As filed with the Securities and Exchange Commission on July 24, 1996
Registration No. 33-13990/811-5148
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 34
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 34
THE WOODWARD FUNDS
D/B/A PEGASUS FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o NBD Bank
900 Tower Drive
P.O. Box 7058
Troy, Michigan
48007-7058
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(313) 259-0729
W. Bruce McConnel, III
DRINKER BIDDLE & REATH
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[x] on July 26, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
Registrant has previously registered an indefinite number of its shares of
beneficial interest under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for
the fiscal year ended December 31, 1995 was filed on February 27, 1996.
This Post-Effective Amendment is being filed to add financial information of
the predecessor funds of the Registrant's Cash Management Fund, Treasury Prime
Cash Management Fund and U.S. Government Securities Cash Management Fund to
their Prospectus and Statement of Additional Information. On July 13, 1996,
all of the assets and liabilities of the Cash Management, Treasury Prime Cash
Management and U.S. Government Securities Cash Management Funds of the Prairie
Institutional Funds, a registered open-end investment company, were
transferred to the Registrant's Cash Management, Treasury Prime Cash
Management and U.S. Government Securities Cash Management Funds, respectively,
in exchange for shares pursuant to a proposal approved by shareholders of the
Prairie Cash Management, Treasury Prime Cash Management and U.S. Government
Securities Cash Management Funds on July 12, July 8 and July 12, 1996,
respectively. The Prospectuses and Statements of Additional Information for
the Registrant's other investment portfolios are not being filed in this Post-
Effective Amendment.
<PAGE>
PROSPECTUS
CROSS REFERENCE SHEET
---------------------
Series D, E, and F Representing Interests in
the Class S and Class I Shares of the Pegasus Cash
Management,
U.S. Government Securities Cash Management,
and Treasury Prime Cash Management,
Respectively
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover Page.................................... Cover page
2. Synopsis...................................... Annual Fund
Operating
Expenses;
Condensed
Financial
Information
3. Financial Highlights.......................... Performance and
Yield Information
4. General Description of
Registrant.................................... Cover Page;
Introduction;
Investment
Objectives,
Policies and Risk
Factors; Other
Investment
Policies; Other
Information
5. Management of Registrant ..................... Management
5(a). Management's Discussion of
Fund's Performance............................ Inapplicable
6. Capital Stock and Other
Securities.................................... Purchase of
Shares; Redemption
of Shares;
Shareholder
Services;
Dividends and
Distributions;
Taxes; Management;
Other Information
7. Purchase of Securities
Being Offered................................. Purchase of
Shares;
Shareholder
Services;
Management
8. Redemption or Repurchase...................... Redemption of
Shares;
Shareholder
Services
9. Pending Legal Proceedings..................... Inapplicable
<PAGE>
PEGASUS FUNDS
Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
S U P P L E M E N T
dated July 26, 1996
to
P R 0 S P E C T U S
dated July 26, 1996
Until on or about September 2, 1996, the formal name of the Pegasus
Funds is The Woodward Funds. Primary Funds Service Corp. ("PFSC") will serve
as the transfer agent and dividend disbursing agent for the Pegasus Funds
listed above until on or about August 3, 1996. PFSC is located at 100
Financial Park, Franklin, Massachusetts 02038.
<PAGE>
PEGASUS FUNDS
Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
P R 0 S P E C T U S
July 26, 1996
SHARES OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY, FIRST CHICAGO NBD
CORPORATION OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY
GOVERNMENTAL AGENCY. INVESTMENT IN THE TRUST INVOLVES RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THERE CAN BE NO ASSURANCE THAT EACH FUND WILL BE
ABLE TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER SHARE.
____________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
______________________________________________________________________________
First Chicago NBD Investment Management Company
Investment Adviser and Co-Administrator
BISYS Fund Services
Distributor and Co-Administrator
<PAGE>
PEGASUS FUNDS
PROSPECTUS-- July 26, 1996
Pegasus Funds (the "Trust") is an open-end, management investment
company, known as a series fund. By this Prospectus, the Trust is offering
Institutional Shares and Service Shares of three separate diversified, money
market series (each, a "Fund"): Cash Management Fund, Treasury Prime Cash
Management Fund and U.S. Government Securities Cash Management Fund
(collectively, the "Funds"). Each Fund's goal is to provide investors with as
high a level of current income as is consistent with the preservation of
capital and the maintenance of liquidity.
Each Fund is designed for institutional investors, including banks,
acting for themselves or in a fiduciary, advisory, agency, custodial or
similar capacity, public agencies and municipalities. Fund shares may not be
purchased directly by individuals, although institutions may purchase shares
for accounts maintained by individuals.
Each Fund's shares are sold without a sales charge. Investors can invest
or reinvest in or redeem shares at any time without charge or penalty imposed
by the Fund.
Institutional Shares and Service Shares are identical, except as to the
services offered to and expenses borne by each Class. Service Shares bear
certain costs pursuant to a Distribution and Services Plan adopted by the
Board of Trustees.
First Chicago NBD Investment Management Company ("FCNIMCO") serves as
each Fund's investment adviser (the "Investment Adviser") and FCNIMCO and
BISYS Fund Services ("BISYS") serve as co-administrators (collectively, the
"Co-Administrators").
BISYS serves as each Fund's distributor.
___________________________
This Prospectus sets forth concisely information about the Trust and Funds
that an investor should know before investing. It should be read and retained
for future reference.
The Statement of Additional Information, dated July 26, 1996, which may
be revised from time to time, provides a further discussion of certain areas
in this Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. For a free copy, write to the Trust at
3435 Stelzer Road, Columbus, Ohio 43219-3035, or call 1-800-688-3350.
<PAGE>
TABLE OF CONTENTS
ANNUAL FUND OPERATING EXPENSES................................... 3
CONDENSED FINANCIAL INFORMATION.................................. 5
YIELD INFORMATION................................................ 11
DESCRIPTION OF THE FUNDS......................................... 11
MANAGEMENT OF THE TRUST.......................................... 16
HOW TO BUY FUND SHARES........................................... 18
HOW TO REDEEM FUND SHARES........................................ 20
DISTRIBUTION AND SERVICES PLAN................................... 22
DIVIDENDS, DISTRIBUTIONS AND TAXES............................... 22
GENERAL INFORMATION.............................................. 24
SUPPLEMENTAL INFORMATION....................................... A-1
-2-
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
The following table is provided to assist investors in understanding the
various estimated costs and expenses that an investor will indirectly incur as
a beneficial owner of shares in the Funds.
<TABLE>
<CAPTION>
U.S. Government
Cash Management Treasury Prime Cash Securities Cash
Fund Management Fund Management Fund
--------------- ------------------ ---------------
Institutional Service Institutional Service Institutional Service
Shares Shares Shares Shares Shares Shares
------------- ------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Management Fees (after fee waivers) .13% .13% .12% .12% .14% .14%
12b-1 (distribution and servicing) Fees None .25% None .25% None .25%
Other Fund Operating Expenses (after fee waivers and
reimbursements) .22% .22% .23% .23% .21% .21%
Total Fund Operating Expenses (after fee waivers and
expense reimbursements) .35% .60% .35% .60% .35% .60%
</TABLE>
Example:
An investor would pay the following estimated expenses on a $1,000
investment, assuming (1) 5% annual return and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
Institutional Service Institutional Service Institutional Service
Shares Shares Shares Shares Shares Shares
------------- ------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year $ 4 $ 6 $ 4 $ 6 $ 4 $ 6
3 Years $11 $19 $11 $19 $11 $19
5 Years $20 $33 $20 $33 $20 $33
10 Years $44 $75 $44 $75 $44 $75
</TABLE>
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The amounts listed in the examples should not be considered as representative
of past or future expenses and actual expenses may be greater or less than
those indicated. Moreover, while the example assumes a 5% annual return, each
Fund's actual performance will vary and may result in an actual return greater
or less than 5%.
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-3-
<PAGE>
The purpose of the foregoing table is to assist investors in understanding the
various estimated costs and expenses borne by the Funds, and therefore
indirectly by investors, the payment of which will reduce investors' return on
an annual basis. The Investment Adviser has undertaken, as to each Fund, until
such time as it gives investors at least 90 days' notice to the contrary, that
if, in any fiscal year, aggregate expenses exclusive of taxes, brokerage,
interest on borrowings and (with the prior consent of the necessary state
securities commissions) extraordinary expenses, but including the investment
advisory and administration fees, exceed .35% and .60% of the value of the
average net assets of the Institutional Shares and the Service Shares,
respectively, for the fiscal year, the Trust may deduct from the payment to be
made to the Investment Adviser under the Investment Advisory or Administration
Agreements, or the Investment Adviser will bear, such excess expense. The
expenses noted above, without fee waivers or expense reimbursement
arrangements, would have been: Management Fees, .20% for each Fund; Other Fund
Operating Expenses, .23% for the Institutional Shares and Service Shares of
the Cash Management Fund, .32% for the Institutional Shares and Service Shares
of the Treasury Prime Cash Management Fund, and .23% for the Institutional
Shares and Service Shares of the U.S. Government Securities Cash Management
Fund; and Total Fund Operating Expenses, .43% for the Institutional Shares and
.68% for the Service Shares of the Cash Management Fund, .52% for the
Institutional Shares and .77% for the Service Shares of the Treasury Prime
Cash Management Fund, and .43% for the Institutional Shares and .68% for the
Service Shares of the U. S. Government Securities Cash Management Fund. See
"Management of the Trust," "How to Buy Fund Shares" and "Distribution and
Services Plan."
-4-
<PAGE>
Condensed Financial Information
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 Institutional Shares and Service
Shares of the predecessor Cash Management Fund, Treasury Prime Cash Management
Fund and U.S. Government Securities Cash Management Fund for the periods
indicated. This information is based entirely on the predecessor Funds'
financial statements, which have been audited by Ernst & Young LLP,
independent auditors for the predecessor Cash Management, Treasury Prime Cash
Management and U.S. Government Securities Cash Management Funds.
-5-
<PAGE>
Cash Management Fund (1)
<TABLE>
<CAPTION>
Six-Month For the Year Ended
Period Ended June 30, For the Period
December 31, ------------------- Ended June 30,
1995(3) 1995 1994 1993(2)
------------ ---- ---- --------------
<S> <C> <C> <C> <C>
Institutional Shares:
Net Asset Value, Beginning of Period $ 0.9994 $ 0.9993 $ 0.9999 $ 1.0000
--------- -------- --------- ---------
Investment Operations:
Investment income -- net 0.0277 0.0507 0.0333 0.0297
Net realized gain (loss) on investments 0.0002 (0.0059) (0.0006) (0.0001)
--------- -------- --------- ---------
Total from investment operations 0.0279 0.0448 0.0327 0.0296
--------- -------- --------- ---------
Distributions:
Dividends from net investment income -- net (0.0277) (0.0507) (0.0333) (0.0297)
--------- -------- --------- ---------
Increase due to capital contribution from
affiliate of Investment Adviser -- 0.0060 -- --
--------- -------- --------- ---------
Net Asset Value, End of Period $ 0.9996 $ 0.9994 $ 0.9993 $ 0.9999
========= ======== ========= =========
TOTAL INVESTMENT RETURN 2.80%++ 5.19%* 3.38% 3.25%+
Ratios/Supplemental Data:
Ratio of expenses to average net assets 0.35%+ 0.35% 0.31% 0.05%+
Ratio of net investment income to average net
assets 5.51%+ 5.11% 3.33% 3.19%+
Decrease reflected in above expense ratios due to
undertakings 0.08%+ 0.09% 0.12% 0.51%+
Net assets, end of period (000's omitted) $ 389,127 $ 319,214 $ 243,820 $ 175,713
<FN>
___________________
(1) On January 17, 1995, all of the assets and liabilities of First Prairie
Cash Management were transferred to the Cash Management Fund in exchange
for Institutional Shares of the Cash Management Fund. The financial data
provided above prior to such date is for First Prairie Cash Management.
(2) For the period July 30, 1992 (commencement of operations) through June 30,
1993.
(3) Effective July 1, 1995, the Fund changed its fiscal year end from June 30
to December 31. The figures presented are from July 1, 1995 through
December 31, 1995.
* Had the Fund not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
4.51%.
+ Annualized.
++ Not annualized.
</TABLE>
-6-
<PAGE>
Cash Management Fund
<TABLE>
<CAPTION>
Six-Month For the Period
Period Ended Ended
December 31, June 30,
1995(1) 1995(2)
------------ --------------
<S> <C> <C>
Service Shares:
Net Asset Value, Beginning of Period $ 0.9994 $ 1.0000
-------- --------
Investment Operations:
Investment income -- net 0.0264 0.0245
Net realized gain (loss) on investments 0.0002 (0.0006)
-------- --------
Total from investment operations 0.0266 0.0239
-------- --------
Distributions:
Dividends from investment income -- net (0.0264) (0.0245)
-------- --------
Net Asset Value, End of Period $ 0.9996 $ 0.9994
======== ========
TOTAL INVESTMENT RETURN 2.68%++ 2.47%++
Ratios/Supplemental Data:
Ratio of expenses to average net assets 0.60%+ 0.60%+
Ratio of net investment income to average
net assets 5.25%+ 5.46%+
Decrease reflected in above expense
ratios due to undertakings 0.09%+ 0.11%+
Net assets, end of period (000's omitted) $ 121,750 $ 11,372
<FN>
_____________________
(1) Effective July 1, 1995, the Fund changed its fiscal year end from June 30
to December 31. The figures presented are from July 1, 1995 through
December 31, 1995.
(2) For the period January 17, 1995 (initial offering date of Service Shares)
through June 30, 1995.
+ Annualized.
++ Not annualized.
</TABLE>
-7-
<PAGE>
Treasury Prime Cash Management Fund
<TABLE>
<CAPTION>
For the Period Ended December 31, 1995(1)
-----------------------------------------
Institutional Shares Service Shares
-------------------- --------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.0000 $ 1.0000
--------- ---------
Investment Operations:
Investment income -- net 0.0399 0.0380
--------- ---------
Distributions:
Dividends from investment income -- net (0.0399) (0.0380)
--------- ---------
Net Asset Value, End of Period $ 1.0000 $ 1.0000
========= =========
TOTAL INVESTMENT RETURN 4.06%++ 3.86%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets 0.35%+ 0.60%+
Ratio of net investment income to average net
assets 5.16%+ 4.72%+
Decrease reflected in above expense ratios due to
undertakings 0.88%+ 0.14%+
Net assets, end of period (000's omitted) $ 14,008 $ 130,559
<FN>
_______________________________
(1) For the period March 22, 1995 (commencement of operations) through
December 31, 1995.
+ Annualized.
++ Not annualized.
</TABLE>
-8-
<PAGE>
U.S. Government Securities Cash Management Fund (1)
<TABLE>
<CAPTION>
Seven-Month For the Year Ended
Period Ended May 31, For the Period
December 31, ------------------- Ended May 31,
1995(3) 1995 1994 1993(2)
------------- ---- ---- --------------
<S> <C> <C> <C> <C>
Institutional Shares:
Net Asset Value, Beginning of Period $ 0.9989 $ 0.9999 $ 1.0000 $ 1.0000
--------- --------- --------- ---------
Investment operations:
Investment income -- net 0.0320 0.0492 0.0302 0.0319
Net realized gain (loss) on investments 0.0001 (0.0010) (0.0001) --
--------- --------- --------- ---------
Total from investment operations 0.0321 0.0482 0.0301 0.0319
--------- --------- --------- ---------
Distributions:
Dividends from investment income -- net (0.0320) (0.0492) (0.0302) (0.0319)
--------- --------- --------- ---------
Net Asset Value, End of Period $ 0.9990 $ 0.9989 $ 0.9999 $ 1.0000
========= ========= ========= =========
TOTAL INVESTMENT RETURN 3.24%++ 5.03% 3.06% 3.25%+
Ratios/Supplemental Data:
Ratio of expenses to average net assets 0.35%+ 0.34% 0.30% 0.02%+
Ratio of net investment income to average net
assets 5.46%+ 4.94% 3.02% 3.10%+
Decrease reflected in above expense ratios
due to undertakings 0.07%+ 0.07% 0.11% 0.47%+
Net assets, end of period (000's omitted) $ 489,395 $ 475,248 $ 413,634 $ 264,527
<FN>
_______________________
(1) On January 17, 1995, all of the assets and liabilities of First Prairie
U.S. Treasury Securities Cash Management were transferred to the U.S
Government Cash Management Fund in exchange for Institutional Shares of the
U.S. Government Cash Management Fund. The financial data provided above
prior to such date is for First Prairie U.S. Treasury Cash Management.
(2) For the period June 2, 1992 (commencement of operations) through May 31,
1993.
(3) Effective June 1, 1995, the Fund changed its fiscal year end from May 31
to December 31. The figures presented are from June 1, 1995 through
December 31, 1995.
+ Annualized.
++ Not annualized.
</TABLE>
-9-
<PAGE>
U.S. Government Securities Cash Management Fund
<TABLE>
<CAPTION>
Seven-Month For the Period
Period Ended Ended
December 31, May 31,
1995(1) 1995(2)
------------ --------------
<S> <C> <C>
Service Shares:
Net Asset Value, Beginning of Period $ 0.9989 $ 1.0000
-------- ---------
Investment operations:
Investment income -- net 0.0305 0.0199
Net realized gain (loss) on investments 0.0001 (0.0011)
-------- ---------
Total from investment operations 0.0306 0.0188
-------- ---------
Distributions:
Dividends from investment income -- net (0.0305) (0.0199)
-------- ---------
Net Asset Value, End of Period $ 0.9990 $ 0.9989
======== =========
TOTAL INVESTMENT RETURN 3.09%++ 2.01%++
Ratios/Supplemental Data:
Ratio of expenses to average net assets 0.60%+ 0.57%+
Ratio of net investment income to average net
assets 5.17%+ 5.48%+
Decrease reflected in above expense ratios due to
undertakings 0.09%+ 0.09%+
Net assets, end of period (000's omitted) $ 56,000 $ 16,702
<FN>
_________________________
(1) Effective June 1, 1995, the Fund changed its fiscal year end from May 31
to December 31. The figures presented are from June 1, 1995 through
December 31, 1995.
(2) For the period January 17, 1995 (initial offering date of Service Shares)
through May 31, 1995.
+ Annualized.
++ Not annualized.
</TABLE>
-10-
<PAGE>
YIELD INFORMATION
From time to time, each Fund will advertise its yield and effective
yield. Both yield figures are based on historical earnings and are not
intended to indicate future performance. It can be expected that these yields
will fluctuate substantially. The yield of a Fund refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then annualized. That is,
the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage
of the investment. The effective yield is calculated similarly, but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment. Each Fund's yield and
effective yield may reflect absorbed expenses pursuant to any undertaking that
may be in effect. See "Management of the Trust." Both yield figures also take
into account any applicable distribution and service fees. See "Distribution
and Services Plan."
Yield information is useful in reviewing a Fund's performance, but
because yields will fluctuate, under certain conditions such information may
not provide a basis for comparison with domestic bank deposits, other
investments which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing Fund shares, including data from Lipper Analytical
Services, Inc., Bank Rate Monitor(TM), N. Palm Beach, Fla. 33408,
IBC/Donoghue's Money Fund Report(R) and other industry publications.
DESCRIPTION OF THE FUNDS
General
The Trust is a "series fund," which is a mutual fund divided into
separate portfolios. Each portfolio is treated as a separate entity for
certain matters under the Investment Company Act of 1940, as amended (the
"1940 Act"), and for other purposes, and a shareholder of one portfolio is not
deemed to be a shareholder of any other portfolio. As described below, for
certain matters Trust shareholders vote together as a group; as to others they
vote separately by Fund.
By this Prospectus, two classes of shares of each Fund are being offered
- -- Institutional Shares and Service Shares (each
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<PAGE>
such class being referred to as a "Class"). Unlike Institutional Shares,
Service Shares are subject to an annual distribution and service fee at the
rate of up to .25% of the value of the average daily net assets of the Service
Class. The fee is payable to the Distributor for advertising, marketing and
distributing Service Shares and for ongoing personal services to the holders
of Service Shares relating to shareholder accounts and services related to the
maintenance of such shareholder accounts pursuant to a Distribution and
Services Plan adopted in accordance with Rule 12b-1 under the 1940 Act. The
Distributor may make payments to certain financial institutions, securities
dealers and other industry professionals (collectively, "Service Agents") in
respect of these services. See "Distribution and Services Plan."
When used in this Prospectus and the Statement of Additional
Information, the terms "Investor" and "Shareholder" refer to the institution
purchasing Fund shares and do not refer to any individual or entity for whose
account the institution may purchase Fund shares.
Investment Objective
Each Fund's goal is to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance
of liquidity. Each Fund's investment objective cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of such
Fund's outstanding voting shares. There can be no assurance that the Fund's
investment objective will be achieved. Securities in which the Funds invest
may not earn as high a level of current income as long-term or lower quality
securities which generally have less liquidity, greater market risk and more
fluctuation of market value.
Management Policies
Each Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Trust uses the amortized cost method
of valuing each Fund's securities pursuant to Rule 2a-7 under the 1940 Act,
certain requirements of which are summarized below.
In accordance with Rule 2a-7, each Fund is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less and invest only in
U.S. dollar denominated securities determined in accordance with procedures
established by the Board of Trustees to present minimal credit risks and, in
the case of the Cash Management Fund, which are rated in one of the two
highest rating categories for debt obligations by at least two nationally
recognized statistical rating organizations (or one rating organization if the
instrument was rated by only
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<PAGE>
one such organization) or, if unrated, are of comparable quality as determined
in accordance with procedures established by the Board of Trustees. The
nationally recognized statistical rating organizations currently rating
instruments of the type the Cash Management Fund may purchase are Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group, Division
of McGraw-Hill ("S&P"), Duff & Phelps Credit Rating Co., Fitch Investors
Service, L.P. ("Fitch"), IBCA Limited and IBCA Inc., and Thomson BankWatch,
Inc. and their rating criteria are described in the Appendix to the Statement
of Additional Information. For further information regarding the amortized
cost method of valuing securities, see "Determination of Net Asset Value" in
the Statement of Additional Information. There can be no assurance that each
Fund will be able to maintain a stable net asset value of $1.00 per share.
