PRESIDENT'S LETTER
Dear Shareholder:
We are pleased to report that for the fiscal year ended December 31,
1993, the First Prairie Diversified Asset Fund provided a total return of
10.70%, based upon net asset value per share.* This compares with a
return of 10.06% for the Standard & Poor's 500 Composite Stock Price Index**
and 11.03% for the widely followed Lehman Brothers
Government/Corporate Bond Index for the same period.***
For the same 12-month period, the Fund provided a distribution rate per
share of 5.16%, based on the maximum offering price on December 31,
1993, adjusted for capital gain distributions.
We are also pleased that Morningstar, Inc., an acknowledged leader in
mutual fund ratings, continued to award the Fund its highest rating - five
stars. Morningstar ratings are based on its overall assessment of a fund's
risk level and historical return, net of expenses and sales loads, as
compared to other funds in its class. A five star rating is awarded to a
fund if it provides above average returns with below average risk within
its peer group.
Your Fund's primary objective is to maximize income through a mixture
of income producing securities, with capital appreciation a
secondary consideration. At the end of the year, the allocation of net
assets was as follows:
Bonds and Notes.........................33%
Common Stocks and Convertibles..........51%
Cash and Cash Equivalents...............16%
As the stock market has rotated leadership, we believe we have found
some attractive investments, particularly in currently out-of-favor
health care, financial and electric utility stocks. Throughout the fiscal
year, we purchased Pfizer, Bristol Myers-Squibb and Schering Plough, in
the Health Care area. In Financials, we added to our holdings of Aon and
First Union. Late in the year, we purchased Texas Utilities, Long Island
Lighting Company, and Pleo. In September, as interest rates were reaching
their lowest levels in over 25 years, we reduced our long-term bond
holdings, reduced the portfolio allocation of bonds, and significantly
reduced the average maturity of the bond portfolio. We believe we have
already seen the low point in interest rates for the long-term
U.S. Treasury Bond for this cycle.
The economic recovery in the U.S. continued throughout 1993 and picked
up steam in the fourth quarter. We expect economic growth to continue
through 1994 at a moderate rate and inflation and interest rates to
increase somewhat over the cyclical low levels of 1993. Therefore, the
Fund currently intends to focus more toward equity and convertible
investments, consistent with its investment objective, this year.
In 1993, our investment performance was helped by the decline in
interest rates as our bonds increased in value. However, this decline in
interest levels as well as the low level of short-term rates and the
sizeable amount of cash equivalents in the Fund hindered our performance.
Stock groups that added to our overall performance last year were
telecommunications and autos, specifically Sprint, U.S. West, General
Motors and Ford Motor Company. Stock groups that detracted from Fund
performance were tobacco and healthcare, specifically Philip Morris, RJR
Nabisco, Bristol Myers-Squibb, Glaxo and Johnson & Johnson.
As always, we will continue to watch economic, political and market
events during the months ahead, ready to take action to maintain portfolio
income for our shareholders.
Sincerely,
Joseph S. DiMartino
President
January 27, 1994
New York, N.Y.
* Total return represents the change during the period in a hypothetical
account with dividends reinvested.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC. - Reflects the
reinvestment of income dividends and, where applicable, capital gain
distributions. The Standard & Poor's 500 Composite Stock Price Index is a
widely accepted unmanaged index of stock market performance.
*** Source: Lehman Brothers - Lehman Brothers Government/Corporate
Bond Index is a widely accepted, unmanaged index of Government and
Corporate bond market performance and consists of all public obligations
of the U.S. Treasury, all publicly traded issued debt of U.S. Government
agencies and quasi-federal corporations, corporate debt guaranteed by the
U.S. Government and all publicly issued fixed rate, nonconvertible
investment grade, dollar denominated, SEC-registered corporate debt and
debt issued by foreign sovereign governments, municipalities, or
governmental agencies, or international agencies.
Distribution rate per share is based upon dividends per share
declared from net investment income during the period, divided by the
maximum offering price per share at the end of the period, adjusted for
capital gain distributions.
Source: Morningstar, Inc. - Morningstar proprietary ratings reflect
historical risk-adjusted performance as of 12/31/93. The ratings are
subject to change every month. Past performance is no guarantee of future
results. Morningstar ratings are calculated from the fund's three and five-
year average annual returns with appropriate fee adjustments and a risk
factor that reflects fund performance relative to three-month Treasury
bill monthly returns. Ten percent of the funds in an investment category
receive five stars.
