bonds, continued:
Connecticut (3.6%):
$4,360,000 Connecticut State, Clean Water Foundation Revenue,
5.25%, 3/1/20, Callable on 3/1/08 @ 101........... $ 4,414,500
8,785,000 Connecticut State, Series A, G.O., 5.25%, 3/1/13,
Callable on 3/1/07 @ 101 ......................... 8,916,775
-------------
13,331,275
-------------
Florida (6.5%):
5,525,000 Florida State Department of Transportation, G.O.,
5.25%, 7/1/17, Callable on 7/1/06 @ 101 .......... 5,538,812
5,000,000 Florida State Department of Environmental
Preservation 2000, General Services Revenue,
Series A, 5.50%, 7/1/13, Callable on 7/1/06 @ 101
(MBIA Insured) ................................... 5,225,000
8,000,000 Palm Beach County, Solid Waste Authority Revenue,
Series B, 5.38%, 10/1/11, Callable on 10/1/06 @
101 (AMBAC Insured) .............................. 8,230,000
5,000,000 Palm Beach County, Park & Recreational Facilities
Revenue, 5.25%, 11/1/16, Callable on 11/1/06 @
102 (FSA Insured) ................................ 5,062,500
-------------
24,056,312
-------------
Georgia (0.3%):
1,000,000 Georgia State, Series B, G.O., 6.30%, 3/1/09 ....... 1,135,000
-------------
Hawaii (4.0%):
8,000,000 Hawaii State, Series CN, G.O., 5.50%, 3/1/14,
Callable on 3/1/07 @ 102 (FGIC Insured) .......... 8,220,000
5,815,000 Honolulu City & County, Series A, G.O., 6.00%,
1/1/09 ........................................... 6,360,156
-------------
14,580,156
-------------
Illinois (10.7%):
5,000,000 Chicago Metropolitan Water Reclamation District,
G.O., 5.25%, 12/1/14, Callable on 12/1/08 @ 102 .. 5,006,250
1,000,000 Chicago Metropolitan Water Reclamation District,
G.O., 5.40%, 12/1/06 ............................. 1,056,250
1,000,000 Chicago Metropolitan Water Reclamation District,
G.O., 5.50%, 12/1/08 ............................. 1,068,750
3,000,000 Chicago, G.O., 6.00%, 1/1/11, Callable on 7/1/05 @
102 (AMBAC Insured) .............................. 3,217,500
9,090,000 Cook County, Series A, G.O., 6.25%, 11/15/12 (MBIA
Insured) ......................................... 10,294,425
2,000,000 Cook County, G.O., 5.90%, 11/15/16, Callable on
11/15/06 @ 101 (FGIC Insured) .................... 2,112,500
1,000,000 Edwardsville, G.O., 6.00%, 2/1/17, Callable on
2/1/06 @ 101 (FSA Insured) ....................... 1,068,750
7,000,000 Illinois Health Facility Authority Revenue, Loyola
University Health System, Series A, 5.38%,
7/1/17, Callable on 7/1/07 @ 101 (MBIA Insured) .. 7,000,000
8,400,000 Illinois State, G.O., 5.25%, 2/1/13, Callable on
2/1/07 @ 101 (FGIC Insured) ...................... 8,473,500
-------------
39,297,925
-------------
Indiana (2.9%):
5,000,000 Hammond Multi-School Building Corp., First Mortgage
Revenue Bond, 5.85%, 1/15/20, Callable on 7/15/05
@ 102 (MBIA Insured) ............................. 5,462,500
</TABLE>
Continued
-96-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ------------ ---------------------------------------------------- -------------
<S> <C>
Municipal Bonds, continued:
Indiana, continued:
$3,500,000 Indiana Transportation Finance Authority, Highway
Revenue, Series A, 5.75%, 6/1/12 (AMBAC Insured).. $ 3,758,125
1,500,000 Whitko Middle School Building Corp., First Mortgage
Revenue Bond, 5.88%, 7/15/12, Callable on 1/15/07
@ 102 (FSA Insured)............................... 1,595,625
-------------
10,816,250
-------------
Iowa (1.6%)
5,700,000 Iowa Financial Authority, Solid Waste Disposal
Revenue, Cedar River Paper Co., 4.00%*, 2/1/32,
Callable on 12/1/07 @ 100 (AMT)(LOC - Swiss Bank). 5,700,000
-------------
Maryland (2.0%):
7,000,000 Maryland State and Local Facilities, 2nd Series,
G.O., 5.00%, 8/1/08, Callable on 8/1/07 @ 101..... 7,236,250
-------------
Massachusetts (5.2%):
5,795,000 Massachusetts Bay Transportation Authority, Series
A, 5.00%, 3/1/12, Callable on 3/1/07 @ 101 (FGIC
Insured) ......................................... 5,780,513
6,165,000 Massachusetts Bay Transportation Authority, Series
A, 5.13%, 3/1/17, Callable on 3/1/07 @ 101 (FGIC
Insured).......................................... 6,064,819
7,115,000 Massachusetts State Water Pollution Abatement Trust,
Series 3, 5.63%, 2/1/15, Callable on 2/1/07 @ 101. 7,452,963
-------------
19,298,295
-------------
Michigan (0.6%):
2,000,000 Redford Unified School District, G.O., 5.95%,
5/1/15, Callable on 5/1/06 @ 101 (FGIC Insured)... 2,125,000
-------------
Minnesota (3.3%):
1,000,000 Minneapolis Special School District No. 001, Series
A, 5.70%, 2/1/09, Callable on 2/1/06 @ 100 (MBIA
Insured) ......................................... 1,065,000
5,000,000 Minnesota State, G.O., 4.90%, 8/1/14, Callable on
8/1/07 @ 100 ..................................... 4,918,750
6,000,000 Monticello Independent School District No. 882,
G.O., 5.40%, 2/1/15, Callable on 2/1/06 @ 100..... 6,120,000
-------------
12,103,750
-------------
Mississippi (1.9%):
6,835,000 Mississippi State, Series A, G.O., 5.13%, 7/1/14,
Callable on 7/1/07 @ 100 ......................... 6,920,438
-------------
Nebraska (0.6%):
1,000,000 Omaha Public Power District, Electric Revenue,
Series B, 6.00%, 2/1/07 .......................... 1,105,000
1,000,000 Nebraska Public Power District Revenue, Power Supply
Systems, Series A, 5.50%, 1/1/13 Callable on
1/1/05 @ 101 (MBIA Insured)....................... 1,025,000
-------------
2,130,000
-------------
</TABLE>
Continued
-97-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ------------ ---------------------------------------------------- -------------
<S> <C>
Municipal Bonds, continued:
Nevada (2.8%):
$5,000,000 Clark County School District, Series B, G.O., 5.50%,
6/15/11, Callable on 6/15/07 @ 101 (FGIC Insured). $ 5,200,000
5,000,000 Nevada State, Series A, G.O., 5.13%, 9/1/11,
Callable on 3/1/07 @ 101 ......................... 5,062,500
-------------
10,262,500
-------------
New Jersey (3.8%):
5,000,000 Camden County, Municipal Utilities Authority Sewer
Revenue, Series C, 5.10%, 7/15/12, Callable on
7/15/08 @ 101 (FGIC Insured) ..................... 5,006,250
8,000,000 New Jersey State, Series E, G.O., 6.00%, 7/15/09.... 8,900,000
-------------
13,906,250
-------------
New York (1.4%):
5,000,000 New York State Thruway Authority, Series A, 5.25%,
4/1/14, Callable on 4/1/07 @ 102 (AMBAC Insured).. 5,043,750
-------------
North Carolina (2.2%):
8,000,000 North Carolina State, Series A, G.O., 5.20%, 3/1/13,
Callable on 3/1/07 @ 102 ......................... 8,190,000
-------------
North Dakota (1.4%):
5,250,000 Fargo Water Revenue, 5.13%, 1/1/17, Callable on
1/1/08 @ 100 (MBIA Insured) ...................... 5,190,937
-------------
Oregon (1.8%):
6,110,000 Washington County, Unified Sewer Agency, Sewer
Revenue, Series 1, 5.75%, 10/1/10 (FGIC Insured).. 6,682,812
-------------
Pennsylvania (3.8%):
1,500,000 Burrell School District, G.O., 5.65%, 11/15/16,
Callable on 5/15/06 @ 100 (FGIC Insured).......... 1,554,375
9,000,000 Pennsylvania State, G.O., 5.13%, 9/15/11, Callable
on 3/15/07 @ 101.5 (AMBAC Insured)................ 9,135,000
2,000,000 Pennsylvania State Higher Education Facilities
Authority, Health Services Revenue, Presbyterian
Medial Center, Series B, 5.88%, 1/1/15, Callable
on 1/1/06 @ 101 .................................. 2,100,000
1,000,000 Pennsylvania State Higher Education Facilities
Authority, Health Services Revenue, University of
Pennsylvania, Series B, 5.88%, 1/1/15, Callable
on 1/1/06 @ 101 .................................. 1,050,000
-------------
13,839,375
-------------
Rhode Island (1.4%):
5,055,000 Rhode Island State, G.O., Series A, 5.13%, 8/1/12,
Callable on 8/1/07 @ 101 (MBIA Insured)........... 5,092,913
-------------
Texas (12.4%):
3,000,000 Austin Independent School District, G.O., 5.75%,
8/1/15, Callable on 8/1/06 @ 100 (PSF Guaranteed). 3,116,250
8,000,000 Harris County Texas Health Facilities Development
Corp., Hospital Revenue Memorial Hospital Systems,
Series A, 5.50%, 6/1/17, Callable on 6/1/07 @ 102
(MBIA Insured).................................... 8,120,000
</TABLE>
Continued
-98-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ------------ ---------------------------------------------------- -------------
<S> <C>
Municipal Bonds, continued:
Texas, continued:
$ 900,000 Harris County Texas, Industrial Development Corp.,
Pollution Control Revenue, 3.80%, 3/1/24, Callable
on 12/1/07 @ 100 ................................. $ 900,000
1,000,000 Royse City Independent School District, G.O., 5.50%,
2/15/15, Callable on 2/15/07 @ 100 (PSF
Guaranteed) ...................................... 1,023,750
5,000,000 San Antonio, Series A, G.O., 5.00%, 8/1/11, Callable
on 8/1/06 @ 100 .................................. 4,981,250
6,000,000 San Antonio Independent School District, G.O.,
5.13%, 8/15/14, Callable on 8/15/08 @ 100 (PSF
Guaranteed) ...................................... 5,977,500
5,000,000 Texas A&M University, 5.38%, 5/15/13, Callable on
5/15/06 @ 100 .................................... 5,112,500
6,750,000 Texas State, G.O., 5.40%, 8/1/21, Callable on 8/1/06
@ 100 ............................................ 6,800,625
7,500,000 University of Texas, Series B, 5.10%, 8/15/13,
Callable on 8/15/06 @ 102 ........................ 7,528,125
2,000,000 Texas Water Development Board Revenue, Series A,
5.75%, 7/15/15, Callable on 7/15/06 @ 100 ........ 2,090,000
-------------
45,650,000
-------------
Utah (1.7%):
6,200,000 Utah State, Series F, G.O., 5.00%, 7/1/09, Callable
on 7/1/07 @ 100................................... 6,316,250
-------------
Virginia (1.3%):
4,920,000 Virginia State Transportation Board, Transportation
Contract Revenue, U.S. Route 58 Corridor, Series
B, 5.13%, 5/15/12, Callable on 5/15/06 @ 101 ..... 4,944,600
-------------
Washington (7.5%):
1,000,000 Grant County Public Utility District No. 002, Series
F, 5.70%, 1/1/15, Callable 1/1/06 @ 101 (MBIA
Insured) ......................................... 1,027,500
4,050,000 King County School District No. 415, G.O., 5.35%,
12/1/16, Callable on 12/1/07 @ 100, (MBIA
Insured).......................................... 4,085,437
5,000,000 King County, Series F, G.O., 5.13%, 12/1/14,
Callable on 12/1/07 @ 100 ........................ 4,975,000
2,000,000 King County School District No. 415, G.O., 5.88%,
6/1/16, Callable on 6/1/06 @ 100 (FSA Insured) ... 2,085,000
3,000,000 Spokane Regulated Solid Waste Management System
Revenue, 5.50%, 12/1/10, Callable on 12/1/05 @ 102
(AMBAC Insured) .................................. 3,127,500
8,000,000 Washington State Motor Vehicle Fuel Tax, Series D,
G.O., 5.38%, 1/1/22, Callable on 1/1/07 @ 100
(FGIC Insured) ................................... 8,050,000
4,190,000 Washington State, Series C, G.O., 5.50%, 1/1/17,
Callable on 1/1/07 @ 100 ......................... 4,289,512
-------------
27,639,949
-------------
West Virginia (2.2%):
7,940,000 West Virginia School Building, Authority Revenue,
Capital Improvement Revenue, 5.40%, 7/1/10,
Callable on 7/1/07 @ 102 (AMBAC Insured) ......... 8,247,675
-------------
Total Municipal Bonds (Cost $354,599,799) 372,093,781
-------------
</TABLE>
Continued
-99-
<PAGE>
THE ARCH FUND, INC.
National Municipal Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------ ---------------------------------------------------- -------------
<S> <C>
Investment Companies (0.7%):
2,266,000 Federated Tax-Free Fund............................. $ 2,266,000
109,000 Nuveen Tax-Exempt Fund.............................. 109,000
-------------
Total Investment Companies (Cost $2,375,000) 2,375,000
-------------
Total Investments (Cost--$362,674,799)(a) (101.8%) 374,468,781
Liabilities in Excess of Other Assets (-1.8%) (6,454,695)
-------------
Total Net Assets (100.0%) $ 368,014,086
=============
</TABLE>
- ------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation .....................$ 11,836,403
Unrealized depreciation ..................... (42,421)
-------------
Net unrealized appreciation .................$ 11,793,982
=============
* Variable rate investments. The rate presented on the Schedule of Portfolio
Investments is the rate in effect at November 30, 1997. The date presented
reflects the next rate change date.
AMBAC AMBAC Indemnity Corp.
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Corp.
FSA Financial Securities Assurance, Inc.
G.O. General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PSF Permanent School Fund
TCRS Transferrable Custodial Receipts
See notes to financial statements
-100-
<PAGE>
THE ARCH FUND, INC.
Intermediate Corporate Bond Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------- -----------
<S> <C>
Corporate Bonds (62.6%):
Automotive (4.7%):
$ 200,000 Ford Motor Credit, 9.38%, 12/15/97........... $ 200,278
800,000 Ford Motor Credit, 7.50%, 1/15/03............ 840,000
500,000 General Motors Acceptance Corp.,
8.50%, 2/4/02.............................. 539,375
500,000 General Motors Acceptance Corp.
Global Bond, 6.75%, 2/7/02................. 508,750
-----------
2,088,403
-----------
Banking (8.8%):
200,000 BankAmerica Corp., 8.13%, 2/1/02............. 212,750
500,000 Bankers Trust New York, 7.25%,
1/15/03.................................... 516,250
400,000 Boatmen's Bancshares, 8.63%,
11/15/03................................... 443,000
500,000 Chase Manhattan Corp., 7.13%, 3/1/05......... 516,875
500,000 NationsBank Corp., 7.75%, 8/15/04............ 533,750
600,000 NationsBank Corp., 6.88%, 2/15/05............ 612,750
750,000 Toronto-Dominion Bank-NY, 7.88%,
8/15/04.................................... 768,750
300,000 Wells Fargo & Co., 8.38%, 5/15/02............ 322,875
-----------
3,927,000
-----------
Beverages (5.6%):
200,000 Anheuser-Busch Cos., Inc., 8.75%,
12/1/99.................................... 210,000
1,000,000 Anheuser-Busch Cos., Inc., 6.75%,
8/1/03..................................... 1,027,500
1,000,000 Brown-Forman, Corp., 7.38%, 5/10/05.......... 1,056,250
200,000 Coca-Cola Co., 7.88%, 9/15/98................ 202,720
-----------
2,496,470
-----------
Entertainment (2.3%):
1,000,000 Walt Disney Co., Global Bond,
6.75%, 3/30/06(b).......................... 1,027,500
-----------
Financial Services (7.2%):
500,000 Bear Stearns Co., Inc., 9.13%,
4/15/98.................................... 506,130
500,000 Bear Stearns Co., Inc., 8.25%,
2/1/02..................................... 533,750
1,000,000 CIT Group Holdings, 6.80%, 4/17/00........... 1,015,000
300,000 Merrill Lynch & Co., 7.75%, 3/1/99........... 306,375
500,000 Merrill Lynch & Co., 8.00%, 6/1/07........... 551,875
300,000 United Postal Savings, 9.00%,
7/26/99.................................... 313,500
-----------
3,226,630
-----------
Food Products (5.8%):
1,000,000 Campbell Soup Co., 6.90%, 10/15/06........... 1,042,500
200,000 General Mills, 8.47%, 12/15/98............... 204,366
1,000,000 General Mills, 8.90%, 3/15/06................ 1,167,500
150,000 Quaker Oats Co., 9.00%, 12/7/01.............. 164,114
-----------
2,578,480
-----------
Food Service (1.1%):
500,000 McDonald's Corp., 6.50%, 8/1/07.............. 508,125
-----------
Health Care (2.5%):
1,000,000 Eli Lilly & Co., 8.38%, 12/1/06.............. 1,138,750
-----------
Industrial Goods & Services (6.8%):
150,000 BP Amercia, Inc., 9.38%, 11/1/00............. 162,750
200,000 BP America, Inc., 8.50%, 4/15/01............. 214,250
100,000 Clorox, 8.80%, 7/15/01....................... 107,875
200,000 E.I. duPont de Nemours, 8.50%,
2/15/03.................................... 213,000
</TABLE>
Continued
-101-
<PAGE>
THE ARCH FUND, INC.
Intermediate Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------- -----------
<S> <C>
Corporate Bonds, continued:
Industrial Goods & Services, continued:
$1,000,000 E.I. duPont de Nemours, 8.13%,
3/15/04.................................... $ 1,093,750
200,000 Kimberly-Clark, 8.63%,
5/1/01..................................... 215,500
1,000,000 Texaco Capital, 7.09%,
2/1/07(b).................................. 1,052,500
-----------
3,059,625
-----------
Retail Stores (2.4%):
400,000 Wal-Mart Stores, 8.63%, 4/1/01............... 429,000
600,000 Wal-Mart Stores, 7.50%, 5/15/04.............. 639,750
-----------
1,068,750
-----------
Technology (2.4%):
1,000,000 Motorola, Inc., 7.60%,
1/1/07..................................... 1,087,500
-----------
Telecommunications (7.0%):
1,000,000 AT&T Corp., 6.75%, 4/1/04.................... 1,022,500
1,000,000 Lucent Technologies Inc., 7.25%,
7/15/06.................................... 1,058,750
1,000,000 Pacific Bell, 7.25%, 7/1/02(b)............... 1,038,750
-----------
3,120,000
-----------
Transportation & Shipping (0.5%):
200,000 Union Pacific Co., 7.88%, 2/15/02............ 209,250
-----------
Utility - Electricity (1.9%):
810,000 Wisconsin Power & Light, 7.00%,
6/15/07.................................... 845,438
-----------
Utility - Gas (3.6%):
1,500,000 Laclede Gas Co., 7.50%, 11/1/07.............. 1,614,375
-----------
Total Corporate Bonds (Cost $27,066,213) 27,996,296
-----------
Medium Term Notes (6.9%):
Financial Services (2.4%):
1,000,000 General Electric Capital Corp.,
7.66%, 8/2/04.............................. 1,081,250
-----------
Health Care-Drugs (2.3%):
1,000,000 SmithKline Beecham, 6.63%, 10/1/01........... 1,013,750
-----------
Telecommunications (2.2%):
1,000,000 Southwestern Bell, 6.56%, 11/15/05........... 1,007,500
-----------
Total Medium Term Notes
(Cost $3,063,663) 3,102,500
-----------
U.S. Government Agencies (23.0%):
Federal Farm Credit Bank:
500,000 8.95%, 6/1/06................................ 587,975
Federal Home Loan Mortgage Corp.:
484,197 6.00%, 2/1/11, Pool #E62600.................. 474,358
1,894,906 6.50%, 1/1/12, Pool #E00465.................. 1,890,757
486,990 6.50%, 6/1/12, Pool #E67063.................. 485,923
Federal National Mortgage Assoc.:
783,313 7.00%, 11/1/10, Pool #328614................. 792,125
961,541 7.00%, 6/1/11, Pool #349980.................. 972,358
963,213 6.50%, 3/1/12, Pool #372705.................. 960,198
910,964 6.50%, 3/1/12, Pool #372719.................. 908,112
Government National Mortgage Assoc.:
998,096 6.00%, 4/15/26, Pool #345610................. 958,791
1,000,811 6.50%, 1/15/27, Pool #439817................. 985,478
968,027 7.00%, 1/15/27, Pool #442297................. 971,657
296,478 7.00%, 9/15/27, Pool #455304................. 297,590
-----------
Total U.S. Government Agencies
(Cost $10,122,498) 10,285,322
-----------
U.S. Treasury Notes (5.9%):
500,000 7.25%, 8/15/04(b)............................ 538,015
1,500,000 5.88%, 11/15/05.............................. 1,497,570
600,000 6.63%, 5/15/07(b)............................ 631,602
-----------
Total U.S. Treasury Notes
(Cost $2,649,692) 2,667,187
-----------
</TABLE>
Continued
-102-
<PAGE>
THE ARCH FUND, INC.
Intermediate Corporate Bond Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- ---------- --------------------------------------------- -----------
<S> <C>
Investment Companies (1.9%):
849,997 Federated Money Market Trust................. $ 849,997
-----------
Total Investment Companies
(Cost $849,997) 849,997
-----------
Total Investments
(Cost--$43,752,063)(a) (100.3%) 44,901,302
Liabilities in Excess
of Other Assets (-0.3%) (154,081)
-----------
Total Net Assets (100.0%) $44,747,221
===========
</TABLE>
- -------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ...................... $1,192,521
Unrealized depreciation ...................... (43,282)
----------
Net unrealized appreciation .................. $1,149,239
==========
(b) A portion of this security was loaned as of November 30, 1997.
See notes to financial statements
-103-
<PAGE>
THE ARCH FUND, INC.
Bond Index Portfolio
Schedule of Portfolio Investments
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ----------------------------------- -----------------
<S> <C>
Corporate Bonds (25.8%):
Automotive (3.9%):
$ 1,000,000 Ford Motor Credit Co., 7.75%,
11/15/02 ....................... $ 1,060,000
2,000,000 Ford Motor Credit Co., Global
Bond, 7.00%, 9/25/01(b) ........