* Cash Management Fund invests in short-term money market obligations,
including securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, certificates of deposit, time deposits,
bankers' acceptances and other short-term obligations issued by domestic
banks, foreign branches of domestic banks, foreign subsidiaries of domestic
banks, domestic and foreign branches of foreign banks and thrift institutions,
repurchase agreements, and high quality domestic and foreign commercial paper
and other eligible short-term obligations, including those with floating or
variable rates of interest. See "Supplemental Information -- Portfolio
Securities." In addition, the Fund is permitted to lend portfolio securities
to the extent described under "Supplemental Information -- Investment
Practices." During normal market conditions, at least 25% of the Fund's total
assets will be invested in bank obligations or instruments secured by such
obligations.
* Treasury Prime Cash Management Fund invests only in securities issued
and guaranteed by the U.S. Government. These securities include U.S. Treasury
securities, which differ in their interest rates, maturities and times of
issuance. See "Supplemental Information -- Portfolio Securities." The Fund
does not invest in repurchase agreements, securities issued by agencies or
instrumentalities of the Federal government or any other type of money market
instrument or security.
* U.S. Government Securities Cash Management Fund invests only in
short-term securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, may enter into repurchase agreements and may
invest in the securities of other mutual funds that invest in the particular
instruments in which the Fund itself may invest, subject to the requirements
of applicable securities laws. See "Supplemental Information -- Portfolio
Securities." The Fund also may lend securities from
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<PAGE>
its portfolio as described under "Supplemental Information -- Investment
Practices."
Certain Fundamental Policies
Each Fund may not (i) borrow money, issue senior securities, or
mortgage, pledge or hypothecate its assets except to the extent permitted
under the 1940 Act; (ii) act as an underwriter of securities of other issuers,
except to the extent the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of portfolio
securities; (iii) purchase or sell (a) real estate or (b) commodities, except,
in the case of clauses (a) and (b), to the extent permitted under the 1940
Act; (iv) make loans to others (other than through investment in debt
obligations or other instruments referred to in the Fund's Prospectus), except
that the Fund may lend its portfolio securities in an amount not to exceed
33-1/3% of the value of its total assets; (v) purchase any securities which
would cause 25% or more of the value of a Fund's total assets at the time of
purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that (a)
there is no limitation with respect to (1) instruments issued or guaranteed by
the U.S. Government, any state, territory or possession of the United States,
the District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions, (2) instruments issued by
domestic branches of U.S. banks and (3) repurchase agreements secured by
instruments described in clauses (1) and (2), (b) wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents
and (c) utilities will be divided according to their services, for example,
gas, gas transmission, electric and gas, electric and telephone will each be
considered a separate industry and (d) personal credit and business credit
businesses will be considered separate industries, and further provided that
the Cash Management Fund will invest at least 25% of its total assets in
obligations of issuers in the banking industry or instruments secured by such
obligations except during temporary defensive periods; and (vi) purchase
securities of any one issuer (except U.S. Government securities and related
repurchase agreements) if immediately after such purchase, more than 5% of the
value of the Fund's total assets would be invested in the obligations of any
one issuer, except that up to 25% of the value of the Fund's total assets may
be invested without regard to this 5% limitation. See "Investment Objective
and Management Policies -- Investment Restrictions" in the Statement of
Additional Information.
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Additional Non-Fundamental Policy
Each Fund may invest up to 10% of the value of its net assets in
illiquid securities. See "Supplemental Information -- Investment Practices --
Illiquid Securities" and "Investment Objective and Management Policies --
Investment Restrictions" in the Statement of Additional Information.
Risk Factors
See also the Supplemental Information beginning on page A-1.
Foreign Securities -- (Cash Management Fund) Since the Cash Management Fund's
portfolio may contain securities issued by foreign branches of domestic banks
and foreign banks, domestic and foreign branches of foreign banks and thrift
institutions, and commercial paper issued by foreign issuers, the Fund may be
subject to additional investment risks with respect to such securities that
are different in some respects from those incurred by a fund which invests
only in debt obligations of U.S. domestic issuers, although such obligations
may be higher yielding when compared to the securities of U.S. domestic
issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding, taxes on
interest income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on these
securities and the possible seizure or nationalization of foreign deposits.
Other Investment Considerations -- Each Fund will attempt to increase yields
by trading to take advantage of short-term market variations. This policy is
expected to result in high portfolio turnover but should not adversely affect
the Funds since each Fund usually will not pay brokerage commissions on
purchases of short-term debt obligations, including U.S. Government
securities. The value of the securities held by each Fund will vary inversely
to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security, if sold, might
be sold at a price greater than its purchase cost. In either instance, if the
security is held to maturity, no gain or loss will be realized.
Each Fund may purchase securities on a "when-issued" basis. These
transactions, which involve a commitment by a Fund to purchase or sell
particular securities with payment and delivery taking place at a future date
(perhaps one or two months later), permit the Fund to lock-in a price or yield
on a security it owns or intends to purchase, regardless of future changes in
interest
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rates. When-issued transactions involve the risk, however, that the yield
obtained in a transaction may be less favorable than the yield available in
the market when the securities delivery takes place. The Funds do not earn
income with respect to these transactions until the subject securities are
delivered to the Funds. The Funds do not intend to engage in when-issued
purchases for speculative purposes but only in furtherance of their investment
objectives.
Investment decisions for each Fund are made independently from those of
other investment companies or investment advisory accounts that may be advised
by the Investment Adviser. However, if such other investment companies or
managed accounts are prepared to invest in, or desire to dispose of,
securities of the type in which a Fund may invest at the same time as such
Fund, available investments or opportunities for sales will be allocated
equitably to each of them. In some cases, this procedure may adversely affect
the size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
MANAGEMENT OF THE TRUST
Trustees and Officers of the Trust
The Board of Trustees of the Trust is responsible for the management of
the business and affairs of the Trust. The Statement of Additional Information
contains information about the Board of Trustees.
Investment Adviser and Co-Administrators
First Chicago NBD Investment Management Company ("FCNIMCO"), located at
Three First National Plaza, Chicago, Illinois 60670, is each Fund's Investment
Adviser. FCNIMCO is a registered investment adviser and a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), which in turn is a
wholly-owned subsidiary of First Chicago NBD Corporation, a registered bank
holding company. Included among FCNIMCO's accounts are pension and profit
sharing funds for major corporations and state and local governments,
commingled trust funds and a variety of institutional and personal advisory
accounts, estates and trusts. FCNIMCO also acts as investment adviser for
other registered investment company portfolios.
FCNIMCO serves as each predecessor Fund's investment adviser and prior
to January 1, 1995, FNBC served as each Fund's investment adviser. For the
fiscal year ended December 31, 1995, the predecessor Trust paid FCNIMCO an
investment advisory fee under the then advisory agreement at the effective
annual rates of .11%, .09% and .12% of the respective average daily net assets
of the predecessor Cash Management Fund, Treasury Prime Cash
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Management Fund and U.S. Government Securities Cash Management Fund.
FCNIMCO serves as Investment Adviser for the Trust pursuant to an
Investment Advisory Agreement dated as of April 12, 1996. Under the Investment
Advisory Agreement, FCNIMCO provides the day-to-day management of each Fund's
investments, subject to the overall authority of the Trust's Board of Trustees
and in conformity with Massachusetts law and the stated policies of the Trust.
FCNIMCO is responsible for making investment decisions for the Trust, placing
purchase and sale orders (which may be allocated to various dealers based on
their sales of Fund shares) and providing research, statistical analysis and
continuous supervision of each Fund's investment portfolio. Under the
Investment Advisory Agreement, FCNIMCO is entitled to a monthly advisory fee
at the annual rate of .20% of each Fund's average daily net assets.
FCNIMCO serves as each predecessor Fund's administrator, and prior to
January 1, 1995, FNBC served as each predecessor Fund's administrator. For the
fiscal year ended December 31, 1995, the predecessor Trust paid FCNIMCO an
administration fee under the then administration agreement at the effective
annual rates of .15%, .11% and .15% of the respective average daily net assets
of the predecessor Cash Management Fund, Treasury Prime Cash Management Fund
and U.S. Government Securities Cash Management Fund.
FCNIMCO and BISYS serve as the Trust's Co-Administrators pursuant to an
Administration Agreement with the Trust. Under the Administration Agreement,
FCNIMCO and BISYS generally assist in all aspects of the Trust's operations,
other than providing investment advice, subject to the overall authority of
the Trust's Board in accordance with Massachusetts law. Under the terms of the
Administration Agreement, FCIMCO and BISYS are entitled jointly to a monthly
administration fee at the annual rate of .15% of each Fund's average daily net
assets.
Distributor
BISYS Fund Services (the "Distributor"), located at 3435 Stelzer Road,
Columbus, Ohio 43219-3035, serves as the Trust's principal underwriter and
distributor of the Funds' shares.
Transfer and Dividend Disbursing Agent and Custodian
First Data Investor Services Group, Inc., 53 State Street, Boston,
Massachusetts 02109-2873, serves as the Trust's Transfer and Dividend
Disbursing Agent (the "Transfer Agent"). NBD Bank, which is a wholly-owned
subsidiary of First Chicago NBD Corporation, serves as the Trust's custodian
(the "Custodian").
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NBD Bank is located at 611 Woodward Avenue, Detroit, Michigan 48226.
Expenses
All expenses incurred in the operation of the Trust are borne by the
Trust, except to the extent specifically assumed by the Investment Adviser and
Co-Administrators. The expenses borne by the Trust include: organizational
costs, taxes, interest, brokerage fees and commissions, if any, fees and
expenses of Trustees, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining
the Trust's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. In addition, Service Shares are subject to an annual
distribution and service fee pursuant to a plan adopted by the Board of
Trustees. See "Distribution and Services Plan." Expenses attributable to a
particular Fund or Class are generally charged against the assets of that Fund
or Class, respectively, and other expenses of the Trust are allocated among
the Funds on the basis determined by the Board of Trustees, including, but not
limited to, proportionately in relation to the net assets of each Fund.
The Investment Adviser has undertaken, as to each Fund, until such time
as it gives investors at least 90 days' notice to the contrary, that if, in
any fiscal year the aggregate expenses of the Fund, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of the
necessary state securities commissions) extraordinary expenses, but including
the investment advisory and administration fees, exceed .35% and .60% of the
value of the average net assets of the Institutional Class and the Service
Class, respectively, for the fiscal year, the Trust may deduct from the
payment to be made to the Investment Adviser under the Investment Advisory or
Administration Agreements, or the Investment Adviser will bear such excess
expense.
HOW TO BUY FUND SHARES
Each Fund is designed for institutional investors, including banks (such
as FNBC and NBD), acting for themselves or in a fiduciary, advisory, agency,
custodial or similar capacity, public agencies and municipalities. Fund shares
may not be purchased directly by individuals, although institutions may
purchase shares for accounts maintained by individuals.
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Generally, each investor will be required to open a single master account with
the Fund for all purposes. In certain cases, the Trust may request investors
to maintain separate master accounts for shares held by the investor (i) for
its own account, for the account of other institutions and for accounts for
which the institution acts as a fiduciary, and (ii) for accounts for which the
investor acts in some other capacity. An institution may arrange with the
Transfer Agent for sub-accounting services and will be charged directly for
the cost of such services. Certain accounts may be eligible for an automatic
investment privilege, commonly called a "sweep," under which amounts in excess
of a certain minimum held in those accounts will be invested automatically in
shares at pre-determined intervals. Each investor desiring to use this
privilege should consult its bank for details.
The minimum initial investment is $1,000,000 or any lesser amount if, in
the Distributor's opinion, the investor has adequate intent and availability
of funds to reach a future level of investment of $1,000,000. There is no
minimum for subsequent purchases. The initial investment must be accompanied
by the Account Application. The Trust reserves the right to offer Fund shares
without regard to the minimum purchase requirements to qualified or
non-qualified employee benefit plans. The Trust does not impose any sales
charges in connection with purchases of Fund shares, although Service Agents
and other institutions may charge their clients fees in connection with
purchases for the accounts of their clients. These fees would be in addition
to any amounts which might be received under the Distribution and Services
Plan. Service Agents may receive different levels of compensation for selling
different classes of shares. The Fund does not issue share certificates. The
Trust reserves the right to reject any purchase order.
Fund shares may be purchased by wire, by telephone or through compatible
computer facilities. All payments should be made in U.S. dollars and, to avoid
fees and delays, should be drawn only on U.S. banks. Investors may telephone
orders for purchases of Fund shares by calling 1-800-688-3350. For
instructions concerning purchases and to determine whether their computer
facilities are compatible with the Trust's, investors should call
1-800-688-3350.
Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form and Federal Funds (monies
of member banks in the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received by the Transfer Agent. If an investor does
not remit Federal Funds, its payment must be converted into Federal Funds.
This usually occurs within one business day of receipt of a bank wire and
within two business days of receipt of a check drawn on
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<PAGE>
a member bank of the Federal Reserve System. Checks drawn on banks which are
not members of the Federal Reserve System may take considerably longer to
convert into Federal Funds. Prior to receipt of Federal Funds, the investor's
money will not be invested.
Net asset value per share is determined as of 12:00 noon, Central time,
for the Treasury Prime Cash Management Fund, and 2:00 p.m., Central time, for
the Cash Management Fund and U.S. Government Securities Cash Management Fund,
on each Fund business day (which, as used herein, shall include each day that
the New York Stock Exchange is open for business, except Martin Luther King,
Jr. Day, Columbus Day and Veterans Day). Net asset value per share of each
Class is computed by dividing the value of the Fund's net assets represented
by such Class (i.e., the value of its assets less liabilities) by the total
number of shares of such Class outstanding. See "Determination of Net Asset
Value" in the Statement of Additional Information.
Investors whose payments are received in or converted into Federal Funds
by 12:00 noon, Central time, for the Treasury Prime Cash Management Fund or
2:00 p.m., Central time, for the Cash Management Fund and U.S. Government
Securities Cash Management Fund, by the Transfer Agent will receive the
dividend declared that day. Investors whose payments are received in or
converted into Federal Funds by the Transfer Agent after 12:00 noon, Central
time, for the Treasury Prime Cash Management Fund or 2:00 p.m., Central time,
for the Cash Management Fund and U.S. Government Securities Cash Management
Fund, will begin to accrue dividends on the following business day.
Federal Regulations require that an investor provide a certified
Taxpayer Identification Number ("TIN") upon opening or reopening an account.
See "Dividends, Distributions and Taxes" for further information concerning
this requirement. Failure to furnish a certified TIN to the Trust could
subject an investor to a $50 penalty imposed by the Internal Revenue Service
(the "IRS").
HOW TO REDEEM FUND SHARES
An investor may redeem all or any portion of the shares in the
investor's account on any Fund business day at the net asset value next
determined after a redemption request in proper form is received by the
Transfer Agent. Therefore, redemptions will be effected on the same day the
redemption order is received only if such order is received prior to 12:00
noon, Central time, for the Treasury Prime Cash Management Fund or 2:00 p.m.,
Central time, for the Cash Management Fund and U.S. Government Securities Cash
Management Fund, on any Fund business day. Shares that are redeemed earn
dividends up to and including the day prior to the day the redemption is
effected. The proceeds of a redemption will be paid in Federal Funds
ordinarily on the Fund business day
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<PAGE>
the redemption is effected. Payment for redemption requests received before
12:00 noon, Central time, for the Treasury Prime Cash Management Fund or 2:00
p.m., Central time, for the Cash Management Fund and U.S. Government
Securities Cash Management Fund, ordinarily is made in Federal Funds wired to
the redeeming shareholder on the same Fund business day. Payment for redeemed
shares for which a redemption order is received after such time on a Fund
business day is made in Federal Funds wired to the redeeming shareholder on
the next Fund business day following redemption. To allow the Investment
Adviser to manage the Funds' portfolios more effectively, investors are urged
to make redemption requests as early in the day as possible. In making
redemption requests, the names of the registered shareholders and their
account numbers must be supplied. Although each Fund generally retains the
right to pay the redemption price of its shares in kind with securities
(instead of cash), the Trust has filed an election under Rule 18f-1 under the
1940 Act committing to pay in cash all redemptions by a shareholder of record
up to the amounts specified in such rule (in most cases approximately
$250,000).
For redemptions by telephone or wire, please call 1-800-688-3350.
An investor may redeem shares by telephone if the investor has checked
the appropriate box on the Account Application. By selecting a telephone
redemption privilege, an investor authorizes the Transfer Agent to act on
telephone instructions from any person representing himself or herself to be
an authorized representative of the investor and reasonably believed by the
Transfer Agent to be genuine. The Trust will require the Transfer Agent to
employ reasonable procedures, such as requiring a form of identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Trust or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent instructions. Neither the Trust nor the Transfer
Agent will be liable for following telephone instructions reasonably believed
to be genuine.
The Trust makes available to institutions the ability to redeem shares
through compatible computer facilities. Investors desiring to redeem shares in
this manner should call 1-800-688-3350 to determine whether their computer
facilities are compatible and to receive instructions for redeeming shares in
this manner.
The right of any investor to receive payments with respect to any
redemption may be suspended or the payment of the redemption proceeds
postponed during any period in which the New York Stock Exchange is closed
(other than weekends or holidays) or trading on such Exchange is restricted
or, to the extent otherwise permitted by the 1940 Act, if an emergency exists.
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DISTRIBUTION AND SERVICES PLAN
(Service Shares Only)
Service Shares are subject to a Distribution and Services Plan adopted
by the Board of Trustees pursuant to Rule 12b-1 under the 1940 Act. Under the
Distribution and Services Plan, each Fund pays the Distributor for
advertising, marketing and distributing such shares and/or for the provision
of shareholder and administrative services for the beneficial owners of such
shares, a fee at the annual rate of up to .25% of the average daily net asset
value of the Service Class. The support services provided may include personal
services relating to shareholder accounts, providing reports and other
information, and services related to the maintenance of such shareholder
accounts. Under the Distribution and Services Plan, BISYS may make payments to
Service Agents in respect of these services. FCIMCO, FNBC, NBD and their
affiliates may act as Service Agents and receive fees under the Distribution
and Services Plan. BISYS determines the amounts to be paid to Service Agents.
The distribution services provided are activities primarily intended to result
in the sale of Service Shares.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund ordinarily declares dividends from net investment income on
each Fund business day. Fund shares begin earning income dividends on the day
the purchase order is effective. Dividends usually are paid on the last
calendar day of each month, and are automatically reinvested at net asset
value in additional shares of the Fund from which they were paid or, at the
investor's option, paid in cash. Each Fund's earnings for Saturdays, Sundays
and holidays are declared as dividends on the preceding business day. If an
investor redeems all shares in its account at any time during the month, all
proceeds and dividends to which the investor is entitled will be paid.
Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but a Fund may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code of 1986, as amended (the "Code"), in all events in a manner
consistent with the provisions of the 1940 Act. No Fund will make
distributions from net realized securities gains unless capital loss
carryovers, if any, have been utilized or have expired. Investors may choose
whether to receive distributions in cash or to reinvest in additional shares
at net asset value of the Fund from which they were paid. All expenses are
accrued daily and deducted before declaration of dividends to investors.
Dividends paid by each Class will be calculated at the same time and in the
same manner and will be of the same amount, except that the expenses
attributable solely to the Institutional Class or the Service Class will
generally be borne exclusively by such Class. Service
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<PAGE>
Shares will receive lower per share dividends than Institutional Shares
because of the higher expenses borne by the Service Class. See "Annual Fund
Operating Expenses."
Dividends paid by the Funds derived from net investment income, together
with distributions from any net realized short-term securities gains and all
or a portion of any gain realized from the sale or other disposition of
certain market discount bonds, will be taxable to U.S. investors as ordinary
income whether or not reinvested in additional Fund shares. Distributions from
net realized long-term securities gains, if any, will be taxable as long-term
capital gains for Federal income tax purposes if the beneficial holder of Fund
shares is a citizen or resident of the United States, regardless of how long
investors have held shares and whether such distributions are received in cash
or reinvested in additional shares.
Dividends and distributions attributable to interest from direct
obligations of the United States and paid by the Treasury Prime Cash
Management Fund generally are not subject to state personal income tax. The
Trust intends to provide shareholders of the Treasury Prime Cash Management
Fund with a statement which sets forth the percentage of dividends and
distributions paid by the Fund that is attributable to interest income from
direct obligations of the United States.
Dividends paid by a Fund derived from net investment income, together
with distributions from net realized short-term securities gains and all or a
portion of any gain realized from the sale or other disposition of certain
market discount bonds, paid by such Fund to a foreign investor who is the
beneficial owner of such Fund's shares generally are subject to U.S.
nonresident withholding taxes at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty. Distributions
from net realized long-term securities gains paid by the Fund to such foreign
investor generally will not be subject to U.S. nonresident withholding tax.
However, such distributions may be subject to backup withholding, as described
below, unless the foreign investor certifies his non-U.S. residency status.
Federal regulations generally require the Trust to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and
distributions from net realized securities gains paid to a shareholder if such
shareholder fails to certify either that the TIN furnished in connection with
opening an account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Trust to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect or
if a shareholder has failed to
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properly report taxable dividend and interest income on a Federal income tax
return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the record
owner of the account, and may be used to offset the record owner's tax
liability on his/her Federal income tax return.
Notice as to the tax status of dividends and distributions will be
mailed to investors annually. Each investor also will receive periodic
summaries of its account which will include information as to dividends and
distributions from securities gains, if any, paid during the year. No dividend
will qualify for the dividends received deduction allowable to certain U.S.
corporations.
Each Fund intends to qualify as a "regulated investment company" under
the Code. Qualification as a regulated investment company relieves the Fund of
any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. Each Fund is
subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable income and capital gains, if any.
Each investor and beneficial shareholder should consult its tax adviser
regarding questions as to Federal, state or local taxes.
