Arrow Equity Portfolio
Arrow Fixed Income Portfolio
Arrow Municipal Income Portfolio
Arrow Government Money Market Portfolio
(Portfolios of Arrow Funds)
Supplement to Prospectuses dated November 30, 1996
On August 21, 1997, the Board of Directors of Arrow Funds approved a proposed
Agreement and Plan of Reorganization (the "Reorganization Agreement") between
the Arrow Funds and The ARCH Fund, Inc., another family of mutual funds advised
by Mississippi Valley Advisors Inc. ("MVA"). This proposal was made as a result
of the merger of Mark Twain Bancshares, Inc. (the parent company of the Arrow
Funds' former investment adviser) and Mercantile Bancorporation Inc. (the parent
company of MVA), and a desire to combine the two fund families in order to
promote operational efficiencies, reduce duplicative investment advisory and
other expenses and eliminate market overlap. The Reorganization Agreement
contemplates: (a) the transfer of substantially all of the assets and
liabilities of Arrow's Fixed Income, Municipal Income and Equity Portfolios to
corresponding investment portfolios (the "Arch Portfolios") of the The ARCH
Fund, Inc. in exchange for shares of those Arch Portfolios; (b) the distribution
of the Arch Portfolios' shares so received to shareholders of the Arrow
Portfolios; and (c) the termination under state law of Arrow Funds. In addition
to the foregoing, it is anticipated that shareholders of Arrow Government Money
Market Portfolio will redeem their shares.
The Reorganization Agreement will be presented for the approval of shareholders
of Arrow Funds at a Special Meeting of Shareholders to be held on or about
November 12, 1997. It is anticipated that shareholders of record on September
12, 1997 will receive a combined prospectus/proxy statement discussing the terms
of and the reasons for the merger in detail, and will be entitled to vote at the
Special Meeting.
September 12, 1997
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