FIRST PRAIRIE DIVERSIFIED ASSET FUND December 31, 1993
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN FIRST
PRAIRIE DIVERSIFIED ASSET FUND
AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX
AND LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
[Exhibit A]
Past performance is not predictive of future performance.
The above illustration compares a $10,000 investment made in the First
Prairie Diversified Asset Fund on 1/23/86 (Inception Date) to a
$10,000 investment made in the Standard & Poor's 500 Composite Stock
Price Index and Lehman Brothers Government/Corporate Bond Index on
that date. For comparative purposes, the value of the Indices on 1/31/86 are
used as the beginning value on 1/23/86. All dividends and capital gain
distributions are reinvested.
The Fund's performance takes into account the maximum initial sales
charge and all other applicable fees and expenses. The Standard & Poor's
500 Composite Stock Price Index is a widely accepted, unmanaged index of
overall stock market performance. The Lehman Brothers
Government/Corporate Bond Index is a widely accepted, unmanaged index
of Government and Corporate bond market performance and consists of all
public obligations of the U.S. Treasury, all publicly traded issued debt of
U.S. Government agencies and quasi-federal corporations, corporate debt
guaranteed by the U.S. Government and all publicly issued fixed rate,
nonconvertible investment grade, dollar denominated, SEC-registered
corporate debt and debt issued by foreign sovereign governments,
municipalities, or governmental agencies, or international agencies.
Neither index takes into account charges, fees and other expenses. Further
information relating to Fund performance, including expense
reimbursement, if applicable, is contained in the Condensed Financial
Information section of the Prospectus and elsewhere in this report.
*Source: Lipper Analytical Services, Inc.
**Source: Lehman Brothers
<TABLE>
<CAPTION>
FIRST PRAIRIE DIVERSIFIED ASSET FUND
STATEMENT OF INVESTMENTS DECEMBER 31, 1993
PRINCIPAL
BONDS AND NOTES-33.0% AMOUNT VALUE
----------- ------------
<S> <C> <C>
AUTOMOTIVE-1.0% Hertz
6 5/8%, 2000........................ $ 500,000 $ 500,013
------------
BANKING-5.3% Barclays American Corp., Deb.,
9 1/8%, 1997........................ 750,000 840,016
Chemical Banking Corp., Sub. Notes,
7 5/8%, 2003........................ 500,000 537,549
Citicorp:
9 3/4%, 1999........................ 250,000 293,279
8 5/8%, 2002........................ 350,000 398,934
NationsBank Corp., Sub. Notes,
8 1/8%, 2002........................ 350,000 389,325
Westpac Banking Corp., Sub. Deb.,
9 1/8%, 2001........................ 250,000 289,660
------------
2,748,763
------------
BASIC INDUSTRIES-1.0% USX-Marathon Group,
6 3/8%, 1998........................ 500,000 490,508
------------
ENERGY-3.3% Burlington Resources,
8 1/2%, 2001........................ 250,000 285,038
Coastal Corp.,Sr. Deb.,
10 1/4%, 2004....................... 500,000 597,500
Occidental Petroleum, Sr. Notes,
11 1/8%, 2010....................... 400,000 550,941
Shell Canada Corp., Deb.,
7 3/8%, 1999........................ 250,000 270,000
------------
1,703,479
------------
ENTERTAINMENT-1.0% Time Warner, Notes,
7.95%, 2000......................... 500,000 535,000
------------
FINANCE-6.8% Associates Corp. of North America,
Med.-Term Sr. Notes,
8 3/4%, 1996........................ 200,000 216,902
Discover Credit Card Corp., Notes,
8.37%, 1999......................... 250,000 274,925
General Motors Acceptance Corp., Deb.:
8.65%, 1996......................... 400,000 430,724
7 3/4%, 1997........................ 250,000 265,913
7%, 2000............................ 500,000 515,311
International Lease Finance Corp., Notes,
8.35%, 1998......................... 500,000 551,887
KFW International Finance,
Mortgage Guaranteed Notes,
8.85%, 1999......................... 250,000 287,378
Salomon, Sr. Notes,
7 1/2%, 2003........................ 500,000 522,693
Wells Fargo & Co., Sub. Notes,
8 3/8%, 2002........................ 400,000 446,081
------------
3,511,814
------------
FOOD AND BEVERAGES-5.0% Grand Metro Investment Corp., Deb.,
9%, 2011............................ 250,000 297,886
Philip Morris Corp., Deb.:
8 5/8%, 1999........................ 500,000 563,929