2,052,500
2,000,000 General Motors Corp., 8.88%,
5/15/03 ........................ 2,225,000
-----------------
5,337,500
-----------------
Beverages (2.2%):
3,000,000 PepsiCo, Inc., 6.80%,
5/15/00 ........................ 3,048,750
-----------------
Entertainment (1.5%):
1,000,000 Walt Disney Co., Global Bond,
Series A, 6.38%, 3/30/01 ....... 1,008,750
1,000,000 Walt Disney Co., Global Bond,
Series B, 6.75%, 3/30/06(b) .... 1,027,500
-----------------
2,036,250
-----------------
Financial Services (10.1%):
1,800,000 American Express Credit, 6.50%,
8/1/00 ......................... 1,815,750
1,000,000 Dean Witter Discover & Co., 6.25%,
3/15/00 ........................ 1,002,500
1,500,000 Dean Witter Discover & Co., 6.75%,
8/15/00 ........................ 1,522,500
2,000,000 General Electric Capital Corp.,
8.85%, 4/1/05 .................. 2,307,500
1,000,000 General Electric Capital Corp.,
8.50%, 7/24/08 ................. 1,162,500
1,000,000 Household Finance Corp., 7.45%,
4/1/00, Guaranteed by Household
International................... 1,025,000
1,000,000 Household Finance Corp., 8.38%,
11/15/01 ....................... 1,073,750
1,000,000 Household Finance Corp., 6.88%,
3/1/07(b) ...................... 1,025,000
2,000,000 Merrill Lynch & Co., 6.70%, 8/1/00. 2,027,500
1,000,000 Merrill Lynch & Co., 8.00%, 2/1/02. 1,062,500
-----------------
14,024,500
-----------------
Industrial Goods & Services (0.7%):
1,000,000 E.I. duPont de Nemours, 6.75%,
9/1/07 ......................... 1,027,500
-----------------
Oil & Exploration Products & Services (1.2%):
1,500,000 Texaco Capital, 9.45%, 3/1/00...... 1,606,875
-----------------
Retail Stores - Discount (1.6%):
2,000,000 Wal-Mart Stores, Inc., 9.10%,
7/15/00 ........................ 2,142,500
-----------------
Telecommunications (4.6%):
1,000,000 Bell Telephone Co. of
Pennsylvania, 8.75%, 8/15/31 ... 1,262,500
3,000,000 Lucent Technologies, Inc., 6.90%,
7/15/01 ........................ 3,071,250
1,000,000 Northern Telecom Ltd., 6.88%,
10/1/02 ........................ 1,023,750
1,000,000 Pacific Bell, 7.25%, 7/1/02 ....... 1,038,750
-----------------
6,396,250
-----------------
Total Corporate Bonds
(Cost $34,969,550) 35,620,125
-----------------
U.S. Government Agencies (30.9%):
Federal Home Loan Bank (0.8%):
1,000,000 6.67%, 1/8/07, Series I-07 ........ 1,034,690
-----------------
Federal Home Loan Mortgage Corp. (12.9%):
174,251 6.50%, 1/1/98, Gold Pool #L90010 .. 174,850
733,249 6.00%, 4/1/98, Gold Pool #M17791 .. 728,894
187,702 6.50%, 4/1/98, Gold Pool #M17876 .. 188,699
111,232 6.50%, 5/1/98, Gold Pool #M18001 .. 111,823
45,363 8.50%, 10/1/01, Pool #200055 ...... 46,709
</TABLE>
Continued
-104-
<PAGE>
THE ARCH FUND, INC.
Bond Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
U.S. Government Agencies, continued:
Federal Home Loan Mortgage Corp., continued:
$ 166,475 9.00%, 3/1/03, Pool #380019 ....... $ 172,978
58,482 9.00%, 5/1/03, Pool #380021 ....... 60,767
422,401 7.00%, 11/1/10, Gold Pool #E62010 . 427,546
365,363 7.00%, 11/1/10, Gold Pool #E20202 . 369,813
484,197 6.00%, 2/1/11, Pool #E62600 ....... 474,358
922,751 6.00%, 3/1/11, Gold Pool #E63503 .. 904,001
928,746 6.00%, 4/1/11, Gold Pool #E63515 .. 909,874
928,496 6.00%, 6/1/11, Gold Pool #E00439 .. 909,629
1,042,411 7.00%, 7/1/11, Gold Pool #E20252 .. 1,055,108
1,466,562 6.00%, 3/1/12, Gold Pool #E66538 .. 1,436,762
245,599 6.00%, 2/1/26, Gold Pool #D68286 .. 235,544
2,269,954 6.00%, 3/1/26, Gold Pool #C80393 .. 2,177,022
429,535 6.00%, 4/1/26, Gold Pool #D70772 .. 411,950
386,950 6.00%, 4/1/26, Gold Pool #D70405 .. 371,108
115,494 6.00%, 4/1/26, Gold Pool #C80395 .. 110,765
477,700 8.00%, 11/1/26, Gold Pool #D76134 . 493,822
28,546 6.00%, 12/1/26, Gold Pool #D76870 . 27,377
854,039 6.00%, 12/1/26, Gold Pool #C80465 . 819,074
927,764 8.00%, 12/1/26, Gold Pool #D76530 . 959,076
439,109 8.00%, 12/1/26, Gold Pool #D76906 . 453,929
938,930 7.00%, 1/1/27, Gold Pool #D77743 .. 943,033
1,971,860 7.00%, 1/1/27, Gold Pool #D77720 .. 1,980,477
897,693 8.00%, 1/1/27, Gold Pool #C00490 .. 927,990
-----------------
17,882,978
-----------------
Federal National Mortgage Assoc. (5.9%):
604,549 6.00%, 11/1/00, Pool #190070 ...... 596,237
934,674 6.00%, 5/1/11, Pool #337194 ....... 914,812
968,672 6.00%, 2/1/12, Pool #250917 ....... 948,088
971,783 6.00%, 3/1/12, Pool #359504 ....... 951,133
977,223 6.00%, 3/1/12, Pool #373131 ....... 956,457
933,765 6.00%, 3/1/12, Pool #374638 ....... 913,923
500,000 8.35%, 11/10/99 ................... 521,940
351,714 9.00%, 10/1/26, Pool #353671 ...... 374,023
460,236 9.00%, 10/1/26, Pool #358137 ...... 489,429
306,023 9.00%, 10/1/26, Pool #361800 ...... 325,434
320,775 9.00%, 11/1/26, Pool #358703 ...... 341,122
497,132 9.00%, 11/1/26, Pool #364453 ...... 528,665
323,061 9.00%, 12/1/26, Pool #368686 ...... 343,553
-----------------
8,204,816
-----------------
Government National Mortgage Assoc. (11.3%):
187,222 7.50%, 4/15/02, Pool #210173 ...... 192,370
29,628 7.50%, 7/15/02, Pool #216193 ...... 30,443
436,094 7.50%, 7/15/08, Pool #349404 ...... 448,087
</TABLE>
Continued
-105-
<PAGE>
THE ARCH FUND, INC.
Bond Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
U.S. Government Agencies, continued:
Government National Mortgage Assoc., continued:
$ 147,404 7.50%, 8/15/10, Pool #413412 ...... $ 151,458
96,039 7.50%, 9/15/10, Pool #413117 ...... 98,680
457,301 7.50%, 11/15/10, Pool #415775 ..... 469,877
50,954 6.00%, 3/15/11, Pool #425964 ...... 50,078
22,225 6.50%, 3/15/11, Pool #419123 ...... 22,274
437,515 6.00%, 4/15/11, Pool #393849 ...... 429,994
59,054 6.00%, 4/15/11, Pool #421800 ...... 58,039
485,314 6.00%, 4/15/11, Pool #429397 ...... 476,972
53,161 6.00%, 5/15/11, Pool #345647 ...... 52,247
584,785 6.00%, 5/15/11, Pool #421871 ...... 574,733
526,382 6.00%, 5/15/11, Pool #432659 ...... 517,334
572,650 6.50%, 5/15/11, Pool #412598 ...... 573,899
397,335 6.50%, 5/15/11, Pool #432640 ...... 398,201
273,992 6.00%, 6/15/11, Pool #406582 ...... 269,282
324,749 6.00%, 6/15/11, Pool #423828 ...... 319,166
536,288 6.50%, 6/15/11, Pool #426173 ...... 537,457
384,999 6.50%, 8/15/11, Pool #421746 ...... 385,838
484,302 6.50%, 2/15/12, Pool #393334 ...... 485,358
451,746 6.50%, 3/15/12, Pool #399161 ...... 452,731
1,411,605 7.50%, 7/15/12, Pool #447382 ...... 1,450,424
271,452 8.50%, 11/15/21, Pool #297863 ..... 284,175
465,996 8.00%, 5/15/23, Pool #350495 ...... 482,306
513,418 9.00%, 5/15/25, Pool #386743 ...... 547,432
270,768 9.00%, 5/15/25, Pool #401372 ...... 288,707
294,545 9.50%, 8/15/25, Pool #414557 ...... 318,937
465,567 7.50%, 10/15/25, Pool #366152 ..... 475,167
490,132 7.50%, 10/15/25, Pool #366154 ..... 500,238
70,211 6.50%, 3/15/26, Pool #419578 ...... 69,135
969,572 6.50%, 4/15/26, Pool #422656 ...... 954,719
85,206 6.50%, 5/15/26, Pool #428852 ...... 83,901
813,230 6.50%, 6/15/26, Pool #423801 ...... 800,771
579,160 7.00%, 8/20/26, Pool #2266 ........ 578,796
374,640 9.50%, 9/15/26, Pool #438724 ...... 405,664
56,473 9.50%, 10/15/26, Pool #436991 ..... 61,149
222,373 9.50%, 10/15/26, Pool #438728 ..... 240,788
160,582 9.50%, 11/15/26, Pool #436994 ..... 173,880
375,325 9.50%, 11/15/26, Pool #438731 ..... 406,405
494,130 7.00%, 9/15/27, Pool #455304 ...... 495,983
-----------------
15,613,095
-----------------
Total U.S. Government Agencies
(Cost $42,220,698) 42,735,579
-----------------
U.S. Treasury Bonds (21.3%):
4,175,000 12.75%, 11/15/10, Callable on
11/15/05 @ 100.................. 5,943,405
</TABLE>
Continued
-106-
<PAGE>
THE ARCH FUND, INC.
Bond Index Portfolio
Schedule of Portfolio Investments, Continued
November 30, 1997
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
- --------------- ------------------------------------ -----------------
<S> <C>
U.S. Treasury Bonds, continued:
$ 2,055,000 12.00%, 8/15/13, Callable on
8/15/08 @ 100................... $ 3,011,972
1,250,000 7.50%, 11/15/16 ................... 1,441,887
1,500,000 8.75%, 5/15/17(b) ................. 1,945,020
6,000,000 8.13%, 8/15/19(b) ................. 7,425,120
2,000,000 8.75%, 8/15/20 .................... 2,637,460
6,000,000 7.63%, 11/15/22(b) ................ 7,138,680
-----------------
Total U.S. Treasury Bonds (Cost $26,573,839) 29,543,544
-----------------
U.S. Treasury Notes (21.1%):
8,400,000 6.38%, 5/15/99(b).................. 8,469,552
9,000,000 6.00%, 10/15/99(b)................. 9,043,290
200,000 6.13%, 7/31/00..................... 201,612
1,000,000 6.25%, 8/31/00(b).................. 1,011,160
4,000,000 5.75%, 10/31/00(b)................. 3,994,400
1,000,000 5.50%, 12/31/00.................... 991,030
500,000 6.38%, 9/30/01..................... 508,835
2,100,000 5.88%, 9/30/02(b).................. 2,102,835
300,000 7.25%, 5/15/04(b).................. 322,131
1,700,000 6.50%, 5/15/05(b).................. 1,761,761
750,000 6.63%, 5/15/07(b).................. 789,502
-----------------
Total U.S. Treasury Notes
(Cost $28,805,393) 29,196,108
-----------------
Investment Companies (0.5%):
712,841 Federated Money Market Trust ...... 712,841
-----------------
Total Investment Companies
(Cost $712,841) 712,841
-----------------
Total Investments (Cost--$133,282,321)
(a) (99.6%) 137,808,197
Other Assets in Excess of Liabilities (0.4%) 592,874
-----------------
Total Net Assets (100.0%) $ 138,401,071
=================
</TABLE>
- -------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation ...................... $ 4,635,118
Unrealized depreciation ...................... (109,242)
--------------
Net unrealized appreciation .................. $ 4,525,876
==============
(b) A portion of this security was loaned as of November 30, 1997.
See notes to financial statements
-107-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997
1.ORGANIZATION
The ARCH Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. As of November 30, 1997, the Fund is authorized to
offer the following investment portfolios: Money Market, Treasury Money
Market, Tax-Exempt Money Market, Growth & Income Equity, Small Cap Equity,
International Equity, Equity Income, Equity Index, Growth Equity (formerly
the Arrow Equity Portfolio), Balanced, Government & Corporate Bond, U.S.
Government Securities, Short-Intermediate Municipal, Missouri Tax-Exempt
Bond, National Municipal Bond, Intermediate Corporate Bond and Bond Index
Portfolios (referred to individually as a "Portfolio" and collectively, the
"Portfolios"). The Fund was organized as a Maryland corporation on
September 9, 1982. The Kansas Tax-Exempt Bond and Small Cap Equity Index
Portfolios have not yet commenced operations.
The Portfolio's investment objectives are as follows:
Money Market Portfolio -- 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.
Treasury Money Market Portfolio -- To seek a high level of current income
exempt from state income tax consistent with liquidity and security of
principal. In pursuing its investment objective, the Portfolio invests in
selected money market obligations issued by the U.S. Government (or its
agencies and instrumentalities) that are guaranteed as to principal and
interest by the U.S. Government.
Tax-Exempt Money Market Portfolio -- To seek as high level of current
interest income exempt from federal income tax as is consistent with
liquidity and stability of principal. The Portfolio invests substantially
all of its assets in short-term obligations issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and their respective political subdivisions, agencies,
instrumentalities and authorities.
Growth & Income Equity Portfolio -- To provide long-term capital growth,
with income a secondary consideration. In pursuing its investment
objective, the Portfolio normally invests substantially all of its assets
in common stock, preferred stock, rights, warrants and securities
convertible into common stock.
Small Cap Equity Portfolio -- To seek capital appreciation. Current income
is an incidental consideration in the selection of portfolio securities. In
pursuing its investment objective, the Portfolio (which was formerly
Emerging Growth Portfolio) normally invests at least 65% of its total
assets in common stock of emerging or established small- to medium-sized
companies with above-average potential for price appreciation.
International Equity Portfolio -- To provide capital growth consistent with
reasonable investment risk. The Portfolio seeks to achieve this objective
by investing principally in foreign equity securities, most of which will
be denominated in foreign currencies.
Equity Income Portfolio -- To seek to provide an above-average level of
income consistent with long-term capital appreciation. In pursuing its
investment objective, the Portfolio intends to invest, under normal market
and economic conditions, substantially all of its assets in common stock,
preferred stock, rights, warrants, and securities convertible into common
stock.
Continued
-108-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
Equity Index Portfolio -- To seek investment results that, before deduction
of operating expenses, approximate the price and yield performance of U.S.
publicly traded common stocks with large stock market capitalizations, as
represented by the Standard & Poor's 500 Composite Stock Price Index.
Growth Equity Portfolio -- To seek capital appreciation by investing
primarily in equity securities of companies selected on the basis of
assessment of earnings and the risk and volatility of each company's
business.
Balanced Portfolio -- To seek to maximize total return through a
combination of growth of capital and current income consistent with the
preservation of capital. The Portfolio seeks to achieve its objective by
using a disciplined approach of allocating assets primarily among three
major assets groups, i.e. equity securities, fixed income securities and
cash equivalents.
Government & Corporate Bond Portfolio -- To seek the highest level of
current income consistent with conservation of capital. In pursuing its
investment objective, the Portfolio intends to invest at least 65% of its
assets in fixed-income and related debt securities rated in one of the
three highest rating categories assigned by a Rating Agency at the time of
purchase or in unrated investments deemed by the Advisor to be of
comparable quality pursuant to guidelines approved by the Fund's Board of
Directors.
U.S. Government Securities Portfolio -- To seek a high rate of current
income that is consistent with relative stability of principal. In pursuing
its investment objective, the Portfolio invests in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
normally having remaining maturities of 1 to 30 years and repurchase
agreements relating to such obligations.
Short-Intermediate Municipal Portfolio -- To seek as high a level of
current income, exempt from regular federal income tax, as is consistent
with preservation of capital. The Portfolio seeks to achieve its objective
by investing substantially all of its assets in investment grade Municipal
Obligations.
Missouri Tax-Exempt Bond Portfolio -- To seek as high a level of interest
income exempt from federal income tax as is consistent with conservation of
capital. In pursuing its investment objective, the Portfolio invests
substantially all of its assets in investment-grade Missouri Municipal
Obligations, that are also exempt from Missouri income tax.
National Municipal Bond Portfolio -- To seek as high a level of current
interest income exempt from federal income tax as is consistent with
conservation of capital. In pursuing its investments objective, the
Portfolio intends to invest, under normal market and economic conditions,
substantially all of its assets in investment grade Municipal Obligations.
Intermediate Corporate Bond Portfolio -- To seek as high a level of current
income as is consistent with the preservation of capital. In pursuing its
investment objective, the Portfolio will invest, under normal market and
economic conditions, at least 65% of its total assets in non-convertible
corporate debt obligations.
Bond Index Portfolio -- To seek to provide investment results that, before
deduction of operating expenses, approximate the price and yield
performance of U.S. Government, mortgage-backed, asset-backed and corporate
debt securities, as represented by the Lehman Brothers Aggregate Bond
Index.
Continued
-109-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The
preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of income
and expenses for the period. Actual results could differ from these
estimates.
SECURITIES VALUATION:
The securities of the Money Market, Treasury Money Market and Tax-Exempt
Money Market Portfolios (collectively, "the money market portfolios") are
valued at amortized cost. Amortized cost valuation involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the
effect of fluctuating interest rates on the market value of the instrument.
In addition, the money market portfolios may not (a) purchase any
instrument with a remaining maturity greater than 397 days unless such
instrument is subject to a demand feature, or (b) maintain a dollar-
weighted-average portfolio maturity which exceeds 90 days. The securities
of the Growth & Income Equity, Small Cap Equity, International Equity,
Equity Income, Equity Index, Growth Equity, Balanced, Government &
Corporate Bond, U.S. Government Securities, Short-Intermediate Municipal,
Missouri Tax-Exempt Bond, National Municipal Bond, Intermediate Corporate
Bond and Bond Index Portfolios (collectively, "the variable net asset value
portfolios") that are traded on a recognized exchange are valued at the
last sale price on the national securities market. Securities traded only
on over-the-counter markets are valued on the basis of market value when
available. Securities for which there were no transactions are valued at
the mean of the most recent bid and asked prices. Securities maturing in 60
days or less are valued at amortized cost. Securities, including restricted
securities, for which market quotations are not readily available, are
valued at fair market value by the investment adviser (or the sub-
investment adviser) in accordance with guidelines approved by the Fund's
Board of Directors. Quotations of foreign securities in foreign currency
are converted to the U.S. dollar equivalent at the prevailing exchange rate
on the date of conversion. Investments in investment companies are valued
at their respective net asset values as reported by such companies. The
differences between cost and market values of the investments of the
variable net asset portfolios are reflected as unrealized appreciation or
depreciation.
REPURCHASE AGREEMENTS:
The Portfolios may engage in repurchase agreement transactions. Under the
terms of a typical repurchase agreement, a Portfolio takes possession of an
underlying debt obligation subject to an obligation of the seller to
repurchase, and the Portfolio to resell, the obligation at an agreed upon
price and time, thereby determining the yield during the Portfolio's
holding period. This arrangement results in a fixed rate of return that is
not subject to market fluctuations during the Portfolio's holding period.
The value of the collateral exceeds at all times the total amount of the
repurchase obligations, including interest. In the event of counterparty
default, the Portfolio has the right to use the collateral to offset losses
incurred. There is potential for loss to the Portfolio in the event the
Portfolio is delayed or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the
value of the underlying securities during the period while the Portfolio
seeks to assert its rights. The Portfolios' investment adviser, acting
under the supervision of the Board of Directors, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which
the Portfolios enter into repurchase agreements to evaluate potential
risks.
Continued
-110-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded on the trade date. Realized gains and
losses on investments sold are recorded on the identified cost basis.
Interest income, including accretion of discount and amortization of
premium on investments, is accrued on a daily basis. Dividend income is
recorded on the ex-dividend date. Realized and unrealized gains and losses
are allocated based upon relative net assets of each class of shares.
FOREIGN CURRENCY TRANSLATION:
The market value of investment securities, other assets and liabilities of
the International Equity, Equity Index and Growth Equity Portfolios
denominated in a foreign currency are translated into U.S. dollars at the
current exchange rate. Purchases and sales of securities, income receipts
and expense payments are translated into U.S. dollars at the exchange rate
on the dates of the transactions.
The International Equity, Equity Index and Growth Equity Portfolios to the
extent they invest in foreign-denominated securities, isolate that portion
of the results of operations resulting from changes in foreign exchange
rates on investments from the fluctuation arising from changes in market
prices of securities held.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of foreign securities, sales of foreign currencies, currency
exchange fluctuations between the trade and settlement dates on securities
transactions, and the difference between the amount of assets and
liabilities recorded and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities, including investments
in securities, resulting from changes in exchange rates.
RISKS ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES:
Investments in securities of foreign issuers carry certain risks not
ordinarily associated with investments in securities of domestic issuers.
Such risks include future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws
and restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets, confiscatory taxation,
political or social instability or diplomatic developments which could
adversely affect investments in those countries.
Certain countries may also impose substantial restrictions on investments
in their capital markets by foreign entities, including restrictions on
investments in issuers of industries deemed sensitive to relevant national
interests. These factors may limit the investment opportunities available
in the International Equity Portfolio and result in a lack of liquidity and
a high price volatility with respect to securities of issuers from
developing countries.
FORWARD CURRENCY EXCHANGE CONTRACTS:
The International Equity Portfolio may enter into a forward foreign
currency exchange contract ("forward"). A forward is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the forward fluctuates with changes in currency exchange
rates. The forward is marked-to-market daily and the change in market value
is recorded by the Portfolio as unrealized appreciation or depreciation.
When the forward is closed, the Portfolio records a realized gain or loss
equal to the fluctuation
Continued
-111-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
in value during the period the forward was opened. The Portfolio could be
exposed to risk if a counter party is unable to meet the terms of a forward
or if the value of the currency changes unfavorably.
SECURITIES LENDING:
To increase return, the Growth & Income Equity, Small Cap Equity,
International Equity, Equity Income, Equity Index, Growth Equity, Balanced,
Government & Corporate Bond, U.S. Government Securities, Short-Intermediate
Municipal, National Municipal Bond, Intermediate Corporate Bond and Bond
Index Portfolios may, from time to time, lend portfolio securities to
broker-dealers, banks or institutional borrowers of securities pursuant to
agreements requiring that the loans be continuously secured by collateral
equal, at all times, in value to at least the market value of the
securities loaned. Collateral for such loans may include cash, securities
of the U.S. Government, or its agencies or instrumentalities, irrevocable
letters of credit, or any combination thereof. The collateral must be
valued daily, and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the lending
Portfolio. By lending its securities, a Portfolio can increase its income
by continuing to receive interest or dividends on the loaned securities as
well as either investing the cash collateral in short-term instruments or
obtaining yield in the form of interest paid by the borrower when U.S.