GENERAL INFORMATION
The Trust was organized as a business trust on April 21, 1987 under a
Declaration of Trust. As of the date hereof, the Trust is a series fund having
twenty-seven series of shares of beneficial interest, each of which evidences
an interest in a separate investment portfolio. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares
("Series") representing interests in a portfolio and an unlimited number of
classes of shares within a Series. In addition to the Funds described herein,
the Trust currently offers the following investment portfolios by means of
separate prospectuses: the Pegasus Intermediate Bond Fund, Bond Fund, Short
Bond Fund, Income Fund, International Bond Fund, Municipal Bond Fund,
Intermediate Municipal Bond Fund, Michigan Municipal Bond Fund, Equity Income
Fund, Growth Fund, Mid-Cap Opportunity Fund, Small-Cap Opportunity Fund,
Intrinsic Value Fund, Growth and Value Fund, Equity Index Fund, International
Equity Fund, Managed Assets Conservative Fund, Managed Assets Balanced Fund,
Managed Assets Growth Fund, Money Market Fund, Government Fund, Treasury Money
Market Fund, Municipal Money Market Fund and Michigan Municipal Money Market
Fund.
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Shareholders are entitled to one vote for each full share held, and a
proportionate fractional vote for each fractional share held, and each Series
entitled to vote on a matter will vote thereon in the aggregate and not by
Series, except as otherwise expressly required by law or when the Board of
Trustees determines that the matter to be voted on affects only the interests
of shareholders of a particular Series. In addition, shareholders of each of
the Series have equal voting rights except that only shares of a particular
class within a Series are entitled to vote on matters affecting only that
class. Voting rights are not cumulative, and accordingly the holders of more
than 50% of the aggregate number of shares of all Trust portfolios may elect
all of the Trustees.
The Trustees have established a procedure requiring three annual
verifications, two of which are unannounced, of all investments held pursuant
to the Custodian Agreement, to be conducted by the Trust's independent
accountants.
The Trust does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Trust's By-laws provide that special meetings of shareholders of any Series
shall be called at the written request of shareholders entitled to cast at
least 10% of the votes of a Series entitled to be cast at such meeting. The
Trust also stands ready to assist shareholder communications in connection
with any meeting of shareholders as prescribed in Section 16(c) of the 1940
Act.
The Transfer Agent maintains a record of each investor's ownership and
sends confirmations and statements of account.
Investor inquiries may be made by writing to the Trust at the address
shown on the front cover or by calling the telephone number shown on the front
cover.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the
Trust's official sales literature in connection with the offer of the Funds'
shares, and, if given or made, such other information or representations must
not be relied upon as having been authorized by the Trust. This Prospectus
does not constitute an offer in any state in which, or to any person to whom,
such offering may not lawfully be made.
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SUPPLEMENTAL INFORMATION
Portfolio Securities
To the extent set forth in this Prospectus and except as noted below,
each Fund may invest in the following securities:
U.S. Treasury Securities -- Each Fund may invest in U.S Treasury
securities which include Treasury Bills, Treasury Notes and Treasury Bonds
that differ in their interest rates, maturities and times of issuance.
Treasury Bills have initial maturities of one year or less; Treasury Notes
have initial maturities of one to ten years; and Treasury Bonds generally have
initial maturities of greater than ten years.
U.S. Government Securities -- In addition to U.S. Treasury securities,
each Fund, except the Treasury Prime Cash Management Fund, may invest in
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury; others, such as
those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the agency
or instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest. Interest
may fluctuate based on generally recognized reference rates or the
relationship of rates. While the U.S. Government provides financial support to
such U.S. Government sponsored agencies or instrumentalities, no assurance
can be given that it will always do so, since it is not so obligated by law.
Each Fund will invest in such securities only when the Trust is satisfied that
the credit risk with respect to the issuer is minimal.
Stripped U.S. Treasury Securities and U.S. Government Securities -- Each
Fund may invest in stripped U.S. Treasury Securities and the Cash Management
and U.S. Government Securities Cash Management Funds may invest in stripped
U.S. Government Securities, where the principal and instrument components are
traded independently under the Separate Trading of Registered Interest and
Principal Securities program ("STRIPS"). Under STRIPS, the principal and
interest components are individually numbered and separately issued by the U.S.
Treasury at the request of depository financial institutions, which then trade
the component parts independently. These obligations are usually issued at a
discount to their "face value," and because
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of the manner in which principal and interest are returned, may exhibit
greater volatility than more conventional debt securities.
Repurchase Agreements -- Each Fund, except the Treasury Prime Cash
Management Fund, may enter into repurchase agreements, which involve the
acquisition by a Fund of an underlying debt instrument, subject to an
obligation of the seller to repurchase, and such Fund to resell, the
instrument at a fixed price usually not more than one week after its purchase.
Certain costs may be incurred by a Fund in connection with the sale of the
securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Fund may be delayed or limited. Pursuant to an order obtained from the
Securities and Exchange Commission, each Fund also is permitted to enter into
overnight repurchase agreements with FNBC or an affiliate of FNBC subject to
the terms and conditions of such order.
Bank Obligations -- The Cash Management Fund will invest in bank
obligations, including certificates of deposit, time deposits, bankers'
acceptances and other short-term obligations of domestic banks, foreign
subsidiaries of domestic banks, foreign branches of domestic banks, and
domestic and foreign branches of foreign banks and thrift institutions.
Certificates of deposit are negotiable certificates evidencing the obligation
of a bank to repay funds deposited with it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Bankers' acceptances
are credit instruments evidencing the obligation of a bank to pay a draft
drawn on it by a customer. These instruments reflect the obligation both of
the bank and of the drawer to pay the face amount of the instrument upon
maturity. The other short-term obligations may include uninsured, direct
obligations, bearing fixed, floating or variable interest rates.
Commercial Paper and other Short-Term Corporate Obligations -- The Cash
Management Fund may invest in commercial paper, which consists of
short-term, unsecured promissory notes issued to finance short-term credit
needs. The commercial paper purchased by the Fund will consist only of direct
obligations issued by domestic and foreign entities. The other corporate
obligations in which the Fund may invest consist of high quality, U.S. dollar
denominated short-term bonds and notes (including variable amount master
demand notes) issued by domestic and foreign corporations bearing fixed,
floating or variable interest rates.
Floating and Variable Rate Obligations -- The Cash Management Fund may
purchase floating and variable rate demand
A-2
<PAGE>
notes and bonds, which are obligations ordinarily having stated maturities in
excess of 13 months, but which permit the holder to demand payment of
principal at any time, or at specified intervals not exceeding 13 months, in
each case upon not more than 30 days' notice. Variable rate demand notes
include master demand notes which are obligations that permit the Fund to
invest fluctuating amounts, which may change daily without penalty, pursuant
to direct arrangements between the Fund, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations normally has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders
of such obligations. The interest rate on a floating rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a variable
rate demand obligation is adjusted automatically at specified intervals.
Frequently, such obligations are secured by letters of credit or other credit
support arrangements provided by banks. Because these obligations are direct
lending arrangements between the lender and borrower, it is not contemplated
that such instruments generally will be traded, and there generally is no
established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Fund's right to
redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Such obligations frequently are not rated by credit rating
agencies and, if not so rated, the Fund may invest in them only if the
Investment Adviser determines that at the time of investment the obligations
are of comparable quality to the other obligations in which the Fund may
invest. The Investment Adviser, on behalf of the Fund, will consider on an
ongoing basis the creditworthiness of the issuers of the floating and variable
rate demand obligations held by the Fund. The Fund will not invest more than
10% of the value of its net assets in floating or variable rate demand
obligations as to which it cannot exercise the demand feature on not more than
seven days' notice if there is no secondary market available for these
obligations, and in other securities that are illiquid.
Investment Company Securities -- Each of the Cash Management Fund and
U.S. Government Securities Cash Management Funds may invest in securities
issued by other investment companies which principally invest in securities of
the type in which the Fund invests. Under the 1940 Act, a Fund's investments
in such securities, subject to certain exceptions, currently are limited to
(i) 3% of the total voting stock of any one investment company, (ii) 5% of the
Fund's total assets with respect to any one investment company, and (iii) 10%
of the Fund's total assets in the aggregate. Investments in the securities of
other
A-3
<PAGE>
investment companies may involve duplication of advisory fees and certain
other expenses.
Investment Practices
Lending Portfolio Securities -- From time to time, each of the Cash
Management Fund and U.S. Government Securities Cash Management Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the relevant Fund's total
assets. In connection with such loans, each of these Funds will receive
collateral consisting of cash or U.S. Government securities or, with respect
to the Cash Management Fund only, irrevocable letters of credit issued by
financial institutions. Such collateral will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. Each of these Funds can increase its income through the investment
of such collateral. Each of these Funds continues to be entitled to payments
in amounts equal to the interest and other distributions payable on the loaned
security and receives interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. A Fund might experience risk of
loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with such Fund.
Illiquid Securities -- Each Fund may invest up to 10% of the value of
its assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with its investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating and variable rate demand obligations as to which the
Fund cannot exercise the related demand feature described above on not more
than seven days' notice or as to which there is no secondary market and
repurchase agreements providing for settlement in more than seven days after
notice. As to these securities, a Fund is subject to a risk that should such
Fund desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of such Fund's net assets
could be adversely affected.
Borrowing Money -- As a fundamental policy, the Treasury Prime Cash
Management Fund is permitted to borrow money to the extent permitted under the
1940 Act. However, the Fund currently intends to borrow money from banks for
temporary or emergency (not leveraging) purposes in an amount up to 15% of the
value of its total assets (including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the
A-4
<PAGE>
amount borrowed) at the time the borrowing is made. While borrowings exceed 5%
of the Fund's total assets, the Fund will not make any additional investments.
A-5
<PAGE>
PEGASUS FUNDS
Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
S U P P L E M E N T
dated July 26, 1996
to
S T A T E M E N T O F A D D I T I O N A L
I N F O R M A T I O N
dated July 26, 1996
Until on or about September 2, 1996, the formal name of the Pegasus
Funds is The Woodward Funds. Primary Funds Service Corp. ("PFSC") will serve
as the transfer agent and dividend disbursing agent for the Pegasus Funds
listed above until on or about August 3, 1996. PFSC is located at 100
Financial Park, Franklin, Massachusetts 02038.
<PAGE>
______________________________________________________________________________
PEGASUS FUNDS
Cash Management Funds
INSTITUTIONAL And SERVICE SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
July 26, 1996
______________________________________________________________________________
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Cash Management Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund (each, a "Fund") of Pegasus Funds (the
"Trust"), dated July 26, 1996, as it may be revised from time to time. To
obtain a copy of the Funds' Prospectus, please write to the Trust at 3435
Stelzer Road, Columbus, Ohio 43219-3035, or call toll free 1-800-688-3350.
First Chicago NBD Investment Management Company ("FCNIMCO") serves as
each Fund's investment adviser (the "Investment Adviser") and, FCNIMCO and
BISYS Fund Services serve as co- administrators.
BISYS Fund Services is the distributor (the "Distributor") and BISYS
and FCNIMCO serve as co-administrators of the Funds' shares.
TABLE OF CONTENTS
Page
----
Investment Objective and Management Policies........................ B-2
Management of the Trust............................................. B-7
Management Arrangements............................................. B-10
Distribution and Services Plan...................................... B-12
Purchase of Fund Shares............................................. B-13
Redemption of Fund Shares........................................... B-14
Determination of Net Asset Value.................................... B-14
Portfolio Transactions.............................................. B-15
Dividends, Distributions and Taxes.................................. B-16
Yield Information................................................... B-16
Information About the Trust......................................... B-19
Counsel and Independent Auditors.................................... B-19
Appendix............................................................ A-1
Financial Statements including
Report of Independent Auditors......................................FS-1
B-1
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The following information supplements and should be read in
conjunction with the sections in the Funds' Prospectus entitled "Description
of the Funds" and "Supplemental
Information."
Portfolio Securities and Investment Practices
Bank Obligations. (Cash Management Fund) Domestic commercial
banks organized under Federal law are supervised and examined by the
Comptroller of the Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by the Federal Deposit
Insurance Corporation (the "FDIC"). Domestic banks organized under state law
are supervised and examined by state banking authorities but are members of
the Federal Reserve System only if they elect to join. In addition, state
banks whose certificates of deposit ("Cds") may be purchased by the Fund are
insured by the FDIC (although such insurance may not be of material benefit to
the Fund, depending on the principal amount of the Cds of each bank held by
the Fund) and are subject to Federal examination and to a substantial body of
Federal law and regulation.
Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks, and domestic and foreign branches of foreign
banks, such as Cds and time deposits ("Tds"), may be general obligations of
the parent banks in addition to the issuing branch, or may be limited by the
terms of a specific obligation and governmental regulation. Such obligations
are subject to different risks than are those of domestic banks. These risks
include foreign economic and political developments, foreign governmental
restrictions that may adversely affect payment of principal and interest on
the obligations, foreign exchange controls and foreign withholding and other
taxes on interest income. These foreign branches and subsidiaries are not
necessarily subject to the same or similar regulatory requirements that apply
to domestic banks, such as mandatory reserve requirements, loan limitations,
and accounting, auditing and financial recordkeeping requirements. In
addition, less information may be publicly available about a foreign branch of
a domestic bank or about a foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may
be general obligations of the parent bank in addition to the issuing branch,
or may be limited by the terms of a specific obligation or by Federal or state
regulation as well as governmental action in the country in which the foreign
bank has its head office. A domestic branch of a foreign bank with assets in
excess of $1 billion may be subject to reserve requirements imposed by the
Federal Reserve System or by the state in which the branch is located if the
branch is licensed in that state.
B-2
<PAGE>
The Fund may purchase Cds issued by banks, savings and loan
associations and similar thrift institutions with less than $1 billion in
assets, which are members of the FDIC, provided the Fund purchases any such Cd
in a principal amount of not more than $100,000, which amount would be fully
insured by the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC. Interest payments on such a Cd are not insured by
the FDIC. The Fund will not own more than one such Cd per such issuer.
Foreign Securities. (Cash Management Fund) Foreign
securities markets generally are not as developed or efficient as those in the
United States. Securities of some foreign issuers are less liquid and more
volatile than securities of comparable U.S. issuers. Similarly, volume and
liquidity in most foreign securities markets are less than in the United
States and, at times, volatility of price can be greater than in the United
States.
Furthermore, some of these securities are subject to
brokerage taxes levied by foreign governments, which have the effect of
increasing the cost of such investment and reducing the realized gain or
increasing the realized loss on such securities at the time of sale. Custodial
expenses for a portfolio of non-U.S. securities generally are higher than for
a portfolio of U.S. securities. Income earned or received by the Cash
Management Fund from sources within foreign countries may be reduced by
withholding and other taxes.
Repurchase Agreements. (Cash Management Fund and U.S.
Government Securities Cash Management Fund) The Trust's custodian or
subcustodian will have custody of, and will hold in a segregated account,
securities acquired by a Fund under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund that enters into them. Each Fund will enter
into repurchase agreements only with registered or unregistered securities
dealers or banks with total assets in excess of one billion dollars, with
respect to securities of the type in which such Fund may invest, and will
require that additional securities be deposited with it if the value of the
securities purchased should decrease below the resale price. The Investment
Adviser will monitor on an ongoing basis the value of the collateral to assure
that it always equals or exceeds the repurchase price. Each of these Funds
will consider on an ongoing basis the creditworthiness of the institutions
with which it enters into repurchase agreements.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities Act
of 1933, as amended, for certain restricted securities held by a Fund, the
Trust intends to treat such securities as liquid securities in accordance with
procedures approved by the Trust's Board of Trustees. Because
B-3
<PAGE>
it is not possible to predict with assurance how the market for restricted
securities pursuant to Rule 144A will develop, the Trust's Board of Trustees
has directed the Investment Adviser to monitor carefully each Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that, for a period of time, qualified institutional buyers cease
purchasing restricted securities pursuant to Rule 144A, a Fund's investing in
such securities may have the effect of increasing the level of illiquidity in
its investment portfolio during such period.
Lending Portfolio Securities. (Cash Management Fund and U.S.
Government Securities Cash Management Fund) To a limited extent, each of these
Funds may lend its portfolio securities to brokers, dealers and other
financial institutions, provided it receives cash collateral which at all
times is maintained in an amount equal to at least 100% of the current market
value of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral. For
purposes of this policy, the Trust considers collateral consisting of U.S.
Government securities or, in the case of the Cash Management Fund only,
irrevocable letters of credit issued by banks whose securities meet the
standards for investment by the Fund to be the equivalent of cash. Such loans
may not exceed 33 1/3% of the Fund's total assets. From time to time, the Fund
may return to the borrower or a third party which is unaffiliated with the
Fund, and which is acting as a "placing broker," a part of the interest earned
from the investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires
that the following conditions must be met whenever portfolio securities are
loaned: (1) the Fund must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever the market
value of the securities rises above the level of such collateral; (3) the Fund
must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Fund may pay only reasonable custodian fees in connection
with the loan. These conditions may be subject to future modification.
Investment Restrictions
Each Fund has adopted the following investment restrictions
as fundamental investment limitations which cannot be changed, as to a
particular Fund, without approval by the holders of a majority (as defined in
the Investment Company Act of 1940, as amended (the "1940 Act")), of that
Fund's outstanding voting shares. Each Fund may not:
B-4
<PAGE>
1. Borrow money, issue senior securities, or mortgage,
pledge or hypothecate its assets except to the extent permitted under the 1940
Act.
2. Act as an underwriter of securities of other issuers,
except to the extent the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of portfolio
securities.
3. Purchase or sell (a) real estate or (b) commodities,
except, in the case of clauses (a) and (b), to the extent permitted under the
1940 Act.
4. Make loans to others (other than through investment in
debt obligations or other instruments referred to in the Fund's Prospectus),
except that the Fund may lend its portfolio securities in an amount not to
exceed 33 1/3% of the value of its total assets.
5. Purchase any securities which would cause 25% or more of
the value of a Fund's total assets at the time of purchase to be invested in
the securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation with
respect to (i) instruments issued or guaranteed by the U.S. Government, any
state, territory or possession of the United States, the District of Columbia
or any of their authorities, agencies, instrumentalities or political
subdivisions, (ii) instruments issued by domestic branches of U.S. banks and
(iii) repurchase agreements secured by instruments described in clauses (i)
and (ii), (b) wholly-owned finance companies will be considered to be in the
industries of their parents if their activities are primarily related to
financing the activities of the parents and (c) utilities will be divided
according to their services, for example, gas, gas transmission, electric and
gas, electric and telephone will each be considered a separate industry and
(d) personal credit and business credit businesses will be considered separate
industries, and further provided that the Cash Management Fund will invest at
least 25% of its total assets in obligations of issuers in the banking
industry or instruments secured by such obligations except during temporary
defensive periods.
In construing number 5 in accordance with SEC policy, to the
extent permitted, U.S. branches of foreign banks will be considered to be U.S.
banks where they are subject to the same regulation as U.S. banks.
6. Purchase securities of any one issuer (except U.S.
Government securities and related repurchase agreements) if immediately after
such purchase, more than 5% of the value of the Fund's total assets would be
invested in the obligations of any one issuer, except that up to 25% of the
value of the Fund's
B-5
<PAGE>
total assets may be invested without regard to this 5% limitation.
Each Fund has adopted the following investment restrictions
as non-fundamental limitations which may be changed, as to a particular Fund,
by the Board of Trustees without the approval of by the holders of a majority,
as defined in 1940 Act of that Fund's outstanding voting shares.
Each Fund may not:
1. Purchase securities on margin, except as described in the
Fund's Prospectus or this Statement of Additional Information.
2. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
3. Purchase, sell or write puts, calls or combinations
thereof, except as described in the Fund's Prospectus or this Statement of
Additional Information.
4. Enter into repurchase agreements providing for settlement
in more than seven days after notice or purchase securities which are
illiquid, if, in the aggregate, more than 10% of the value of the Fund's net
assets would be so invested.
5. Invest in securities of other investment companies,
except to the extent permitted under the 1940 Act.
6. Invest more than 5% of its assets in the obligations of
any one issuer, except if permitted under Rule 2a-7 under the 1940 Act.
The Cash Management and U.S. Government Securities Cash
Management Funds also may not sell securities short.
If a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a change
in values or assets will not constitute a violation of such restriction.
The Trust may make commitments more restrictive than the
restrictions listed above so as to permit the sale of a Fund's shares in
certain states. Should the Trust determine that a commitment is no longer in
the best interests of a Fund and its shareholders, the Trust reserves the
right to revoke the commitment by terminating the sale of a Fund's shares in
the state involved.
B-6
<PAGE>
MANAGEMENT OF THE TRUST
Trustees and officers of the Trust, together with
information as to their principal business occupations during at least the
last five years, are shown below. Each Trustee has an address at the Trust,
c/o NBD Bank, 611 Woodward Avenue, Detroit, Michigan 48226.
Trustees and Officers of the Trust
Will M. Caldwell, Trustee
Retired; Executive Vice President, Chief Financial Officer
and Director, Ford Motor Company (1979-1985); Director, First Nationwide Bank
(1986-1991); Director, Air Products & Chemicals, Inc. (since 1985); Director,
Zurich Holding Company of America (since 1990); Director, The Batts Group,
Ltd. (since 1986); Trustee and Vice Chairman, Detroit Medical Center (1986-
1991); Trustee Emeritus and Chairman of the Pension Investment Sub-Committee,
Detroit Medical Center (since 1991); Trustee, Pegasus Variable Annuity Fund.
He is 70 years old.
Nicholas J. De Grazia, Trustee
Consultant, Lionel L.L.C. (since 1995); President, Chief
Operating Officer and Director, Lionel Trains, Inc. (1990- 1995); Vice
President-Finance and Treasurer, University of Detroit (1981-1990); President
(1981-1990) and Director (since 1986), Polymer Technologies, Inc.; President,
Florence Development Company (1987-1990); Chairman (since 1994) and Director
(since 1992), Central Macomb County Chamber of Commerce; Vice Chairman,
Michigan Higher Education Facilities Authority (since 1991); Trustee, Pegasus
Variable Annuity Fund.
He is 53 years old.