7 1/8%, 2004........................ 250,000 260,983
FIRST PRAIRIE DIVERSIFIED ASSET FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
PRINCIPAL
BONDS AND NOTES (CONTINUED) AMOUNT VALUE
----------- ------------
FOOD AND BEVERAGES (CONTINUED) RJR Nabisco Guaranteed Sr. Notes:
8.30%, 1999......................... $ 750,000 $ 750,937
8 5/8%, 2002........................ 700,000 689,009
------------
2,562,744
------------
RETAIL-.6% May Department Stores, Notes,
9.45%, 1999......................... 250,000 285,270
------------
TECHNOLOGY-1.1% Digital Equipment, Deb.,
8 5/8%, 2012........................ 500,000 559,204
------------
UTILITIES-2.1% Commonwealth Edison,
First Mortgage, Ser. 81,
8 5/8%, 2022....................... 250,000 267,313
Long Island Lighting, Notes,
9%, 2022............................ 300,000 313,164
Pacific Bell, Notes,
7%, 2004............................ 500,000 526,156
------------
1,106,633
------------
U.S. GOVERNMENT AND AGENCIES-5.8% Federal Home Loan Banks, Notes,
8 1/4%, 1996........................ 100,000 108,360
Federal National Mortgage Assn., Deb.:
7.60%, 1997......................... 400,000 432,095
8.35%, 1999......................... 500,000 569,451
Student Loan Marketing Assn.,
ECU/YEN Reverse Principal Exchange
Rate Linked Securities,
10 3/8%, 1995....................... 200,000 112,500
FHLMC Series 98,
8 1/4%, 2020....................... 500,000 520,625
U.S. Treasury Notes:
8 1/2%, 1997........................ 100,000 111,594
8 1/8%, 1998........................ 500,000 557,578
8%, 2001............................ 500,000 571,953
------------
2,984,156
------------
TOTAL BONDS AND NOTES
(cost $16,172,418).................. $ 16,987,584
============
EQUITY-RELATED SECURITIES-50.9%
(COMMON STOCKS AND CONVERTIBLE SECURITIES)
COMMON STOCKS-31.8% SHARES
-----------
BANKING-4.3% BankAmerica............................ 18,000 $ 834,750
First Union............................ 19,000 783,750
NationsBank............................ 11,912 583,688
------------
2,202,188
------------
BASIC INDUSTRIES-.9% Union Camp............................. 10,000 476,250
------------
FIRST PRAIRIE DIVERSIFIED ASSET FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
EQUITY-RELATED SECURITIES (CONTINUED)
COMMON STOCKS (CONTINUED) SHARES VALUE
----------- ------------
DRUGS AND HEALTH CARE-7.5% Bristol-Myers Squibb................... 20,000 $ 1,162,500
Glaxo Holdings PLC A.D.R............... 24,000 501,000
Johnson and Johnson.................... 11,000 492,250
Pfizer................................. 17,000 1,173,000
Schering-Plough........................ 8,000 548,000
------------
3,876,750
------------
ENERGY-3.7% Atlantic Richfield..................... 5,000 526,250
British Petroleum PLC A.D.S............ 9,000 576,000
Occidental Petroleum................... 20,000 342,500
Texaco................................. 7,500 484,687
------------
1,929,437
------------
FINANCE-1.5% American Express....................... 20,000 795,000
------------
FOOD AND BEVERAGES-2.2% Philip Morris Cos...................... 20,000 1,115,000
------------
HOSPITAL RELATED-3.0% National Health Investors.............. 55,000 1,526,250
------------
MANUFACTURING-1.0% Jostens Inc............................ 25,000 493,750
------------
TECHNOLOGY-1.0% International Business Machines........ 9,000 508,500
------------
UTILITIES-6.7% British Telecommunications............. 10,000 321,250
GTE.................................... 14,000 490,000
Long Island Lighting................... 20,000 487,500
Philadelphia Electric.................. 16,000 484,000
Sprint................................. 20,000 695,000
Texas Utilities........................ 12,000 519,000
U.S. West.............................. 10,000 458,750
------------
3,455,500
------------
TOTAL COMMON STOCKS 16,378,625
------------
CONVERTIBLE PREFERRED STOCKS-14.4%
AUTOMOTIVE-4.3% Ford Motor, Ser.A, Cum., $4.20......... 8,000 868,000
General Motors, Ser.A, Cum., $3.31..... 15,000 765,000
General Motors, Ser.C, Cum., $3.25..... 11,000 602,250
------------
2,235,250
------------
BANKING-3.8% BankAmerica, Ser.G, Cum., $3.25........ 7,000 414,750
Citicorp, Cum., $1.22.................. 25,000 496,875
Citicorp, Cum., $5.375................. 6,000 (a) 651,750
National City, Cum., $4.00............. 6,000 411,000