Government securities are used as collateral. Loans are subject to
termination by the Portfolio or the borrower at any time. The risks, to the
Portfolios, of securities lending are that the borrower may not provide
additional collateral when required or return the securities when due. In
addition, if cash collateral invested by a Portfolio is less than the
amount required to be returned to the borrower as a result of a decrease in
the value of the cash collateral investments, the Portfolios must
compensate the borrower for the deficiency. At November 30, 1997, the
following Portfolios had securities with the following market values on
loan:
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE OF LOANED
PORTFOLIO COLLATERAL SECURITIES
--------- --------------- ----------------------
<S> <C> <C>
Growth & Income Equity Portfolio..... $23,676,239 $23,211,999
Small Cap Equity Portfolio........... 34,927,872 34,243,012
Equity Income Portfolio.............. 4,777,849 4,684,166
Balanced Portfolio................... 18,521,357 18,158,193
Government & Corporate Bond
Portfolio........................... 49,628,036 48,654,938
U.S. Government Securities Portfolio. 9,651,645 9,462,398
Intermediate Corporate Bond
Portfolio........................... 3,097,699 3,036,960
Bond Index Portfolio................. 25,702,967 25,198,988
</TABLE>
The loaned securities were fully collateralized by cash and U.S. Government
Securities.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends on each share of the Portfolios are determined in the same
manner, irrespective of class, except that shares of each class bear
separate fees under either a Distribution and Services Plan or an
Administrative Services Plan adopted for each class and enjoy certain
exclusive voting rights on matters relating to these fees. It is the policy
of the Money Market, Treasury Money Market, Tax-Exempt Money Market,
Government & Corporate Bond, U.S. Government Securities, Short-Intermediate
Municipal, Missouri Tax-Exempt Bond, National Municipal Bond, Intermediate
Corporate Bond, and Bond Index Portfolios to declare dividends daily from
net investment income and to pay such dividends no later than five business
Continued
-112-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
days after the end of the month. Net investment income for the Growth &
Income Equity, Equity Income, Equity Index, Growth Equity and Balanced
Portfolios is declared and paid monthly as a dividend to shareholders of
record. The Small Cap Equity and International Equity Portfolios declare
and pay dividends from net investment income quarterly. Net realized
capital gains for each Portfolio, if any, are distributed at least
annually. Additional distributions of net investment income and capital
gains may be made at the discretion of the Board of Directors in order to
avoid the 4% excise tax to which a Portfolio is subject with respect to
certain undistributed amounts of net investment income and capital gains.
Distributions from net investment income and from net realized capital
gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These
"book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the composition of net assets based on
their federal tax-basis treatment; temporary differences do not require
reclassification. Distributions to shareholders which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as distributions in excess of net
investment income or net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are
reported as distributions of capital.
As of November 30, 1997, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to paid-
in-capital:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAIN/(LOSS)
INCOME ON INVESTMENTS
-------------- --------------
<S> <C> <C>
Treasury Money Market Portfolio................ $ 357 $ (357)
Small Cap Equity Portfolio..................... 106,581 (133,088)
International Equity Portfolio................. 274,842 (268,877)
Equity Income Portfolio........................ 6,930 --
Equity Index Portfolio......................... 4,004 --
Growth Equity Portfolio........................ 4,235 --
Balanced Portfolio............................. (14,156) 14,156
Government & Corporate Bond Portfolio.......... 72,668 (72,668)
U.S. Government Securities Portfolio........... 39,236 (39,236)
Missouri Tax-Exempt Bond Portfolio............. -- 5
Intermediate Corporate Bond Portfolio.......... 7,399 (2,239)
Bond Index Portfolio........................... (184,726) 193,662
</TABLE>
FEDERAL INCOME TAXES:
It is the policy of each of the Portfolios to qualify, or to continue to
qualify, as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable
sections of the Internal Revenue Code, and to make distributions of net
investment income and net realized capital gains sufficient to relieve it
from all, or substantially all, federal income taxes.
Continued
-113-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
For federal income tax purposes, the following Portfolios have capital loss
carryforwards as of November 30, 1997, which are available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
---------- -------
<S> <C> <C>
Money Market Portfolio.................................... $ 4,907 2003
Government & Corporate Bond Portfolio..................... $ 65,133 2002
1,171,567 2003
210,648 2005
----------
$1,447,348
==========
U.S. Government Securities Portfolio...................... $ 325,257 2004
279,506 2005
----------
$ 604,763
==========
Missouri Tax-Exempt Bond Portfolio........................ $ 118,537 2003
31 2005
----------
$ 118,568
==========
</TABLE>
ORGANIZATION COSTS:
The Portfolios bear all costs in connection with their organization,
including the fees and expenses of registering and qualifying shares for
distribution under federal and state securities regulations. All such costs
are amortized using the straight-line method over a period of five years
from the dates each Portfolio commenced operations: April 4, 1994 for the
International Equity Portfolio, from February 27, 1997 for the Equity
Income Portfolio, from May 1, 1997 for the Equity Index Portfolio, January
4, 1993 for the Growth Equity Portfolio, from April 1, 1993 for the
Balanced Portfolio, from November 18, 1996 for the National Municipal Bond
Portfolio, from February 10, 1997 for the Intermediate Corporate Bond
Portfolio and the Bond Index Portfolio. As of November 30, 1997, all costs
were fully amortized for the Money Market, Treasury Money Market, Tax-
Exempt Money Market, Growth & Income Equity, Small Cap Equity, Government &
Corporate Bond, U.S. Government Securities, Short-Intermediate Municipal,
and Missouri Tax-Exempt Bond Portfolios.
OTHER:
Operating expenses of the Fund not directly attributable to a Portfolio or
to any class of shares of a Portfolio are prorated among the Portfolios
based on the relative net assets of each Portfolio or other appropriate
basis. Operating expenses directly attributable to a Portfolio or class are
charged directly to that Portfolio's or class' operations. Fees paid under
either a Distribution and Services Plan or an Administrative Services Plan
are borne by the specific class of shares to which they apply.
3.SHARES OF COMMON STOCK
The Fund is authorized to issue four classes of Portfolio shares in each
Portfolio (except as noted): Investor A Shares, Investor B Shares (except
the Treasury Money Market, Tax-Exempt Money Market, Equity Index, Short-
Intermediate Municipal, Intermediate Corporate Bond, Bond Index and Small
Cap Equity Index Portfolios), Trust Shares, and Institutional Shares
(except the Tax-Exempt Money Market, Missouri Tax-
Continued
-114-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
Exempt Bond, Short-Intermediate Municipal, National Municipal Bond and
Kansas Tax-Exempt Bond Portfolios). Investor A shares of the variable net
asset value portfolios are sold with front-end sales charges. Investor B
Shares of the variable net asset value portfolios may be subject to
contingent deferred sales charges ("CDSC") based on the lesser of the net
asset value of the shares on the redemption date or the original cost of
the shares redeemed. The following table sets forth the time schedule of
redemptions of Investor B Shares subject to CDSC:
<TABLE>
<CAPTION>
CDSC
(PERCENTAGE OF
NUMBER OF YEARS AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
---------------------- --------------
<S> <C>
One or less................................................... 5.0%
More than one, but less than two.............................. 4.0%
Two, but less than three...................................... 3.0%
Three, but less than four..................................... 3.0%
Four, but less than five...................................... 2.0%
Five, and up to and including six............................. 1.0%
More than six................................................. None
</TABLE>
Investor B Shares of the Money Market Portfolio are available for purchase
only by those investors participating in the ARCH Asset Advisor Program or
through exchanges of Investor B Shares of the variable net asset value
portfolios. Each class of shares in a Portfolio has identical rights and
privileges except with respect to the fees paid by the classes under either
a Distribution and Services Plan or an Administrative Services Plan,
expenses allocable exclusively to each class of shares, voting rights on
matters affecting a single class of shares, the exchange privilege of each
class of shares, and the automatic conversion of Investor B Shares of a
Portfolio into Investor A Shares of that Portfolio eight years after
purchase.
Continued
-115-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
As of November 30, 1997, the Fund's Articles of Incorporation authorize the
Board of Directors, in its discretion, to issue up to seven billion full
and fractional shares of capital stock, $.001 par value per share, and to
classify or reclassify any unissued shares of the Fund into one or more
additional classes. Pursuant to such authority, as of November 30, 1997,
the Fund's shares were classified as follows:
<TABLE>
<CAPTION>
REPRESENT INTERESTS IN:
-------------------------------------------
CLASS SHARES (000) PORTFOLIO CLASS
------------------------ ------------ ---------------------------- -------------
<S> <C> <C> <C>
Class A Shares........ 550,000 Money Market Investor A
Class A -- Special Se-
ries 1 Shares.......... 1,800,000 Money Market Trust
Class A -- Special Se-
ries 2 Shares.......... 300,000 Money Market Investor B
Class A -- Special Se-
ries 3 Shares.......... 50,000 Money Market Institutional
Class B Shares ....... 100,000 Treasury Money Market Investor A
Class B -- Special Se-
ries 1 Shares.......... 1,000,000 Treasury Money Market Trust
Class B -- Special Se-
ries 2 Shares.......... 300,000 Treasury Money Market Institutional
Class C Shares........ 5,000 Growth & Income Equity Investor A
Class C -- Special Se-
ries 1 Shares.......... 50,000 Growth & Income Equity Trust
Class C -- Special Se-
ries 2 Shares.......... 20,000 Growth & Income Equity Investor B
Class C -- Special Se-
ries 3 Shares.......... 50,000 Growth & Income Equity Institutional
Class D Shares........ 5,000 Government & Corporate Bond Investor A
Class D -- Special Se-
ries 1 Shares.......... 50,000 Government & Corporate Bond Trust
Class D -- Special Se-
ries 2 Shares.......... 20,000 Government & Corporate Bond Investor B
Class D -- Special Se-
ries 3 Shares.......... 50,000 Government & Corporate Bond Institutional
Class E Shares........ 5,000 U.S. Government Securities Investor A
Class E -- Special Se-
ries 1 Shares.......... 15,000 U.S. Government Securities Trust
Class E -- Special Se-
ries 2 Shares.......... 20,000 U.S. Government Securities Investor B
Class E -- Special Se-
ries 3 Shares.......... 50,000 U.S. Government Securities Institutional
Class F Shares........ 5,000 Small Cap Equity Investor A
Class F -- Special Se-
ries 1 Shares.......... 15,000 Small Cap Equity Trust
Class F -- Special Se-
ries 2 Shares.......... 20,000 Small Cap Equity Investor B
Class F -- Special Se-
ries 3 Shares.......... 50,000 Small Cap Equity Institutional
Class G Shares........ 5,000 Balanced Investor A
Class G -- Special Se-
ries 1 Shares.......... 15,000 Balanced Trust
Class G -- Special Se-
ries 2 Shares.......... 20,000 Balanced Investor B
Class G -- Special Se-
ries 3 Shares.......... 50,000 Balanced Institutional
Class H Shares........ 10,000 International Equity Investor A
Class H -- Special Se-
ries 1 Shares.......... 10,000 International Equity Trust
Class H -- Special Se-
ries 2 Shares.......... 10,000 International Equity Investor B
Class H -- Special Se-
ries 3 Shares.......... 50,000 International Equity Institutional
</TABLE>
Continued
-116-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
REPRESENT INTERESTS IN:
-------------------------------------------
CLASS SHARES (000) PORTFOLIO CLASS
------------------------ ------------ ---------------------------- -------------
<S> <C> <C> <C>
Class I Shares........ 25,000 Short-Intermediate Municipal Investor A
Class I -- Special Se-
ries 1 Shares.......... 25,000 Short-Intermediate Municipal Trust
Class J Shares........ 50,000 Tax-Exempt Money Market Investor A
Class J -- Special Se-
ries 1 Shares.......... 300,000 Tax-Exempt Money Market Trust
Class K Shares........ 25,000 Missouri Tax-Exempt Bond Investor A
Class K -- Special Se-
ries 1 Shares.......... 25,000 Missouri Tax-Exempt Bond Trust
Class K -- Special Se-
ries 2 Shares.......... 10,000 Missouri Tax-Exempt Bond Investor B
Class L Shares........ 25,000 Kansas Tax-Exempt Bond Investor A
Class L -- Special Se-
ries 1 Shares.......... 25,000 Kansas Tax-Exempt Bond Trust
Class L -- Special Se-
ries 2 Shares.......... 10,000 Kansas Tax-Exempt Bond Investor B
Class M Shares........ 25,000 Equity Income Investor A
Class M -- Special Se-
ries 1 Shares.......... 50,000 Equity Income Trust
Class M -- Special Se-
ries 2 Shares.......... 25,000 Equity Income Investor B
Class M -- Special Se-
ries 3 Shares.......... 25,000 Equity Income Institutional
Class N Shares........ 25,000 National Municipal Bond Investor A
Class N -- Special Se-
ries 1 Shares.......... 50,000 National Municipal Bond Trust
Class N -- Special Se-
ries 2 Shares.......... 25,000 National Municipal Bond Investor B
Class O Shares........ 25,000 Intermediate Corporate Bond Investor A
Class O -- Special Se-
ries 1 Shares.......... 50,000 Intermediate Corporate Bond Trust
Class O -- Special Se-
ries 2 Shares.......... 25,000 Intermediate Corporate Bond Institutional
Class P Shares........ 25,000 Equity Index Investor A
Class P -- Special Se-
ries 1 Shares.......... 50,000 Equity Index Trust
Class P -- Special Se-
ries 2 Shares.......... 25,000 Equity Index Institutional
Class Q Shares........ 25,000 Bond Index Investor A
Class Q -- Special Se-
ries 1 Shares.......... 50,000 Bond Index Trust
Class Q -- Special Se-
ries 2 Shares.......... 25,000 Bond Index Institutional
Class R Shares........ 25,000 Small Cap Equity Index Investor A
Class R -- Special Se-
ries 1 Shares.......... 50,000 Small Cap Equity Index Trust
Class R -- Special Se-
ries 2 Shares.......... 25,000 Small Cap Equity Index Institutional
Class S Shares........ 25,000 Growth Equity Investor A
Class S -- Special Se-
ries 1 Shares.......... 50,000 Growth Equity Trust
Class S -- Special Se-
ries 2 Shares.......... 25,000 Growth Equity Investor B
Class S -- Special Se-
ries 3 Shares.......... 25,000 Growth Equity Institutional
Unclassified............ 1,030,000
</TABLE>
Each Portfolio share represents an equal, proportionate interest in the
Portfolio with respect to other shares outstanding, irrespective of series.
Continued
-117-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
4.CAPITAL SHARE TRANSACTIONS
Transactions in portfolio shares of the Fund were as follows:
<TABLE>
<CAPTION>
MONEY MARKET TREASURY MONEY
PORTFOLIO MARKET PORTFOLIO
-------------------------------- ------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued................ $ 309,755,097 $ 104,686,425 $ 18,452,906 $ 14,064,613
Dividends reinvested... 5,145,284 3,310,910 276,548 198,801
Cost of shares
redeemed.............. (241,289,100) (81,696,699) (17,987,741) (9,372,706)
--------------- --------------- ------------- ---------------
Change in net assets
from Investor A Share
transactions.......... $ 73,611,281 $ 26,300,636 $ 741,713 $ 4,890,708
=============== =============== ============= ===============
INVESTOR B SHARES:
Proceeds from shares
issued................ $ 46,996 $ 64,563 -- --
Dividends reinvested... 2,791 954 -- --
Cost of shares
redeemed.............. (18,022) (24,585) -- --
--------------- --------------- ------------- ---------------
Change in net assets
from Investor B Share
transactions.......... $ 31,765 $ 40,932 -- --
=============== =============== ============= ===============
TRUST SHARES:
Proceeds from shares
issued................ $ 4,112,502,624 $ 2,117,336,443 $ 974,965,197 $ 899,191,996
Dividends reinvested... 15,379,414 11,554,554 3,220,851 3,311,570
Cost of shares
redeemed.............. (3,802,997,661) (2,109,752,319) (825,860,764) (1,023,961,242)
--------------- --------------- ------------- ---------------
Change in net assets
from Trust Share
transactions.......... $ 324,884,377 $ 19,138,678 $ 152,325,284 $ (121,457,676)
=============== =============== ============= ===============
INSTITUTIONAL SHARES:
Proceeds from shares
issued................ $ 70,987,898 $ 77,856,028 $ 714,908 $ 5,811,068
Dividends reinvested... 45,325 8,204 276 412
Cost of shares
redeemed.............. (64,931,657) (75,283,110) (781,277) (5,541,015)
--------------- --------------- ------------- ---------------
Change in net assets
from Institutional
Share transactions.... $ 6,101,566 $ 2,581,122 $ (66,093) $ 270,465
=============== =============== ============= ===============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................. 309,755,097 104,686,425 18,452,906 14,064,613
Reinvested............. 5,145,284 3,310,910 276,548 198,801
Redeemed............... (241,289,100) (81,696,699) (17,987,741) (9,372,706)
--------------- --------------- ------------- ---------------
Change in Investor A
Shares................ 73,611,281 26,300,636 741,713 4,890,708
=============== =============== ============= ===============
INVESTOR B SHARES:
Issued................. 46,996 64,563 -- --
Reinvested............. 2,791 954 -- --
Redeemed............... (18,022) (24,585) -- --
--------------- --------------- ------------- ---------------
Change in Investor B
Shares................ 31,765 40,932 -- --
=============== =============== ============= ===============
TRUST SHARES:
Issued................. 4,112,502,624 2,117,336,443 974,965,197 899,191,996
Reinvested............. 15,379,414 11,554,554 3,220,851 3,311,570
Redeemed............... (3,802,997,661) (2,109,752,319) (825,860,764) (1,023,961,242)
--------------- --------------- ------------- ---------------
Change in Trust Shares. 324,884,377 19,138,678 152,325,284 (121,457,676)
=============== =============== ============= ===============
INSTITUTIONAL SHARES:
Issued................. 70,987,898 77,856,028 714,908 5,811,068
Reinvested............. 45,325 8,204 276 412
Redeemed............... (64,931,657) (75,283,110) (781,277) (5,541,015)
--------------- --------------- ------------- ---------------
Change in Institutional
Shares................ 6,101,566 2,581,122 (66,093) 270,465
=============== =============== ============= ===============
</TABLE>
Continued
-118-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY GROWTH & INCOME
MARKET PORTFOLIO EQUITY PORTFOLIO
---------------------------- ---------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued................ $ 42,324,801 $ 27,071,489 $ 6,774,856 $ 9,870,808
Dividends reinvested... 463,949 235,312 3,288,711 1,806,750
Cost of shares
redeemed.............. (44,984,145) (14,725,931) (7,579,480) (3,418,441)
------------- ------------- ------------- ------------
Change in net assets
from Investor A Share
transactions.......... $ (2,195,395) $ 12,580,870 $ 2,484,087 $ 8,259,117
============= ============= ============= ============
INVESTOR B SHARES:
Proceeds from shares
issued................ -- -- $ 2,201,422 $ 2,406,329
Dividends reinvested... -- -- 296,096 62,055
Cost of shares
redeemed.............. -- -- (415,984) (141,771)
------------- ------------- ------------- ------------
Change in net assets
from Investor B Share
transactions.......... -- -- $ 2,081,534 $ 2,326,613
============= ============= ============= ============
TRUST SHARES:
Proceeds from shares
issued................ $ 335,656,279 $ 186,179,822 $ 68,543,364 $ 55,386,626
Dividends reinvested... 377,277 327,245 22,757,271 17,221,218
Cost of shares
redeemed.............. (288,242,067) (168,808,702) (151,166,803) (57,945,665)
------------- ------------- ------------- ------------
Change in net assets
from Trust Share
transactions.......... $ 47,791,489 $ 17,698,365 $ (59,866,168) $ 14,662,179
============= ============= ============= ============
INSTITUTIONAL SHARES:
Proceeds from shares
issued................ -- -- $ 16,152,636 $ 24,656,743
Dividends reinvested... -- -- 6,370,055 2,967,915
Cost of shares
redeemed.............. -- -- (14,151,970) (3,784,451)
------------- ------------- ------------- ------------
Change in net assets
from Institutional
Share transactions.... -- -- $ 8,370,721 $ 23,840,207
============= ============= ============= ============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................. 42,324,801 27,071,489 358,479 598,426
Reinvested............. 463,949 235,312 191,757 115,115
Redeemed............... (44,984,145) (14,725,931) (402,496) (204,520)
------------- ------------- ------------- ------------
Change in Investor A
Shares................ (2,195,395) 12,580,870 147,740 509,021
============= ============= ============= ============
INVESTOR B SHARES:
Issued................. -- -- 116,804 146,675
Reinvested............. -- -- 17,441 3,961
Redeemed............... -- -- (21,377) (8,326)
------------- ------------- ------------- ------------
Change in Investor B
Shares................ -- -- 112,868 142,310
============= ============= ============= ============
TRUST SHARES:
Issued................. 335,656,279 186,179,822 3,808,036 3,359,483
Reinvested............. 377,277 327,245 1,324,519 1,095,493
Redeemed............... (288,242,067) (168,808,702) (8,530,932) (3,405,972)
------------- ------------- ------------- ------------
Change in Trust Shares. 47,791,489 17,698,365 (3,398,377) 1,049,004
============= ============= ============= ============
INSTITUTIONAL SHARES:
Issued................. -- -- 845,760 1,473,440
Reinvested............. -- -- 371,256 189,057
Redeemed............... -- -- (744,988) (225,116)
------------- ------------- ------------- ------------
Change in Institutional
Shares................ -- -- 472,028 1,437,381
============= ============= ============= ============
</TABLE>
Continued
-119-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
SMALL CAP EQUITY INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued................. $ 8,477,400 $ 8,330,915 $ 713,643 $ 1,165,994
Dividends reinvested.... 843,177 1,175,137 77,495 --
Cost of shares redeemed. (10,564,564) (10,568,422) (510,586) (393,881)
------------ ------------ ----------- -----------
Change in net assets
from Investor A Share
transactions........... $ (1,243,987) $ (1,062,370) $ 280,552 $ 772,113
============ ============ =========== ===========
INVESTOR B SHARES:
Proceeds from shares
issued................. $ 299,657 $ 668,648 $ 203,253 $ 314,369
Dividends reinvested.... 78,176 51,148 12,225 --
Cost of shares redeemed. (299,685) (82,619) (83,552) (7,784)
------------ ------------ ----------- -----------
Change in net assets
from Investor B Share
transactions........... $ 78,148 $ 637,177 $ 131,926 $ 306,585
============ ============ =========== ===========
TRUST SHARES:
Proceeds from shares
issued................. $ 31,937,921 $ 57,112,437 $ 8,443,834 $18,402,546
Dividends reinvested.... 9,158,530 9,768,137 829,252 --
Cost of shares redeemed. (23,554,423) (38,246,394) (6,194,325) (7,672,403)
------------ ------------ ----------- -----------
Change in net assets
from Trust Share
transactions........... $ 17,542,028 $ 28,634,180 $ 3,078,761 $10,730,143
============ ============ =========== ===========
INSTITUTIONAL SHARES:
Proceeds from shares
issued................. $ 7,060,546 $ 13,386,432 $ 2,118,356 $ 3,792,099
Dividends reinvested.... 1,847,189 1,411,691 182,813 --
Cost of shares redeemed. (8,516,957) (3,039,946) (1,491,470) (346,775)
------------ ------------ ----------- -----------
Change in net assets
from Institutional
Share transactions..... $ 390,778 $ 11,758,177 $ 809,699 $ 3,445,324
============ ============ =========== ===========
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued.................. 562,627 652,412 59,032 103,191
Reinvested.............. 66,550 96,278 6,635 --
Redeemed................ (719,822) (832,375) (41,200) (35,253)
------------ ------------ ----------- -----------
Change in Investor A
Shares................. (90,645) (83,685) 24,467 67,938
============ ============ =========== ===========
INVESTOR B SHARES:
Issued.................. 21,436 53,222 16,938 27,867
Reinvested.............. 6,249 4,217 1,068 --
Redeemed................ (21,821) (6,486) (6,957) (672)
------------ ------------ ----------- -----------
Change in Investor B
Shares................. 5,864 50,953 11,049 27,195
============ ============ =========== ===========
TRUST SHARES:
Issued.................. 2,220,381 4,475,488 687,342 1,619,798
Reinvested.............. 718,294 796,399 70,409 --
Redeemed................ (1,691,027) (2,922,899) (510,626) (658,505)
------------ ------------ ----------- -----------
Change in Trust Shares.. 1,247,648 2,348,988 247,125 961,293
============ ============ =========== ===========
INSTITUTIONAL SHARES:
Issued.................. 517,342 1,064,056 171,752 333,036
Reinvested.............. 146,372 116,019 15,683 --
Redeemed................ (620,536) (242,572) (123,206) (30,224)
------------ ------------ ----------- -----------
Change in Institutional
Shares................. 43,178 937,503 64,229 302,812
============ ============ =========== ===========
</TABLE>
Continued
-120-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
GROWTH
EQUITY INCOME EQUITY INDEX EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------
FEBRUARY 27, MAY 1, OCTOBER 1,
1997 TO 1997 TO 1997 TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 (A) 1997 (A) 1997 (B)
------------- ------------ ------------
<S> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares issued.......... $ 191,357 $ 203,713 $ 994,408
Dividends reinvested................. 556 113 8,110,971
Cost of shares redeemed.............. (35,756) (3,426) (1,988,138)
Cost of shares exchanged to Trust
Class............................... --- --- (63,119,438)
------------ ----------- ------------
Change in net assets from Investor A
Share transactions.................. $ 156,157 $ 200,400 $(56,002,197)
============ =========== ============
INVESTOR B SHARES:
Proceeds from shares issued.......... $ 131,061 -- $ 10
Dividends reinvested................. 216 -- --
Cost of shares redeemed.............. (2,752) -- --
------------ ----------- ------------
Change in net assets from Investor B
Share transactions.................. $ 128,525 -- $ 10
============ =========== ============
TRUST SHARES:
Proceeds from shares issued.......... $125,128,668 $26,727,245 $ 142,980
Proceeds from shares exchanged from
Investor A Class.................... -- -- 63,119,438
Dividends reinvested................. 40,883 204,335 --
Cost of shares redeemed.............. (11,607,549) (49,547) --
------------ ----------- ------------
Change in net assets from Trust Share
transactions........................ $113,562,002 $26,882,033 $ 63,262,418
============ =========== ============
INSTITUTIONAL SHARES:
Proceeds from shares issued.......... $ 1,000 $ 7,400 $ 10
Dividends reinvested................. 17 21 --
------------ ----------- ------------
Change in net assets from
Institutional Share transactions.... $ 1,017 $ 7,421 $ 10
============ =========== ============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued............................... 18,368 17,532 53,783
Reinvested........................... 51 10 502,850
Redeemed............................. (3,415) (294) (108,433)
Exchanged to Trust................... -- -- (3,913,170)
------------ ----------- ------------
Change in Investor A Shares.......... 15,004 17,248 (3,464,970)
============ =========== ============
INVESTOR B SHARES:
Issued............................... 11,596 -- 1
Reinvested........................... 19 -- --
Redeemed............................. (232) -- --
------------ ----------- ------------
Change in Investor B Shares.......... 11,383 -- 1
============ =========== ============
TRUST SHARES:
Issued............................... 12,516,793 2,648,917 8,833
Exchanged from Investor A............ -- -- 3,913,170
Reinvested........................... 3,805 18,011 --
Redeemed............................. (1,110,408) (4,260) --
------------ ----------- ------------
Change in Trust Shares............... 11,410,190 2,662,668 3,922,003
============ =========== ============
INSTITUTIONAL SHARES:
Issued............................... 100 667 1
Reinvested........................... 2 2 --
------------ ----------- ------------
Change in Institutional Shares....... 102 669 1
============ =========== ============
</TABLE>
(a)Period from commencement of operations.