John P. Gould, Trustee
Steven G. Rothmeier Professor (since January, 1996);
Distinguished Service Professor of Economics of the University of Chicago
Graduate School of Business (since 1984); Dean of the University of Chicago
Graduate School of Business (1983-1993); Member of Economic Club of Chicago
and Commercial Club of Chicago; Director of Harbor Capital Advisors and
Dimensional Fund Advisors; Trustee, Pegasus Variable Annuity Fund. He is 57
years old.
Marilyn McCoy, Trustee
Vice President of Administration and Planning of
Northwestern University (since 1985); Director of Planning and Policy
Development for the University of Colorado (1981-1985); Member of the Board of
Directors of Evanston Hospital, Chicago Metropolitan YMCA, Chicago Network and
United Charities; Member
B-7
<PAGE>
of the Chicago Economics Club; Trustee, Pegasus Variable Annuity Fund. She is
48 years old.
Julius L. Pallone, Trustee
President, J.L. Pallone Associates, Consultants (since
1994); Chairman of the Board (1974-1993), Maccabees Life Insurance Company;
President and Chief Executive Officer, Royal Financial Services (1991-1993);
Director, American Council of Life Insurance of Washington, D.C. (life
insurance industry association) (1988-1993); Director, Crowley, Milner and
Company (department store) (since 1988); Trustee, Lawrence Institute of
Technology (since 1982); Director, Detroit Symphony Orchestra (since 1985);
Director, Oakland Commerce Bank (since 1984) and Michigan Opera Theater (since
1981); Trustee, Pegasus Variable Annuity Fund. He is 65 years old.
*Donald G. Sutherland, Trustee
Partner of the law firm Ice, Miller, Donadio & Ryan,
Indianapolis, Indiana; Trustee, Pegasus Variable Annuity Fund.
He is 67 years old.
Donald L. Tuttle, Trustee
Vice President (since 1995), Senior Vice President
(1992-1995), Association for Investment Management and Research; Senior
Professor of Finance, Indiana University (1970-1991); Vice President, Trust &
Investment Advisers, Inc. (1990-1991); Director, Federal Home Loan Bank of
Indianapolis (1981 to 1985); Trustee, Pegasus Variable Annuity Fund. He is 61
years old.
Earl I. Heenan, Jr., President
Director (since 1995), Vice Chairman (1988-1995) and
President (1955-1988), Detroit Mortgage & Realty Company; President
(1989-1992) and Trustee (since 1966), Cottage Hospital of Grosse Pointe
(affiliate of Henry Ford Health System); Trustee, Henry Ford Health Sciences
Center (since 1987); Trustee, Henry Ford Continuing Care Corporation (since
1980); Trustee, Earhart Foundation (since 1980). He is 77 years old and his
address is 333 West Fort Street, Detroit, Michigan 48226.
_________________
* Trustee who is an "interested person" of the Trust, as
defined in the 1940 Act.
B-8
<PAGE>
Eugene C. Yehle, Treasurer
Retired; Director of Investor Relations and Pension
Investments, Dow Chemical Company (1972-1985); Trustee, Alma College (since
1978); Trustee (since 1977) and Chairman (since 1983), Charles J. Strosacker
Foundation; Trustee (1989-1993), Higgins Lake Foundation. He is 75 years old
and his address is 4501 Linden Drive, Midland, Michigan 48640.
W. Bruce McConnel, III, Secretary
Partner of the law firm Drinker Biddle & Reath,
Philadelphia, Pennsylvania. He is 53 years old, and his address is 1345
Chestnut Street, Philadelphia, Pennsylvania 19107.
For so long as the plan described in the section captioned
"Distribution and Services Plan" remains in effect, the Trustees of the Trust
who are not "interested persons" of the Trust, as defined in the 1940 Act,
will be selected and nominated by the Trustees who are not "interested
persons" of the Trust.
Each Trustee receives from the Trust and the Pegasus
Variable Annuity Fund a total annual fee of $17,000 and a fee of $2,000 for
each Board of Trustees meeting attended. The Chairman is entitled to
additional compensation of $4,250 per year for his services to the Trusts in
that capacity. These fees are allocated among the investment portfolios of the
Trust and the Pegasus Variable Annuity Fund based on their relative net
assets. All Trustees are reimbursed for out of pocket expenses in connection
with attendance at meetings. Drinker Biddle & Reath, of which Mr. McConnel is
a partner, receives legal fees as counsel to the Trusts.
B-9
<PAGE>
The following table summarizes the compensation for each of the Trustees
for the Trust's fiscal year ended December 31, 1995:
<TABLE>
<CAPTION>
(3)
Total
Compensation
(2) From Fund and
Aggregate Fund Complex**
(1) Compensation Paid to Board
Name of Board Member from Fund* Member
-------------------- ------------ ---------------
<S> <C> <C>
Will M. Caldwell, Trustee $21,250 $21,250(2)+
Nicholas J. DeGrazia, Trustee $21,250 $21,250(2)+
John P. Gould, Trustee *** $30,000(4)+
Earl I. Heenan, Jr., $24,437.50 $24,437.50(2)+
Chairman and President++,+++
Marilyn McCoy, Trustee *** $30,000(4)+
Julius L. Pallone, Trustee ++ $21,250 $21,250(2)+
Donald G. Sutherland, $21,250 $21,250(2)+
Trustee ++
Donald L. Tuttle, Trustee ++ $21,250 $21,250(2)+
Eugene C. Yehle, Trustee $21,250 $21,250(2)+
and Treasurer+++
__________________
<FN>
* Amount does not include reimbursed expenses for attending Board meeting,
which are estimated to be approximately $350 for all Trustees as a group.
** The Fund Complex consists of the Trust, the Pegasus Variable Annuity Fund,
Prairie Funds, Prairie Institutional Funds, Prairie Intermediate Bond Fund and
Prairie Municipal Bond Fund, Inc.
*** Mr. Gould and Ms. McCoy were not trustees of the Trust during the fiscal
year ended December 31, 1995.
+ Total number of investment companies in the Fund Complex from which the
Trustee receives compensation for serving as a trustee.
++ Deferred compensation in the amounts of $24,437.50, $21,500, $21,500, and
$21,500 accrued during the Pegasus Funds' fiscal year ended December 31, 1995
for Earl I. Heenan, Jr., Julius L. Pallone, Donald G. Sutherland and Donald L.
Tuttle, respectively.
+++ Messrs. Heenan and Yehle resigned as Trustees of the Trust and the Pegasus
Variable Annuity Fund as of July 13, 1996.
</TABLE>
__________________
Board members and officers of the Trust, as a group, owned less than 1%
of any Fund's shares outstanding on July 1, 1996.
B-10
<PAGE>
MANAGEMENT ARRANGEMENTS
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "Management of the Trust."
Investment Advisory Agreement. FCNIMCO provides investment advisory
services pursuant to the Investment Advisory Agreement (the "Agreement") dated
as of April 12, 1996 with the Trust. As to each Fund, the Agreement is subject
to annual approval by (i) the Trust's Board of Trustees or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
such Fund, provided that in either event the continuance also is approved by a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust or FCNIMCO, by vote cast in person at a meeting called
for the purpose of voting on such approval. As to each Fund, the Agreement is
terminable without penalty, on 60 days' notice, by the Trust's Board of
Trustees or by vote of the holders of a majority of such Fund's shares, or, on
not less than 90 days' notice, by FCNIMCO. The Agreement will terminate
automatically, as to the relevant Fund, in the event of its assignment (as
defined in the 1940 Act).
FCNIMCO is responsible for investment decisions for each Fund in
accordance with the stated policies of such Fund, subject to the general
supervision of the Trust's Board of Trustees.
Under the terms of the Investment Advisory Agreement with the Trust,
FCNIMCO is entitled to a monthly advisory fee at the annual rate of .20% of
each Fund's average daily net assets.
Treasury Prime Cash Fund only. For the period from March 22, 1995
(commencement of operations of Treasury Prime Cash Management Fund) through
December 31, 1995, the advisory fee payable by the predecessor Treasury Prime
Cash Management Fund amounted to $50,405, which amount was reduced by $27,592
pursuant to an undertaking by FCNIMCO, resulting in a net advisory fee paid by
the Treasury Prime Cash Management Fund of $22,813.
Cash Management Fund and U.S. Government Securities Cash Management Fund
only. Prior to January 17, 1995, The First National Bank of Chicago ("FNBC")
provided management services to First Prairie Cash Management and First
Prairie U.S. Treasury Securities Cash Management (the predecessor funds to the
predecessor Cash Management Fund and predecessor U.S. Government Securities
Cash Management Fund, respectively) pursuant to separate management agreements
with each such fund and engaged The Dreyfus Corporation ("Dreyfus") to provide
administrative services to the funds. As compensation for FNBC's services,
First Prairie Cash Management and First Prairie U.S. Treasury Securities Cash
Management each agreed to pay FNBC a monthly
B-11
<PAGE>
management fee at the annual rate of .35 of l% of the value of the fund's
average daily net assets. The fees payable to Dreyfus for its services were
paid by FNBC.
For the period July 30, 1992 (commencement of operations of First Prairie
Cash Management) through June 30, 1993 (the Fund's prior fiscal year end), no
management fee was paid by First Prairie Cash Management pursuant to an
undertaking by FNBC. For the fiscal year ended June 30, 1994, the management
fee payable by First Prairie Cash Management amounted to $892,114, which
amount was reduced by $304,836 pursuant to an undertaking by FNBC, resulting
in a net management fee paid by First Prairie Cash Management of $587,278. For
the fiscal year ended June 30, 1995, the aggregate management/advisory fee
payable by the predecessor Cash Management Fund and its predecessor amounted
to $793,104, which amount was reduced by $267,419 pursuant to undertakings by
FNBC and FCNIMCO, resulting in an aggregate net management/advisory fee paid
by the Cash Management Fund and its predecessor of $525,685. For the
predecessor Cash Management Fund's fiscal year ended December 31, 1995, the
aggregate management/advisory fee payable by the Fund and its predecessor
amounted to $716,956, which amount was reduced by $331,599 pursuant to
undertakings by FNBC and FCNIMCO, resulting in an aggregate net
management/advisory fee paid by the predecessor Cash Management Fund and its
predecessor of $385,357.
For the period June 2, 1992 (commencement of operations of First Prairie
U.S. Treasury Securities Cash Management) through May 31, 1993 (the Fund's
prior fiscal year end), no management fee was paid by First Prairie U.S.
Treasury Securities Cash Management pursuant to an undertaking by FNBC. For
the fiscal year ended May 31, 1994, the management fee payable by First
Prairie U.S. Treasury Cash Management amounted to $1,478,021, which amount was
reduced by $477,943 pursuant to an undertaking by FNBC, resulting in a net
management fee paid by First Prairie U.S. Treasury Cash Management of
$1,000,078. For the fiscal year ended May 31, 1995, the aggregate
management/advisory fee payable by the predecessor U.S. Government Securities
Cash Management Fund and it predecessor amounted to $1,388,345, which amount
was reduced by $312,740 pursuant to undertakings by FNBC and FCNIMCO,
resulting in an aggregate net management/advisory fee paid by the predecessor
U.S. Government Securities Cash Management fund and its predecessor of
$1,075,605. For the predecessor U.S. Government Securities Cash Management
Fund's fiscal year ended December 31, 1995, the aggregate management/advisory
fee payable by the Fund and its predecessor amounted to $968,761, which amount
was reduced by $381,198 pursuant to undertakings by FNBC and FCNIMCO,
resulting in an aggregate net management/advisory fee paid by the U.S.
Government Securities Cash Management Fund and its predecessor of $587,563.
Administration Agreement. Pursuant to an Administration
Agreement dated as of April 12, 1996 with the Trust, FCNIMCO and
B-12
<PAGE>
BISYS assist in all aspects of the Trust's operations, other than providing
investment advice, subject to the overall authority of the Trust's Board in
accordance with Massachusetts law. Under the terms of the Administration
Agreement, FCNIMCO and BISYS are entitled jointly to a monthly administration
fee at the annual rate of .15% of each Fund's average daily net assets.
The Trust has agreed that neither FCNIMCO nor BISYS will be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust
in connection with the matters to which the agreement with FCNIMCO or BISYS
relates, except for a loss resulting from wilful misfeasance, bad faith or
gross negligence on the part of FCNIMCO or BISYS in the performance of their
obligations or from reckless disregard by any of them of their obligations and
duties under the Administration Agreement.
For the period January 17, 1995 (effective date of Administration
Agreement) through December 31, 1995, the predecessor Cash Management Fund and
the predecessor U.S. Government Securities Cash Management Fund paid FCNIMCO
an administrative fee of $522,730 and $707,131, respectively. For the period
March 22, 1995 (commencement of operations of Treasury Prime Cash Management
Fund) through December 31, 1995, the administrative fee payable by the
predecessor Treasury Prime Cash Management Fund amounted to $37,804, which
amount was reduced by $9,695 pursuant to an undertaking by FCNIMCO, resulting
in a net administrative fee paid by the predecessor Treasury Prime Cash
Management Fund of $28,109.
In addition, the Administration Agreement provides that if, in any fiscal
year, the aggregate expenses of a Fund exceed the expense limitation of any
state having jurisdiction over the Fund, FCNIMCO, and BISYS will bear such
excess expense to the extent required by state law.
The aggregate of the fees payable to FCNIMCO and BISYS is not subject to
reduction as the value of the Fund's net assets increases.
DISTRIBUTION AND SERVICES PLAN
(Service Shares Only)
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "Distribution and Services
Plan."
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange Commission
under the 1940 Act provides, among other things, that an investment company
may bear expenses of distributing its shares only pursuant to a plan adopted
in accordance with the Rule. The Trust's Board of Trustees has adopted such a
plan (the "Plan") with respect to each Fund's
B-13
<PAGE>
Service Shares, pursuant to which each Fund pays BISYS a fee of up to .25% of
the average daily net asset value attributable to such Service Shares for
advertising, marketing and distributing such Service Shares and for the
provision of certain services to the holders of such Service Shares. Under the
Plan, BISYS may make payments to certain financial institutions, securities
dealers and other financial industry professionals (collectively, "Service
Agents") in respect of these services. The Board of Trustees believes that
there is a reasonable likelihood that the Plan will benefit each Fund and the
holders of Service Shares.
The Board of Trustees reviews, at least quarterly, a written report of
the amounts expended under the Plan and the purposes for which the
expenditures were made. In addition, such arrangements are approved annually
by a majority of the Trustees, including a majority of the Trustees who are
not "interested persons" of the Trust as defined in the 1940 Act and have no
direct or indirect financial interest in such arrangements (the "Disinterested
Trustees").
Any material amendment to the Plan must be approved by a majority of the
Board of Trustees (including a majority of the Disinterested Trustees).
PURCHASE OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "How to Buy Fund Shares."
The Distributor. The Distributor serves on a best efforts
basis as the Trust's distributor pursuant to an agreement which
is renewable annually.
Using Federal Funds. First Data Investor Services Group, Inc., the
Trust's transfer and dividend disbursing agent (the "Transfer Agent"), or the
Trust may attempt to notify the investor upon receipt of checks drawn on banks
that are not members of the Federal Reserve System as to the possible delay in
conversion into Federal Funds and may attempt to arrange for a better means of
transmitting the money. If the investor is a customer of a securities dealer,
bank or other financial institution and his order to purchase Fund shares is
paid for other than in Federal Funds, the securities dealer, bank or other
financial institution, acting on behalf of its customer, generally will
complete the conversion into, or itself advance, Federal Funds on the business
day following receipt of the customer order. The order is effective only when
so converted and received by the Transfer Agent. An order for the purchase of
Fund shares placed by an investor with a sufficient Federal Funds or cash
balance in his brokerage account with a securities dealer, bank or other
financial institution will become
B-14
<PAGE>
effective on the day that the order, including Federal Funds, is received by
the Transfer Agent. In some states, banks or other institutions effecting
transactions in Fund shares may be required to register as dealers pursuant to
state law.
REDEMPTION OF FUND SHARES
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "How to Redeem Fund
Shares."
Redemption Commitment. The Trust normally redeems shares for cash.
However, the Trustees can determine that conditions exist making cash payments
undesirable. If they should so determine, redemption payments could be made in
securities valued at the value used in determining net asset value. There may
be brokerage and other costs incurred by the redeeming shareholder in selling
such securities. The Trust has elected to be covered by Rule 18f-1 under the
1940 Act, pursuant to which the Trust is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of net asset value during any 90-day
period for any one shareholder.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closing), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods
as the Securities and Exchange Commission by order may permit to protect the
Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "How to Buy Fund Shares."
Amortized Cost Pricing. The valuation of each Fund's portfolio securities
is based upon their amortized cost which does not take into account unrealized
capital gains or losses. This involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if it sold the
instrument.
B-15
<PAGE>
The Board of Trustees has established procedures, as a particular
responsibility within the overall duty of care owed to each Fund's investors,
reasonably designed to stabilize the Fund's price per share as computed for
purposes of purchases and redemptions at $1.00. Such procedures include review
of each Fund's portfolio holdings by the Board of Trustees, at such intervals
as it deems appropriate, to determine whether the Fund's net asset value
calculated by using available market quotations or market equivalents deviates
from $1.00 per share based on amortized cost. In such review of the portfolio
of the Fund, investments for which market quotations are readily available
will be valued at the most recent bid price or yield equivalent for such
securities or for securities of comparable maturity, quality and type, as
obtained from one or more of the major market makers for the securities to be
valued. Other investments and assets of the Funds will be valued at fair value
as determined in good faith by the Board of Trustees.
The extent of any deviation between a Fund's net asset value based upon
available market quotations or market equivalents and $1.00 per share based on
amortized cost will be examined by the Board of Trustees. If such deviation
exceeds 1/2 of 1%, the Board of Trustees will consider what actions, if any,
will be initiated. In the event the Board of Trustees determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, it has agreed to take such corrective
action as it regards as necessary and appropriate, including: selling
portfolio instruments prior to maturity to realize capital gains or losses or
to shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market quotations
or market equivalents.
New York Stock Exchange Closings. The holidays (as observed) on which the
New York Stock Exchange is closed currently are: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
PORTFOLIO TRANSACTIONS
Portfolio securities of each Fund ordinarily are purchased directly from
the issuer or from an underwriter or a market maker for the securities.
Ordinarily, no brokerage commissions are paid by the Fund for such purchases.
Purchases from underwriters of portfolio securities may include a concession
paid by the issuer to the underwriter and the purchase price paid to, and
sales price received from, market makers for the securities may reflect the
spread between the bid and asked price. No brokerage commissions have been
paid by any Fund to date.
B-16
<PAGE>
Transactions are allocated to various dealers by the Trust's investment
personnel in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable FCNIMCO to supplement its own research and analysis
with the views and information of other securities firms and may be selected
based upon their sales of Fund shares.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by FCNIMCO in advising other funds or
accounts it advises and, conversely, research services furnished to FCNIMCO by
brokers in connection with other funds or accounts FCNIMCO advises may be used
by FCNIMCO in advising the Fund. Although it is not possible to place a dollar
value on these services, it is the opinion of FCNIMCO that the receipt and
study of such services should not reduce FCNIMCO's overall research expenses.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information supplements and should be read in conjunction
with the section in Funds' Prospectus entitled "Dividends, Distributions and
Taxes."
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gain or loss. However, all or a portion of the gain
realized from the disposition of certain market discount bonds will be treated
as ordinary income under Section 1276 of the Internal Revenue Code of 1986, as
amended.
YIELD INFORMATION
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "Yield Information."
Yield is computed in accordance with a standardized method which involves
determining the net change in the value of a hypothetical pre-existing Fund
account having a balance of one share at the beginning of a seven calendar day
period for which yield is to be quoted, dividing the net change by the value
of the account at the beginning of the period to obtain the base period
return, and annualizing the results (i.e., multiplying the base period return
by 365/7). The net change in the value of the account reflects the value of
additional shares purchased with dividends declared on the original share and
any such additional shares and fees that may be charged to the shareholder's
account, in proportion to the length of the base period and the Fund's average
account size, but does not include
B-17
<PAGE>
realized gains and losses or unrealized appreciation and depreciation.
Effective yield is computed by adding 1 to the base period return (calculated
as described above), raising that sum to a power equal to 365 divided by 7,
and subtracting 1 from the result.
For the seven-day period ended December 31, 1995, the yield and effective
yield of each predecessor Fund were as follows:
<TABLE>
<CAPTION>
Name of Predecessor
Fund and Class Yield Effective Yield
-------------- ----- ---------------
<S> <C> <C>
Cash Management Fund
Institutional Shares 5.43%/5.35%* 5.57%/5.47*
Service Shares 5.18%/5.09%* 5.31%/5.22%*
Treasury Prime Cash
Management Fund
Institutional Shares 4.87%/4.81* 4.98%/4.93%*
Service Shares 4.62%/4.56%* 4.72%/4.66%*
U.S. Government
Securities
Cash Management Fund
Institutional Shares 5.31%/5.22%* 5.44%/5.36%*
Service Shares 5.06%/4.93%* 5.28%/5.05%*
__________________
<FN>
* Absent fee waivers.
</TABLE>
Yields will fluctuate and are not necessarily representative of future
results. Each investor should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which the
Fund's price per share is determined.
The Cash Management Fund, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund are rated AAAm or AAAmG, as the
case may be, by Standard & Poor's Ratings Group, Division of McGraw Hill and
Aaa by Moody's Investors
Service, Inc.
From time to time, advertising materials for the Funds may refer to
FNBC's` or any of their affiliate's full line of investment products for the
corporate cash market, including sweep services, on-line money market mutual
fund purchases, customized portfolio management, and OASIS, a same-day sweep
product that sweeps funds to an overnight Eurodollar time deposit. In
addition, from time to time, references to the Funds may appear in
advertisements and sales literature for certain products or services offered
by the Trust's Investment Adviser, its affiliates or others, through which it
is possible to invest in one or more of the Funds, such as the Investment
B-18
<PAGE>
Architect wrap account, the Pathmaker variable annuity, and First Choice and
First Choice Select 401(k) products.
INFORMATION ABOUT THE TRUST
The following information supplements and should be read in conjunction
with the section in the Funds' Prospectus entitled "General Information."