------------
1,974,375
------------
ENERGY-1.0% Snyder Oil, Cum., $6.00................ 20,000 540,000
------------
FOOD AND BEVERAGES-1.8% Conagra, Ser. E, Cum., $1.69........... 11,000 343,750
RJR Nabisco Holdings, Cum., $2.00...... 80,000 560,000
------------
903,750
------------
INSURANCE-2.6% Aon, Ser.B, Cum., $3.04................ 12,000 564,000
Conseco, Ser. D, Cum., $3.25........... 14,000 770,000
------------
1,334,000
------------
RETAIL-.9% Kmart, Ser.A, Cum., $3.41.............. 10,000 443,750
------------
TOTAL CONVERTIBLE PREFERRED STOCKS..... 7,431,125
------------
FIRST PRAIRIE DIVERSIFIED ASSET FUND
STATEMENT OF INVESTMENTS (CONTINUED) DECEMBER 31, 1993
EQUITY-RELATED SECURITIES (CONTINUED)
PRINCIPAL
CONVERTIBLE SUBORDINATE DEBENTURES-4.7% AMOUNT VALUE
----------- ------------
BANKING-.8% Bank of New York,
7 1/2%, 2001........................ $ 275,000 $ 435,188
------------
ENERGY-.6% Swift Energy,
6 1/2%, 2003........................ 300,000 309,000
------------
ENTERTAINMENT-.5% Time Warner,
8 3/4%, 2015........................ 248,000 261,330
------------
HOSPITAL MANAGEMENT-.9% Genesis Health
6%, 2003............................ 400,000 480,000
------------
MINING AND METALS-.6% Trimas Corp.,
5%, 2003............................ 250,000 308,750
------------
RETAIL-1.3% Hechinger,
5 1/2%, 2012........................ 350,000 279,125
Price,
6 3/4%, 2001........................ 350,000 365,750
------------
644,875
------------
TOTAL CONVERTIBLE
SUBORDINATED DEBENTURES............. 2,439,143
------------
TOTAL EQUITY-RELATED SECURITIES
(cost $24,078,883).................. $ 26,248,893
============
SHORT-TERM INVESTMENTS-15.5%
COMMERCIAL PAPER: Ford Motor Credit Corp.,
3.35%, 1/3/94....................... $ 3,700,000 $ 3,700,000
General Electric Cap. Corp.:
3.4032%, 1/7/94..................... 3,950,000 3,950,000
3.20%, 1/10/94...................... 370,000 370,000
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $8,020,000)................... $ 8,020,000
============
TOTAL INVESTMENTS (cost $48,271,301)........................................... 99.4% $ 51,256,477
====== ============
CASH AND RECEIVABLES (NET)..................................................... .6% $ 329,266
====== ============
NET ASSETS..................................................................... 100.0% $ 51,585,743
====== ============
NOTE TO STATEMENT OF INVESTMENTS;
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At December 31, 1993, this
security amounted to $651,750 or 1.3% of net assets.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
FIRST PRAIRIE DIVERSIFIED ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1993
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $48,271,301)-see statement....................................... $51,256,477
Dividends and interest receivable.......................................... 495,261
Receivable for shares of Beneficial Interest subscribed.................... 204,466
Prepaid expenses........................................................... 19,146
Due from administrator..................................................... 5,834
-----------
51,981,184
LIABILITIES:
Due to custodian........................................................... $217,571
Payable for shares of Beneficial Interest redeemed......................... 120,261
Accrued expenses........................................................... 57,609 395,441
-------- -----------
NET ASSETS..................................................................... $51,585,743
===========
REPRESENTED BY:
Paid-in capital............................................................ $48,421,161
Accumulated undistributed investment income-net............................ 110,357
Accumulated undistributed net realized gain on investments................. 69,049
Accumulated net unrealized appreciation on investments-Note 3.............. 2,985,176
-----------
NET ASSETS at value applicable to 3,934,557 shares outstanding
(unlimited number of $.01 par value shares of Beneficial
Interest authorized)....................................................... $51,585,743
===========
NET ASSET VALUE, offering and redemption price per share
($51,585,743 / 3,934,557 shares)........................................... $13.11