(b)Investor B, Trust and Institutional Shares commenced operations on November
24, 1997.
Continued
-121-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
BALANCED GOVERNMENT & CORPORATE
PORTFOLIO BOND PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued.................. $ 1,537,501 $ 1,279,888 $27,165,642 $ 1,081,992
Dividends reinvested..... 806,963 540,237 209,221 288,701
Cost of shares redeemed.. (2,329,861) (1,566,057) (27,531,566) (1,822,047)
----------- ------------ ----------- -----------
Change in net assets from
Investor A Share
transactions............ $ 14,603 $ 254,068 $ (156,703) $ (451,354)
=========== ============ =========== ===========
INVESTOR B SHARES:
Proceeds from shares
issued.................. $ 194,146 $ 255,917 $ 83,288 $ 431,722
Dividends reinvested..... 24,803 5,128 21,312 12,973
Cost of shares redeemed.. (51,667) (2,897) (74,060) (42,309)
----------- ------------ ----------- -----------
Change in net assets from
Investor B Share
transactions............ $ 167,282 $ 258,148 $ 30,540 $ 402,386
=========== ============ =========== ===========
TRUST SHARES:
Proceeds from shares
issued.................. $11,210,581 $ 8,437,415 $51,290,657 $33,574,691
Dividends reinvested..... 4,843,545 4,712,847 4,152,833 4,910,841
Cost of shares redeemed.. (25,276,653) (29,178,365) (24,790,124) (22,962,197)
----------- ------------ ----------- -----------
Change in net assets from
Trust Share
transactions............ $(9,222,527) $(16,028,103) $30,653,366 $15,523,335
=========== ============ =========== ===========
INSTITUTIONAL SHARES:
Proceeds from shares
issued.................. $13,196,103 $ 15,950,520 $ 3,950,530 $ 7,558,229
Dividends reinvested..... 4,854,948 2,533,910 864,537 708,554
Cost of shares redeemed.. (14,889,355) (4,695,716) (2,808,156) (2,656,046)
----------- ------------ ----------- -----------
Change in net assets from
Institutional Share
transactions............ $ 3,161,696 $ 13,788,714 $ 2,006,911 $ 5,610,737
=========== ============ =========== ===========
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................... 126,661 111,445 2,622,237 105,753
Reinvested............... 67,585 47,412 20,596 28,274
Redeemed................. (187,760) (134,124) (2,657,122) (180,569)
----------- ------------ ----------- -----------
Change in Investor A
Shares.................. 6,486 24,733 (14,289) (46,542)
=========== ============ =========== ===========
INVESTOR B SHARES:
Issued................... 15,906 22,386 8,280 42,182
Reinvested............... 2,094 447 2,096 1,284
Redeemed................. (4,025) (249) (7,198) (4,176)
----------- ------------ ----------- -----------
Change in Investor B
Shares.................. 13,975 22,584 3,178 39,290
=========== ============ =========== ===========
TRUST SHARES:
Issued................... 881,762 732,718 4,998,391 3,312,003
Reinvested............... 405,996 413,590 408,777 481,194
Redeemed................. (2,111,332) (2,470,952) (2,438,301) (2,242,645)
----------- ------------ ----------- -----------
Change in Trust Shares... (823,574) (1,324,644) 2,968,867 1,550,552
=========== ============ =========== ===========
INSTITUTIONAL SHARES:
Issued................... 1,083,548 1,372,147 388,441 737,749
Reinvested............... 407,674 222,611 85,077 69,542
Redeemed................. (1,193,788) (401,065) (277,121) (262,357)
----------- ------------ ----------- -----------
Change in Institutional
Shares.................. 297,434 1,193,693 196,397 544,934
=========== ============ =========== ===========
</TABLE>
Continued
-122-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
U.S. GOVERNMENT SHORT-INTERMEDIATE
SECURITIES PORTFOLIO MUNICIPAL PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares is-
sued.................... $ 168,375 $ 322,833 $ 205,699 $ 50,234
Dividends reinvested..... 283,177 467,398 1,147 1,301
Cost of shares redeemed.. (2,371,476) (1,672,421) (240,296) --
------------ ----------- ----------- -----------
Change in net assets from
Investor A Share
transactions............ $ (1,919,924) $ (882,190) $ (33,450) $ 51,535
============ =========== =========== ===========
INVESTOR B SHARES:
Proceeds from shares is-
sued.................... $ 135,748 $ 316,733 -- --
Dividends reinvested..... 17,529 11,390 -- --
Cost of shares redeemed.. (46,020) (8,781) -- --
------------ ----------- ----------- -----------
Change in net assets from
Investor B Share
transactions............ $ 107,257 $ 319,342 -- --
============ =========== =========== ===========
TRUST SHARES:
Proceeds from shares is-
sued.................... $ 23,128,193 $17,936,354 $ 5,241,935 $ 9,434,735
Dividends reinvested..... 2,017,395 1,953,246 43,196 63,662
Cost of shares redeemed.. (12,278,294) (4,671,823) (4,369,507) (3,763,873)
------------ ----------- ----------- -----------
Change in net assets from
Trust Share
transactions............ $ 12,867,294 $15,217,777 $ 915,624 $ 5,734,524
============ =========== =========== ===========
INSTITUTIONAL SHARES:
Proceeds from shares is-
sued.................... $ 6,239,041 $ 1,798,550 -- --
Dividends reinvested..... 271,123 80,448 -- --
Cost of shares redeemed.. (1,754,631) (319,286) -- --
------------ ----------- ----------- -----------
Change in net assets from
Institutional Share
transactions............ $ 4,755,533 $ 1,559,712 -- --
============ =========== =========== ===========
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued................... 15,979 30,791 20,507 4,971
Reinvested............... 26,840 43,886 114 131
Redeemed................. (225,337) (157,854) (24,107) --
------------ ----------- ----------- -----------
Change in Investor A
Shares.................. (182,518) (83,177) (3,486) 5,102
============ =========== =========== ===========
INVESTOR B SHARES:
Issued................... 12,926 29,636 -- --
Reinvested............... 1,663 1,081 -- --
Redeemed................. (4,364) (835) -- --
------------ ----------- ----------- -----------
Change in Investor B
Shares.................. 10,225 29,882 -- --
============ =========== =========== ===========
TRUST SHARES:
Issued................... 2,196,909 1,690,682 521,384 939,097
Reinvested............... 191,147 184,241 4,303 6,368
Redeemed................. (1,166,692) (438,058) (436,228) (377,354)
------------ ----------- ----------- -----------
Change in Trust Shares... 1,221,364 1,436,865 89,459 568,111
============ =========== =========== ===========
INSTITUTIONAL SHARES:
Issued................... 599,173 171,123 -- --
Reinvested............... 25,777 7,639 -- --
Redeemed................. (168,592) (30,613) -- --
------------ ----------- ----------- -----------
Change in Institutional
Shares.................. 456,358 148,149 -- --
============ =========== =========== ===========
</TABLE>
Continued
-123-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
MISSOURI TAX-EXEMPT NATIONAL MUNICIPAL
BOND PORTFOLIO BOND PORTFOLIO
-------------------------- --------------------------
YEAR YEAR YEAR NOVEMBER 18,
ENDED ENDED ENDED 1996 TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996 (A)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares
issued................. $ 1,499,109 $ 2,404,280 $ 13,770,069 $ 1,000
Dividends reinvested.... 789,615 884,429 3,680 --
Cost of shares redeemed. (4,057,694) (2,791,258) (13,076,003) --
----------- ----------- ------------ ------------
Change in net assets
from Investor A Share
transactions........... $(1,768,970) $ 497,451 $ 697,746 $ 1,000
=========== =========== ============ ============
INVESTOR B SHARES:
Proceeds from shares
issued................. $ 789,463 $ 284,623 $ 411,518 $ 1,000
Dividends reinvested.... 20,926 9,017 1,479 --
Cost of shares redeemed. (111,171) (52,123) (6,295) --
----------- ----------- ------------ ------------
Change in net assets
from Investor B Share
transactions........... $ 699,218 $ 241,517 $ 406,702 $ 1,000
=========== =========== ============ ============
TRUST SHARES:
Proceeds from shares
issued................. $23,929,592 $15,517,040 $ 60,718,167 $314,006,996
Dividends reinvested.... 330,429 432,469 10,473 --
Cost of shares redeemed. (5,967,692) (7,879,384) (12,338,741) (4,987,761)
----------- ----------- ------------ ------------
Change in net assets
from Trust Share
transactions........... $18,292,329 $ 8,070,125 $ 48,389,899 $309,019,235
=========== =========== ============ ============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued.................. 128,988 210,587 1,349,188 100
Reinvested.............. 67,767 76,641 366 --
Redeemed................ (349,719) (242,599) (1,279,833) --
----------- ----------- ------------ ------------
Change in Investor A
Shares................. (152,964) 44,629 69,721 100
=========== =========== ============ ============
INVESTOR B SHARES:
Issued.................. 67,907 24,662 40,048 100
Reinvested.............. 1,790 784 144 --
Redeemed................ (9,625) (4,537) (617) --
----------- ----------- ------------ ------------
Change in Investor B
Shares................. 60,072 20,909 39,575 100
=========== =========== ============ ============
TRUST SHARES:
Issued.................. 2,053,156 1,348,946 6,018,490 31,400,089
Reinvested.............. 28,328 37,452 1,035 --
Redeemed................ (510,882) (674,245) (1,229,913) (498,183)
----------- ----------- ------------ ------------
Change in Trust Shares.. 1,570,602 712,153 4,789,612 30,901,906
=========== =========== ============ ============
</TABLE>
(a) Period from commencement of operations.
Continued
-124-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
INTERMEDIATE BOND
CORPORATE INDEX
BOND PORTFOLIO PORTFOLIO
-------------- ------------
FEBRUARY 10, FEBRUARY 10,
1997 TO 1997 TO
NOVEMBER 30, NOVEMBER 30,
1997 (A) 1997 (A)
-------------- ------------
<S> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR A SHARES:
Proceeds from shares issued...................... $ 270,045 $ 249,869
Dividends reinvested............................. 2,019 878
Cost of shares redeemed.......................... -- (198,047)
----------- ------------
Change in net assets from Investor A Share
transactions.................................... $ 272,064 $ 52,700
=========== ============
TRUST SHARES:
Proceeds from shares issued...................... $47,591,097 $141,965,580
Dividends reinvested............................. 96,442 64,546
Cost of shares redeemed.......................... (3,610,853) (5,562,846)
----------- ------------
Change in net assets from Trust Share
transactions.................................... $44,076,686 $136,467,280
=========== ============
INSTITUTIONAL SHARES:
Proceeds from shares issued...................... $ 26,700 $ 36,865
Dividends reinvested............................. 354 454
Cost of shares redeemed.......................... -- (10,305)
----------- ------------
Change in net assets from Institutional Share
transactions.................................... $ 27,054 $ 27,014
=========== ============
SHARE TRANSACTIONS:
INVESTOR A SHARES:
Issued........................................... 27,183 25,427
Reinvested....................................... 201 89
Redeemed......................................... -- (20,139)
----------- ------------
Change in Investor A Shares...................... 27,384 5,377
=========== ============
TRUST SHARES:
Issued........................................... 4,752,205 14,163,934
Reinvested....................................... 9,712 6,471
Redeemed......................................... (363,897) (556,016)
----------- ------------
Change in Trust Shares........................... 4,398,020 13,614,389
=========== ============
INSTITUTIONAL SHARES:
Issued........................................... 2,678 3,679
Reinvested....................................... 35 45
Redeemed......................................... -- (1,021)
----------- ------------
Change in Institutional Shares................... 2,713 2,703
=========== ============
</TABLE>
(a) Period from commencement of operations.
Continued
-125-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
5.PURCHASES AND SALES OF INVESTMENT SECURITIES
Purchases and sales of securities (excluding short-term securities) during
the period ended November 30, 1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
PURCHASES SALES
---------- ----------
<S> <C> <C>
Growth & Income Equity................................ $ 240,919 $ 326,917
Small Cap Equity...................................... 180,769 183,387
International Equity.................................. 46,337 48,953
Equity Income......................................... 116,486 58,095
Equity Index.......................................... 27,359 478
Growth Equity......................................... 16,641 80,358
Balanced.............................................. 47,608 65,383
Government & Corporate Bond........................... 213,874 195,322
U.S. Government Securities............................ 65,754 67,349
Short-Intermediate Municipal.......................... 1,802 --
Missouri Tax-Exempt Bond.............................. 17,760 2,966
National Municipal Bond............................... 330,739 274,513
Intermediate Corporate Bond........................... 64,882 24,347
Bond Index............................................ 191,217 60,046
</TABLE>
6.RELATED PARTY TRANSACTIONS
Investment advisory services are provided to the Fund by Mississippi Valley
Advisors Inc. ("MVA"), a wholly owned subsidiary of Mercantile Bank
National Association ("Mercantile"), which in turn is a wholly owned
subsidiary of Mercantile Bancorporation Inc. Under the terms of the
investment advisory agreement, MVA is entitled to receive fees based on a
percentage of the average daily net assets of the Fund. Mercantile also
serves as custodian for the Fund. Under terms of the custodian agreement,
Mercantile receives fees computed as .03% (.0125% for Money Market,
Treasury Money Market and Tax-Exempt Money Market) of the average daily net
assets of each Portfolio.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS")
is an Ohio limited partnership. BISYS Fund Services Ohio, Inc. (the
"Company"), and BISYS are subsidiaries of The BISYS Group, Inc.
The Company, with whom certain officers of the Fund are affiliated, serves
the Fund as Administrator. Such officers are paid no fees directly by the
Portfolios for serving as officers of the Fund. Under the terms of the
administration agreement, the Company receives fees computed as 0.20%
(0.10% for the Tax-Exempt Money Market Portfolio) of the average daily net
assets of each Portfolio. The Company also serves the Fund as Transfer
Agent. BISYS serves as the Fund's distributor and is entitled to receive
commissions on sales of Investor A Shares and Investor B Shares of the
variable net asset value portfolios. For the period ended November 30,
1997, BISYS received approximately $307,048 from commissions earned on
sales of Investor A Shares and $271,984 from commissions earned on
redemptions of Investor B Shares. BISYS re-allowed $98,336 to dealers of
the Fund's shares.
Continued
-126-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
With respect to Investor A Shares of the Portfolios, the Fund has adopted a
Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act. Under the Plan, each portfolio may pay (i) up to 0.10% of the
average daily net assets of each Portfolio's outstanding Investor A Shares
to BISYS or another organization for distribution services performed and
expenses assumed relating to the Fund's Investor A shares and (ii) up to
0.20% (0.15% for the money market portfolios) of the average daily net
assets of each Portfolio's outstanding Investor A Shares to broker-dealers
and other organizations for shareholder administrative services provided
pursuant to servicing agreements under the Plan.
Similarly, with respect to Investor B Shares, the Fund has adopted a
Distribution and Services Plan (the "Plan") pursuant to Rule 12b-1 under
the 1940 Act. Under the Plan, a portfolio may pay (i) up to 0.75% of the
average daily net assets of the Portfolio's outstanding Investor B Shares
to BISYS or another organization for distribution services performed and
expenses assumed relating to the Fund's Investor B Shares and (ii) up to
0.25% of the average daily net assets of the Portfolio's Investor B Shares
to broker-dealers and other organizations for shareholder administrative
services provided pursuant to servicing agreements under the Plan.
With respect to Trust and Institutional Shares of the Portfolios, the Fund
has adopted separate Administrative Services Plans pursuant to which Trust
Shares are sold to banks and other financial institutions on behalf of
their qualified accounts and Institutional Shares are sold to banks and
other financial institutions acting on behalf of their accounts for which
they do not exercise investment discretion. A Portfolio could pay these
banks and other financial institutions, which have agreed to provide
certain shareholder administrative services for their clients or account
holders, up to 0.30% (0.25% for money market portfolios) of the average
daily net assets of the Portfolio's Trust or Institutional Shares,
respectively.
Continued
-127-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
Fees may be voluntarily reduced to assist the Portfolios in maintaining
competitive expense ratios.
Information regarding these transactions is as follows for the period ended
November 30, 1997:
<TABLE>
<CAPTION>
ADMINISTRATIVE
SERVICES
INVESTMENT ADVISORY ADMINISTRATION CUSTODIAN FEES--TRUST
FEES FEES FEES SHARES
--------------------- -------------- ---------- --------------
ANNUAL FEE
BEFORE
VOLUNTARY VOLUNTARY VOLUNTARY VOLUNTARY VOLUNTARY FUND TRANSFER
FEE FEE FEE FEE FEE ACCOUNTING AGENT
REDUCTIONS REDUCTIONS REDUCTIONS REDUCTIONS REDUCTIONS FEES FEES
---------- ---------- -------------- ---------- -------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market Portfolio.. 0.40% $ 734,416 $743,132 $ -- $1,068,696 $ 5,513 $240,018
Treasury Money Market
Portfolio.............. 0.40% 132,471 121,453 -- 272,575 171 31,846
Tax-Exempt Money Market
Portfolio.............. 0.40% 74,067 -- -- 256,817 1,341 33,731
Growth & Income Equity
Portfolio.............. 0.55% -- 435,169 -- 919,816 1,575 114,862
Small Cap Equity
Portfolio.............. 0.75% -- 237,775 -- 569,663 3,233 61,107
International Equity
Portfolio.............. 1.00% 50,950 54,941 1,637 165,438 31 19,585
Equity Income Portfolio. 0.75% 681,294 131,717 27,350 272,243 3,825 30,968
Equity Index Portfolio.. 0.30% 51,115 17,038 5,139 50,999 13,585 5,325
Growth Equity Portfolio. 0.75% -- 1,287 -- -- 6,880 7,834
Balanced Portfolio...... 0.75% -- 118,063 -- 148,419 8,289 31,611
Government & Corporate
Bond Portfolio......... 0.45% -- 165,189 -- 432,811 9,342 43,735
U.S. Government
Securities Portfolio... 0.45% -- 79,515 -- 203,924 8,376 21,475
Short-Intermediate
Municipal Portfolio.... 0.55% 160,036 29,097 -- 87,151 9,921 9,563
Missouri Tax-Exempt Bond
Portfolio.............. 0.45% -- 92,042 -- 200,722 9,955 22,573
National Municipal Bond
Portfolio.............. 0.55% 1,812,782 478,060 98,901 987,353 16,728 64,660
Intermediate Corporate
Bond Portfolio......... 0.55% 175,432 46,250 9,602 95,336 6,402 32,762
Bond Index Portfolio.... 0.30% 312,722 104,239 10,175 312,619 12,768 18,908
</TABLE>
Additionally, the distributor voluntarily reduced distribution and services
fees in the amount of $26 for the Short-Intermediate Municipal Portfolio,
$24,192 for the Missouri Tax-Exempt Bond Portfolio and $485 for the
National Municipal Bond Portfolio. The distributor also voluntarily reduced
administrative services fees in the amounts of $3, $7, $23 and $27, for the
Equity Income Portfolio, the Equity Index Portfolio, the Intermediate
Corporate Bond Portfolio and Bond Index Portfolio, respectively. For the
period October 1, 1997 through November 23, 1997, the distributor for the
Arrow Equity Portfolio (predecessor to the Growth Equity Portfolio),
Federated Securities Corp., voluntarily reduced distribution and services
fees in the amount of $25,468.