Each Fund share has one vote and, when issued and paid for in accordance
with the terms of the offering, is fully paid and non-assessable. Fund shares
have no preemptive, subscription or conversion rights and are freely
transferable.
On January 17, 1995, all of the assets and liabilities of First Prairie
Cash Management and First Prairie U.S. Treasury Securities Cash Management
were transferred to the Cash Management Fund and U.S. Government Securities
Cash Management Fund of the Prairie Institutional Funds, respectively, in
exchange for Institutional Shares pursuant to a proposal approved by
shareholders of each such First Prairie Fund on December 30, 1994.
On July 13, 1996, all of the assets and liabilities of the Cash
Management Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund of the Prairie Institutional Funds were
transferred to the Cash Management Fund, Treasury Prime Cash Management Fund
and U.S. Government Securities Cash Management Fund, respectively, in exchange
for Institutional Shares and Service Shares pursuant to a proposal approved by
shareholders of the Prairie Cash Management, Treasury Prime Cash Management
and U.S. Government Securities Cash Management Funds on July 12, July 8 and
July 12, 1996, respectively.
As of July 17, 1996, the following persons may have beneficially owned 5%
or more of the outstanding shares of the following Portfolios.
Cash Management Fund
I Shares 421,718,683.30
-------- --------------
None
S Shares 120,657,898.46
-------- --------------
Madison Plaza Venture 6,037,743.75 5.0040%
U.S. Government Securities Cash Management Fund
I Shares 381,042,279.91
-------- --------------
Illinois State Medical
Inter-Insurance
Exchange Fixed Income
Fund Exchange 19,603,204.60 5.1446%
S Shares 106,567,944.80
-------- --------------
1st Chicago Mercantile 15,988,811.02 15.0034%
Treasury Prime Cash Management Fund
I Shares 39,145,773.27
-------- --------------
ICH Bankers Municiple Line
Insurance Co. 13,956,483.44 35.6526%
Southwestern Financial Corp. 7,197,677.68 18.3869%
School District 57 4,707,919.93 12.0266%
S Shares 151,919,941.13
-------- --------------
First Chicago Positional
Account 28,006,337.47 18.4349%
The Trust will send annual and semi-annual financial statements to all
its shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Drinker Biddle & Reath, 1345 Chestnut Street, Philadelphia, PA
19107-3496, serves as the Trust's counsel.
Arthur Andersen LLP, One Detroit Center, 500 Woodward Avenue, Detroit,
Michigan 48226-3424, independent auditors, is auditor of the Trust.
B-19<PAGE>
APPENDIX
Commercial Paper Ratings
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term
in the relevant market. The following summarizes the rating categories used by
Standard and Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."
"A-3" - Issue has an adequate capacity for timely payment. It
is, however, somewhat more vulnerable to the adverse effects of changes in
circumstances than an obligation carrying a higher designation.
"B" - Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are
considered to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative
capitalization structures with moderate reliance on debt and ample asset
protection; broad margins in earning coverage of fixed financial charges and
high internal cash generation; and well established access to a range of
financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuer or related supporting institutions are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will
A-1
<PAGE>
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.
"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime
rating categories.
The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff &
Phelps employs three designations, "D- 1+," "D-1" and "D-1-," within the
highest rating category. The following summarizes the rating categories used
by Duff & Phelps for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
"D-2" - Debt possesses good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
"D-3" - Debt possesses satisfactory liquidity, and other
protection factors qualify issue as investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against
A-2
<PAGE>
disruption in debt service. Operating factors and market access
may be subject to a high degree of variation.
"D-5" - Issuer has failed to meet scheduled principal and/or
interest payments.
Fitch short-term ratings apply to debt obligations that are
payable on demand or have original maturities of generally up to three years.
The following summarizes the rating categories used by Fitch for short-term
obligations:
"F-1+" - Securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned
this rating have a satisfactory degree of assurance for timely payment, but
the margin of safety is not as great as the "F-1+" and "F-1" categories.
"F-3" - Securities possess fair credit quality. Issues assigned
this rating have characteristics suggesting that the degree of assurance for
timely payment is adequate; however, near-term adverse changes could cause
these securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues assigned
this rating have characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes in financial
and economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term ratings
to indicate that the rating is based upon a letter of credit issued by a
commercial bank.
Thomson BankWatch short-term ratings assess the likelihood of
an untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which are issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-dealers. The following summarizes the ratings used by Thomson
BankWatch:
A-3
<PAGE>
"TBW-1" - This designation represents Thomson BankWatch's
highest rating category and indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of
safety regarding timely payment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment
grade category and indicates that while the debt is more susceptible to
adverse developments (both internal and external) than obligations with higher
ratings, capacity to service principal and interest in a timely fashion is
considered adequate.
"TBW-4" - This designation indicates that the debt is regarded
as non-investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1+" - Obligations which posses a particularly strong credit
feature are supported by the highest capacity for timely repayment.
"A1" - Obligations are supported by the highest capacity for
timely repayment.
"A2" - Obligations are supported by a satisfactory capacity for
timely repayment.
"A3" - Obligations are supported by a satisfactory capacity for
timely repayment.
"B" - Obligations for which there is an uncertainty as to the
capacity to ensure timely repayment.
"C" - Obligations for which there is a high risk of default or
which are currently in default.
A-4
<PAGE>
Corporate and Municipal Long-Term Debt Ratings
The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:
"AAA" - This designation represents the highest rating assigned
by Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small degree.
"A" - Debt is considered to have a strong capacity to pay
interest and repay principal although such issues are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and
repay principal in accordance with the terms of the obligation. "BB" indicates
the lowest degree of speculation and "C" the highest degree of speculation.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The "BB" rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
A-5
<PAGE>
"CCC" - Debt has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated to
senior debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no
interest is being paid.
"D" - Debt is in payment default. This rating is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may
be modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This r-ating is attached to highlight derivative, hybrid,
and certain other obligations that S & P believes may experience high
volatility or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or interest
return is indexed to equities, commodities, or currencies; certain swaps and
options; and interest only and principal only mortgage securities. The absence
of an "r" symbol should not be taken as an indication that an obligation will
exhibit no volatility or variability in total return.
The following summarizes the ratings used by Moody's for
corporate and municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin
A-6
<PAGE>
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A" - Bonds possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of
these ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing;
"Ca" represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be
in default.
Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
(P)... - When applied to forward delivery bonds, indicates that
the rating is provisional pending delivery of the bonds. The rating may be
revised prior to delivery if changes occur in the legal documents or the
underlying credit quality of the bonds.
A-7
<PAGE>
The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality.
The risk factors are negligible, being only slightly more than for risk-free
U.S. Treasury debt.
"AA" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but
such protection factors are still considered sufficient for prudent
investment. Considerable variability in risk is present during economic
cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when
due. Debt rated "B" possesses the risk that obligations will not be met when
due. Debt rated "CCC" is well below investment grade and has considerable
uncertainty as to timely payment of principal, interest or preferred
dividends. Debt rated "DD" is a defaulted debt obligation, and the rating "DP"
represents preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major
categories.
The following summarizes the highest four ratings used by Fitch
for corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
"AA" - Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."
A-8
<PAGE>
"A" - Bonds considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
To provide more detailed indications of credit quality, the
Fitch ratings from and including "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standing within these major
rating categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions may increase investment risk, albeit not very significantly.
"A" - Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
"BBB" - Obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in other categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one
of these ratings where it is considered that
A-9
<PAGE>
speculative characteristics are present. "BB" represents the lowest degree of
speculation and indicates a possibility of investment risk developing. "C"
represents the highest degree of speculation and indicates that the
obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating
to denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks,
thrifts and non-bank banks; non-United States banks; and broker-dealers. The
following summarizes the rating categories used by Thomson BankWatch for
long-term debt ratings:
"AAA" - This designation represents the highest category
assigned by Thomson BankWatch to long-term debt and indicates that the ability
to repay principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to
repay principal and interest on a timely basis with limited incremental risk
compared to issues rated in the highest category.
"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned
by Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long- term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which
A-10
<PAGE>
indicates where within the respective category the issue is placed.
Municipal Note Ratings
A Standard and Poor's rating reflects the liquidity concerns
and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's Ratings Group for
municipal notes:
"SP-1" - The issuers of these municipal notes exhibit very
strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a plus (+)
designation.
"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit
risk and long-term risk. The following summarizes the ratings by Moody's
Investors Service, Inc. for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the
best quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is likely to be
less well established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of
adequate quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.
"SG" - Loans bearing this designation are of speculative
quality and lack margins of protection.
A-11
<PAGE>
Fitch and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.
A-12
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
DESCRIPTION RATE DATE (000) (NOTE 2(A))
----------- ---- -------- --------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY NOTES--79.6%
Federal Farm Credit Bank Discount
Note................................. 5.59%* 1/19/96 $15,000 $ 14,958,075
Federal Farm Credit Bank Discount
Note................................. 5.48%* 1/22/96 30,000 29,904,100
Federal Farm Credit Bank Discount
Note................................. 5.63%* 1/25/96 20,000 19,924,933
Federal Farm Credit Bank Discount
Note................................. 5.50%* 2/15/96 27,000 26,814,375
Federal Farm Credit Bank Discount
Note................................. 5.47%* 3/11/96 25,000 24,734,097
Federal Home Loan Bank Discount Note.. 5.62%* 1/5/96 20,000 19,987,511
Federal Home Loan Bank Discount Note.. 5.61%* 1/12/96 30,000 29,948,575
Federal Home Loan Bank Discount Note.. 5.60%* 1/19/96 15,000 14,958,000
Federal Home Loan Bank Discount Note.. 5.50%* 2/21/96 30,000 29,766,250
Federal Home Loan Bank Discount Note.. 5.32%* 3/1/96 20,000 19,822,667
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.60%* 1/3/96 35,000 34,989,111
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.61%* 1/4/96 9,000 8,995,793
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.56%* 2/2/96 24,000 23,881,387
Federal Home Loan Mortgage Corp.
Discount Note........................ 5.40%* 2/22/96 25,000 24,805,000
Federal National Mortgage Association
Discount Note........................ 5.52%* 1/29/96 26,000 25,888,373
Federal National Mortgage Association
Discount Note........................ 5.55%* 1/10/96 30,000 29,958,375
Federal National Mortgage Association
Discount Note........................ 5.53%* 1/24/96 25,000 24,911,674
Federal National Mortgage Association
Discount Note........................ 5.50%* 2/9/96 30,000 29,821,250
------------
TOTAL U.S. GOVERNMENT AGENCY NOTES
(AMORTIZED COST $434,069,546)......... 434,069,546
------------
REPURCHASE AGREEMENTS--21.5%
Repurchase agreement with the Sanwa
Bank, dated 12/29/95, with a maturity
value of $100,060,556 (See Footnote
A)................................... 5.45% 1/2/96 100,000 100,000,000
Repurchase agreement with the National
Westminster Bank, dated 12/29/95,
with a maturity value of $17,210,798
(See Footnote B)..................... 5.65% 1/2/96 17,200 17,200,000
------------
TOTAL REPURCHASE AGREEMENTS
(AMORTIZED COST $117,200,000)......... 117,200,000
------------
TOTAL INVESTMENTS
(AMORTIZED COST $551,269,546)(A)--
101.1%................................ 551,269,546
Liabilities in excess of other assets--
(1.1)%................................ (5,875,100)
------------
NET ASSETS--100.0%..................... $545,394,446
============
</TABLE>
- --------
Percentages indicated are based on net assets of $545,394,446.
(a)Cost for federal income tax and financial reporting purposes are the same.
*Yield at purchase.
Footnote A: Collateralized by $100,000,000 U.S. Treasury Bills, due 8/22/96
and $4,428,000 U.S. Treasury Bills, due 8/22/96; with an aggregate
value of $101,011,116.
Footnote B: Collateralized by $17,000,000 U.S. Treasury Note, 6.63%, due
3/31/97; with a value of $17,488,962.
See Notes to Financial Statements.
FS-1<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
DESCRIPTION RATE* DATE (000) (NOTE 2(A))
----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--100.7%
U.S. TREASURY BILLS--100.7%
U.S. Treasury Bill................... 5.24% 1/4/96 $14,235 $ 14,228,795
U.S. Treasury Bill................... 5.35% 1/11/96 22,290 22,260,306
U.S. Treasury Bill................... 5.32% 1/18/96 26,680 26,619,493
U.S. Treasury Bill................... 5.35% 1/25/96 11,466 11,425,504
U.S. Treasury Bill................... 5.27% 2/1/96 2,400 2,389,119
U.S. Treasury Bill................... 5.36% 2/8/96 15,940 15,856,931
U.S. Treasury Bill................... 5.33% 2/15/96 13,890 13,798,838
U.S. Treasury Bill................... 5.32% 2/22/96 11,000 10,919,284
U.S. Treasury Bill................... 5.37% 2/29/96 5,000 4,955,996
U.S. Treasury Bill................... 5.32% 3/7/96 15,000 14,853,700
U.S. Treasury Bill................... 5.20% 3/14/96 1,380 1,365,463
U.S. Treasury Bill................... 4.90% 3/21/96 6,000 5,934,667
U.S. Treasury Bill................... 4.94% 4/4/96 920 908,133
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(AMORTIZED COST $145,516,229)........ 145,516,229
------------
TOTAL INVESTMENTS
(AMORTIZED COST $145,516,229)(A)--
100.7%............................... 145,516,229
Liabilities in excess of other
assets--(0.7)%....................... (948,650)
------------
NET ASSETS--100.0%.................... $144,567,579
============
</TABLE>
- --------
Percentages indicated are based on net assets of $144,567,579.
(a)Cost for federal income tax and financial reporting purposes are the same.
*Yield at purchase.
See Notes to Financial Statements.
FS-2
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
MOODY'S/ PRINCIPAL AMORTIZED
S&P MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2(A))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS--100.2%
COMMERCIAL PAPER--46.6%
BANKING--3.5%
Bayerische Vereinsbank...... A-1+/P-1 5.73% 1/8/96 $18,000 $ 17,979,945
------------
BROKERAGE--7.0%
Morgan Stanley Group,
Inc. ...................... A-1+/P-1 6.00% 1/3/96 18,000 17,994,000
Goldman Sachs & Co.......... A-1+/P-1 5.55% 4/2/96 18,000 17,744,700
------------
35,738,700
------------
CONSUMER GOODS AND SERVICES--
3.9%
Hershey Foods............... A-1+/P-1 5.65% 1/12/96 20,000 19,965,472
------------
FINANCE--21.3%
Barclays Funding............ A-1+/P-1 5.67% 1/19/96 20,000 19,943,300
Ciesco L.P.................. A-1+/P-1 5.70% 1/19/96 20,000 19,943,000
Corporate Asset Funding Co.,
Inc........................ A-1+/P-1 5.65% 2/9/96 18,000 17,889,825
Dresdener U.S. Finance,
Inc........................ A-1+/P-1 5.69% 1/3/96 15,000 14,995,258
Nestle Capital.............. A-1+/P-1 5.73% 1/12/96 18,000 17,968,485
USAA Capital................ A-1+/P-1 5.64% 2/7/96 18,000 17,895,660
------------
108,635,528
------------
OIL--3.9%
Exxon Imperial.............. A-1+/P-1 5.62% 1/16/96 20,000 19,953,167
------------
TOBACCO--3.5%
Philip Morris Capital
Corp....................... A-1/P-1 5.72% 1/19/96 18,000 17,948,520
------------
TELECOMMUNICATIONS--3.5%
AT&T Corp................... A-1+/P-1 5.40% 3/19/96 18,000 17,783,940
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST
$238,005,272)............... 238,005,272
------------
</TABLE>
See Notes to Financial Statements.
FS-3
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS--(CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATINGS
MOODY'S/ PRINCIPAL AMORTIZED
S&P MATURITY AMOUNT COST
DESCRIPTION (UNAUDITED) RATE DATE (000) (NOTE 2(A))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
BANKERS ACCEPTANCES--5.1%
Dai-Ichi Kangyo............. A-1/P-1 5.81% 2/23/96 $10,000 $ 9,914,464
Fuji Bank................... A-1/P-1 5.77% 1/3/96 8,000 7,997,436
Fuji Bank................... A-1/P-1 5.77% 1/12/96 3,000 2,994,711
Industrial Bank of Japan.... A-1/P-1 5.81% 2/28/96 5,000 4,953,197
------------
TOTAL BANKERS ACCEPTANCES
(AMORTIZED COST
$25,859,808)................ 25,859,808
------------
CERTIFICATES OF DEPOSIT--
35.0%
U.S. BRANCHES OF FOREIGN
BANKS--35.0%
ABN-AMRO.................... A-1+/P-1 5.78% 2/1/96 18,000 18,000,752
Bank of Montreal............ A-1+/P-1 5.78% 1/17/96 20,000 20,000,240
Banque Nationale de Paris... A-1/P-1 5.75% 2/5/96 18,000 18,000,646
Bayerische Hypotheken-Und
Wechsel Bank............... A-1/P-1 5.68% 3/22/96 19,000 19,000,078
Canadian Imperial Bank of
Commerce................... A-1+/P-1 5.60% 3/12/96 18,000 18,000,000
Commerzbank AG, New York ... A-1+/P-1 5.77% 1/17/96 15,000 15,000,132
Mitsubishi Bank............. A-1+/P-1 5.86% 3/6/96 18,000 18,002,183
National Westminster........ A-1+/P-1 5.78% 1/16/96 15,000 15,000,112
Rabobank.................... A-1+/P-1 5.75% 1/22/96 20,000 20,000,116
Societe Generale, New York.. A-1+/P-1 5.77% 2/5/96 18,000 18,000,330
------------
TOTAL CERTIFICATES OF DEPOSIT
(AMORTIZED COST
$179,004,589)............... 179,004,589
------------
TOTAL INVESTMENTS IN
SECURITIES
(AMORTIZED COST
$442,869,669)............... 442,869,669
------------
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS--(CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
DESCRIPTION RATE DATE (000) (NOTE 2(A))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS--13.5%
Repurchase agreement with National
Westminster, dated 12/29/95, with a
maturity value of $8,805,524 (See
Footnote A)........................... 5.65% 1/2/96 $ 8,800 $ 8,800,000
Repurchase agreement with Sanwa Bank,
dated 12/29/95, with a maturity value
of $60,036,333 (See Footnote B)....... 5.45% 1/2/96 60,000 60,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(AMORTIZED COST $68,800,000)........... 68,800,000
------------
TOTAL INVESTMENTS
(AMORTIZED COST $511,669,669)(A)--
100.2% ................................ 511,669,669
Liabilities in excess of other assets--
(0.2%)................................. (792,813)
------------
NET ASSETS--100.0%...................... $510,876,856
============
</TABLE>
- --------
Percentages indicated are based on net assets of $510,876,856.
(a) Cost for federal income tax and financial reporting purposes are the same.
Footnote A: Collateralized by $8,700,000 U.S. Treasury Note, 6.63%, due
3/31/97; with a value of $9,022,031.
Footnote B: Collateralized by $45,000,000 U.S. Treasury Bills, due 8/22/96 and
$16,528,000 U.S. Treasury Note, 6.50%; due 8/15/97; with an
aggregate value of $61,839,987.
See Notes to Financial Statements.
FS-5
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT TREASURY PRIME CASH
SECURITIES CASH CASH MANAGEMENT MANAGEMENT
MANAGEMENT FUND FUND FUND
--------------- --------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at
amortized cost (amortized cost
$434,069,546, $145,516,229 and
$442,869,669 respectively)..... $434,069,546 $145,516,229 $442,869,669
Repurchase agreements (amortized
cost $117,200,000, $0 and
$68,800,000, respectively)..... 117,200,000 -- 68,800,000
Cash............................ -- -- 109,258
Interest receivable............. 25,567 -- 1,185,264
Deferred organization expenses.. 129,663 87,971 140,036
Prepaid expenses and other
assets......................... 28,398 10,875 23,044
------------ ------------ ------------
Total Assets................. 551,453,174 145,615,075 513,127,271
------------ ------------ ------------
LIABILITIES:
Advisory fees payable........... 186,860 15,774 91,725
Administration fees payable..... 78,347 5,228 69,812
Service Plan fees payable
(Service Shares)............... 37,975 37,202 53,567
Bank overdraft.................. 3,618,499 537,469 --
Dividends payable............... 2,046,983 417,391 1,968,881
Accrued expenses................ 90,064 34,432 66,430
------------ ------------ ------------
Total Liabilities............ 6,058,728 1,047,496 2,250,415
------------ ------------ ------------
NET ASSETS....................... $545,394,446 $144,567,579 $510,876,856
============ ============ ============
Net Asset Value, Offering Price
and Redemption Price per Share:
Institutional Shares:
Net Assets..................... $489,394,679 $ 14,008,335 $389,126,965
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized............. 489,865,389 14,008,529 389,280,704
------------ ------------ ------------
Net Asset Value per Share...... $ 1.00 $ 1.00 $ 1.00
============ ============ ============
Service Shares:
Net Assets..................... $ 55,999,767 $130,559,244 $121,749,891
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized............. 56,053,643 130,561,050 121,798,020
------------ ------------ ------------
Net Asset Value per Share...... $ 1.00 $ 1.00 $ 1.00
============ ============ ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest,
at par........................ $ 545,919 $ 144,570 $ 511,079
Additional paid-in capital..... 545,373,112 144,425,009 510,567,644
Accumulated net realized losses
from investment transactions.. (524,585) (2,000) (201,867)
------------ ------------ ------------
NET ASSETS, DECEMBER 31, 1995.... $545,394,446 $144,567,579 $510,876,856
============ ============ ============
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT U.S. GOVERNMENT TREASURY PRIME CASH CASH
SECURITIES CASH SECURITIES CASH CASH MANAGEMENT MANAGEMENT MANAGEMENT
MANAGEMENT FUND MANAGEMENT FUND FUND FUND FUND
--------------- ------------------ --------------- -------------- ------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FROM JUNE 1, FROM MARCH 22, FROM JULY 1,
1995 THROUGH FOR THE YEAR ENDED 1995 THROUGH 1995 THROUGH FOR THE YEAR ENDED
DECEMBER 31, MAY 31, DECEMBER 31, DECEMBER 31, JUNE 30,
1995(A) 1995 1995(B) 1995(A) 1995
--------------- ------------------ --------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income......... $17,275,666 $25,222,014 $1,364,594 $12,568,427 $15,728,576
----------- ----------- ---------- ----------- -----------
Expenses:
Advisory fees.......... 645,155 1,388,345 50,405 428,914 793,104
Administration fees.... 445,948 280,584 37,804 321,686 212,319
Service Plan fees
(Service Shares)...... 56,289 4,987 38,892 73,857 4,441
Custodian fees and
expenses.............. 81,041 52,283 42,386 68,908 68,943
Registration fees...... 3,430 83,301 3,693 19,428 54,803
Legal and audit fees... 22,812 82,193 18,638 33,180 62,493
Amortization of
organization
expenses.............. 14,413 11,079 12,559 13,095 12,954
Transfer agent fees and
expenses.............. 12,300 12,882 10,560 17,855
Reports to
shareholders.......... 12,838 9,301 19,437 11,592 13,114
Trustees' fees......... 6,670 4,990 625 6,912 4,608
Other expenses......... 21,361 48,122 2,042 13,845 44,768
----------- ----------- ---------- ----------- -----------
1,322,257 1,965,185 239,363 1,001,977 1,289,402
Less: Expense
reimbursements........ (224,593) (312,740) (107,023) (177,520) (267,419)
----------- ----------- ---------- ----------- -----------
1,097,664 1,652,445 132,340 824,457 1,021,983
----------- ----------- ---------- ----------- -----------
NET INVESTMENT
INCOME.............. 16,178,002 23,569,569 1,232,254 11,743,970 14,706,593
----------- ----------- ---------- ----------- -----------
REALIZED GAINS (LOSSES)
ON INVESTMENT
TRANSACTIONS:
Net realized gains
(losses) on investment
transactions.......... 4,517 (482,586) (2,000) (4,009) (1,706,625)
----------- ----------- ---------- ----------- -----------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $16,182,519 $23,086,983 $1,230,254 $11,739,961 $12,999,968
=========== =========== ========== =========== ===========
</TABLE>
- --------
(a)Effective June 1, 1995 and July 1, 1995, the Funds changed their fiscal year
ends from May 31 and June 30, respectively, to December 31.