======
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
FIRST PRAIRIE DIVERSIFIED ASSET FUND
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME:
INCOME:
<S> <C> <C>
Interest............................................................... $1,734,098
Cash dividends (net of $9,316 foreign taxes withheld at source)........ 941,289
----------
TOTAL INCOME................................................... $2,675,387
EXPENSES:
Investment advisory fee-Note 2(a)...................................... 293,405
Administration fee-Note 2(a)........................................... 135,418
Shareholder servicing costs-Note 2(b).................................. 187,815
Prospectus and shareholders' reports-Note 2(b)......................... 29,430
Legal fees............................................................. 28,415
Auditing fees.......................................................... 21,613
Registration fees...................................................... 19,140
Custodian fees......................................................... 16,335
Trustees' fees and expenses-Note 2(c).................................. 4,999
Miscellaneous.......................................................... 7,920
----------
744,490
Less-expense reimbursement from Adviser and Administrator due
to undertakings-Note 2(a).......................................... 570,074
----------
TOTAL EXPENSES................................................. 174,416
----------
INVESTMENT INCOME-NET.......................................... 2,500,971
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments-Note 3.................................... $ 625,561
Net unrealized appreciation on investments................................. 1,377,749
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 2,003,310
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $4,504,281
==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
FIRST PRAIRIE DIVERSIFIED ASSET FUND
STATEMENT OF CHANGES IN NET ASSETS
OPERATIONS:
YEAR ENDED DECEMBER 31,
-------------------------------
1992 1993
----------- -----------
<S> <C> <C>
Investment income-net...................................................... $ 1,391,154 $ 2,500,971
Net realized gain on investments........................................... 179,839 625,561
Net unrealized appreciation on investments for the year.................... 343,006 1,377,749
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... 1,913,999 4,504,281
----------- -----------
NET EQUALIZATION CREDITS-Note 1(e)............................................. 51,331 59,053
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income-net...................................................... (1,385,188) (2,506,116)
Net realized gain on investments........................................... (279,770) (674,754)
----------- -----------
TOTAL DIVIDENDS........................................................ (1,664,958) (3,180,870)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from shares sold.............................................. 20,593,226 17,738,182
Dividends reinvested....................................................... 1,264,046 2,955,407
Cost of shares redeemed.................................................... (1,933,539) (4,752,158)
----------- -----------
INCREASE IN NET ASSETS FROM BENEFICIAL INTEREST TRANSACTIONS........... 19,923,733 15,941,431
----------- -----------
TOTAL INCREASE IN NET ASSETS....................................... 20,224,105 17,323,895
NET ASSETS:
Beginning of year.......................................................... 14,037,743 34,261,848
----------- -----------
End of year (including undistributed investment income-net:
$56,449 at December 31, 1992 and $110,357 at December 31, 1993)........ $34,261,848 $51,585,743
=========== ===========
SHARES SHARES
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................ 1,637,986 1,371,296
Shares issued for dividends reinvested..................................... 100,550 226,486
Shares redeemed............................................................ (153,827) (365,489)
----------- -----------
NET INCREASE IN SHARES OUTSTANDING..................................... 1,584,709 1,232,293
=========== ===========
See notes to financial statements.