Continued
-128-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
7.CONCENTRATION OF CREDIT RISK
The Missouri Tax-Exempt Bond Portfolio invests a substantial proportion of
its assets in debt obligations issued by the State of Missouri and its
political subdivisions, agencies and public authorities. The Portfolio is
more susceptible to factors adversely affecting issuers of Missouri
municipal securities than a fund that is not concentrated in these issuers
to the same extent.
The Tax-Exempt Money Market Portfolio, Short-Intermediate Municipal
Portfolio, the Missouri Tax-Exempt Bond Portfolio and the National
Municipal Bond Portfolio had the following concentrations by industry
sector at November 30, 1997 (as a percentage of total investments):
<TABLE>
<CAPTION>
SHORT- MISSOURI NATIONAL
TAX-EXEMPT INTERMEDIATE TAX-EXEMPT MUNICIPAL
MONEY MARKET MUNICIPAL BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ---------- ---------
<S> <C> <C> <C> <C>
Airport....................... 3.65% -- -- --
Commercial Paper.............. 3.15% -- -- --
Development................... 13.26% -- 0.74% --
Education..................... 2.38% 1.69% 6.53% 4.09%
Facilities.................... -- 7.76% 4.82% --
General Obligation............ 8.90% 36.83% 18.51% 42.63%
Higher Education.............. 5.22% 3.35% 12.21% 5.82%
Medical....................... 13.02% 2.49% 17.05% 4.04%
Miscellaneous................. 2.27% 3.63% -- 2.75%
Multifamily Housing........... -- 2.51% --
Mutual Funds.................. 0.35% 3.79% 4.25% 0.63%
Pollution..................... 44.82% -- 6.69% 6.79%
Power......................... -- 5.42% 2.39% 4.79%
School District............... -- 16.65% 14.23% 12.90%
Single Family Housing......... -- -- 1.06% 0.28%
Student Loan.................. -- -- 1.05% --
Transportation................ 1.38% 5.87% -- 3.96%
Utilities..................... -- 7.55% 3.17% 8.20%
Water......................... 1.15% 4.97% 4.79% 3.12%
------ ------ ------ ------
100.00% 100.00% 100.00% 100.00%
====== ====== ====== ======
</TABLE>
8.CONVERSION OF COMMON TRUST FUNDS
On March 8, 1997, the Growth & Income Equity, Equity Income and Balanced
Portfolios issued Trust shares to acquire all of the assets and liabilities
of certain common trust funds of Mercantile Bank National Association and
its affiliates. On February 15, 1997, the Intermediate Corporate Bond and
Bond Index Portfolios issued Trust Shares to acquire all of the assets and
liabilities of certain common trust funds of the Mercantile Bank National
Association and its affiliates. The following is a summary of shares
issued, net
Continued
-129-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
assets converted, and net asset values per share, and unrealized
appreciation as of the conversion date (amounts in thousands except per
share amounts):
<TABLE>
<CAPTION>
NET ASSET UNREALIZED
SHARES NET ASSETS VALUE APPRECIATION
------ ---------- --------- ------------
<S> <C> <C> <C> <C>
Growth & Income Equity Portfolio... 2,380 $ 42,719 $17.95 $11,129
Equity Income Portfolio............ 11,901 $118,888 $ 9.99 $48,912
Balanced Portfolio................. 80 $ 961 $11.98 $ 657
Bond Index Portfolio............... 12,688 $127,261 $10.03 $ 2,951
Intermediate Corporate Bond
Portfolio......................... 3,657 $ 36,717 $10.04 $ 1,281
</TABLE>
9.REORGANIZATIONS
The Fund entered an Agreement and Plan of Reorganization with Arrow Funds
pursuant to which all of the assets and liabilities of each Arrow Portfolio
transferred to a portfolio of The ARCH Fund, Inc. in exchange for shares of
the corresponding portfolio of The ARCH Fund, Inc. The Arrow Fixed Income
Portfolio transferred its assets and liabilities to the Government &
Corporate Bond Portfolio. The Arrow Municipal Income Portfolio transferred
its assets and liabilities to the National Municipal Bond Portfolio. The
Arrow Equity Portfolio transferred its assets and liabilities to the Growth
Equity Portfolio. The reorganization, which qualified as a tax-free
exchange for federal income tax purposes, was completed on November 14,
1997 for the Arrow Fixed Income Portfolio and the Arrow Municipal Income
Portfolio, and on November 21, 1997 for the Arrow Equity Portfolio,
following approval by shareholders of Arrow at a special shareholder
meeting held on November 12, 1997. The following is a summary of shares
outstanding, net assets, net asset value per share and unrealized
appreciation immediately before and after the reorganization:
<TABLE>
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------ --------------
ARROW ARCH
FIXED GOVERNMENT & GOVERNMENT &
INCOME CORPORATE BOND CORPORATE BOND
PORTFOLIO PORTFOLIO PORTFOLIO
--------- -------------- --------------
<S> <C> <C> <C>
Shares (000)......................... 2,675 16,521 19,105
Net Assets (000)..................... $26,775 $171,232 $198,007
Net Asset Value...................... $ 10.05 $ 10.36 $ 10.36
Unrealized Appreciation.............. $ 739 $ 4,732 $ 5,471
<CAPTION>
AFTER
BEFORE REORGANIZATION REORGANIZATION
------------------------ --------------
ARROW
MUNICIPAL ARCH NATIONAL NATIONAL
INCOME MUNICIPAL BOND MUNICIPAL BOND
PORTFOLIO PORTFOLIO PORTFOLIO
--------- -------------- --------------
<S> <C> <C> <C>
Shares (000)......................... 1,220 34,561 35,806
Net Assets (000)..................... $12,738 $353,711 $366,449
Net Asset Value...................... $ 10.44 $ 10.23 $ 10.23
Unrealized Appreciation.............. $ 548 $ 10,069 $ 10,617
</TABLE>
Continued
-130-
<PAGE>
THE ARCH FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
BEFORE AFTER
REORGANIZATION REORGANIZATION
------------------- --------------
ARCH
ARROW GROWTH
EQUITY EQUITY GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------------
<S> <C> <C> <C>
Shares (000).............................. 4,129 -- 4,129
Net Assets (000).......................... $67,869 -- $67,869
Net Asset Value........................... $ 16.44 -- $ 16.44
Unrealized Appreciation................... $21,998 -- $21,998
</TABLE>
The ARCH Growth Equity Portfolio has retained the investment objectives and
assumed the financial history of the Arrow Equity Portfolio.
10.FEDERAL INCOME TAX INFORMATION (UNAUDITED)
During the year ended November 30, 1997, the Portfolios declared long-term
capital gain distributions in the following amounts.
<TABLE>
<S> <C>
Growth & Income Equity Portfolio................................ $30,913,616
Small Cap Equity Portfolio...................................... 32,725
International Equity Portfolio.................................. 1,570,388
Balanced Portfolio.............................................. 6,808,557
National Municipal Bond Portfolio............................... 59,659
</TABLE>
For the taxable year ended November 30, 1997, the following percentages of
income dividends paid by the Funds qualify for the dividends received
deduction available to corporations:
<TABLE>
<CAPTION>
QUALIFIED
DIVIDEND INCOME
---------------
<S> <C>
Growth & Income Equity Portfolio............................. 11.56%
Small Cap Equity Portfolio................................... 10.67%
Equity Income Portfolio...................................... 48.00%
Equity Index Portfolio....................................... 70.56%
Balanced Portfolio........................................... 21.28%
</TABLE>
During the year ended November 30, 1997, the following Portfolios declared
tax-exempt income in the following amounts:
<TABLE>
<S> <C>
Tax-Exempt Money Market Portfolio............................... $ 4,328,697
Short-Intermediate Municipal Portfolio.......................... 1,159,928
Missouri Tax-Exempt Bond Portfolio.............................. 4,253,574
National Municipal Bond Portfolio............................... 16,140,414
</TABLE>
Continued
-131-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------------
1997 1996 1995 1994 (A) 1993
---------- ---------- ---------- ---------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.048 0.047 0.052 0.033 0.025
-------- ------- ------- ------- -------
Total from Investment
Activities........... 0.048 0.047 0.052 0.033 0.025
-------- ------- ------- ------- -------
Distributions
Net investment income.. (0.048) (0.047) (0.052) (0.033) (0.025)
-------- ------- ------- ------- -------
Total Distributions... (0.048) (0.047) (0.052) (0.033) (0.025)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= =======
Total Return............ 4.93 % 4.81 % 5.33 % 3.37 % 2.52 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $164,777 $91,166 $64,865 $48,384 $46,920
Ratio of expenses to
average net assets.... 0.77 % 0.78 % 0.77 % 0.78 % 0.79 %
Ratio of net investment
income to average net
assets................ 4.84 % 4.70 % 5.20 % 3.35 % 2.50 %
Ratio of expenses to
average net assets*... 0.92 % 0.93 % 0.92 % 0.93 % 0.93 %
Ratio of net investment
income to average net
assets*............... 4.69 % 4.55 % 5.05 % 3.20 % 2.36 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
See notes to financial statements
-132-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 26, 1996
YEAR ENDED TO
NOVEMBER 30, 1997 NOVEMBER 30, 1996 (A)
----------------- ---------------------
INVESTOR B INVESTOR B
SHARES SHARES
----------------- ---------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD... $ 1.00 $ 1.00
------- -------
Investment Activities
Net investment income................. 0.041 0.033
------- -------
Total from Investment Activities..... 0.041 0.033
------- -------
Distributions
Net investment income................. (0.041) (0.033)
------- -------
Total Distributions.................. (0.041) (0.033)
------- -------
NET ASSET VALUE, END OF PERIOD......... $ 1.00 $ 1.00
======= =======
Total Return (excludes sales charge)... 4.15 % 3.35 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $ 73 $ 41
Ratio of expenses to average net
assets............................... 1.52 % 1.47 %(c)
Ratio of net investment income to
average net assets................... 4.10 % 3.73 %(c)
Ratio of expenses to average net
assets*.............................. 1.67 % 1.68 %(c)
Ratio of net investment income to
average net assets*.................. 3.95 % 3.52 %(c)
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-133-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------------------------------
1997 1996 1995 1994 1993
---------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.050 0.049 0.054 0.035 0.026
---------- -------- -------- -------- --------
Total from Investment
Activities........... 0.050 0.049 0.054 0.035 0.026
---------- -------- -------- -------- --------
Distributions
Net investment income.. (0.050) (0.049) (0.054) (0.035) (0.026)
---------- -------- -------- -------- --------
Total Distributions... (0.050) (0.049) (0.054) (0.035) (0.026)
---------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ========
Total Return............ 5.06 % 4.99 % 5.52 % 3.55 % 2.72 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $1,042,151 $717,265 $698,131 $544,952 $621,717
Ratio of expenses to
average net assets.... 0.64 % 0.61 % 0.59 % 0.61 % 0.59 %
Ratio of net investment
income to average net
assets................ 4.96 % 4.88 % 5.38 % 3.45 % 2.70 %
Ratio of expenses to
average net assets *.. 0.92 % 0.76 % 0.74 % 0.93 % 0.80 %
Ratio of net investment
income to average net
assets *.............. 4.68 % 4.73 % 5.23 % 3.13 % 2.49 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements
-134-
<PAGE>
THE ARCH FUND, INC.
MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------------------
1997 1996 1995 1994 (A) 1993
------------- ------------- ------------- ------------- --------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.048 0.047 0.052 0.033 0.025
------- ------- ------- ------- -------
Total from Investment
Activities........... 0.048 0.047 0.052 0.033 0.025
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.048) (0.047) (0.052) (0.033) (0.025)
------- ------- ------- ------- -------
Total Distributions... (0.048) (0.047) (0.052) (0.033) (0.025)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return............ 4.93 % 4.81 % 5.33 % 3.34 % 2.52 %
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of
period (000).......... $22,022 $15,921 $13,340 $10,295 $46,920
Ratio of expenses to
average net assets.... 0.77 % 0.78 % 0.77 % 0.78 % 0.79 %
Ratio of net investment
income to average net
assets................ 4.83 % 4.70 % 5.20 % 3.48 % 2.50 %
Ratio of expenses to
average net assets*... 0.92 % 0.93 % 0.92 % 0.95 % 0.93 %
Ratio of net investment
income to average net
assets*............... 4.68 % 4.55 % 5.05 % 3.31 % 2.36 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On January 3, 1994, the Portfolio issued a new series of shares which were
designated as "Institutional" Shares. The financial highlights presented
for the periods prior to January 3, 1994 represent financial highlights
applicable to the Investor Shares.
See notes to financial statements
-135-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------------
1997 1996 1995 1994 (A) 1993
---------- ---------- ---------- ---------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.044 0.044 0.048 0.031 0.024
------- ------- ------- ------- -------
Total from Investment
Activities........... 0.044 0.044 0.048 0.031 0.024
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.044) (0.044) (0.048) (0.031) (0.024)
------- ------- ------- ------- -------
Total Distributions... (0.044) (0.044) (0.048) (0.031) (0.024)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return............ 4.53 % 4.46 % 4.93 % 3.16 % 2.43 %
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of
period (000).......... $8,409 $ 7,667 $ 2,776 $ 1,713 $ 1,411
Ratio of expenses to
average net assets.... 0.77 % 0.81 % 0.78 % 0.71 % 0.64 %
Ratio of net investment
income to average net
assets................ 4.43 % 4.35 % 4.84 % 3.14 % 2.41 %
Ratio of expenses to
average net assets*... 0.92 % 0.96 % 0.93 % 0.94 % 0.97 %
Ratio of net investment
income to average net
assets*............... 4.28 % 4.20 % 4.69 % 2.90 % 2.08 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
See notes to financial statements
-136-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.046 0.045 0.050 0.033 0.026
-------- -------- -------- -------- --------
Total from Investment
Activities........... 0.046 0.045 0.050 0.033 0.026
-------- -------- -------- -------- --------
Distributions
Net investment income.. (0.046) (0.045) (0.050) (0.033) (0.026)
-------- -------- -------- -------- --------
Total Distributions... (0.046) (0.045) (0.050) (0.033) (0.026)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return............ 4.70 % 4.64 % 5.12 % 3.38 % 2.67 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $283,653 $131,322 $252,780 $242,099 $256,503
Ratio of expenses to
average net assets.... 0.61 % 0.61 % 0.60 % 0.49 % 0.41 %
Ratio of net investment
income to average net
assets................ 4.60 % 4.55 % 5.01 % 3.26 % 2.64 %
Ratio of expenses to
average net assets*... 0.92 % 0.76 % 0.75 % 0.94 % 0.85 %
Ratio of net investment
income to average net
assets*............... 4.28 % 4.40 % 4.86 % 2.82 % 2.21 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements
-137-
<PAGE>
THE ARCH FUND, INC.
TREASURY MONEY MARKET PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 26, 1995
NOVEMBER 30, TO
--------------------------- NOVEMBER 30,
1997 1996 1995 (A)
------------- ------------- ----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
SHARES SHARES SHARES
------------- ------------- ----------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Investment Activities
Net investment income........... 0.044 0.044 0.042
------- ------- -------
Total from Investment
Activities.................... 0.044 0.044 0.042
------- ------- -------
Distributions
Net investment income........... (0.044) (0.044) (0.042)
------- ------- -------
Total Distributions............ (0.044) (0.044) (0.042)
------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total Return..................... 4.53 % 4.46 % 4.94 %(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).......................... $ 233 $ 299 $ 28
Ratio of expenses to average net
assets......................... 0.77 % 0.79 % 0.92 %(b)
Ratio of net investment income
to average net assets.......... 4.44 % 4.39 % 5.76 %(b)
Ratio of expenses to average net
assets*........................ 0.92 % 0.94 % 1.07 %(b)
Ratio of net investment income
to average net assets*......... 4.29 % 4.24 % 5.61 %(b)
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Represents total return for the Investor A Shares from December 1, 1994
to January 25, 1995 plus the total return for the Institutional Shares
from January 26, 1995 to November 30, 1995.
See notes to financial statements
-138-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED ENDED
NOVEMBER 30, NOVEMBER 30, YEARS ENDED MAY 31,
---------------------- ------------ -----------------------------
1997 1996 1995 (D) 1995 (A) 1994 1993
---------- ---------- ------------ ---------- -------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------- ---------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------ ------ ------ ------
INVESTMENT ACTIVITIES
Net investment income.. 0.028 0.028 0.014 0.027 0.017 0.019
------- ------- ------ ------ ------ ------
Total from Investment
Activities........... 0.028 0.028 0.014 0.027 0.017 0.019
------- ------- ------ ------ ------ ------
DISTRIBUTIONS
Net investment income.. (0.028) (0.028) (0.014) (0.027) (0.017) (0.019)
------- ------- ------ ------ ------ ------
Total Distributions... (0.028) (0.028) (0.014) (0.027) (0.017) (0.019)
------- ------- ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ====== ====== ====== ======
Total Return............ 2.88 % 2.83 % 1.45 %(b) 2.70 % 1.73 % 1.90 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $15,789 $17,984 $5,403 $5,138 $8,631 $6,837
Ratio of expenses to
average net assets.... 0.77 % 0.75 % 0.94 %(c) 0.84 % 0.76 % 0.80 %
Ratio of net investment
income to average net
assets................ 2.82 % 2.78 % 2.87 %(c) 2.63 % 1.72 % 1.88 %
Ratio of expenses to
average net assets*... 0.82 % 0.80 % 0.99 %(c) 0.93 % 0.86 % 0.90 %
Ratio of net investment
income to average net
assets*............... 2.77 % 2.73 % 2.82 %(c) 2.54 % 1.62 % 1.78 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares.
(b) Not annualized.
(c) Annualized.
(d) Upon reorganizing as a portfolio of the ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-139-
<PAGE>
THE ARCH FUND, INC.
TAX-EXEMPT MONEY MARKET PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED ENDED
NOVEMBER 30, NOVEMBER 30, YEARS ENDED MAY 31,
------------------ ------------ -----------------------------
1997 1996 1995 (C) 1995 1994 1993
-------- ------- ------------ ------- -------- --------
TRUST TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES SHARES
-------- ------- ------------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- -------- --------
Investment Activities
Net investment income.. 0.030 0.030 0.016 0.029 0.020 0.021
-------- ------- ------- ------- -------- --------
Total from Investment
Activities........... 0.030 0.030 0.016 0.029 0.020 0.021
-------- ------- ------- ------- -------- --------
Distributions
Net investment income.. (0.030) (0.030) (0.016) (0.029) (0.020) (0.021)
-------- ------- ------- ------- -------- --------
Total Distributions... (0.030) (0.030) (0.016) (0.029) (0.020) (0.021)
-------- ------- ------- ------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= ======== ========
Total Return............ 3.08 % 3.06 % 1.57 %(a) 2.93 % 1.97 % 2.16 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $143,517 $95,726 $78,031 $85,324 $112,594 $137,602
Ratio of expenses to
average net assets.... 0.58 % 0.53 % 0.70 %(b) 0.61 % 0.52 % 0.52 %
Ratio of net investment
income to average net
assets................ 3.04 % 3.01 % 3.10 %(b) 2.87 % 1.95 % 2.13 %
Ratio of expenses to
average net assets*... 0.83 % 0.58 % 0.75 %(b) 0.70 % 0.86 % 0.62 %
Ratio of net investment
income to average net
assets*............... 2.79 % 2.96 % 3.05 %(b) 2.78 % 1.61 % 2.03 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Upon reorganizing as a Portfolio of the ARCH Fund, Inc., the Tax-Exempt
Money Market Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-140-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------------
1997 1996 1995 1994 (A) 1993
---------- ---------- ---------- ---------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 18.67 $ 16.30 $ 12.70 $ 14.74 $ 14.49
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.11 0.20 0.23 0.20 0.25
Net realized and
unrealized gains
(losses) from
investments........... 3.96 3.32 3.74 (0.17) 1.06
------- ------- ------- ------- -------
Total from Investment
Activities........... 4.07 3.52 3.97 0.03 1.31
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.13) (0.20) (0.23) (0.21) (0.25)
In excess of net
investment income..... (0.03) (0.01) -- -- --
Net realized gains..... (1.46) (0.94) (0.14) (0.18) (0.81)
In excess of net
realized gains........ -- -- -- (1.68) --
------- ------- ------- ------- -------
Total Distributions... (1.62) (1.15) (0.37) (2.07) (1.06)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 21.12 $ 18.67 $ 16.30 $ 12.70 $ 14.74
======= ======= ======= ======= =======
Total Return (excludes
sales charge).......... 23.90 % 22.99 % 31.95 % 0.20 % 9.65 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $46,372 $38,229 $25,082 $18,343 $11,157
Ratio of expenses to
average net assets.... 1.04 % 1.05 % 1.05 % 1.05 % 0.74 %
Ratio of net investment
income to average net
assets................ 0.60 % 1.20 % 1.59 % 1.45 % 1.74 %
Ratio of expenses to
average net assets*... 1.14 % 1.15 % 1.15 % 1.15 % 0.96 %
Ratio of net investment
income to average net
assets*............... 0.50 % 1.10 % 1.49 % 1.35 % 1.52 %
Portfolio turnover**... 57.11 % 63.90 % 58.50 % 65.00 % 41.00 %
Average commission rate
paid (b).............. $0.0451 $0.0598 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-141-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 1, 1995
NOVEMBER 30, TO
---------------------- NOVEMBER 30,
1997 1996 1995 (A)
---------- ---------- -------------
INVESTOR B INVESTOR B INVESTOR B
SHARES SHARES SHARES
---------- ---------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 18.58 $ 16.23 $13.43
------- ------- ------
Investment Activities
Net investment income (loss)............ (0.02) 0.11 0.14
Net realized and unrealized gains
(losses) from investments.............. 3.93 3.30 2.81
------- ------- ------
Total from Investment Activities....... 3.91 3.41 2.95
------- ------- ------
Distributions
Net investment income................... -- (0.11) (0.15)
In excess of net investment income...... (0.09) (0.01) --
Net realized gains...................... (1.46) (0.94) --
------- ------- ------
Total Distributions.................... (1.55) (1.06) (0.15)
------- ------- ------
NET ASSET VALUE, END OF PERIOD........... $ 20.94 $ 18.58 $16.23
======= ======= ======
Total Return (excludes sales charge)..... 23.04 % 22.29 % 31.20 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 6,349 $ 3,537 $ 781
Ratio of expenses to average net assets. 1.73 % 1.75 % 1.75 %(c)
Ratio of net investment income (loss) to
average net assets..................... (0.11)% 0.49 % 0.87 %(c)
Ratio of expenses to average net
assets*................................ 1.83 % 1.85 % 1.85 %(c)
Ratio of net investment income (loss) to
average net assets*.................... (0.21)% 0.39 % 0.77 %(c)
Portfolio turnover**.................... 57.11 % 63.90 % 58.50 %
Average commission rate paid (d)........ $0.0451 $0.0598 --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio authorized the issuance of a series designated as "Investor B"
Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-142-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 18.71 $ 16.32 $ 12.72 $ 14.74 $ 14.49
-------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.23 0.24 0.27 0.22 0.25
Net realized and
unrealized gains
(losses) from
investments........... 3.96 3.34 3.74 (0.17) 1.06
-------- -------- -------- -------- --------
Total from Investment
Activities........... 4.19 3.58 4.01 0.05 1.31
-------- -------- -------- -------- --------
Distributions
Net investment income.. (0.25) (0.24) (0.27) (0.21) (0.25)
In excess of net in-
vestment income....... -- (0.01) -- -- --
Net realized gains..... (1.46) (0.94) (0.14) (0.18) (0.81)
In excess of net real-
ized gains............ -- -- -- (1.68) --
-------- -------- -------- -------- --------
Total Distributions... (1.71) (1.19) (0.41) (2.07) (1.06)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 21.19 $ 18.71 $ 16.32 $ 12.72 $ 14.74
======== ======== ======== ======== ========
Total Return............ 24.55 % 23.45 % 32.27 % 0.36 % 9.65 %
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of
period (000).......... $322,304 $348,183 $286,546 $235,955 $238,771
Ratio of expenses to
average net assets.... 0.74 % 0.75 % 0.75 % 0.75 % 0.74 %
Ratio of net investment
income to average net
assets................ 0.91 % 1.50 % 1.89 % 1.72 % 1.74 %
Ratio of expenses to
average net assets*... 1.14 % 0.85 % 0.85 % 1.15 % 0.96 %
Ratio of net investment
income to average net
assets*............... 0.51 % 1.40 % 1.79 % 1.32 % 1.52 %
Portfolio turnover**... 57.11 % 63.90 % 58.50 % 65.00 % 41.00 %
Average commission rate
paid (a).............. $0.0451 $0.0598 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-143-
<PAGE>
THE ARCH FUND, INC.