(b)Commencement of operations.
See Notes to Financial Statements.
FS-7
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995(1) MAY 31, 1995 MAY 31, 1994
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 16,178,002 $ 23,569,569 $ 12,751,537
Net realized gains
(losses) from
investment
transactions.......... 4,517 (482,586) (42,640)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 16,182,519 23,086,983 12,708,897
--------------- --------------- --------------
DIVIDENDS TO
SHAREHOLDERS FROM NET
INVESTMENT INCOME:
Institutional Shares.. (15,014,802) (23,456,426) (12,751,537)
Service Shares........ (1,163,200) (113,143) --
--------------- --------------- --------------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (16,178,002) (23,569,569) (12,751,537)
--------------- --------------- --------------
FUND SHARE TRANSACTIONS
(AT $1.00 PER SHARE):
Net proceeds from
shares sold........... 2,081,961,762 3,284,015,157 4,379,511,392
Dividends reinvested... 785,116 1,824,905 563,903
Cost of shares re-
deemed................ (2,029,306,950) (3,207,041,446) (4,230,925,537)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS
(NOTE 3)............ 53,439,928 78,798,616 149,149,758
--------------- --------------- --------------
TOTAL INCREASE IN
NET ASSETS......... 53,444,445 78,316,030 149,107,118
NET ASSETS:
Beginning of period.... 491,950,001 413,633,971 264,526,853
--------------- --------------- --------------
End of period.......... $ 545,394,446 $ 491,950,001 $ 413,633,971
=============== =============== ==============
</TABLE>
- --------
(1) For the period June 1, 1995 through December 31, 1995. Effective June 1,
1995, the Fund changed its fiscal year end from May 31 to December 31.
See Notes to Financial Statements.
FS-8
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
DECEMBER 31, 1995(A)
--------------------
<S> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income.................................... $ 1,232,254
Net realized losses from investment transactions......... (2,000)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... 1,230,254
-------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares.................................... (497,768)
Service Shares.......................................... (734,486)
-------------
Total Dividends to Shareholders........................ (1,232,254)
-------------
FUND SHARE TRANSACTIONS (AT $1.00 PER SHARE):
Net proceeds from shares sold............................ 393,556,208
Dividends reinvested..................................... 434,305
Cost of shares redeemed.................................. (249,420,934)
-------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS
(NOTE 3).............................................. 144,569,579
-------------
TOTAL INCREASE IN NET ASSETS.......................... 144,567,579
NET ASSETS:
Beginning of period...................................... --
-------------
End of period............................................ $ 144,567,579
=============
</TABLE>
- --------
(a) For the period March 22, 1995 (commencement of operations) through December
31, 1995.
See Notes to Financial Statements.
FS-9
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995(1) JUNE 30, 1995 JUNE 30, 1994
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 11,743,970 $ 14,706,593 $ 8,493,966
Net realized losses
from investment
transactions.......... (4,009) (1,706,625) (136,023)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 11,739,961 12,999,968 8,357,943
--------------- --------------- --------------
DIVIDENDS TO
SHAREHOLDERS FROM NET
INVESTMENT INCOME:
Institutional Shares.. (10,179,235) (14,606,645) (8,493,966)
Service Shares........ (1,564,735) (99,948) --
--------------- --------------- --------------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (11,743,970) (14,706,593) (8,493,966)
--------------- --------------- --------------
FUND SHARE TRANSACTIONS
(AT $1.00 PER SHARE):
Net proceeds from
shares sold........... 1,257,882,248 1,539,582,005 2,167,517,783
Dividends reinvested... 985,906 1,362,169 654,107
Cost of shares
redeemed.............. (1,078,572,576) (1,454,140,686) (2,099,928,742)
--------------- --------------- --------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS
(NOTE 3)............ 180,295,578 86,803,488 68,243,148
--------------- --------------- --------------
Increase due to capital
contribution from
affiliate of Investment
Adviser
(Note 4(d))............ -- 1,668,500 --
--------------- --------------- --------------
TOTAL INCREASE IN
NET ASSETS......... 180,291,569 86,765,363 68,107,125
NET ASSETS:
Beginning of period.... 330,585,287 243,819,924 175,712,799
--------------- --------------- --------------
End of period.......... $ 510,876,856 $ 330,585,287 $ 243,819,924
=============== =============== ==============
</TABLE>
- --------
(1)For the period from July 1, 1995 through December 31, 1995. Effective July
1, 1995, the Fund changed its fiscal year end from June 30 to December 31.
See Notes to Financial Statements.
FS-10
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1--GENERAL
Prairie Institutional Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, (the "Act") as an open-end management
investment company. At December 31, 1995, the Trust was comprised of four
separate investment portfolios as follows: Cash Management Fund, Municipal
Cash Management Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund. The accompanying financial statements relate
only to the Cash Management Fund, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund (collectively, the "Funds"). As of
December 31, 1995, the Municipal Cash Management Fund had not yet commenced
operations.
The Funds each offer two classes of shares, Institutional Shares and Service
Shares. Institutional Shares and Service Shares are substantially the same
except that Service Shares are subject to fees payable under a Service Plan
adopted pursuant to Rule 12b-1 under the Act (the "Service Plan") at an annual
rate of 0.25% of the average daily net asset value of the outstanding Service
Shares.
At a shareholder meeting of the First Prairie U.S. Treasury Securities Cash
Management Fund (the "Treasury Predecessor Fund") held on December 21, 1994,
the shareholders approved an Agreement and Plan of Exchange pursuant to which
the Treasury Predecessor Fund transferred all of its assets and liabilities to
the U.S. Government Securities Cash Management Fund. In exchange for the
assets and liabilities, the U.S. Government Securities Cash Management Fund
issued Institutional Shares to the shareholders of the Treasury Predecessor
Fund equal in value to shares held by such shareholders immediately prior to
the exchange. This exchange took place on January 17, 1995, at which time the
shareholders of the Treasury Predecessor Fund received a pro rata distribution
of 431,159,110 Institutional Shares of the U.S. Government Securities Cash
Management Fund having a net asset value of $430,731,675.
At a shareholder meeting of First Prairie Cash Management Fund (the
"Predecessor Fund") held on December 21, 1994, the shareholders approved an
Agreement and Plan of Exchange pursuant to which the Predecessor Fund
transferred all of its assets and liabilities to the Cash Management Fund. In
exchange for the assets and liabilities, the Cash Management Fund issued
Institutional Shares to the shareholders of the Predecessor Fund equal in
value to shares held by such shareholders immediately prior to the exchange.
This exchange took place on January 17, 1995 at which time the shareholders of
the Predecessor Fund received a pro rata distribution of 263,124,343
Institutional Shares of the Cash Management Fund having a net asset value of
$262,954,610.
First Chicago Investment Management Company ("FCIMCO"), a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), serves as each
Fund's investment adviser and administrator. FCIMCO has engaged Concord
Holding Corporation ("Concord"), a wholly-owned subsidiary of The BISYS Group,
Inc. ("BISYS"), to serve as the Funds' sub-administrator. Concord Financial
Group, Inc., a wholly-owned subsidiary of BISYS, serves as the principal
underwriter and distributor of each Fund's shares.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. These principles
require management to make estimates and assumptions that affect the reported
amounts of assets and
FS-11
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
- -------------------------------------------------------------------------------
liabilities at the date of the financial statements and the reported amounts
of income and expenses for the period. Actual results could differ from those
estimates.
(a) Portfolio Valuation: Investments of the Funds are valued at either
amortized cost, which approximates market value. Under the amortized cost
method, discount or premium is amortized on a constant basis to the maturity
of the security. In addition, the Funds generally may not (a) purchase any
instrument with a remaining maturity greater than thirteen months unless such
instrument is subject to a demand feature, or (b) maintain a dollar-weighted
average maturity which exceeds 90 days.
(b) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Interest income,
adjusted for amortization of premiums and when appropriate, discounts on
investments, is earned from settlement date and recognized on the accrual
basis.
The U.S. Government Securities Cash Management Fund and Cash Management Fund
may enter into repurchase agreements with financial institutions deemed to be
creditworthy by FCIMCO, subject to the seller's agreement to repurchase and
the Fund's agreement to resell such securities at a mutually agreed upon
price. Securities purchased subject to repurchase agreements are deposited
with the Fund's custodian and, pursuant to the terms of the purchase
agreement, must have an aggregate market value greater than or equal to the
repurchase price plus accrued interest at all times. If the value of the
underlying securities falls below the value of the repurchase price plus
accrued interest, the Fund will require the seller to deposit additional
collateral by the next business day. If the request for additional collateral
is not met, or the seller defaults on its purchase obligation, the Fund
maintains the right to sell the underlying securities at market value and may
claim any resulting loss against the seller.
(c) Dividends to shareholders: Each Fund's dividends from net investment
income are declared daily and paid monthly. Distributions from net realized
capital gains, if any, are normally declared annually and paid annually, but
each Fund may make distributions on a more frequent basis to comply with the
distribution requirements of the Internal Revenue Code (the "Code"). To the
extent that net realized capital gains can be offset by capital loss
carryovers, it is the policy of each Fund not to distribute such gains.
(d) Federal income taxes: It is the policy of each Fund 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 Code, and to make distributions of taxable income sufficient to relieve
it from all, or substantially all, Federal income taxes. At December 31, 1995,
the U.S. Government Securities Cash Management Fund had unused capital loss
carryovers of approximately $525,000, which are available for Federal income
tax purposes to be applied against future net capital gains, if any, realized
subsequent to December 31, 1995. If not applied, $7,000 of the carryover
expires in 2001, $460,000 expires in 2002 and $58,000 expires in 2003. At
December 31, 1995, the Treasury Prime Cash Management Fund had unused capital
loss carryovers of approximately $2,000, which are available for Federal
income tax purposes to be applied against future net capital gains, if any,
realized subsequent to December 31, 1995. If not applied, $2,000 of the
carryover expires in 2003. At December 31, 1995, the Cash Management Fund had
unused capital loss carryovers of approximately
FS-12
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
- -------------------------------------------------------------------------------
$201,000 available for Federal income tax purposes to be applied against
future net capital gains, if any, realized subsequent to December 31, 1995.
The carryover does not include net realized securities losses from November 1,
1995 through December 31, 1995 which are treated, for Federal income tax
purposes, as arising in fiscal 1996. If not applied, $19,000 of the carryover
expires in 2001, $151,000 expires in 2002 and $31,000 expires in 2003.
(e) Expenses: Expenses directly attributable to a Fund are charged to that
Fund's operations; expenses which are applicable to all Funds are allocated
among them on the basis of relative net assets. Fund expenses directly
attributable to a class of shares are charged to that class; expenses which
are applicable to all classes are allocated among them.
NOTE 3--FUND SHARE TRANSACTIONS
Transactions in shares of the Funds are summarized below (at $1.00 per
share):
<TABLE>
<CAPTION>
TREASURY PRIME
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT
CASH MANAGEMENT FUND FUND
---------------------------------------------- ---------------
FOR THE PERIOD FOR THE PERIOD
JUNE 1, 1995 FOR THE YEAR MARCH 22, 1995
THROUGH ENDED MAY 31, THROUGH
DECEMBER 31, ------------------------------ DECEMBER 31,
1995(1) 1995 1994 1995(2)
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Institutional Shares:
Shares issued.......... 1,915,896,446 3,256,766,429 4,379,511,392 206,294,412
Dividends reinvested... 784,723 1,824,654 563,903 433,330
Shares redeemed........ (1,902,575,044) (3,196,512,306) (4,230,925,537) (192,719,213)
-------------- -------------- -------------- ------------
Net increase........... 14,106,125 62,078,777 149,149,758 14,008,529
============== ============== ============== ============
Service Shares:
Shares issued.......... 166,065,316 27,248,728 -- 187,261,796
Dividends reinvested... 393 251 -- 975
Shares redeemed........ (126,731,906) (10,529,140) -- (56,701,721)
-------------- -------------- -------------- ------------
Net increase........... 39,333,803 16,719,839 -- 130,561,050
============== ============== ============== ============
Net increase in Fund.... 53,439,928 78,798,616 149,149,758 144,569,579
============== ============== ============== ============
</TABLE>
FS-13
<PAGE>
<TABLE>
<CAPTION>
CASH MANAGEMENT
FUND
--------------------------------------------
FOR THE
PERIOD
JULY 1, 1995 FOR THE YEAR
THROUGH ENDED MAY 31,
DECEMBER ------------------------------
31, 1995(1) 1995 1994
------------ -------------- --------------
<S> <C> <C> <C>
Institutional Shares:
Shares issued.................... 930,307,164 1,491,127,430 2,167,517,783
Dividends reinvested............. 985,563 1,361,860 654,107
Shares redeemed.................. (861,416,587) (1,417,064,383) (2,099,928,742)
------------ -------------- --------------
Net increase..................... 69,876,140 75,424,907 68,243,148
============ ============== ==============
Service Shares:
Shares issued.................... 327,575,084 48,454,575 --
Dividends reinvested............. 343 309 --
Shares redeemed.................. (217,155,989) (37,076,303) --
------------ -------------- --------------
Net increase..................... 110,419,438 11,378,581 --
============ ============== ==============
Net increase in Fund.............. 180,295,578 86,803,488 68,243,148
============ ============== ==============
</TABLE>
(1) Effective June 1, 1995 and July 1, 1995, the Funds changed their fiscal
year ends from May 31 and June 30, respectively, to December 31.
(2) Commencement of operations.
NOTE 4--MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFIILIATES
(a) The Trust has an Investment Advisory Agreement with FCIMCO pursuant to
which FCIMCO has agreed to provide the day-to-day management of each of the
Fund's investments for an advisory fee at an annual rate of 0.20% of each
Fund's average daily net assets.
The Trust has an Administration Agreement with FCIMCO pursuant to which
FCIMCO has agreed to assist in all aspects of each Fund's operations for an
administration fee at an annual rate of 0.15% of each Fund's average daily net
assets. In addition, FCIMCO has engaged Concord to assist in providing certain
administrative services to each Fund pursuant to a Master Sub-Administration
Agreement between FCIMCO and Concord. FCIMCO has agreed to pay Concord a fee
from its own administration fee on a monthly basis.
For the period June 1, 1995 through December 31, 1995 for the U.S.
Government Securities Cash Management Fund, the period March 22, 1995
(commencement of operations) through December 31, 1995 for the Treasury Prime
Cash Management Fund and the period July 1, 1995 through December 31, 1995 for
the Cash Management Fund, FCIMCO agreed to limit each Fund's expenses to an
annual amount not to exceed 0.35% of average daily net assets for
Institutional Shares and 0.60% of average daily net assets for Service Shares.
As a result, The U.S. Government Securities Cash Management Fund, Treasury
Prime Cash Management Fund and Cash Management Fund were reimbursed expenses
of $224,593, $107,023 and $177,520, respectively.
FS-14
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
- -------------------------------------------------------------------------------
(b) The Trust has adopted a Service Plan pursuant to Rule 12b-1 under the
Act. Under the terms of the Service Plan, each Fund pays the Distributor an
annual fee of 0.25% of the average daily net assets of the outstanding Service
Shares for advertising, marketing and distributing each Fund's Service Shares
and for the provision of certain services to the holders of Service Shares.
The Distributor may make payments to others, including FCIMCO, FNBC and their
affiliates, for the provision of these services. For the period June 1, 1995
through December 31, 1995, the U.S. Government Securities Cash Management Fund
paid fees under the Service Plan in the amount of $56,289. For the period
March 22, 1995 (commencement of operations) through December 31, 1995, the
Treasury Prime Cash Management Fund paid fees under the Service Plan in the
amount of $38,892. For the period July 1, 1995 (initial offering of Service
Shares) through December 31, 1995, the Cash Management Fund paid fees under
the Service Plan in the amount of $73,857. Of these amounts, the following was
paid to the Distributor and FCIMCO and its affiliates:
<TABLE>
<CAPTION>
AMOUNT PAID TO
AMOUNT PAID TO FCIMCO
THE DISTRIBUTOR AND ITS AFFILIATES
--------------- ------------------
<S> <C> <C>
U.S. Government Securities Cash Management
Fund...................................... $19 $56,270
Treasury Prime Cash Management Fund........ 25 38,867
Cash Management Fund....................... 16 73,841
</TABLE>
(c) The Fund's pay each Trustee a pro-rata share of the aggregate fixed
annual fee of $25,000 and an attendance fee of $1,000 per meeting for all of
the Funds in the Prairie Family of Funds.
(d) During the year ended June 30, 1995, an affiliate of FCIMCO purchased
securities from the Cash Management Fund at an amount in excess of the
securities' fair market value. The Cash Management Fund recorded a realized
loss on these sales in the amount of $1,668,500 and the Cash Management Fund
recorded an offsetting capital contribution from the affiliate. As a result of
varying treatment for book and tax purposes, the capital contribution was
reclassified from additional paid-in-capital to accumulated net realized
losses in the Statement of Assets and Liabilities.
NOTE 5--MERGER AND SUBSEQUENT EVENT
On December 1, 1995, FCIMCO's ultimate parent company, First Chicago
Corporation, merged with NBD Bancorp, Inc., with the combined company renamed
First Chicago NBD Corporation (FCNBD). FCNBD has now begun the process of
reorganizing their proprietary mutual funds: Prairie Funds, Prairie
Institutional Funds and The Woodward Funds (whose investment adviser is NBD
Bank, a wholly owned subsidiary of NBD Bancorp, Inc., which in turn is a
wholly owned subsidiary of FCNBD).
On February 20, 1996, the Board of Trustees of The Woodward Funds and the
Board of Trustees of Prairie Funds and Prairie Institutional Funds approved
Reorganization Agreements which are subject to shareholder approval. The
expenses incurred in connection with entering into and carrying out provisions
of the Reorganization Agreements, whether or not the transactions contemplated
thereby are consummated, will be paid by FCNBD. The reorganization is intended
to be effected on a tax-free basis, so that none of the Fund's shareholders
will recognize taxable gains or losses as a result of the reorganization.
A proxy statement/prospectus describing the reorganization and the reasons
therefore will be sent to shareholders.
FS-15
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
ENDED ENDED MAY 31, ENDED
DECEMBER 31, ------------------ MAY 31,
1995(1) 1995 1994 1993(2)
-------------- -------- -------- --------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING
OF PERIOD.................. $ 0.9989 $ 0.9999 $ 1.0000 $ 1.0000
-------- -------- -------- --------
Income from investment oper-
ations:
Net investment income..... 0.0320 0.0492 0.0302 0.0319
Net realized gains
(losses) from
investments.............. 0.0001 (0.0010) (0.0001) --
-------- -------- -------- --------
Total income from
investment operations... 0.0321 0.0482 0.0301 0.0319
-------- -------- -------- --------
Less dividends:
From net investment
income................... (0.0320) (0.0492) (0.0302) (0.0319)
-------- -------- -------- --------
Net change in net asset val-
ue......................... 0.0001 (0.0010) (0.0001) --
-------- -------- -------- --------
NET ASSET VALUE, END OF PE-
RIOD....................... $ 0.9990 $ 0.9989 $ 0.9999 $ 1.0000
======== ======== ======== ========
TOTAL RETURN................. 3.24%++ 5.03% 3.06% 3.25%+
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets................. 0.35%+ 0.34% 0.30% 0.02%+
Ratio of net investment
income to average net
assets..................... 5.46%+ 4.94% 3.02% 3.10%+
Ratio of expenses to average
net assets*................ 0.42%+ 0.41% 0.41% 0.49%+
Ratio of net investment
income to average net
assets*.................... 5.39%+ 4.87% 2.91% 2.63%+
Net assets, end of period
(000's omitted)............ $489,395 $475,248 $413,634 $264,527
</TABLE>
- --------
(1) For the period June 1, 1995 through December 31, 1995. Effective June 1,
1995, the Fund changed its fiscal year end from May 31 to December 31.