</TABLE>
FIRST PRAIRIE DIVERSIFIED ASSET FUND
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of
Beneficial Interest outstanding, total investment return, ratios to average
net assets and other supplemental data for each year indicated. This
information has been derived from information provided in the Fund's
financial statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
PER SHARE DATA: 1989 1990 1991 1992 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............................. $10.66 $11.54 $10.79 $12.56 $12.68
------ ------ ------ ------ ------
INVESTMENT OPERATIONS:
Investment income-net.......................................... .88 .86 .83 .79 .72
Net realized and unrealized gain (loss) on investments......... 1.10 (.54) 1.77 .26 .61
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS........................... 1.98 .32 2.60 1.05 1.33
------ ------ ------ ------ ------
DISTRIBUTIONS:
Dividends from investment income-net........................... (.89) (.88) (.83) (.77) (.72)
Dividends from net realized gain on investments................ (.21) (.19) -- (.16) (.18)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS........................................ (1.10) (1.07) (.83) (.93) (.90)
------ ------ ------ ------ ------
Net asset value, end of year................................... $11.54 $10.79 $12.56 $12.68 $13.11
====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN* 19.08% 2.94% 24.87% 8.68% 10.70%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........................ -- -- -- .02% .39%
Ratio of net investment income to average net assets........... 7.74% 7.71% 7.04% 6.24% 5.54%
Decrease reflected in above expense ratios due to undertakings
by the Adviser and Administrator (limited to the expense
limitation provision of the Investment Advisory and
Administration Agreements)................................. 2.96% 2.58% 2.16% 1.86% 1.26%
Portfolio Turnover Rate........................................ 49.46% 29.97% 26.02% 22.14% 16.40%
Net Assets, end of year (000's Omitted)........................ $7,407 $8,950 $14,038 $34,262 $51,586
_______________________________
* Exclusive of sales charge.
See notes to financial statements.
</TABLE>
FIRST PRAIRIE DIVERSIFIED ASSET FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940
("Act") as a diversified open-end management investment company. The
First National Bank of Chicago ("Adviser") serves as the Fund's
investment adviser. The Dreyfus Corporation ("Administrator") serves as
the Fund's administrator. Dreyfus Service Corporation ("Distributor"), a
wholly-owned subsidiary of the Administrator, acts as the distributor of
the Fund's shares.
(A) PORTFOLIO VALUATION: Most debt securities (excluding short-term
investments) are valued each business day by an independent pricing
service ("Service") approved by the Board of Trustees. Debt securities for
which quoted bid prices in the judgement of the Service are readily
available and are representative of the bid side of the market are valued
at the mean between the quoted bid prices (as obtained by the Service
from dealers in such securities) and asked prices (as calculated by the
Service based upon its evaluation of the market for such securities). Other
debt securities are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications
as to values from dealers; and general market conditions. Short-term
investments are carried at amortized cost, which approximates value.
Other securities are valued at the average of the most recent bid and
asked prices in the market in which such securities are primarily traded,
or at the last sales price for securities traded primarily on an exchange or
the national securities market. In the absence of reported sales of
securities traded primarily on an exchange or the national securities
market, the average of the most recent bid and asked prices is used. Bid
price is used when no asked price is available.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss
from securities transactions are recorded on the identified cost basis.
Dividend income is recognized on the ex-dividend date and interest
income, including, where applicable, amortization of discounts on
investments, is recognized on the accrual basis.
(C) DIVIDENDS TO SHAREHOLDERS: Dividends are recorded on the ex-
dividend date. Dividends from investment income-net are declared and
paid monthly. Dividends from net realized capital gain are normally
declared and paid annually, but the Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the
Internal Revenue Code. This may result in distributions that are in excess
of investment income-net and net realized gain on a fiscal year basis. To
the extent that net realized capital gain can be offset by capital loss
carryovers, if any, it is the policy of the Fund not to distribute such gain.
On January 31, 1994, the Board of Trustees declared a cash dividend
of $.047 per share from undistributed investment income-net, payable on
February 1, 1994 (ex-dividend date) to shareholders of record as of the
close of business on January 31, 1994.
(D) FEDERAL INCOME TAXES: It is the policy of the Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, 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
taxable income sufficient to relieve it from all, or substantially all,
Federal income taxes.
(E) EQUALIZATION: The Fund follows the accounting practice known as
"equalization" by which a portion of the amounts received on issuances
and paid on redemptions of Fund shares is allocated to undistributed
investment income-net so that undistributed investment income-net per
share is unaffected by Fund shares issued or redeemed.
FIRST PRAIRIE DIVERSIFIED ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2-INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Fees payable by the Fund pursuant to the provisions of an
Investment Advisory Agreement with the Adviser and an Administration
Agreement with the Administrator are payable monthly based on annual
rates of .65 of 1% and .30 of 1%, respectively, of the average daily value
of the Fund's net assets. The agreements further provide that if in any full
year the aggregate expenses of the Fund, excluding taxes, brokerage,
interest on borrowings and extraordinary expenses, exceed the expense
limitation of any state having jurisdiction over the Fund, the Fund may
deduct from the payments to be made to the Adviser and the
Administrator, or the Adviser and the Administrator will each bear, such
excess expense in proportion to their respective fees. The most stringent
state expense limitation applicable to the Fund presently requires
reimbursement of expenses in any full year that such expenses (exclusive
of distribution expenses and certain expenses as described above) exceed
2 1/2% of the first $30 million, 2% of the next $70 million and 1 1/2% of
the excess over $100 million of the average value of the Fund's net assets
in accordance with California "blue sky" regulations.