GROWTH & INCOME EQUITY PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------------------
1997 1996 1995 1994 (A) 1993
------------- ------------- ------------- ------------- --------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 18.67 $ 16.29 $ 12.70 $ 14.74 $ 14.49
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.12 0.20 0.23 0.20 0.25
Net realized and
unrealized gains
(losses) from
investments........... 3.95 3.33 3.74 (0.17) 1.06
------- ------- ------- ------- -------
Total from Investment
Activities........... 4.07 3.53 3.97 0.03 1.31
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.13) (0.20) (0.24) (0.21) (0.25)
In excess of net
investment income..... (0.03) (0.01) -- -- --
Net realized gains..... (1.46) (0.94) (0.14) (0.18) (0.81)
In excess of net
realized gains........ -- -- -- (1.68) --
------- ------- ------- ------- -------
Total Distributions... (1.62) (1.15) (0.38) (2.07) (1.06)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 21.12 $ 18.67 $ 16.29 $ 12.70 $ 14.74
======= ======= ======= ======= =======
Total Return............ 23.90 % 23.08 % 31.88 % 0.19 % 9.65 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $92,515 $72,950 $40,228 $21,897 $11,157
Ratio of expenses to
average net assets.... 1.04 % 1.05 % 1.05 % 1.05 % 0.74 %
Ratio of net investment
income to average net
assets................ 0.60 % 1.19 % 1.58 % 1.41 % 1.74 %
Ratio of expenses to
average net assets*... 1.14 % 1.15 % 1.15 % 1.16 % 0.96 %
Ratio of net investment
income to average net
assets*............... 0.50 % 1.09 % 1.48 % 1.30 % 1.52 %
Portfolio turnover**... 57.11 % 63.90 % 58.50 % 65.00 % 41.00 %
Average commission rate
paid (b).............. $0.0451 $0.0598 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On January 3, 1994, the Portfolio issued a new series of shares which were
designated as "Institutional" Shares. The financial highlights presented
for the periods prior to January 3, 1994 represent financial highlights
applicable to the Investor Shares.
(b) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-144-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------------
1997 1996 1995 1994 (A) 1993
---------- ---------- ---------- ---------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 13.40 $ 13.44 $ 11.99 $ 13.14 $11.23
------- ------- ------- ------- ------
Investment Activities
Net investment income
(loss)................. (0.05) (0.01) -- (0.03) 0.03
Net realized and
unrealized gains
(losses) from
investments............ 2.50 1.03 2.36 0.89 2.14
------- ------- ------- ------- ------
Total from Investment
Activities............ 2.45 1.02 2.36 0.86 2.17
------- ------- ------- ------- ------
Distributions
Net investment income... -- -- -- -- (0.05)
In excess of net
investment income...... -- (0.01) -- -- --
Net realized gains...... (0.82) (1.05) (0.91) (1.78) (0.21)
In excess of net
realized gains......... -- -- -- (0.23) --
------- ------- ------- ------- ------
Total Distributions.... (0.82) (1.06) (0.91) (2.01) (0.26)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD.................. $ 15.03 $ 13.40 $ 13.44 $ 11.99 $13.14
======= ======= ======= ======= ======
Total Return (excludes
sales charge)........... 19.45 % 8.36 % 21.47 % 7.38 % 19.75 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $14,213 $13,889 $15,056 $10,899 $4,559
Ratio of expenses to
average net assets..... 1.25 % 1.26 % 1.26 % 1.25 % 0.61 %
Ratio of net investment
income (loss) to
average net assets..... (0.29)% (0.13)% (0.12)% (0.44)% 0.19 %
Ratio of expenses to
average net assets*.... 1.35 % 1.36 % 1.36 % 1.36 % 1.23 %
Ratio of net investment
loss to average net
assets*................ (0.39)% (0.23)% (0.22)% (0.55)% (0.43)%
Portfolio turnover**.... 80.23 % 65.85 % 83.13 % 85.00 % 65.00 %
Average commission rate
paid (b)............... $0.0515 $0.0582 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-145-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 1, 1995
NOVEMBER 30, TO
---------------------- NOVEMBER 30,
1997 1996 1995 (A)
---------- ---------- -------------
INVESTOR B INVESTOR B INVESTOR B
SHARES SHARES SHARES
---------- ---------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 13.24 $ 13.37 $11.83
------- ------- ------
Investment Activities
Net investment loss..................... (0.13) (0.07) (0.03)
Net realized and unrealized gains
(losses) from investments.............. 2.45 0.99 1.57
------- ------- ------
Total from Investment Activities....... 2.32 0.92 1.54
------- ------- ------
Distributions
Net realized gains...................... (0.82) (1.05) --
------- ------- ------
Total Distributions.................... (0.82) (1.05) --
------- ------- ------
NET ASSET VALUE, END OF PERIOD........... $ 14.74 $ 13.24 $13.37
======= ======= ======
Total Return (excludes sales charge)..... 18.62 % 7.63% 20.83 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 1,503 $ 1,272 $ 603
Ratio of expenses to average net assets. 1.95 % 1.96 % 1.96 %(c)
Ratio of net investment loss to average
net assets............................. (0.99)% (0.83)% (0.78)%(c)
Ratio of expenses to average net
assets *............................... 2.05 % 2.06 % 2.06 %(c)
Ratio of net investment loss to average
net assets *........................... (1.09)% (0.93)% (0.88)%(c)
Portfolio turnover **................... 80.23 % 65.85 % 83.13 %
Average commission rate paid (d)........ $0.0515 $0.0582 --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio authorized the issuance of a series designated as "Investor B"
Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-146-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
--------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- ------- -------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................ $ 13.49 $ 13.49 $ 12.01 $ 13.14 $ 11.23
-------- -------- -------- ------- -------
Investment Activities
Net investment income
(loss).................. 0.01 0.02 0.03 (0.01) 0.03
Net realized and
unrealized gains
(losses) from
investments............. 2.50 1.05 2.36 0.89 2.14
-------- -------- -------- ------- -------
Total from Investment
Activities............. 2.51 1.07 2.39 0.88 2.17
-------- -------- -------- ------- -------
Distributions
Net investment income.... (0.01) (0.02) -- -- (0.05)
Net realized gains....... (0.82) (1.05) (0.91) (1.78) (0.21)
In excess of net realized
gains................... -- -- -- (0.23) --
-------- -------- -------- ------- -------
Total Distributions..... (0.83) (1.07) (0.91) (2.01) (0.26)
-------- -------- -------- ------- -------
NET ASSET VALUE, END OF
PERIOD................... $ 15.17 $ 13.49 $ 13.49 $ 12.01 $ 13.14
======== ======== ======== ======= =======
Total Return.............. 19.77 % 8.72 % 21.70 % 7.56 % 19.75 %
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000)............ $211,643 $171,295 $139,681 $77,690 $47,473
Ratio of expenses to
average net assets...... 0.95 % 0.96 % 0.96 % 0.95 % 0.61 %
Ratio of net investment
income (loss) to average
net assets.............. 0.01 % 0.17 % 0.18 % (0.16)% 0.19 %
Ratio of expenses to
average net assets*..... 1.35 % 1.06 % 1.06 % 1.36 % 1.23 %
Ratio of net investment
income (loss) to average
net assets*............. (0.39)% 0.07 % 0.08 % (0.56)% (0.43)%
Portfolio turnover**..... 80.23 % 65.85 % 83.13 % 85.00 % 65.00 %
Average commission rate
paid (a)................ $ 0.0515 $ 0.0582 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-147-
<PAGE>
THE ARCH FUND, INC.
SMALL CAP EQUITY PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------------------
1997 1996 1995 1994 (A) 1993
------------- ------------- ------------- ------------- --------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 13.36 $ 13.40 $ 11.96 $13.14 $11.23
Investment Activities
Net investment income
(loss)................ (0.04) (0.01) (0.01) (0.03) 0.03
Net realized and
unrealized gains
(losses) from invest-
ments................. 2.48 1.03 2.36 0.86 2.14
------- ------- ------- ------ ------
Total from Investment
Activities........... 2.44 1.02 2.35 0.83 2.17
------- ------- ------- ------ ------
Distributions
Net investment income.. -- -- -- -- (0.05)
In excess of net in-
vestment income....... -- (0.01) -- -- --
Net realized gains..... (0.82) (1.05) (0.91) (1.78) (0.21)
In excess of net real-
ized gains............ -- -- -- (0.23) --
------- ------- ------- ------ ------
Total Distributions... (0.82) (1.06) (0.91) (2.01) (0.26)
------- ------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 14.98 $ 13.36 $ 13.40 $11.96 $13.14
======= ======= ======= ====== ======
Total Return............ 19.41 % 8.39 % 21.43 % 7.11 % 19.75 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $34,395 $30,081 $17,620 $5,633 $4,559
Ratio of expenses to
average net assets.... 1.25 % 1.26 % 1.26 % 1.25 % 0.61 %
Ratio of net investment
income (loss) to aver-
age net assets........ (0.29)% (0.13)% (0.11)% (0.41)% 0.19 %
Ratio of expenses to
average net assets*... 1.35 % 1.36 % 1.36 % 1.37 % 1.23 %
Ratio of net investment
loss to average net
assets*............... (0.39)% (0.23)% (0.21)% (0.53)% (0.43)%
Portfolio turnover**... 80.23 % 65.85 % 83.13 % 85.00 % 65.00 %
Average commission rate
paid (b).............. $0.0515 $0.0582 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On May 6, 1992 the Portfolio issued a series of shares designated as
"Investor" Shares. In addition, on January 3, 1994, the Portfolio issued a
new series of shares designated as "Institutional" Shares. The financial
highlights presented for periods prior to January 3, 1994 represent
financial highlights applicable to the Investor Shares.
(b) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-148-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30, APRIL 4, 1994 TO
---------------------------------- NOVEMBER 30,
1997 1996 1995 1994 (A)(B)(C)
---------- ---------- ---------- ----------------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A
SHARES SHARES SHARES SHARES
---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 12.05 $ 10.76 $ 9.90 $10.00
------- ------- ------ ------
Investment Activities
Net investment income
(loss)..................... (0.02) 0.02 0.02 (0.01)
Net realized and unrealized
gains (losses) from
investments and foreign
currency................... 0.32 1.27 0.86 (0.09)
------- ------- ------ ------
Total from Investment
Activities................ 0.30 1.29 0.88 (0.10)
------- ------- ------ ------
Distributions
In excess of net investment
income..................... (0.05) -- -- --
Net realized gains.......... (0.31) -- (0.01) --
Tax return of capital....... -- -- (0.01) --
------- ------- ------ ------
Total Distributions........ (0.36) -- (0.02) --
------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD...................... $ 11.99 $ 12.05 $10.76 $ 9.90
======= ======= ====== ======
Total Return (excludes sales
charge)..................... 2.58 % 11.99 % 8.89 % (1.00)%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)...................... $ 2,854 $ 2,573 $1,568 $ 791
Ratio of expenses to average
net assets................. 1.59 % 1.44 % 1.45 % 1.55 %(e)
Ratio of net investment
income (loss) to average
net assets................. (0.20)% 0.19 % 0.07 % (0.39)%(e)
Ratio of expenses to average
net assets*................ 1.75 % 1.75 % 1.76 % 1.89 %(e)
Ratio of net investment
income (loss) to average
net assets*................ (0.36)% (0.12)% (0.24)% (0.73)%(e)
Portfolio turnover**........ 75.18 % 77.63 % 62.78 % 21.00 %
Average commission rate
paid (f)................... $0.0229 $0.0251 -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) On April 4, 1994, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on May 2, 1994, the Portfolio
issued a new series of shares which were designated as "Investor" Shares.
The financial highlights presented for April 4, 1994 to May 2, 1994
represent financial highlights applicable to the Trust Shares.
(c) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(d) Not annualized.
(e) Annualized.
(f) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-149-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 1, 1995
NOVEMBER 30, TO
---------------------- NOVEMBER 30,
1997 1996 1995 (A)
---------- ---------- -------------
INVESTOR B INVESTOR B INVESTOR B
SHARES SHARES SHARES
---------- ---------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 11.90 $ 10.71 $ 9.26
------- ------- ------
Investment Activities
Net investment loss..................... (0.09) (0.04) (0.03)
Net realized and unrealized gains
(losses) from investments and foreign
currency............................... 0.30 1.23 1.48
------- ------- ------
Total from Investment Activities....... 0.21 1.19 1.45
------- ------- ------
Distributions
In excess of net investment income...... (0.03) -- --
Net realized gains...................... (0.31) -- --
------- ------- ------
Total Distributions.................... (0.34) -- --
------- ------- ------
NET ASSET VALUE, END OF PERIOD........... $ 11.77 $ 11.90 $10.71
======= ======= ======
Total Return (excludes sales charge)..... 1.82 % 11.11 % 8.38 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 562 $ 437 $ 102
Ratio of expenses to average net assets. 2.29 % 2.14 % 2.02 %(c)
Ratio of net investment loss to average
net assets............................. (0.91)% (0.50)% (0.96)%(c)
Ratio of expenses to average net
assets*................................ 2.45 % 2.46 % 2.44 %(c)
Ratio of net investment loss to average
net assets*............................ (1.07)% (0.82)% (1.38)%(c)
Portfolio turnover**.................... 75.18 % 77.63 % 62.78 %
Average commission rate paid (d)........ $0.0229 $0.0251 $ --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-150-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30, APRIL 4, 1994 TO
------------------------------ NOVEMBER 30,
1997 1996 1995 1994 (A)
-------- -------- -------- ----------------
TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD.................. $ 12.12 $ 10.79 $ 9.92 $ 10.00
-------- -------- -------- -------
Investment Activities
Net investment income...... 0.01 0.06 0.03 0.01
Net realized and unrealized
gains (losses) from
investments and foreign
currency.................. 0.33 1.27 0.86 (0.09)
-------- -------- -------- -------
Total from Investment
Activities............... 0.34 1.33 0.89 (0.08)
-------- -------- -------- -------
Distributions
Net investment income...... (0.04) -- -- --
In excess of net investment
income.................... (0.02) -- -- --
Net realized gains......... (0.31) -- (0.01) --
Tax return of capital...... -- -- (0.01) --
-------- -------- -------- -------
Total Distributions....... (0.37) -- (0.02) --
-------- -------- -------- -------
NET ASSET VALUE, END OF
PERIOD..................... $ 12.09 $ 12.12 $ 10.79 $ 9.92
======== ======== ======== =======
Total Return................ 2.91 % 12.33 % 8.97 % (0.80)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)..................... $ 55,038 $ 52,181 $ 36,096 $23,746
Ratio of expenses to
average net assets........ 1.29 % 1.14 % 1.16 % 1.23 %(c)
Ratio of net investment
income to average net
assets.................... 0.09 % 0.51 % 0.39 % 0.23 %(c)
Ratio of expenses to
average net assets*....... 1.75 % 1.45 % 1.46 % 1.95 %(c)
Ratio of net investment
income (loss) to average
net assets*............... (0.37)% 0.20 % 0.09 % (0.49)%(c)
Portfolio turnover**....... 75.18 % 77.63 % 62.78 % 21.00 %
Average commission rate
paid (d).................. $ 0.0229 $ 0.0251 $ -- $ --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-151-
<PAGE>
THE ARCH FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30, APRIL 4, 1994 TO
----------------------------------------- NOVEMBER 30,
1997 1996 1995 1994 (A)
------------- ------------- ------------- ----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
SHARES SHARES SHARES SHARES
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 12.03 $ 10.75 $ 9.90 $10.00
------- ------- ------ ------
Investment Activities
Net investment income
(loss)................ (0.03) 0.01 0.01 (0.01)
Net realized and
unrealized gains
(losses) from
investments and
foreign currency...... 0.33 1.27 0.86 (0.09)
------- ------- ------ ------
Total from Investment
Activities........... 0.30 1.28 0.87 (0.10)
------- ------- ------ ------
Distributions
In excess of net
investment income..... (0.05) -- -- --
Realized net gains..... (0.31) -- (0.01) --
Total return of
capital............... -- -- (0.01) --
------- ------- ------ ------
Total Distributions... (0.36) -- (0.02) --
------- ------- ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 11.97 $ 12.03 $10.75 $ 9.90
======= ======= ====== ======
Total Return............ 2.59 % 11.91 % 8.78 % (1.00)%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $ 6,798 $ 6,059 $2,159 $ 197
Ratio of expenses to
average net assets.... 1.59 % 1.44 % 1.44 % 1.70 %(c)
Ratio of net investment
income (loss) to
average net assets.... (0.21)% 0.16 % 0.13 % (0.48)%(c)
Ratio of expenses to
average net assets*... 1.75 % 1.76 % 1.75 % 2.17 %(c)
Ratio of net investment
loss to average net
assets*............... (0.37)% (0.16)% (0.18)% (0.94)%(c)
Portfolio turnover**... 75.18 % 77.63 % 62.78 % 21.00 %
Average commission rate
paid (d).............. $0.0229 $0.0251 -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On April 4, 1994, the Portfolio issued a series of shares which were
designated as "Trust" Shares. In addition, on April 24, 1994, the
Portfolio issued a new series of shares which were designated as
"Institutional" Shares. The financial highlights presented for April 4,
1994 to April 24, 1994 represent financial highlights applicable to the
Trust Shares.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-152-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INVESTOR A
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
-------
Investment Activities
Net investment income................................... 0.16
Net realized and unrealized gains (losses) from
investments............................................ 1.57
-------
Total from Investment Activities....................... 1.73
-------
Distributions
Net investment income................................... (0.16)
In excess of net investment income...................... (0.01)
-------
Total Distributions.................................... (0.17)
-------
NET ASSET VALUE, END OF PERIOD........................... $ 11.56
=======
Total Return (excludes sales charge)..................... 17.42 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $ 173
Ratio of expenses to average net assets................. 0.45 %(c)
Ratio of net investment income to average net assets.... 2.29 %(c)
Ratio of expenses to average net assets*................ 1.38 %(c)
Ratio of net investment income to average net assets*... 1.36 %(c)
Portfolio turnover**.................................... 48.33 %
Average commission rate paid (d)........................ $0.0566
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-153-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INVESTOR B
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
-------
Investment Activities
Net investment income................................... 0.10
Net realized and unrealized gains (losses) from
investments............................................ 1.57
-------
Total from Investment Activities....................... 1.67
-------
Distributions
Net investment income................................... (0.10)
In excess of net investment income...................... (0.02)
-------
Total Distributions.................................... (0.12)
-------
NET ASSET VALUE, END OF PERIOD........................... $ 11.55
=======
Total Return (excludes sales charge)..................... 16.75 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $ 131
Ratio of expenses to average net assets................. 1.14 %(c)
Ratio of net investment income to average net assets.... 1.53 %(c)
Ratio of expenses to average net assets*................ 2.07 %(c)
Ratio of net investment income to average net assets*... 0.60 %(c)
Portfolio turnover**.................................... 48.33 %
Average commission rate paid (d)........................ $0.0566
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-154-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
TRUST
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
--------
Investment Activities
Net investment income................................... 0.20
Net realized and unrealized gains (losses) from
investments............................................ 1.55
--------
Total from Investment Activities....................... 1.75
--------
Distributions
Net investment income................................... (0.19)
--------
Total Distributions.................................... (0.19)
--------
NET ASSET VALUE, END OF PERIOD........................... $ 11.56
========
Total Return............................................. 17.64 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $131,919
Ratio of expenses to average net assets................. 0.15 %(c)
Ratio of net investment income to average net assets.... 2.51 %(c)
Ratio of expenses to average net assets*................ 1.38 %(c)
Ratio of net investment income to average net assets*... 1.28 %(c)
Portfolio turnover**.................................... 48.33 %
Average commission rate paid (d)........................ $ 0.0566
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-155-
<PAGE>
THE ARCH FUND, INC.
EQUITY INCOME
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INSTITUTIONAL
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
-------
Investment Activities
Net investment income................................... 0.19
Net realized and unrealized gains (losses) from
investments............................................ 1.56
-------
Total from Investment Activities....................... 1.75
-------
Distributions
Net investment income................................... (0.19)
-------
Total Distributions.................................... (0.19)
-------
NET ASSET VALUE, END OF PERIOD........................... $ 11.56
=======
Total Return............................................. 17.64 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $ 1
Ratio of expenses to average net assets................. 0.37 %(c)
Ratio of net investment income to average net assets.... 2.34 %(c)
Ratio of expenses to average net assets*................ 1.60 %(c)
Ratio of net investment income to average net assets*... 1.11 %(c)
Portfolio turnover**.................................... 48.33 %
Average commission rate paid (d)........................ $0.0566
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-156-
<PAGE>
THE ARCH FUND, INC.
EQUITY INDEX
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 1, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INVESTOR A
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
-------
Investment Activities
Net investment income................................... 0.07
Net realized and unrealized gains (losses) from
investments............................................ 1.94
-------
Total from Investment Activities....................... 2.01
-------
Distributions
Net investment income................................... (0.07)
In excess of net investment income...................... (0.01)
-------
Total Distributions.................................... (0.08)
-------
NET ASSET VALUE, END OF PERIOD........................... $ 11.93
=======
Total Return (excludes sales charge)..................... 20.14 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $ 206
Ratio of expenses to average net assets................. 0.78 %(c)
Ratio of net investment income to average net assets.... 1.02 %(c)
Ratio of expenses to average net assets*................ 1.21 %(c)
Ratio of net investment income to average net assets*... 0.59 %(c)
Portfolio turnover**.................................... 1.66 %
Average commission rate paid (d)........................ $0.0206
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-157-
<PAGE>
THE ARCH FUND, INC.
EQUITY INDEX
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 1, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
TRUST
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
-------
Investment Activities
Net investment income................................... 0.10
Net realized and unrealized gains (losses) from
investments............................................ 1.94
-------
Total from Investment Activities....................... 2.04
-------
Distributions
Net investment income................................... (0.10)
-------
Total Distributions.................................... (0.10)
-------
NET ASSET VALUE, END OF PERIOD........................... $ 11.94
=======
Total Return............................................. 20.40 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $31,787
Ratio of expenses to average net assets................. 0.39 %(c)
Ratio of net investment income to average net assets.... 1.48 %(c)
Ratio of expenses to average net assets*................ 1.12 %(c)
Ratio of net investment income to average net assets*... 0.75 %(c)
Portfolio turnover**.................................... 1.66 %
Average commission rate paid (d)........................ $0.0206
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-158-
<PAGE>
THE ARCH FUND, INC.