(2) For the period June 2, 1992 (commencement of operations) through May 31,
1993.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-16
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
DECEMBER 31, MAY 31,
1995(1) 1995(2)
-------------- --------------
<S> <C> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 0.9989 $ 1.0000
-------- --------
Income from investment operations:
Net investment income......................... 0.0305 0.0199
Net realized gains (losses) from investments.. 0.0001 (0.0011)
-------- --------
Total income from investment operations...... 0.0306 0.0188
-------- --------
Less dividends:
From net investment income.................... (0.0305) (0.0199)
-------- --------
Net change in net asset value................... 0.0001 (0.0011)
-------- --------
NET ASSET VALUE, END OF PERIOD.................. $ 0.9990 $ 0.9989
======== ========
TOTAL RETURN..................................... 3.09%++ 2.01%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... 0.60%+ 0.57%+
Ratio of net investment income to average net
assets......................................... 5.17%+ 5.48%+
Ratio of expenses to average net assets*........ 0.69%+ 0.66%+
Ratio of net investment income to average net
assets*........................................ 5.08%+ 5.39%+
Net assets, end of period (000's omitted)....... $ 56,000 $ 16,702
</TABLE>
- --------
(1) For the period June 1, 1995 through December 31, 1995. Effective June 1,
1995, the Fund changed its fiscal year end from May 31 to December 31.
(2) For the period January 17, 1995 (initial offering date of Service Shares)
through May 31, 1995.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-17
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED
DECEMBER 31,
1995(1)
--------------
<S> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 1.0000
--------
Income from investment operations:
Net investment income......................................... 0.0399
--------
Less dividends:
From net investment income.................................... (0.0399)
--------
Net change in net asset value................................... --
--------
NET ASSET VALUE, END OF PERIOD.................................. $ 1.0000
========
TOTAL RETURN..................................................... 4.06%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................... 0.35%+
Ratio of net investment income to average net assets............ 5.16%+
Ratio of expenses to average net assets*........................ 1.23%+
Ratio of net investment income to average net assets*........... 4.28%+
Net assets, end of period (000's omitted)....................... $ 14,008
</TABLE>
- --------
(1) For the period March 22, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-18
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
TREASURY PRIME CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED
DECEMBER 31,
1995(1)
--------------
<S> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............................ $ 1.0000
--------
Income from investment operations:
Net investment income......................................... 0.0380
--------
Less dividends:
From net investment income.................................... (0.0380)
--------
Net change in net asset value................................... --
--------
NET ASSET VALUE, END OF PERIOD.................................. $ 1.0000
========
TOTAL RETURN..................................................... 3.86%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......................... 0.60%+
Ratio of net investment income to average net assets............ 4.72%+
Ratio of expenses to average net assets*........................ 0.74%+
Ratio of net investment income to average net assets*........... 4.58%+
Net assets, end of period (000's omitted)....................... $130,559
</TABLE>
- --------
(1) For the period March 22, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-19
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
FOR THE PERIOD YEAR ENDED FOR THE PERIOD
ENDED JUNE 30, ENDED
DECEMBER 31, ------------------- JUNE 30,
1995(1) 1995 1994 1993(2)
-------------- -------- -------- --------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 0.9994 $ 0.9993 $ 0.9999 $ 1.0000
-------- -------- -------- --------
Income from investment
operations:
Net investment income.... 0.0277 0.0507 0.0333 0.0297
Net realized gains
(losses) from
investments............. 0.0002 (0.0059) (0.0006) (0.0001)
-------- -------- -------- --------
Total income from
investment operations.. 0.0279 0.0448 0.0327 0.0296
-------- -------- -------- --------
Less dividends:
From net investment
income.................. (0.0277) (0.0507) (0.0333) (0.0297)
-------- -------- -------- --------
Increase due to capital
contribution from
affiliate of Investment
Adviser (Note 3(d))....... -- 0.0060 -- --
-------- -------- -------- --------
Net change in net asset
value..................... 0.0002 0.0001 (0.0006) (0.0001)
-------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD.................... $ 0.9996 $ 0.9994 $ 0.9993 $ 0.9999
======== ======== ======== ========
TOTAL RETURN................ 2.80%++ 5.19%* 3.38% 3.25%+
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets........ 0.35%+ 0.35% 0.31% 0.05%+
Ratio of net investment
income to average net
assets.................... 5.51%+ 5.11% 3.33% 3.19%+
Ratio of expenses to
average net assets**...... 0.43%+ 0.44% 0.43% 0.56%+
Ratio of net investment
income to average net
assets**.................. 5.43%+ 5.02% 3.21% 2.68%+
Net assets, end of period
(000's omitted)........... $389,127 $319,214 $243,820 $175,713
</TABLE>
- --------
(1) For the period July 1, 1995 through December 31, 1995. Effective July 1,
1995, the Fund changed its fiscal year end from June 30 to December 31.
(2) For the period July 30, 1992 (commencement of operations) through June 30,
1993.
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
4.51% (See Note 4(d) to Financial Statements).
** During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-20
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
CASH MANAGEMENT FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--(CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
DECEMBER 31, JUNE 30,
1995(1) 1995(2)
-------------- --------------
<S> <C> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 0.9994 $ 1.0000
-------- --------
Income from investment operations:
Net investment income......................... 0.0264 0.0245
Net realized gains (losses) from investments.. 0.0002 (0.0006)
-------- --------
Total income from investment operations...... 0.0266 0.0239
-------- --------
Less dividends:
From net investment income.................... (0.0264) (0.0245)
-------- --------
Net change in net asset value................... 0.0002 (0.0006)
-------- --------
NET ASSET VALUE, END OF PERIOD.................. $ 0.9996 $ 0.9994
======== ========
TOTAL RETURN..................................... 2.68%++ 2.47%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... 0.60%+ 0.60%+
Ratio of net investment income to average net
assets......................................... 5.25%+ 5.46%+
Ratio of expenses to average net assets*........ 0.69%+ 0.71%+
Ratio of net investment income to average net
assets*........................................ 5.16%+ 5.35%+
Net assets, end of period (000's omitted)....... $121,750 $ 11,372
</TABLE>
- --------
(1) For the period July 1, 1995 through December 31, 1995. Effective June 1,
1995, the Fund changed its ficsal year end from June 30 to December 31.
(2) For the period January 17, 1995 (initial offering date of Service Shares)
through June 30, 1995.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee waivers and/or reimbursements had not occurred, the
ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-21
<PAGE>
PRAIRIE INSTITUTIONAL FUNDS
- -------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- -------------------------------------------------------------------------------
PRAIRIE INSTITUTIONAL FUNDS THE BOARD OF TRUSTEES AND SHAREHOLDERS
We have audited the accompanying statements of asset and liabilities,
including the portfolios of investments, of Prairie Institutional Funds
(comprising, respectively, the U.S. Government Securities Cash Managment,
Treasury Prime Cash Management and Cash Management Funds) (the "Fund") as of
December 31, 1995 and the related statements of operations for the periods
then ended, and the statements of changes in net assets and the financial
highlights for each of the periods 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 investments
owned as of December 31, 1995 by correspondence with the custodians and
others. 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 respective funds constituting the Prairie Institutional Funds at
December 31, 1995, the results of their operations for the periods then ended,
and the changes in their net assets and the financial highlights for each of
the indicated periods, in conformity with generally accepted accounting
principles.
LOGO
New York, New York February 22, 1996
FS-22
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A of the Registration Statement
are the following audited tables:
(i) With respect to the Pegasus Cash Management
Fund:
Financial Highlights for the period ended
December 31, 1995, the years ended June 30,
1995, 1994 and the period ended June 30,
1993;
(ii) With respect to the Pegasus Treasury Prime
Cash Management Fund:
Financial highlights for the period ended
December 31, 1995; and
(iii) With respect to the Pegasus U.S. Government
Securities Cash Management Fund:
Financial highlights for the period ended
December 31, 1995 and the years ended May
31, 1995, 1994 and the period ended May
31, 1993.
(2) Included in Part B of the Registration Statement
are the following audited financial statements:
(i) With respect to the Pegasus Cash
Management, Treasury Prime Cash
Management, U.S. Government Securities
Cash Management Funds:
Portfolio of Investments -- December 31,
1995;
Statements of Assets and Liabilities --
December 31, 1995;
Statements of Operations --
C-1
<PAGE>
(a) With respect to the Cash
Management Fund -- the year ended
June 30, 1995 and the period ended
December 31, 1995;
(b) With respect to the Treasury Prime
Cash Management Fund -- the period
ended December 31, 1995;
(c) With respect to the U.S.
Government Securities Cash
Management Fund -- the year ended
May 31, 1995 and the period ended
December 31, 1995;
Statements of Changes in Net Assets --
(a) With respect to the Cash
Management Fund -- the year ended
June 30, 1995 and 1994 and the
period ended December 31, 1995;
(b) With respect to the Treasury Prime
Cash Management Fund -- the period
ended December 31, 1995;
(c) With respect to the U.S.
Government Securities Cash
Management Fund -- the year ended
May 31, 1995 and 1994 and the
period ended December 31, 1995;
Notes to Financial Statements.
(ii) With respect to the Cash Management Fund:
Financial highlights for the period ended
December 31, 1995, the years ended June
30, 1995 and 1994, and the period ended
June 30, 1993;
(iii) With respect to the Treasury Prime Cash
Management Fund:
Financial highlights for the period ended
December 31, 1995;
(iv) With respect to the U.S. Government
Securities Cash Management Fund:
Financial highlights for the period ended
December 31, 1995, the years ended May 31,
1995 and 1994, and the period ended May
31, 1993; and
C-2
<PAGE>
(v) Report of Ernst & Young LLP, Independent
Auditors for the fiscal year ended
December 31, 1995.
(b) Exhibits:
(1) (a) Amended and Restated Declaration of Trust
dated as of May 1, 1992 is incorporated
herein by reference to exhibit (1)(b) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement on
Form N-1A filed with the Commission on
September 8, 1992.
(2) Bylaws of Registrant is incorporated
herein by reference to exhibit (2) of
Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 24, 1987.
(3) None.
(4) None.
(5) (a) Form of Co-Advisory Agreement among Regis-
trant, NBD Bank ("NBD") and First Chicago
Investment Management Company ("FCIMCO")
is incorporated herein by reference to
exhibit (5)(a) of Post-Effective Amendment
No. 28 to Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 5, 1996.
(b) Advisory Agreement between Registrant and
NBD dated November 28, 1995 is
incorporated herein by reference to
exhibit (5)(b) of Post-Effective Amendment
No. 28 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 5, 1996.
(6) (a) Form of Distribution Agreement between
Registrant and BISYS Fund Services
("BISYS") is incorporated herein by
reference to exhibit (6)(a) of
Post-Effective Amendment No. 28 to
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 5, 1996.
(b) Distribution Agreement dated March 15,
1995 among Registrant, FoM and Essex
relating to Series A, B, C, M, N, O, P, Q,
R, S, T, U and
C-3
<PAGE>
V is incorporated herein by reference to
exhibit (6)(a) of Post-Effective Amendment
No. 25 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 28, 1995.
(7) Deferred Compensation Plan is incorporated
herein by reference to exhibit (7) of
Post- Effective Amendment No. 30 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 15, 1996.
(8) (a) Amended and Restated Custodian Agreement
dated May 16, 1989 between Registrant and
National Bank of Detroit for Series A, B,
C, H, I, J, K and L of the Registrant is
incorporated herein by reference to
exhibit (8)(b) of Post-Effective Amendment
No. 3 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 30, 1990.
(b) Addendum No. 1 dated January 23, 1991 to
the Amended and Restated Custodian
Agreement between Registrant and NBD
relating to the Woodward Michigan
Tax-Exempt Money Market Fund (Series M) is
incorporated herein by reference to
exhibit (8)(c) of Post-Effective Amendment
No. 5 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on February 28, 1991.
(c) Addendum No. 2 dated April 28, 1992 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Equity Index Fund (Series N) is
incorporated herein by reference to
exhibit (8)(d) of Post-Effective Amendment
No. 10 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on September 8, 1992.
(d) Addendum No. 3 dated January 1, 1993 to
the Amended and Restated Custodian
Agreement between Registrant and NBD
relating to the Woodward Treasury Money
Market Fund (Series O) is incorporated
herein by reference to exhibit (8)(e) of
Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 29, 1993.
C-4
<PAGE>
(e) Addendum No. 4 dated February 1, 1993 to
the Amended and Restated Custodian
Agreement between Registrant and NBD
relating to the Woodward Municipal Bond
Fund (Series P) and the Woodward Michigan
Municipal Bond Fund (Series Q) is
incorporated herein by reference to
exhibit (8)(f) of Post-Effective Amendment
No. 14 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 29, 1993.
(f) Addendum No. 5 dated January 1, 1994 to
the Amended and Restated Custodian
Agreement between Registrant and NBD
relating to the Woodward Balanced Fund
(Series R) is incorporated herein by
reference to exhibit (8)(g) of
Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 29, 1994.
(g) Addendum No. 6 dated July 1, 1994 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Capital Growth and Short Bond
Funds (Series S and U) is incorporated
herein by reference to exhibit (8)(h) of
Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
January 27, 1995.
(h) Addendum No. 7 dated November 30, 1994 to
the Amended and Restated Custodian
Agreement between Registrant and NBD
relating to the Woodward International
Equity Fund (Series T) is incorporated
herein by reference to exhibit (8)(i) of
Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 28, 1995.
(i) Addendum No. 8 to the Amended and Restated
Custodian Agreement between Registrant and
NBD relating to the Woodward Cash
Management, U.S. Government Securities
Cash Management, Treasury Prime Cash
Management, Equity Income, Small Cap
Opportunity, Intermediate Municipal Bond,
Income, International Bond, Managed Assets
Conservative and Managed Assets Growth
Funds is incorporated herein by reference
to exhibit (8)(i) of Post-Effective
Amendment No. 28 to the Registrant's
C-5
<PAGE>
Registration Statement on Form N-1A filed
with the Commission on April 5, 1996.
(j) Form of Addendum No. 9 to the Amended and
Restated Custodian Agreement between
Registrant and NBD relating to the
Woodward U.S. Government Income Fund
(Series V) is incorporated herein by
reference to exhibit (8)(k) of
Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
November 1, 1993.
(k) Global Custody Agreement dated November
21, 1994 between Barclays Bank, PLC and
NBD relating to Series A, B, C, M, N, O,
P, Q, R, S, T, U and V is incorporated
herein by reference to exhibit (8)(k) of
Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 28, 1995.
(9) (a) Co-Administration Agreement among the
Registrant, NBD, FCIMCO and BISYS is
incorporated herein by reference to
exhibit (9)(a) of Post-Effective Amendment
No. 28 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 5, 1996.
(b) Amended and Restated Transfer Agency and
Dividend Disbursement Agreement dated May
16, 1989 between Registrant and NBD
(formerly, National Bank of Detroit) for
Series A, B, C, H, I, J, K and L of the
Registrant is incorporated herein by
reference to exhibit (9)(b) of
Post-Effective Amendment No. 3 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 30, 1990.
(c) Addendum No. 1 dated January 23, 1991 to
the Amended and Restated Transfer Agency
and Dividend Disbursement Agreement
between Registrant and NBD relating to the
Woodward Michigan Tax-Exempt Money Market
Fund (Series M) is incorporated herein by
reference to exhibit (9)(c) of
Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
February 28, 1991.
C-6
<PAGE>
(d) Addendum No. 2 dated April 28, 1992 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the
Woodward Equity Index Fund (Series N) is
incorporated herein by reference to
exhibit (9)(d) of Post-Effective Amendment
No. 10 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on September 8, 1992.
(e) Addendum No. 3 dated January 1, 1993 to
the Amended and Restated Transfer Agency
and Dividend Disbursement Agreement
between Registrant and NBD relating to the
Woodward Treasury Money Market Fund
(Series O) is incorporated herein by
reference to exhibit (9)(e) of
Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 29, 1993.
(f) Addendum No. 4 dated February 1, 1993 to
the Amended and Restated Transfer Agency
and Dividend Disbursement Agreement
between Registrant and NBD relating to the
Woodward Municipal Bond Fund (Series P)
and the Woodward Michigan Municipal Bond
Fund (Series Q) is incorporated herein by
reference to exhibit (9)(f) of
Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 29, 1993.
(g) Addendum No. 5 dated January 1, 1994 to
the Amended and Restated Transfer Agency
and Dividend Disbursement Agreement
between Registrant and NBD relating to the
Woodward Balanced Fund (Series R) is
incorporated herein by reference to
exhibit (9)(g) of Post-Effective Amendment
No. 22 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 29, 1994.
(h) Addendum No. 6 dated July 1, 1994 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the
Woodward Capital Growth, International
Equity and Short Bond Funds (Series S, T
and U) is incorporated herein by reference
to exhibit
C-7
<PAGE>
(9)(h) of Post-Effective Amendment No. 23
to the Registrant's Registration Statement
on Form N-1A filed with the Commission on
January 27, 1995.
(i) Form of Addendum No. 7 to the Amended and
Restated Transfer Agency and Dividend
Disbursement Agreement between Registrant
and NBD relating to the Woodward Cash
Management Fund, Treasury Prime Cash
Management Fund and U.S. Government
Securities Cash Management Fund is
incorporated herein by reference to
exhibit (9)(i) of Post-Effective Amendment
No. 28 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 5, 1996.
(j) Form of Addendum No. 8 to the Amended and
Restated Transfer Agency and Dividend
Disbursement Agreement between Registrant
and NBD relating to the Woodward Managed
Assets Conservative Fund, Managed Assets
Growth Fund, Equity Income Fund, Small-Cap
Opportunity Fund, International Major
Markets Fund, Income Fund, International
Bond Fund and Intermediate Municipal Bond
Fund is incorporated herein by reference
to exhibit (9)(j) of Post-Effective
Amendment No. 30 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on April 15, 1996.
(k) Form of Broker-Dealer Agreement between
FoM and Broker-Dealers is incorporated
herein by reference to exhibit (9)(c) of
Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
March 2, 1989.
(l) Bank Agreement between FoM and BHC
Securities, Inc. dated June 15, 1992 is
incorporated herein by reference to
exhibit (9)(h) of Post-Effective Amendment
No. 10 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on September 8, 1992.
(m) Bank Agreement between FoM and NBD
Securities, Inc. dated June 8, 1992 is
incorporated herein by reference to
exhibit (9)(i) of Post-Effective Amendment
No. 10 to the Registrant's Registration
Statement on
C-8
<PAGE>
Form N-1A filed with the Commission on
September 8, 1992.
(n) Revised Shareholder Services Plan
including form of Service Agreement
adopted by the Board of Trustees on
November 16, 1993 is incorporated herein
by reference to exhibit (9)(t) of
Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 29, 1994.
(o) Shareholder Services Plan including form
of Service Agreement with respect to Class
A Shares is incorporated herein by
reference to exhibit (9)(p) of
Post-Effective Amendment No. 30 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 15, 1996.
(p) Shareholder Administrative Services Plan
including form of Service Agreement is
incorporated herein by reference to
exhibit (9)(q) of Post-Effective Amendment
No. 30 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 15, 1996.
*(10) Opinion of Drinker Biddle & Reath, counsel
for the Registrant.
(11) (a) Consent of Arthur Andersen LLP.
(b) Consent of Ernst & Young LLP.
(c) Consent of Drinker Biddle & Reath.
(12) None.
(13) Letter dated May 8, 1987 from FoM to the
effect that its purchase of shares of the
Registrant will be made for investment
purposes without any present intention of
redeeming or reselling, is incorporated
herein by reference to exhibit (13) of
Pre- Effective Statement No. 1 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 24, 1987.
(14) None.
____________
* Registrant's Rule 24f-2 Notice and related Opinion of
Counsel relating to Series A, B, C, H, I, J, K, L, M,
N, O, P, Q, R, S, T and U was filed with the SEC on
February 27, 1996.
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(15) (a) Revised Service and Distribution Plan
relating to Registrant's distribution
expenses pursuant to Rule 12b-1, effective
April 20, 1994, is incorporated herein by
reference to exhibit (15)(l) of Post-
Effective Amendment No. 22 of the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 29, 1994.
(b) Distribution Plan for Class B Shares is
incorporated herein by reference to
exhibit (15)(b) of Post-Effective
Amendment No. 30 of the Registrant's
Registration Statement on Form N-1A filed
with the Commission on April 15, 1996.
(c) Distribution and Services Plan including
form of Agreement (relating to the Cash
Management Funds).
(16) (a) Schedules of Performance Computations are
incorporated herein by reference to
exhibit (16) of Post-Effective Amendment
No. 5 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on February 28, 1991.
(b) Schedules of Performance Computations with
respect to the Woodward Michigan
Tax-Exempt Money Market Fund, Growth/Value
Fund, Opportunity Fund, Intrinsic Value
Fund, Intermediate Bond Fund and Bond Fund
are incorporated herein by reference to
Exhibit (16)(b) of Post-Effective
Amendment No. 7 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on December 3, 1991.
(c) Schedules of Performance Computations with
respect to the Woodward Equity Index Fund
and the Woodward Treasury Money Market
Fund are incorporated herein by reference
to Exhibit 16(c) of Post-Effective
Amendment No. 14 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on April 29, 1993.
(d) Schedules of Performance Computations with
respect to the Woodward Municipal Bond
Fund and Woodward Michigan Municipal Bond
Fund are incorporated herein by reference
to Exhibit
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<PAGE>
16(d) of Post-Effective Amendment No. 15
to the Registrant's Registration Statement
on Form N-1A filed with the Commission on
July 30, 1993.
(e) Schedules of Performance Computations with
respect to the Woodward Balanced Fund are
incorporated herein by reference to
Exhibit 16(e) of Post-Effective Amendment
No. 22 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 29, 1994.
(f) Schedules of Performance Computations with
respect to the Woodward Capital Growth and
Short Bond Funds are incorporated herein
by reference to exhibit (16)(f) of Post-
Effective Amendment No. 23 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
January 27, 1995.
(g) Schedules of Performance Computations with
respect to the Woodward International
Equity Fund is incorporated herein by
reference to exhibit (16)(g) of
Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
July 28, 1995.