However, the Adviser and the Administrator had undertaken, from
January 1, 1993 through October 24, 1993, to reduce the Advisory fee and
the Administration fee paid by, or reimburse such excess expenses of the
Fund, to the extent that the Fund's aggregate expenses (excluding certain
expenses as described above) exceeded specified annual percentages of the
Fund's average daily net assets. The Adviser and Administrator have
currently undertaken from October 25, 1993 to waive receipt of the
Advisory fee and the Administration fee paid by the Fund in excess of an
annual rate of .50 of 1% of the Fund's average daily net assets. Pursuant to
such undertakings, the Adviser and the Administrator reimbursed the Fund
$293,405 and $276,669, respectively.
First Chicago Investment Services, Inc., an affiliate of the Adviser,
retained $34,436 during the year ended December 31, 1993 from
commissions earned on sales of Fund shares.
(B) The Fund has adopted a Service Plan (the "Plan") pursuant to which
it has agreed to pay costs and expenses in connection with advertising and
marketing shares of the Fund and payments made to one or more Service
Agents (which may include the Adviser, the Administrator and the
Distributor) based on the value of the Fund's shares owned by clients of
the Service Agent. These advertising and marketing expenses and fees of
the Service Agents may not exceed an annual rate of .30 of 1% of the
Fund's average daily net assets. The Plan also separately provides for the
Fund to bear the costs of preparing, printing and distributing certain of
the Fund's prospectuses and statements of additional information and
costs associated with implementing and operating the Plan, not to exceed
the greater of $100,000 or .005 of 1% of the Fund's average daily net
assets for any full year. During the year ended December 31, 1993,
$145,590 was charged to the Fund pursuant to the Plan, of which $141,251
was waived pursuant to an undertaking by the Administrator.
(C) Certain officers and trustees of the Fund are "affiliated persons,"
as defined in the Act, of the Adviser or the Administrator. Each trustee
who is not an "affiliated person" receives an annual fee of $1,500 and an
attendance fee of $250 per meeting.
FIRST PRAIRIE DIVERSIFIED ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) On December 5, 1993, Dreyfus entered into an Agreement and Plan of
Merger providing for the merger of Dreyfus with a subsidiary of Mellon
Bank Corporation ("Mellon").
Following the merger, it is planned that Dreyfus will be a direct
subsidiary of Mellon Bank, N.A. Closing of this merger is subject to a
number of contingencies, including the receipt of certain regulatory
approvals and the approvals of the stockholders of Dreyfus and of Mellon.
The merger is expected to occur in mid-1994, but could occur later.
NOTE 3-SECURITIES TRANSACTIONS:
The aggregate amount of purchases and sales of investment securities,
other than short-term securities, during the year ended December 31,
1993 amounted to $20,117,316 and $6,059,306, respectively.
At December 31, 1993, accumulated net unrealized appreciation on
investments was $2,985,176, consisting of $3,879,019 gross unrealized
appreciation and $893,843 gross unrealized depreciation.
At December 31, 1993, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see the Statement of Investments).
FIRST PRAIRIE DIVERSIFIED ASSET FUND
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
FIRST PRAIRIE DIVERSIFIED ASSET FUND
We have audited the accompanying statement of assets and liabilities
of First Prairie Diversified Asset Fund, including the statement of
investments, as of December 31, 1993, and the related statement of
operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and financial highlights
for each of the years indicated therein. These financial statements and
financial highlights are the responsibility of the Fund'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
confirmation of securities owned as of December 31, 1993 by
correspondence with the custodian. 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 First Prairie Diversified Asset Fund, at December 31, 1993,
the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the indicated years, in conformity with
generally accepted accounting principles.
Ernst & Young Signature
New York, New York
February 9, 1994
IMPORTANT TAX INFORMATION (UNAUDITED)
For Federal Tax purposes the Fund hereby designates $.02 per share as
a long-term capital gain distribution of the $.095 per share paid on
September 1, 1993. The Fund also designates $.0965 per share as a long-term
capital gain distribution of the $.226 per share paid on December 1, 1993.