EQUITY INDEX
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MAY 1, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INSTITUTIONAL
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
-------
Investment Activities
Net investment income................................... 0.10
Net realized and unrealized gains (losses) from
investments............................................ 1.94
-------
Total from Investment Activities....................... 2.04
-------
Distributions
Net investment income................................... (0.10)
-------
Total Distributions.................................... (0.10)
-------
NET ASSET VALUE, END OF PERIOD........................... $ 11.94
=======
Total Return............................................. 20.40 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $ 8
Ratio of expenses to average net assets................. 0.46 %(c)
Ratio of net investment income to average net assets.... 1.30 %(c)
Ratio of expenses to average net assets*................ 1.19 %(c)
Ratio of net investment income to average net assets*... 0.57 %(c)
Portfolio turnover**.................................... 1.66 %
Average commission rate paid (d)........................ $0.0206
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
See notes to financial statements
-159-
<PAGE>
THE ARCH FUND, INC.
GROWTH EQUITY
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
OCTOBER 1, 1997
TO
NOVEMBER 30, 1997 (A) YEAR ENDED SEPTEMBER 30,
--------------------- --------------------------------------------
INVESTOR A
SHARES 1997 1996 1995 1994 1993(E)
--------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 18.75 $ 15.06 $ 13.80 $ 9.74 $ 10.02 $ 10.00
------- ------- ------- ------- ------- -------
Investment Activities...
Net investment income.. (0.01) 0.08 0.12 0.10 0.07 0.04
Net realized and
unrealized gains
(losses) from
investments........... (0.24) 4.75 1.32 4.05 (0.25) 0.02
------- ------- ------- ------- ------- -------
Total from Investment
Activities........... (0.25) 4.83 1.44 4.15 (0.18) 0.06
------- ------- ------- ------- ------- -------
Distributions
Net investment income.. -- (0.09) (0.11) (0.09) (0.07) (0.04)
Net realized gains..... (2.24) (1.05) (0.07) -- (0.03) --
------- ------- ------- ------- ------- -------
Total Distributions... (2.24) (1.14) (0.18) (0.09) (0.10) (0.04)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 16.26 $ 18.75 $ 15.06 $ 13.80 $ 9.74 $ 10.02
======= ======= ======= ======= ======= =======
Total Return (excludes
sales charge).......... (1.25)%(b) 33.85% 10.48% 42.90% (1.84%) 0.60%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $ 3,467 $68,965 $55,573 $43,708 $30,282 $31,159
Ratio of expenses to
average net assets.... 1.17 %(c) 1.14% 1.17% 1.28% 1.36% 1.32%(c)
Ratio of net investment
income to average net
assets................ (0.27)%(c) 0.44% 0.86% 0.90% 0.74% 0.62%(c)
Ratio of expenses to
average net assets*... 1.42 %(c) 1.39% 1.45% 1.58% 1.64% 1.62%(c)
Ratio of net investment
income to average net
assets*............... (0.52)%(c) 0.19% 0.58% 0.60% 0.46% 0.32%(c)
Portfolio turnover**... 24.45 % 42% 45% 45% 127% 54%
Average commission rate
paid (d).............. $0.0525 $0.0815 $0.0756 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Upon reorganizing as a Portfolio of the Arch Fund, Inc., the Arrow Equity
Portfolio became the Growth Equity Portfolio and changed its year-end to
November 30. Financial Highlights for the periods prior to November 24,
1997 represent financial highlights of the Arrow Equity Portfolio.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
(e) Reflects operations for the period from January 4, 1993 (date of initial
public investment) to September 30, 1993.
See notes to financial statements
-160-
<PAGE>
THE ARCH FUND, INC.
GROWTH EQUITY
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 24, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
TRUST
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 16.44
-------
Investment Activities
Net investment income................................... 0.09
Net realized and unrealized gains (losses) from
investments............................................ (0.27)
-------
Total from Investment Activities....................... (0.18)
-------
Distributions
Net investment income................................... --
-------
Total Distributions.................................... --
-------
NET ASSET VALUE, END OF PERIOD........................... $ 16.26
=======
Total Return............................................. (1.09)%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....................... $63,786
Ratio of expenses to average net assets................. 1.24 %(c)
Ratio of net investment income to average net assets.... (0.15)%(c)
Ratio of expenses to average net assets*................ 1.34 %(c)
Ratio of net investment income to average net assets*... (0.25)%(c)
Portfolio turnover**.................................... 0.00 %
Average commission rate paid (d)........................ $ --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-161-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
APRIL 1, 1993
YEARS ENDED NOVEMBER 30, TO
--------------------------------------------- NOVEMBER 30,
1997 1996 1995 1994 (A) 1993 (B)
---------- ---------- ---------- ---------- -------------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 12.58 $ 11.65 $ 9.61 $10.22 $10.00
------- ------- ------ ------ ------
Investment Activities
Net investment income.. 0.32 0.32 0.32 0.28 0.23
Net realized and
unrealized gains
(losses) from
investments........... 1.47 1.34 2.02 (0.47) 0.15
------- ------- ------ ------ ------
Total from Investment
Activities........... 1.79 1.66 2.34 (0.19) 0.38
------- ------- ------ ------ ------
Distributions
Net investment income.. (0.40) (0.31) (0.30) (0.29) (0.16)
Net realized gains..... (0.71) (0.42) -- -- --
In excess of net
realized gains........ -- -- -- (0.13) --
------- ------- ------ ------ ------
Total Distributions... (1.11) (0.73) (0.30) (0.42) (0.16)
------- ------- ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 13.26 $ 12.58 $11.65 $ 9.61 $10.22
======= ======= ====== ====== ======
Total Return (excludes
sales charge).......... 15.38 % 15.10 % 24.85 % (1.91)% 3.86 %(c)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $ 9,923 $ 9,328 $8,348 $7,321 $1,978
Ratio of expenses to
average net assets.... 1.27 % 1.27 % 1.27 % 1.27 % 0.56 %(d)
Ratio of net investment
income to average net
assets................ 2.57 % 2.79 % 2.98 % 2.77 % 3.42 %(d)
Ratio of expenses to
average net assets*... 1.37 % 1.37 % 1.37 % 1.39 % 1.21 %(d)
Ratio of net investment
income to average net
assets*............... 2.47 % 2.69 % 2.88 % 2.65 % 2.77 %(d)
Portfolio turnover**... 43.60 % 85.16 % 58.16 % 49.00 % 26.00 %
Average commission rate
paid (e).............. $0.0503 $0.0599 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Period from commencement of operations.
(c) Not annualized.
(d) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-162-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 1,
NOVEMBER 30, 1995 TO
---------------------- NOVEMBER 30,
1997 1996 1995 (A)
---------- ---------- ------------
INVESTOR B INVESTOR B INVESTOR B
SHARES SHARES SHARES
---------- ---------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 12.49 $ 11.59 $10.13
------- ------- ------
Investment Activities
Net investment income.................... 0.25 0.25 0.22
Net realized and unrealized gains
(losses) from investments............... 1.43 1.33 1.44
------- ------- ------
Total from Investment Activities........ 1.68 1.58 1.66
------- ------- ------
Distributions
Net investment income.................... (0.26) (0.26) (0.20)
In excess of net investment income....... (0.05) -- --
Net realized gains....................... (0.71) (0.42) --
------- ------- ------
Total Distributions..................... (1.02) (0.68) (0.20)
------- ------- ------
NET ASSET VALUE, END OF PERIOD............ $ 13.15 $ 12.49 $11.59
======= ======= ======
Total Return (excludes sales charge)...... 14.57 % 14.35 % 23.92 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........ $ 522 $ 321 $ 36
Ratio of expenses to average net assets.. 1.96 % 1.96 % 1.93 %(c)
Ratio of net investment income to average
net assets.............................. 1.85 % 2.09 % 2.28 %(c)
Ratio of expenses to average net assets*. 2.06 % 2.06 % 2.03 %(c)
Ratio of net investment income to average
net assets*............................. 1.75 % 1.99 % 2.18 %(c)
Portfolio turnover**..................... 43.60 % 85.16 % 58.16 %
Average commission rate paid (d)......... $0.0503 $0.0599 --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio authorized the issuance of a series of shares designated as
"Investor B" Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-163-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
APRIL 1, 1993
YEARS ENDED NOVEMBER 30, TO
------------------------------------- NOVEMBER 30,
1997 1996 1995 1994 1993 (A)
------- ------- ------- ------- -------------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 12.58 $ 11.64 $ 9.62 $ 10.22 $ 10.00
------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.38 0.37 0.34 0.29 0.23
Net realized and
unrealized gains
(losses) from
investments........... 1.45 1.34 2.02 (0.47) 0.15
------- ------- ------- ------- -------
Total from Investment
Activities........... 1.83 1.71 2.36 (0.18) 0.38
------- ------- ------- ------- -------
Distributions
Net investment income.. (0.43) (0.35) (0.34) (0.29) (0.16)
Net realized gains..... (0.71) (0.42) -- -- --
In excess of net
realized gains........ -- -- -- (0.13) --
------- ------- ------- ------- -------
Total Distributions... (1.14) (0.77) (0.34) (0.42) (0.16)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 13.27 $ 12.58 $ 11.64 $ 9.62 $ 10.22
======= ======= ======= ======= =======
Total Return............ 15.81 % 15.56 % 24.97 % (1.81)% (3.86)%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $54,299 $61,821 $72,669 $65,288 $69,720
Ratio of expenses to
average net assets.... 0.97 % 0.97 % 0.98 % 0.97 % 0.56 %(c)
Ratio of net investment
income to average net
assets................ 2.87 % 3.08 % 3.29 % 3.04 % 3.42 %(c)
Ratio of expenses to
average net assets *.. 1.37 % 1.07 % 1.08 % 1.39 % 1.21 %(c)
Ratio of net investment
income to average net
assets *.............. 2.47 % 2.98 % 3.19 % 2.63 % 2.77 %(c)
Portfolio turnover **.. 43.60 % 85.16 % 58.16 % 49.00 % 26.00 %
Average commission rate
paid (d).............. $0.0503 $0.0599 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-164-
<PAGE>
THE ARCH FUND, INC.
BALANCED PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
APRIL 1, 1993
YEARS ENDED NOVEMBER 30, TO
---------------------------------------------------- NOVEMBER 30,
1997 1996 1995 1994 (A) 1993 (B)
-------- ------------- ------------- ------------- -------------
INVESTOR INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES SHARES
-------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD................. $ 12.54 $ 11.62 $ 9.60 $ 10.22 $10.00
------- ------- ------- ------- ------
Investment Activities
Net investment income.. 0.31 0.32 0.31 0.28 0.23
Net realized and
unrealized gains
(losses) from
investments........... 1.49 1.34 2.02 (0.48) 0.15
------- ------- ------- ------- ------
Total from Investment
Activities........... 1.80 1.66 2.33 (0.20) 0.38
------- ------- ------- ------- ------
Distributions
Net investment income.. (0.37) (0.32) (0.31) (0.29) (0.16)
In excess of net
investment income..... (0.03) -- -- -- --
Net realized gains..... (0.71) (0.42) -- -- --
In excess of net
realized gains........ -- -- -- (0.13) --
------- ------- ------- ------- ------
Total Distributions... (1.11) (0.74) (0.31) (0.42) (0.16)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD................. $ 13.23 $ 12.54 $ 11.62 $ 9.60 $10.22
======= ======= ======= ======= ======
Total Return............ 15.52 % 15.08 % 24.67 % (2.00)% 3.86 %(c)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $61,655 $54,731 $36,827 $22,723 $1,978
Ratio of expenses to
average net assets.... 1.27 % 1.27 % 1.27 % 1.27 % 0.56 %(d)
Ratio of net investment
income to average net
assets................ 2.56 % 2.78 % 2.97 % 2.77 % 3.42 %(d)
Ratio of expenses to
average net assets*... 1.37 % 1.37 % 1.37 % 1.40 % 1.21 %(d)
Ratio of net investment
income to average net
assets*............... 2.46 % 2.68 % 2.87 % 2.64 % 2.77 %(d)
Portfolio turnover**... 43.60 % 85.16 % 58.16 % 49.00 % 26.00 %
Average commission rate
paid (e).............. $0.0503 $0.0599 -- -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) The Balanced Portfolio issued a series of shares designated as "Investor"
Shares on April 1, 1993. In addition, on January 3, 1994, the Portfolio
issued a new series of shares designated as "Institutional" Shares. The
financial highlights presented for periods prior to January 3, 1994
represent financial highlights applicable to the Investor Shares.
(c) Not annualized.
(d) Annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged.
See notes to financial statements
-165-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------
1997 1996 1995 1994 (A) 1993
---------- ---------- ---------- ---------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $10.34 $10.53 $ 9.64 $10.65 $10.26
------ ------ ------ ------ ------
Investment Activities
Net investment income... 0.56 0.64 0.61 0.60 0.64
Net realized and
unrealized gains
(losses) from
investments............ 0.01 (0.19) 0.89 (0.94) 0.39
------ ------ ------ ------ ------
Total from Investment
Activities............ 0.57 0.45 1.50 (0.34) 1.03
------ ------ ------ ------ ------
Distributions
Net investment income... (0.56) (0.64) (0.61) (0.60) (0.64)
In excess of net
investment income...... -- -- -- (0.07) --
------ ------ ------ ------ ------
Total Distributions.... (0.56) (0.64) (0.61) (0.67) (0.64)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD.................. $10.35 $10.34 $10.53 $ 9.64 $10.65
====== ====== ====== ====== ======
Total Return (excludes
sales charge)........... 5.78 % 4.51 % 15.98 % (3.32)% 10.23 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $4,774 $4,915 $5,496 $5,167 $3,737
Ratio of expenses to
average net assets..... 0.95 % 0.95 % 0.95 % 0.95 % 0.95 %
Ratio of net investment
income to average net
assets................. 5.46 % 6.06 % 6.03 % 6.00 % 6.00 %
Ratio of expenses to
average net assets*.... 1.05 % 1.05 % 1.05 % 1.05 % 1.05 %
Ratio of net investment
income to average net
assets*................ 5.36 % 5.96 % 5.93 % 5.90 % 5.90 %
Portfolio turnover**.... 140.72 % 149.20 % 59.32 % 50.00 % 31.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
See notes to financial statements
-166-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 1, 1995
NOVEMBER 30, TO
---------------------- NOVEMBER 30,
1997 1996 1995 (A)
---------- ---------- -------------
INVESTOR B INVESTOR B INVESTOR B
SHARES SHARES SHARES
---------- ---------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 10.34 $ 10.53 $ 9.92
------- ------- ------
Investment Activities
Net investment income................... 0.49 0.57 0.38
Net realized and unrealized gains
(losses) from investments.............. 0.03 (0.19) 0.61
------- ------- ------
Total from Investment Activities....... 0.52 0.38 0.99
------- ------- ------
Distributions
Net investment income................... (0.49) (0.57) (0.38)
------- ------- ------
Total Distributions.................... (0.49) (0.57) (0.38)
------- ------- ------
NET ASSET VALUE, END OF PERIOD........... $ 10.37 $ 10.34 $10.53
======= ======= ======
Total Return (excludes sales charge)..... 5.26 % 3.79 % 15.27 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)....... $ 545 $ 511 $ 106
Ratio of expenses to average net assets. 1.65 % 1.65 % 1.65 %(c)
Ratio of net investment income to
average net assets..................... 4.84 % 5.37 % 5.19 %(c)
Ratio of expenses to average net
assets*................................ 1.75 % 1.75 % 1.75 %(c)
Ratio of net investment income to
average net assets*.................... 4.74 % 5.27 % 5.09 %(c)
Portfolio turnover**.................... 140.72 % 149.20 % 59.32 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio redesignated the Investor Shares as "Investor A" Shares and
authorized the issuance of a series of shares designated as "Investor B"
Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994 to
February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements
-167-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER
----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.34 $ 10.53 $ 9.64 $ 10.65 $ 10.26
-------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.59 0.67 0.64 0.63 0.68
Net realized and
unrealized gains
(losses) from
investments........... 0.03 (0.19) 0.89 (0.94) 0.39
-------- -------- -------- -------- --------
Total from Investment
Activities........... 0.62 0.48 1.53 (0.31) 1.07
-------- -------- -------- -------- --------
Distributions
Net investment income.. (0.59) (0.67) (0.64) (0.63) (0.68)
In excess of net
realized gains........ -- -- -- (0.07) --
-------- -------- -------- -------- --------
Total Distributions... (0.59) (0.67) (0.64) (0.70) (0.68)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 10.37 $ 10.34 $ 10.53 $ 9.64 $ 10.65
======== ======== ======== ======== ========
Total Return............ 6.32 % 4.82 % 16.31 % (3.03)% 10.55 %
RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000).......... $172,637 $141,440 $127,741 $132,577 $149,674
Ratio of expenses to
average net assets.... 0.65 % 0.65 % 0.65 % 0.65 % 0.65 %
Ratio of net investment
income to average net
assets................ 5.85 % 6.36 % 6.32 % 6.25 % 6.32 %
Ratio of expenses to
average net assets*... 1.05 % 0.75 % 0.75 % 1.05 % 0.88 %
Ratio of net investment
income to average net
assets*............... 5.45 % 6.26 % 6.22 % 5.85 % 6.09 %
Portfolio turnover**... 140.72 % 149.20 % 59.32 % 50.00 % 31.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements
-168-
<PAGE>
THE ARCH FUND, INC.
GOVERNMENT & CORPORATE BOND PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------------------
1997 1996 1995 1994 (A) 1993
------------- ------------- ------------- ------------- --------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 10.34 $ 10.53 $ 9.64 $10.65 $10.26
------- ------- ------ ------ ------
Investment Activities
Net investment income.. 0.56 0.64 0.61 0.60 0.64
Net realized and
unrealized gains
(losses) from
investments........... 0.03 (0.19) 0.89 (0.94) 0.39
------- ------- ------ ------ ------
Total from Investment
Activities........... 0.59 0.45 1.50 (0.34) 1.03
------- ------- ------ ------ ------
Distributions
Net investment income.. (0.56) (0.64) (0.61) (0.60) (0.64)
In excess of net
realized gains........ -- -- -- (0.07) --
------- ------- ------ ------ ------
Total Distributions... (0.56) (0.64) (0.61) (0.67) (0.64)
------- ------- ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 10.37 $ 10.34 $10.53 $ 9.64 $10.65
======= ======= ====== ====== ======
Total Return............ 6.00 % 4.51 % 15.98 % (3.32)% 10.23 %
RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000).......... $16,954 $14,875 $9,413 $5,965 $3,737
Ratio of expenses to
average net assets.... 0.95 % 0.95 % 0.95 % 0.96 % 0.95 %
Ratio of net investment
income to average net
assets................ 5.55 % 6.06 % 6.01 % 6.03 % 6.00 %
Ratio of expenses to
average net assets*... 1.05 % 1.05 % 1.05 % 1.07 % 1.05 %
Ratio of net investment
income to average net
assets*............... 5.45 % 5.96 % 5.91 % 5.92 % 5.90 %
Portfolio turnover**... 140.72 % 149.20 % 59.32 % 50.00 % 31.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On January 3, 1994, the Portfolio issued a new series of shares which were
designated as "Institutional" Shares. The financial highlights presented
for the periods prior to January 3, 1994 represent financial highlights
applicable to the Investor Shares.
See notes to financial statements
-169-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------
1997 1996 1995 1994 (A) 1993
---------- ---------- ---------- ---------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR
SHARES SHARES SHARES SHARES SHARES
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $10.67 $10.85 $10.05 $11.20 $10.80
------ ------ ------ ------ ------
Investment Activities
Net investment income... 0.60 0.62 0.64 0.61 0.59
Net realized and
unrealized gains
(losses) from
investments............ (0.07) (0.15) 0.80 (1.00) 0.47
------ ------ ------ ------ ------
Total from Investment
Activities............ 0.53 0.47 1.44 (0.39) 1.06
------ ------ ------ ------ ------
Distributions
Net investment income... (0.58) (0.62) (0.64) (0.61) (0.59)
In excess of net
investment income...... -- (0.03) -- -- --
Net realized gains...... -- -- -- -- (0.07)
In excess of net
realized gains......... -- -- -- (0.18) --
------ ------ ------ ------ ------
Total Distributions.... (0.58) (0.65) (0.64) (0.79) (0.66)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD.................. $10.62 $10.67 $10.85 $10.05 $11.20
====== ====== ====== ====== ======
Total Return (excludes
sales charge)........... 5.20 % 4.57 % 14.66 % (3.14)% 10.03 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)........... $5,181 $7,153 $8,179 $9,631 $9,567
Ratio of expenses to
average net assets..... 0.97 % 0.97 % 0.97 % 0.96 % 0.97 %
Ratio of net investment
income to average net
assets................. 5.56 % 5.82 % 6.05 % 5.98 % 5.25 %
Ratio of expenses to
average net assets*.... 1.07 % 1.07 % 1.07 % 1.06 % 1.08 %
Ratio of net investment
income to average net
assets*................ 5.46 % 5.72 % 5.95 % 5.88 % 5.14 %
Portfolio turnover**.... 100.33 % 53.76 % 93.76 % 50.00 % 24.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
See notes to financial statements
-170-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED MARCH 1, 1995
NOVEMBER 30, TO
--------------------- NOVEMBER 30,
1997 1996 1995 (A)
---------- ---------- -------------
INVESTOR B INVESTOR B INVESTOR B
SHARES SHARES SHARES
---------- ---------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $10.66 $10.84 $10.34
------ ------ ------
Investment Activities
Net investment income................... 0.51 0.55 0.31
Net realized and unrealized gains
(losses) from investments.............. (0.05) (0.15) 0.50
------ ------ ------
Total from Investment Activities....... 0.46 0.40 0.81
------ ------ ------
Distributions
Net investment income................... (0.51) (0.55) (0.31)
Net realized gains...................... -- (0.03) --
------ ------ ------
Total Distributions.................... (0.51) (0.58) (0.31)
------ ------ ------
NET ASSET VALUE, END OF PERIOD........... $10.61 $10.66 $10.84
====== ====== ======
Total Return (excludes sales charge)..... 4.47 % 3.85 % 12.85 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 466 $ 359 $ 41
Ratio of expenses to average net assets. 1.67 % 1.66 % 1.68 %(c)
Ratio of net investment income to
average net assets..................... 4.84 % 5.06 % 5.37 %(c)
Ratio of expenses to average net
assets*................................ 1.77 % 1.76 % 1.78 %(c)
Ratio of net investment income to
average net assets*.................... 4.74 % 4.96 % 5.27 %(c)
Portfolio turnover**.................... 100.33 % 53.76 % 93.76 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Period from commencement of operations. On September 27, 1994, the
Portfolio redesignated the Investor Shares as "Investor A" Shares and
authorized the issuance of a series of shares designated as "Investor B"
Shares.
(b) Represents total return for the Investor A Shares from December 1, 1994
to February 28, 1995 plus the total return for the Investor B Shares from
March 1, 1995 to November 30, 1995.
(c) Annualized.
See notes to financial statements
-171-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-----------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 10.67 $ 10.85 $ 10.05 $ 11.20 $ 10.80
------- ------- ------- ------- -------
Investment Activities
Net investment income....... 0.61 0.66 0.67 0.66 0.62
Net realized and unrealized
gains (losses) from
investments................ (0.05) (0.15) 0.80 (0.97) 0.47
------- ------- ------- ------- -------
Total from Investment
Activities................ 0.56 0.51 1.47 (0.31) 1.09
------- ------- ------- ------- -------
Distributions
Net investment income....... (0.61) (0.66) (0.67) (0.66) (0.62)
Net realized gains.......... -- -- -- -- (0.07)
In excess of net realized
gains...................... -- (0.03) -- (0.18) --
------- ------- ------- ------- -------
Total Distributions........ (0.61) (0.69) (0.67) (0.84) (0.69)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD...................... $ 10.62 $ 10.67 $ 10.85 $ 10.05 $ 11.20
======= ======= ======= ======= =======
Total Return................. 5.51 % 4.88 % 15.00 % (2.85)% 10.36 %
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)...................... $72,753 $60,079 $45,513 $33,166 $35,121
Ratio of expenses to average
net assets................. 0.67 % 0.67 % 0.67 % 0.66 % 0.67 %
Ratio of net investment
income to average net
assets..................... 5.84 % 6.10 % 6.36 % 6.25 % 5.57 %
Ratio of expenses to average
net assets*................ 1.07 % 0.77 % 0.77 % 1.06 % 0.91 %
Ratio of net investment
income to average net
assets*.................... 5.44 % 6.00 % 6.26 % 5.85 % 5.33 %
Portfolio turnover**........ 100.33 % 53.67 % 93.76 % 50.00 % 24.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements
-172-
<PAGE>
THE ARCH FUND, INC.
U.S. GOVERNMENT SECURITIES PORTFOLIO
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
----------------------------------------------------------------
1997 1996 1995 1994 (A) 1993
------------- ------------- ------------- ------------- --------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INVESTOR
SHARES SHARES SHARES SHARES SHARES
------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.64 $10.82 $10.02 $11.20 $10.80
------ ------ ------ ------ ------
Investment Activities
Net investment income.. 0.56 0.62 0.63 0.61 0.59
Net realized and
unrealized gains
(losses) from
investments........... (0.04) (0.15) 0.80 (1.00) 0.47
------ ------ ------ ------ ------
Total from Investment
Activities........... 0.52 0.47 1.43 (0.39) 1.06
------ ------ ------ ------ ------
Distributions
Net investment income.. (0.58) (0.62) (0.63) (0.61) (0.59)
In excess of net
investment income..... -- -- -- (0.18) --
Net realized gains..... -- -- -- -- (0.07)
In excess of net
realized gains........ -- (0.03) -- -- --
------ ------ ------ ------ ------
Total Distributions... (0.58) (0.65) (0.63) (0.79) (0.66)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $10.58 $10.64 $10.82 $10.02 $11.20
====== ====== ====== ====== ======
Total Return............ 5.10 % 4.55 % 14.69 % (3.46)% 10.03 %
RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000).......... $7,049 $2,232 $ 667 $ 51 $9,567
Ratio of expenses to
average net assets.... 0.97 % 0.96 % 0.97 % 0.95 % 0.97 %
Ratio of net investment
income to average net
assets................ 5.52 % 5.75 % 5.91 % 6.54 % 5.25 %
Ratio of expenses to
average net assets*... 1.07 % 1.06 % 1.07 % 1.16 % 1.08 %
Ratio of net investment
income to average net
assets*............... 5.42 % 5.65 % 5.81 % 6.33 % 5.14 %
Portfolio turnover**... 100.33 % 53.76 % 93.76 % 50.00 % 24.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) As of December 1, 1990, the Portfolio designated the existing series of
shares as "Investor" Shares. In addition, on June 7, 1994, the Portfolio
issued a new series of shares designated as "Institutional" Shares. The
financial highlights presented for periods prior to June 7, 1994 represent
financial highlights applicable to the Investor Shares.
See notes to financial statements
-173-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED JULY 10, 1995
NOVEMBER 30, TO
--------------------- NOVEMBER 30,
1997 1996 1995 (A)
---------- ---------- -------------
INVESTOR A INVESTOR A INVESTOR A
SHARES SHARES SHARES
---------- ---------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $10.08 $10.08 $10.00
------ ------ ------
Investment Activities
Net investment income................... 0.37 0.40 --
Net realized and unrealized gains
(losses) from investments.............. 0.03 -- 0.08
------ ------ ------
Total from Investment Activities....... 0.40 0.40 0.08
------ ------ ------
Distributions
Net investment income................... (0.37) (0.40) --
------ ------ ------
Total Distributions.................... (0.37) (0.40) --
------ ------ ------
NET ASSET VALUE, END OF PERIOD........... $10.11 $10.08 $10.08
====== ====== ======
Total Return (excludes sales charge)..... 4.12 % 4.02 % 0.80 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 16 $ 51 --(c)
Ratio of expenses to average net assets. 0.62 % 0.56 % 0.00 %(d)
Ratio of net investment income to
average net assets..................... 3.78 % 3.83 % 0.00 %(d)
Ratio of expenses to average net
assets*................................ 1.32 % 1.26 % 0.00 %(d)
Ratio of net investment income to
average net assets*.................... 3.08 % 3.13 % 0.00 %(d)
Portfolio turnover**.................... 0.00 % 0.00 % 0.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Only one Investor A Share, worth $10.08, was outstanding as of November 30,
1995.
(d) Annualized.
See notes to financial statements
-174-
<PAGE>
THE ARCH FUND, INC.
SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED JULY 10,
NOVEMBER 30, 1995 TO
----------------- NOVEMBER 30,
1997 1996 1995 (A)
------- ------- ------------
TRUST TRUST TRUST
SHARES SHARES SHARES
------- ------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $ 10.07 $ 10.07 $ 10.00
------- ------- -------
Investment Activities
Net investment income..................... 0.40 0.41 0.14
Net realized and unrealized gains (losses)
from investments......................... 0.03 -- 0.07
------- ------- -------
Total from Investment Activities......... 0.43 0.41 0.21
------- ------- -------
Distributions
Net investment income..................... (0.40) (0.41) (0.14)
------- ------- -------
Total Distributions...................... (0.40) (0.41) (0.14)
------- ------- -------
NET ASSET VALUE, END OF PERIOD............. $10.10 $ 10.07 $ 10.07
------- ------- -------
Total Return............................... 4.39 % 4.15 % 2.15 %(b)
======= ======= =======
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)......... $30,454 $29,472 $23,754
Ratio of expenses to average net assets... 0.38 % 0.31 % 0.47 %(c)
Ratio of net investment income to average
net assets............................... 4.00 % 4.07 % 3.81 %(c)
Ratio of expenses to average net assets*.. 1.33 % 0.96 % 1.12 %(c)
Ratio of net investment income to average
net assets*.............................. 3.05 % 3.42 % 3.16 %(c)
Portfolio turnover**...................... 0.00 % 0.00 % 0.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-175-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS
NOVEMBER 30, ENDED YEARS ENDED MAY 31,
---------------------- NOVEMBER 30, -------------------------------
1997 1996 1995 (D) 1995 (A) 1994 1993
---------- ---------- ------------ ---------- -------- --------
INVESTOR A INVESTOR A INVESTOR A INVESTOR A INVESTOR INVESTOR
SHARES SHARES SHARES SHARES SHARES SHARES
---------- ---------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income . 0.53 0.55 0.27 0.55 0.55 0.58
Net realized and
unrealized gains
(losses) from
investments .......... 0.18 (0.05) 0.22 0.40 (0.37) 0.64
------- ------- ------- ------- ------- -------
Total from Investment
Activities........... 0.71 0.50 0.49 0.95 0.18 1.22
------- ------- ------- ------- ------- -------
Distributions
Net investment income . (0.53) (0.55) (0.27) (0.55) (0.55) (0.58)
Net realized gains..... -- -- -- (0.01) (0.04) (0.07)
------- ------- ------- ------- ------- -------
Total Distributions... (0.53) (0.55) (0.27) (0.56) (0.59) (0.65)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 11.87 $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54
======= ======= ======= ======= ======= =======
Total Return (excludes
sales charge).......... 6.27 % 4.41 % 4.32 %(b) 8.91 % 1.53 % 11.47 %
RATIOS/SUPPLEMENTARY
DATA:
Net assets at end of
period (000).......... $23,722 $25,144 $24,726 $24,318 $27,919 $23,223
Ratio of expenses to
average net assets ... 0.86 % 0.85 % 0.95 %(c) 0.84 % 0.65 % 0.63 %
Ratio of net investment
income to average net
assets................ 4.57 % 4.75 % 4.64 %(c) 5.02 % 4.75 % 5.11 %
Ratio of expenses to
average net assets*... 1.06 % 1.05 % 1.18 %(c) 1.18 % 1.12 % 1.18 %
Ratio of net investment
income to average net
assets*............... 4.37 % 4.55 % 4.44 %(c) 4.68 % 4.28 % 4.56 %
Portfolio turnover**... 3.50 % 3.66 % 1.55 % -- 20.00 % 15.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated the Investor Shares as
"Investor A" Shares, and authorized the issuance of a series of shares
designated as "Investor B" Shares.
(b) Not annualized.
(c) Annualized.
(d) Upon reorganizing as a Portfolio of the ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-176-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS
NOVEMBER 30, ENDED MARCH 1, 1995
--------------------- NOVEMBER 30, TO MAY 31,
1997 1996 1995 (E) 1995 (A)
---------- ---------- ------------ -------------
INVESTOR B INVESTOR B INVESTOR B INVESTOR B
SHARES SHARES SHARES SHARES
---------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................ $11.68 $11.74 $11.52 $11.19
------ ------ ------ ------
Investment Activities
Net investment income.... 0.44 0.45 0.22 0.11
Net realized and
unrealized gains
(losses) from
investments............. 0.18 (0.06) 0.22 0.33
------ ------ ------ ------
Total from Investment
Activities............. 0.62 0.39 0.44 0.44
------ ------ ------ ------
Distributions
Net investment income.... (0.44) (0.45) (0.22) (0.11)
------ ------ ------ ------
Total Distributions..... (0.44) (0.45) (0.22) (0.11)
------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................... $11.86 $11.68 $11.74 $11.52
====== ====== ====== ======
Total Return (excludes
sales charge)............ 5.43 % 3.48 % 3.88 %(b) 8.61 %(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of
period (000)............ $1,398 $ 675 $ 433 $ 94
Ratio of expenses to
average net assets...... 1.66 % 1.65 % 1.77 %(d) 1.76 %(d)
Ratio of net investment
income to average net
assets.................. 3.76 % 3.96 % 3.82 %(d) 4.00 %(d)
Ratio of expenses to
average net assets*..... 1.76 % 1.75 % 1.87 %(d) 1.88 %(d)
Ratio of net investment
income to average net
assets*................. 3.66 % 3.86 % 3.72 %(d) 3.89 %(d)
Portfolio turnover**..... 3.50 % 3.66 % 1.55 % --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) On September 27, 1994, the Portfolio redesignated Investor shares as
"Investor A" shares and authorized the issuance of a third series of
shares designated as "Investor B" shares. These financial highlights of
Investor B shares cover the period from March 1, 1995 (commencement of
operations) through May 31, 1995.
(b) Not annualized.
(c) Represents total return for the Investor A Shares from June 1, 1994 to
February 28, 1995, plus the total return for the Investor B Shares for the
period from March 1, 1995 to May 31, 1995.
(d) Annualized.
(e) Upon reorganizing as a Portfilio of the ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-177-
<PAGE>
THE ARCH FUND, INC.
MISSOURI TAX-EXEMPT BOND PORTFOLIO
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS
NOVEMBER 30, ENDED YEAR ENDED MAY 31,
----------------- NOVEMBER 30, ---------------------------
1997 1996 1995 (C) 1995 1994 1993
------- ------- ------------ ------- ------- -------
TRUST TRUST TRUST TRUST TRUST TRUST
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54 $ 10.97
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income.. 0.56 0.57 0.28 0.57 0.58 0.60
Net realized and
unrealized gains
(losses) from
investments........... 0.18 (0.05) 0.22 0.40 (0.37) 0.64
------- ------- ------- ------- ------- -------
Total from Investment
Activities........... 0.74 0.52 0.50 0.97 0.21 1.24
------- ------- ------- ------- ------- -------
Distributions
Net investment income.. (0.56) (0.57) (0.28) (0.57) (0.58) (0.60)
Net realized gains..... -- -- -- (0.01) (0.04) (0.07)
------- ------- ------- ------- ------- -------
Total Distributions... (0.56) (0.57) (0.28) (0.58) (0.62) (0.67)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 11.87 $ 11.69 $ 11.74 $ 11.52 $ 11.13 $ 11.54
======= ======= ======= ======= ======= =======
Total Return............ 6.48 % 4.62 % 4.41 %(a) 9.12 % 1.73 % 11.70 %
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $75,431 $55,905 $47,773 $44,336 $47,743 $32,777
Ratio of expenses to
average net assets.... 0.66 % 0.65 % 0.78 %(b) 0.64 % 0.45 % 0.43 %
Ratio of net investment
income to average net
assets................ 4.76 % 4.95 % 4.83 %(b) 5.22 % 4.96 % 5.30 %
Ratio of expenses to
average net assets*... 1.06 % 0.75 % 0.88 %(b) 1.16 % 1.13 % 0.98 %
Ratio of net investment
income to average net
assets*............... 4.36 % 4.85 % 4.73 %(b) 4.70 % 4.28 % 4.75 %
Portfolio turnover**... 3.50 % 3.66 % 1.55 % -- 20.00 % 15.00 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized.
(c) Upon reorganizing as a Portfolio of the ARCH Fund, Inc., the Missouri Tax-
Exempt Bond Portfolio changed its fiscal year end from May 31 to November
30.
See notes to financial statements
-178-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 18, 1996
YEAR ENDED TO
NOVEMBER 30, 1997 NOVEMBER 30, 1996 (A)
----------------- ---------------------
INVESTOR A INVESTOR A
SHARES SHARES
----------------- ---------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD... $10.05 $10.00
------ ------
Investment Activities
Net investment income................. 0.52 0.02
Net realized and unrealized gains
(losses) from investments............ 0.22 0.05
------ ------
Total from Investment Activities..... 0.74 0.07
------ ------
Distributions
Net investment income................. (0.52) (0.02)
------ ------
Total Distributions.................. (0.52) (0.02)
------ ------
NET ASSET VALUE, END OF PERIOD......... $10.27 $10.05
====== ======
Total Return (excludes sales charge)... 7.61 % 0.73 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $ 717 $ 1
Ratio of expenses to average net
assets............................... 0.35 % 0.37 %(c)
Ratio of net investment income to
average net assets................... 4.71 % 9.08 %(c)
Ratio of expenses to average net
assets*.............................. 1.17 % 1.07 %(c)
Ratio of net investment income to
average net assets*.................. 3.89 % 8.38 %(c)
Portfolio turnover**.................. 83.94 % --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-179-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
INVESTOR B SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 18, 1996
YEAR ENDED TO
NOVEMBER 30, 1997 NOVEMBER 30, 1996 (A)
----------------- ---------------------
INVESTOR B INVESTOR B
SHARES SHARES
----------------- ---------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD... $10.05 $10.00
------ ------
Investment Activities
Net investment income................. 0.44 0.02
Net realized and unrealized gains
(losses) from investments............ 0.24 0.05
------ ------
Total from Investment Activities..... 0.68 0.07
------ ------
Distributions
Net investment income................. (0.44) (0.02)
------ ------
Total Distributions.................. (0.44) (0.02)
------ ------
NET ASSET VALUE, END OF PERIOD......... $10.29 $10.05
====== ======
Total Return (excludes sales charge)... 7.01 % 0.70 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $ 408 $ 1
Ratio of expenses to average net
assets............................... 1.17 % 1.10 %(c)
Ratio of net investment income to
average net assets................... 4.08 % 8.35 %(c)
Ratio of expenses to average net
assets*.............................. 1.89 % 1.80 %(c)
Ratio of net investment income to
average net assets*.................. 3.36 % 7.65 %(c)
Portfolio turnover**.................. 83.94 % --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-180-
<PAGE>
THE ARCH FUND, INC.
NATIONAL MUNICIPAL BOND
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 18, 1996
YEAR ENDED TO
NOVEMBER 30, 1997 NOVEMBER 30, 1996 (A)
----------------- ---------------------
TRUST TRUST
SHARES SHARES
----------------- ---------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD... $ 10.05 $ 10.00
-------- --------
Investment Activities
Net investment income................. 0.54 0.02
Net realized and unrealized gains
(losses) from investments............ 0.23 0.05
-------- --------
Total from Investment Activities..... 0.77 0.07
-------- --------
Distributions
Net investment income................. (0.54) (0.02)
-------- --------
Total Distributions.................. (0.54) (0.02)
-------- --------
NET ASSET VALUE, END OF PERIOD......... $ 10.28 $ 10.05
======== ========
Total Return........................... 7.97 % 0.74 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $366,889 $310,413
Ratio of expenses to average net
assets............................... 0.14 % 0.12 %(c)
Ratio of net investment income to
average net assets................... 5.38 % 5.77 %(c)
Ratio of expenses to average net
assets*.............................. 1.17 % 0.82 %(c)
Ratio of net investment income to
average net assets*.................. 4.35 % 5.07 %(c)
Portfolio turnover**.................. 83.94 % --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-181-
<PAGE>
THE ARCH FUND, INC.
INTERMEDIATE CORPORATE BOND
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INVESTOR A
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $10.00
------
Investment Activities
Net investment income................................... 0.52
Net realized and unrealized gains (losses) from
investments............................................ 0.11
------
Total from Investment Activities....................... 0.63
------
Distributions
Net investment income................................... (0.52)
------
Total Distributions.................................... (0.52)
------
NET ASSET VALUE, END OF PERIOD........................... $10.11
======
Total Return (excludes sales charge)..................... 6.48 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at the end of period (000)................... $ 277
Ratio of expenses to average net assets................. 0.58 %(c)
Ratio of net investment income to average net assets.... 6.52 %(c)
Ratio of expenses to average net assets*................ 1.31 %(c)
Ratio of net investment income to average net assets*... 5.79 %(c)
Portfolio turnover**.................................... 61.98 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-182-
<PAGE>
THE ARCH FUND, INC.
INTERMEDIATE CORPORATE BOND
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
TRUST
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
-------
Investment Activities
Net investment income................................... 0.53
Net realized and unrealized gains (losses) from
investments............................................ 0.11
-------
Total from Investment Activities....................... 0.64
-------
Distributions
Net investment income................................... (0.53)
-------
Total Distributions.................................... (0.53)
-------
NET ASSET VALUE, END OF PERIOD........................... $ 10.11
=======
Total Return............................................. 6.65 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net assets at the end of period (000)................... $44,443
Ratio of expenses to average net assets................. 0.29 %(c)
Ratio of net investment income to average net assets.... 6.90 %(c)
Ratio of expenses to average net assets*................ 1.32 %(c)
Ratio of net investment income to average net assets*... 5.87 %(c)
Portfolio turnover**.................................... 61.98 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-183-
<PAGE>
THE ARCH FUND, INC.
INTERMEDIATE CORPORATE BOND
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INSTITUTIONAL
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $10.00
------
Investment Activities
Net investment income................................... 0.53
Net realized and unrealized gains (losses) from
investments............................................ 0.11
------
Total from Investment Activities....................... 0.64
------
Distributions
Net investment income................................... (0.53)
------
Total Distributions.................................... (0.53)
------
NET ASSET VALUE, END OF PERIOD........................... $10.11
======
Total Return............................................. 6.60 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at the end of period (000)................... $ 27
Ratio of expenses to average net assets................. 0.29 %(c)
Ratio of net investment income to average net assets.... 7.06 %(c)
Ratio of expenses to average net assets*................ 1.31 %(c)
Ratio of net investment income to average net assets*... 6.04 %(c)
Portfolio turnover**.................................... 61.98 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-184-
<PAGE>
THE ARCH FUND, INC.
BOND INDEX
INVESTOR A SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INVESTOR A
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $10.00
------
Investment Activities
Net investment income................................... 0.50
Net realized and unrealized gains (losses) from
investments............................................ 0.17
------
Total from Investment Activities....................... 0.67
------
Distributions
Net investment income................................... (0.50)
------
Total Distributions.................................... (0.50)
------
NET ASSET VALUE, END OF PERIOD........................... $10.17
======
Total Return (excludes sales charge)..................... 6.93 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at the end of period (000)................... $ 55
Ratio of expenses to average net assets................. 0.54 %(c)
Ratio of net investment income to average net assets.... 6.71 %(c)
Ratio of expenses to average net assets*................ 0.95 %(c)
Ratio of net investment income to average net assets*... 6.30 %(c)
Portfolio turnover**.................................... 46.16 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-185-
<PAGE>
THE ARCH FUND, INC.
BOND INDEX
TRUST SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
TRUST
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.00
--------
Investment Activities
Net investment income................................... 0.53
Net realized and unrealized gains (losses) from invest-
ments.................................................. 0.16
--------
Total from Investment Activities....................... 0.69
--------
Distributions
Net investment income................................... (0.53)
--------
Total Distributions.................................... (0.53)
--------
NET ASSET VALUE, END OF PERIOD........................... $ 10.16
========
Total Return............................................. 7.15 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at the end of period (000)................... $138,319
Ratio of expenses to average net assets................. 0.23 %(c)
Ratio of net investment income to average net assets.... 6.92 %(c)
Ratio of expenses to average net assets*................ 0.94 %(c)
Ratio of net investment income to average net assets*... 6.21 %(c)
Portfolio turnover**.................................... 46.16 %
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
-186-
<PAGE>
THE ARCH FUND, INC.
BOND INDEX
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FEBRUARY 10, 1997
TO
NOVEMBER 30, 1997 (A)
---------------------
INSTITUTIONAL
SHARES
---------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $10.00
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Investment Activities
Net investment income................................... 0.53
Net realized and unrealized gains (losses) from
investments............................................ 0.17
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Total from Investment Activities....................... 0.70
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Distributions
Net investment income................................... (0.53)
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Total Distributions.................................... (0.53)
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NET ASSET VALUE, END OF PERIOD........................... $10.17
======
Total Return............................................. 7.20 %(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at the end of period (000)................... $ 27
Ratio of expenses to average net assets................. 0.24 %(c)
Ratio of net investment income to average net assets.... 7.09 %(c)
Ratio of expenses to average net assets*................ 0.95 %(c)
Ratio of net investment income to average net assets*... 6.38 %(c)
Portfolio turnover**.................................... 46.16 %
</TABLE>
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* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements
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[PHOTO OF DOLLAR AND POCKET WATCH APPEARS HERE]
INVESTMENT ADVISER
Mississippi Valley Advisors Inc.
One Mercantile Center
Seventh & Washington Streets
St. Louis, Missouri 63101
DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
LEGAL COUNSEL
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-3035
This report is submitted for the general information of the shareholders of The
ARCH Funds, Inc. It is not authorized for distribution to prospective investors
unless accompanied or preceded by effective prospectuses for the Funds, which
contain information concerning the Funds' investment policies and expenses as
well as other pertinent information.
1/98