FIRST PRAIRIE
DIVERSIFIED ASSET FUND
144 Glenn Curtiss Boulevard
Uniondale, NY 11556
Investment Adviser
THE FIRST NATIONAL BANK OF CHICAGO
Three First National Plaza
Chicago, IL 60670
Administrator
THE DREYFUS CORPORATION
200 Park Avenue
New York, NY 10166
Distributor
DREYFUS SERVICE CORPORATION
200 Park Avenue
New York, NY 10166
Custodian
THE BANK OF NEW YORK
110 Washington Street
New York, NY 10286
Transfer Agent &
Dividend Disbursing Agent
THE SHAREHOLDER SERVICES GROUP, INC.
P.O. Box 9671
Providence, RI 02940
Further information is contained
in the Prospectus, which must
precede or accompany this report.
Printed in U.S.A. 372AR9312
FIRST (First Prairie Logo)PRAIRIE
DIVERSIFIED
ASSET FUND
Annual Report
December 31, 1993
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN FIRST PRAIRIE DIVERSIFIED ASSET FUND
AND THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE
INDEX AND LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND
INDEX
EXHIBIT A:
___________________________________________________________
| | STANDARD | LEHMAN BROTHERS| |
| | & POOR'S 500 | GOVERNMENT/ | FIRST PRAIRIE|
| PERIOD | COMPOSITE STOCK | CORPORATE | DIVERSIFIED |
| | PRICE INDEX * | BOND INDEX** | ASSET FUND |
| --------|-----------------| ---------------| -------------|
| 1/23/86 | 10,000 | 10,000 | 9,551 |
| 3/31/86 | 11,347 | 10,789 | 9,766 |
| 6/30/86 | 12,015 | 10,931 | 10,250 |
| 9/30/86 | 11,177 | 11,152 | 10,345 |
| 12/31/86| 11,799 | 11,494 | 10,849 |
| 3/31/87 | 14,318 | 11,664 | 11,480 |
| 6/30/87 | 15,037 | 11,443 | 11,589 |
| 9/30/87 | 16,030 | 11,109 | 11,669 |
| 12/31/87| 12,418 | 11,757 | 10,662 |
| 3/31/88 | 13,123 | 12,178 | 11,606 |
| 6/30/88 | 13,995 | 12,298 | 12,051 |
| 9/30/88 | 14,042 | 12,528 | 12,243 |
| 12/31/88| 14,475 | 12,649 | 12,558 |
| 3/31/89 | 15,501 | 12,788 | 13,128 |
| 6/30/89 | 16,867 | 13,816 | 14,033 |
| 9/30/89 | 18,670 | 13,946 | 14,725 |
| 12/31/89| 19,055 | 14,449 | 14,954 |
| 3/31/90 | 18,481 | 14,284 | 14,861 |
| 6/30/90 | 19,642 | 14,798 | 15,411 |
| 9/30/90 | 16,945 | 14,888 | 14,703 |
| 12/31/90| 18,461 | 15,646 | 15,394 |
| 3/31/91 | 21,138 | 16,068 | 16,529 |
| 6/30/91 | 21,088 | 16,310 | 16,978 |
| 9/30/91 | 22,214 | 17,249 | 18,213 |
| 12/31/91| 24,075 | 18,169 | 19,222 |
| 3/31/92 | 23,468 | 17,896 | 19,248 |
| 6/30/92 | 23,914 | 18,621 | 19,777 |
| 9/30/92 | 24,668 | 19,531 | 20,610 |
| 12/31/92| 25,906 | 19,547 | 20,890 |
| 3/31/93 | 27,035 | 20,455 | 21,795 |
| 6/30/93 | 27,165 | 21,069 | 22,039 |
| 9/30/93 | 27,866 | 21,766 | 22,678 |
| 12/31/93| 28,514 | 21,703 | 23,126 |
| ----------------------------------------------------------|
| FIRST PRAIRIE DIVERSIFIED ASSET FUND |
| ----------------------------------------------------------|
| AVERAGE ANNUAL TOTAL RETURNS ENDED ON 12/31/93 |
| REFLECTS MAXIMUM SALES CHARGE |
| ----------------------------------------------------------|
| | | SINCE INCEPTION |
| 1 YEAR | 5 YEAR | (1/23/86) |
| ----------------------------------------------------------|
| 5.70%| 11.96%| 11.14% |
| ----------------------------------------------------------|