(h) Schedules of Performance Computations with
respect to the Cash Management, Treasury
Prime Cash Management and U.S. Government
Securities Cash Management Funds.
(17) None.
(18) (a) Rule 18f-3 Plan is incorporated herein by
reference to exhibit (18)(a) of Post-
Effective Amendment No. 30 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 15, 1996.
(b) Amended Rule 18f-3 Plan is incorporated
herein by reference to exhibit (18)(b) of
Post-Effective Amendment No. 30 to the
Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 15, 1996.
(c) Amended Rule 18f-3 Plan.
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<PAGE>
(27) Financial Data Schedules with respect to
the Cash Management, Treasury Prime Cash
Management and U.S. Government Securities
Cash Management Funds.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
Registrant is controlled by its Board of Trustees.
However, under the Investment Company Act of 1940, NBD Bank may
be deemed a controlling person of the Registrant because such
entity possesses or shares investment or voting power with
respect to more than 25% of the outstanding shares of the
Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following table sets forth information as to all
record holders of Registrant's securities as of May 31, 1996:
Number
of
Record
Title of Class Holders
-------------- -------
Series A Shares of beneficial interest ($.10 par value) 1,314
Series B Shares of beneficial interest ($.10 par value) 9,883
Series C Shares of beneficial interest ($.10 par value) 3,629
Series H Shares of beneficial interest ($.10 par value) 8,563
Series I Shares of beneficial interest ($.10 par value) 12,193
Series J Shares of beneficial interest ($.10 par value) 4,885
Series K Shares of beneficial interest ($.10 par value) 2,762
Series L Shares of beneficial interest ($.10 par value) 3,998
Series M Shares of beneficial interest ($.10 par value) 614
Series N Shares of beneficial interest ($.10 par value) 1,130
Series O Shares of beneficial interest ($.10 par value) 1,863
Series P Shares of beneficial interest ($.10 par value) 918
Series Q Shares of beneficial interest ($.10 par value) 1,035
Series R Shares of beneficial interest ($.10 par value) 1,130
Series S Shares of beneficial interest ($.10 par value) 2,875
Series T Shares of beneficial interest ($.10 par value) 2,070
Series U Shares of beneficial interest ($.10 par value) 471
ITEM 27. INDEMNIFICATION
Indemnification of Registrant's current principal
underwriters against certain losses is provided for in Section 11
of the Distribution Agreement incorporated herein by reference as
Exhibit (6)(b). Indemnification of Registrant's proposed
principal underwriter against certain losses is provided for in
Section 10 of the Distribution Agreement filed as Exhibit (6)(a).
Indemnification of Registrant's Custodian is provided for in
Article XII of the Amended and Restated Custodian Agreement
incorporated herein by reference as Exhibit (8)(a).
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<PAGE>
Indemnification of Registrant's Transfer Agent and Dividend
Disbursing Agent is provided for in Article III of the Amended
and Restated Transfer Agency and Dividend Disbursing Agreement
incorporated herein by reference as Exhibit (9)(b). Registrant
has obtained from a major insurance carrier a trustees' and
officers' liability policy covering certain types of errors and
omissions. In addition, Section 5.4 of the Registrant's Amended
and Restated Declaration of Trust incorporated herein by
reference as Exhibit (1)(a), provides as follows:
5.4 Mandatory Indemnification.
(a) Subject only to the provisions hereof, every
person who is or has been a Trustee, officer, employee or agent of
the Trust and every person who serves at the Trust's request as
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall be
indemnified by the Trust to the fullest extent permitted by law
against all liabilities and against all expenses reasonably incurred
or paid by him in connection with any debt, claim, action, demand,
suit, proceeding, judgment, decree, liability or obligation of any
kind in which he becomes involved as a party or otherwise or is
threatened by virtue of his being or having been a Trustee, officer,
employee or agent of the Trust or of another corporation,
partnership, joint venture, trust or other enterprise at the request
of the Trust and against amounts paid or incurred by him in the
compromise or settlement thereof.
(b) The words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal, administrative, legislative, investigative or
other, including appeals), actual or threatened, and the words
"liabilities" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(c) No indemnification shall be provided here-
under to a Trustee or officer:
(i) against any liability to the Trust or
the Shareholders by reason of willful
misfeasance, bad faith, gross negligence
or reckless disregard of the duties
involved in the conduct of his office
("disabling conduct");
(ii) with respect to any matter as to which
he shall, by the court or other body by
or before which the proceeding was
brought or engaged, have
C-13
<PAGE>
been finally adjudicated to be liable by reason of
disabling conduct;
(iii) in the absence of a final adjudication
on the merits that such Trustee or
officer did not engage in disabling
conduct, unless a reasonable
determination, based upon a review of
the facts that the person to be
indemnified is not liable by reason of
such conduct, is made:
(A) by vote of a majority of a
quorum of the Trustees who are neither
Interested Persons nor parties to the
proceedings; or
(B) by independent legal
counsel, in a written opinion.
(d) The rights of indemnification herein provided
may be insured against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any Trustee,
officer, employee or agent may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee, officer,
employee, or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person; provided, however,
that no person may satisfy any right of indemnity or reimbursement
granted herein except out of the property of the Trust, and no other
person shall be personally liable to provide indemnity or
reimbursement hereunder (except an insurer or surety or person
otherwise bound by contract).
(e) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of
the character described in paragraph (a) of this Section 5.4 may be
paid by the Trust prior to final disposition thereof upon receipt of
a written undertaking by or on behalf of the Trustee, officer,
employee or agent to reimburse the Trust if it is ultimately
determined under this Section 5.4 that he is not entitled to
indemnification. Such undertaking shall be secured by a surety bond
or other suitable insurance or such security as the Trustees shall
require unless a majority of a quorum of the Trustees who are neither
Interested Persons nor parties to the proceeding, or independent
legal counsel in a written opinion, shall have determined, based on
readily available facts, that there is reason to believe that the
indemnitee ultimately will be found to be entitled to
indemnification.
Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise,
C-14
<PAGE>
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a
trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in
connection with the securities being registered, Registrant
will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
Section 5.1 of the Registrant's Declaration of
Trust, incorporated herein by reference as Exhibit (1), also
provided indemnification of shareholders of the Registrant.
Section 5.1 states as follows:
5.1 Limitation of Personal Liability and
Indemnification of Shareholders. The Trustees, officers,
employees or agents of the Trust shall have no power to bind
any Shareholder personally or to call upon any Shareholder
for the payment of any sum of money or assessment
whatsoever, other than such as the Shareholder may at any
time agree to pay by way of subscription to any Shares or
otherwise.
No Shareholder or former Shareholder of the Trust
shall be liable solely by reason of his being or having been a
Shareholder for any debt, claim, action, demand, suit, proceeding,
judgment, decree, liability or obligation of any kind, against, or
with respect to, the Trust arising out of any action taken or omitted
for or on behalf of the Trust, and the Trust shall be solely liable
therefor and resort shall be had solely to the Trust Property for the
payment or performance thereof.
Each Shareholder or former Shareholder of the
Trust (or their heirs, executors, administrators or other
legal representatives or, in case of a corporate entity, its
corporate or general successor) shall be entitled to
indemnity and reimbursement out of the Trust Property to the
full extent of such liability and the costs of any
litigation or other proceedings in which such liability
shall have been determined, including, without limitation,
the fees and disbursements of counsel if, contrary to the
provisions hereof, such Shareholder or former Shareholder of
the Trust shall be held to personal liability.
C-15
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
The Registrant's investment adviser, NBD, is a state
chartered bank incorporated under the laws of Michigan which is
wholly-owned by NBD Bancorp, Inc., a Delaware corporation. NBD
conducts a general banking and trust business.
(a) To the Registrant's knowledge, none of the directors or officers
of NBD, except as set forth below, is, or has been at any time during the
Registrant's past two fiscal years, engaged in any other business, profession,
vocation, or employment of a substantial nature, except that certain directors
and officers and certain executives of NBD also hold various positions with,
and are engaged in business for, First Chicago NBD Corporation, which owns all
of the outstanding stock of NBD. Set forth below are the names and principal
business of the directors and certain of the senior executive officers of NBD
who are engaged in any other business, profession, vocation or employment of a
substantial nature.
Terence E. Adderley
President and Chief Executive Officer, Kelly Services, Inc.;
and Director of Kelly Services, Inc. and The Detroit Edison
Company.
James K. Baker
Chairman, Arvin Industries, Inc.; Director of Amcast
Industrial Corporation, Geon Company, CINergy Corp., and
Tokheim Corp.
Don H. Barden
Chairman and President, Barden Companies, Inc.; Director of
National Cable TV Association and C-SPAN, the Cable
Satellite Public Affairs Network.
Siegfried Buschmann
Chairman and Chief Executive Officer, The Budd Company.
Bernard B. Butcher
Retired Senior Consultant and Director of The Dow Chemical
Company.
John W. Day
Retired Executive Vice President, Allied-Signal, Inc.; and
President, Allied-Signal International, Inc.
Maureen A. Fay, O.P.
President, University of Detroit Mercy.
C-16
<PAGE>
Charles T. Fisher III
Retired Chairman and President, NBD Bancorp, Inc.; and NBD
Bank; and Director of AMR Corporation, General Motors
Corporation, and JANNOCK Limited (Toronto).
Alfred R. Glancy III
Chairman, President, and Chief Executive Officer of MCN
Corporation; Chairman of Michigan Consolidated Gas Company;
and Director of MLX Corp.
Dennis J. Gormley
Chairman, President and Chief Executive Officer, Federal-
Mogul Corporation; and Director of Cooper Tire and Rubber
Company.
Joseph L. Hudson, Jr.
Chairman, Hudson-Webber Foundation.
Verne G. Istock
Chairman and Chief Executive Officer, NBD Bancorp, Inc. and
NBD Bank and Director of Handleman Company; and Kelly
Services, Inc.; Grand Trunk Corp.
Thomas H. Jeffs II
President and Chief Operating Officer, NBD Bancorp, Inc. and
NBD Bank; and Director of MCN Corporation.
John E. Lobbia
Chairman and Chief Executive Officer, The Detroit Edison
Company.
Richard A. Manoogian
Chairman and Chief Executive Officer, Masco Corporation and
MascoTech, Inc.; and Chairman of TriMas Corporation.
William T. McCormick, Jr.
Chairman and Chief Executive Officer, CMS Energy
Corporation; Chairman, Consumers Power Company; and Director
of Rockwell International Corporation and Schlumberger, Ltd.
Thomas E. Reilly, Jr.
Chairman of the Board, Reilly Industries, Inc. and Director
of Lilly Industries, Inc.
Irving Rose
Partner, Edward Rose & Sons (Residential Builders).
Robert C. Stempel
Retired Chairman and Chief Executive Officer, General Motors
Corporation.
C-17
<PAGE>
Peter W. Stroh
Chairman and Chief Executive Officer, The Stroh Companies,
Inc.; Chairman, The Stroh Brewery Company and Director of
Masco Corporation.
Ormand J. Wade
Retired Vice Chairman, American Information Technologies
Corporation (Ameritech) and Director of Illinois Tool Works,
Inc.; and Andrew Corp.
(b) The Registrant's investment adviser, FCNIMCO, is a registered
investment adviser and wholly-owned subsidiary of The First National Bank of
Chicago ("FNBC"), which in turn is a wholly-owned subsidiary of First Chicago
NBD Corporation, a registered bank holding company.
Registrant is fulfilling the requirement of this Item 28 to
provide a list of the officers and directors of FCNIMCO, together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by FCNIMCO or those of its officers and
directors during the past two years, by incorporating by reference the
information contained in the Form ADV filed with the SEC pursuant to the
Investment Advisers Act of 1940 by FCNIMCO (SEC File No. 801- 47947).
ITEM 29. PRINCIPAL UNDERWRITERS
(a) FoM is one of the Registrant's current principal underwriters.
FoM currently acts as principal underwriter for Renaissance Assets Trust, a
registered investment company. Except for the foregoing, FoM does not act as
principal underwriter, depositor or investment adviser for any other
registered investment company.
(b) The following information is submitted with respect to each
director and officer of FoM, the principal business address of which is 100
Renaissance Center, 26th Floor, Detroit, Michigan 48243:
Position with Position with
Name Underwriter Registrant
---- ----------- ----------
Steve Gasper, Jr. President, Chief None
Executive Officer,
Director
William H. Cuddy Chairman of the Board None
of Directors
C-18
<PAGE>
Position with Position with
Name Underwriter Registrant
---- ----------- ----------
Joseph M. Mengden Director None
Craig P. Baker Director None
Geoffrey B. Baker Director None
Gerard M. Lavin Director None
Thomas A. McDonnell Director None
Conrad W. Koski Executive Vice None
President and
Treasurer
Hal H. Smith, III Executive Vice President None
Anthony Calice Senior Vice President None
Lenore P. Denys Senior Vice President None
and Secretary
Ernest J. Gargaro, Jr. Vice President - Tax None
Incentive Planning/
Qualified Plans
Thomas Enright Vice President None
Ned Evans Vice President None
Martha M. Feazell Vice President None
John Freeman Vice President None
Perry Foor Vice President None
Monica Glinski Vice President None
Michael Gormely Vice President None
Paul Harris Vice President None
Colleen Mahoney Vice President None
Carol McDiarmid Vice President None
Robert H. Stoetzer Vice President None
C-19
<PAGE>
Position with Position with
Name Underwriter Registrant
---- ----------- ----------
Diane DeParre Vertin Vice President None
Wayne J. Wright Vice President None
(c) None
(a) Essex is one of the Registrant's current principal
underwriters. Essex does not act as principal
underwriter, depositor or investment adviser for any
other registered investment company.
(b) The following information is submitted with respect to
each director and officer of Essex, the principal
business address of which is 825 3rd Avenue, 37th
Floor, New York, NY 10022:
Position with Position with
Name Underwriter Registrant
---- ----------- ----------
Kevin E. Crowe Chairman and None
Chief Executive Officer
Gerald Cunningham President None
Thomas E. Albright Senior Vice President None
Elisa Lanthier Treasurer None
William O'Loughlin Treasurer, Vice None
President
Greg Zytkowicz Secretary, Vice None
President
Robert B. Twomey Vice President None
(c) None
(a) BISYS Fund Services Inc. will act as distributor and
administrator for the Registrant. BISYS Fund Services
also distributes the securities of the American
Performance Funds, The Highmark Group, The Parkstone
Group of Funds, The Sessions Group, the AmSouth Mutual
C-20
<PAGE>
Funds, The Coventry Group, the BB&T Mutual Funds Group,
the MarketWatch Funds, The M.S.D & T Funds, Inc., The
Riverfront Funds, Inc., the Pacific Capital Funds, the
MMA Praxis Mutual Funds, the Qualivest Funds, Mountain
Square Funds, Mariner Mutual Funds Trust, Mariner Funds
Trust and The Victory Portfolios, each of which is an
open-end management investment company.
(b) To the best of Registrant's knowledge, the partners of
BISYS Fund Services are as follows:
Name and
Principal Positions and Positions and
Business Offices with Offices with
Address BISYS Fund Services Registrant
- ------- ------------------- ----------
BISYS Fund Services, Inc. Sole General Partner None
150 Clove Road
Little Falls, NJ 07424
WC Subsidiary Corporation Limited Partner None
150 Clove Road
Little Falls, NJ 07424
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
(a) NBD Bank, 611 Woodward Avenue, Detroit, Michigan 48226
and 900 Tower Drive, Troy, Michigan 48098 (records
relating to functions as advisor, custodian, and
transfer and dividend disbursing agent).
(b) First Chicago NBD Investment Management Company, Three
First National Plaza, Chicago, Illinois 60670 (records
relating to its function as advisor and co-
administrator).
(c) First of Michigan Corporation, 100 Renaissance Center,
26th Floor, Detroit, Michigan 48243 (records relating
to its function as co-distributor).
C-21
<PAGE>
(d) Essex National Securities, Inc., 215 Gateway Road West,
Napa, California 34550-6249 (records relating to its
functions as co-distributor).
(e) BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as distributor
and co-administrator).
(f) Drinker Biddle & Reath, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107-3496 (Registrant's
Declaration of Trust, By-Laws and Minute Books).
ITEM 31. MANAGEMENT SERVICES
Inapplicable.
ITEM 32. UNDERTAKINGS
Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a trustee or trustees if
requested to do so by the holders of at least 10% of Registrant's outstanding
shares. Registrant will stand ready to assist shareholder communications in
connection with any meeting of shareholders as prescribed in Section 16(c) of
the Investment Company Act of 1940.
Registrant undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's most recent annual report
to shareholders, upon request without charge.
C-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment No.
34 to its Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused it to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Detroit, State of
Michigan, on the 23rd day of July, 1996.
THE WOODWARD FUNDS
D/B/A PEGASUS FUNDS
Registrant
* Earl I. Heenan, Jr.
Earl I. Heenan, Jr.
President
Pursuant to the requirements of the Securities Act of
1933, this Post-Effective Amendment to Registrant's Registration
Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
* Earl I. Heenan, Jr.
- -----------------------
Earl I. Heenan, Jr. President July 23, 1996
* Eugene C. Yehle
- -----------------------
Eugene C. Yehle Treasurer July 23, 1996
* Will M. Caldwell
- -----------------------
Will M. Caldwell Trustee July 23, 1996
* Julius L. Pallone
- -----------------------
Julius L. Pallone Trustee July 23, 1996
* Nicholas J. De Grazia
- -----------------------
Nicholas J. De Grazia Trustee July 23, 1996
* Donald G. Sutherland
- -----------------------
Donald G. Sutherland Trustee July 23, 1996
* Donald L. Tuttle
- -----------------------
Donald L. Tuttle Trustee July 23, 1996
* John P. Gould
- -----------------------
John P. Gould Trustee July 23, 1996
* Marilyn McCoy
- -----------------------
Marilyn McCoy Trustee July 23, 1996
*By:/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
(11)(a) Consent of Arthur Andersen LLP.
(11)(b) Consent of Ernst & Young LLP.
(11)(c) Consent of Drinker Biddle & Reath
(15)(c) Distribution and Services Plan including form
of Agreement (relating to the Cash Management
Funds).
(16)(h) Schedules of Performance Computations with
respect to the Cash Management, Treasury
Prime Cash Management and U.S. Government
Securities Cash Management Funds.
(18)(c) Amended Rule 18f-3 Plan.
(27) Financial Data Schedules with respect to the
Cash Management, Treasury Prime Cash Management
and U.S. Government Securities Cash Management
Funds.
EXHIBIT (11)(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to all
references to our Firm included in or made a part of The
Woodward Funds' d/b/a Pegasus Funds registration statement on
Form N-1A (Post-Effective Amendment No. 34 to The Woodward Funds'
d/b/a Pegasus Funds registration statement under the Securities
Act of 1933.)
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Detroit, Michigan,
July 18, 1996
EXHIBIT (11)(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Statements" in the Prospectus and to the use of our report
on the financial statements of The Prairie Institutional Funds dated
February 22, 1996 in this Registration Statement (Form N-1A 33-13990) of
The Woodward Funds doing business as The Pegasus Funds.
/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP
New York, New York
July 22, 1996.
EXHIBIT (11)(c)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the
reference to our Firm under the caption "Counsel" in the
Statement of Additional Information that is included in Post-
Effective Amendment No. 34 to the Registration Statement on Form
N-1A under the Securities Act of 1933, as amended.
Drinker Biddle & Reath
Philadelphia, Pennsylvania
July 22, 1996
Exhibit (15)(c)
THE WOODWARD FUNDS
CASH MANAGEMENT FUNDS
CLASS S SHARES
DISTRIBUTION AND SERVICES PLAN
Introduction: It has been proposed that The Woodward Funds (the
"Fund") adopt a Distribution and Services Plan (the "Plan"), in accordance
with Rule 12b-1 promulgated under the Investment Company Act of 1940, as
amended (the "Act"), under which the Fund would pay the Fund's distributor
(the "Distributor") for (a) advertising, marketing and distributing Class S
shares ("Service Shares") of those Series of the Fund set forth on Exhibit A
hereto, as such Exhibit may be revised from time to time (each, a "Series")
and (b) providing services to holders of Service Shares. The Distributor would
be permitted to pay third parties in respect of these services. If the
proposal is to be implemented, the Act and Rule 12b-1 require that a written
plan describing all material aspects of the proposed financing be adopted by
the Fund.
The Fund's Board of Trustees, in considering whether the Fund
should implement a written plan, has requested and evaluated such information
as it deemed necessary to an informed determination as to whether a written
plan should be implemented and has considered such pertinent factors as it
deemed necessary to form the basis for a decision to use Series' assets for
such purposes.
In voting to approve the implementation of such a plan, the
Board has concluded, in the exercise of its reasonable business judgment and
in light of applicable fiduciary duties, that there is a reasonable likelihood
that the plan set forth below will benefit the Series and holders of its
Service Shares.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor a fee at the annual
rate of up to 0.25% of the average daily net assets attributable to the
outstanding Service Shares of a Series for (i) advertising, marketing and
distributing such shares and/or (ii) the provision of shareholder and
administrative services for the beneficial owners of such shares. The
Distributor may pay one or more financial institutions, securities dealers and
other industry professionals a fee in respect of these services. The
Distributor shall determine the amounts to be paid to third parties and the
basis on which such payments will be made. Payments to financial institutions,
securities dealers and other industry professionals are subject to compliance
by each such party with the terms of any related Plan agreement between it and
the Distributor.
<PAGE>
2. For the purpose of determining the fees payable under this
Plan, the net asset value of the Service Shares shall be computed in the
manner specified in the Fund's then current prospectus and statement of
additional information describing such Service Shares.
3. Joint distribution financing or other services rendered with
respect to such Service Shares (which may involve other investment funds or
companies that are affiliated persons of the Fund or affiliated persons of the
Distributor) is authorized to the extent permitted by law. All expenses
incurred by the Fund under the Plan for Service Shares of a Series shall be
allocated entirely to such Service Shares, as appropriate. The fee allocated
to a Series or to Service Shares of a Series shall be the several (and not
joint or joint and several) obligation of the Fund.
4. So long as this Plan is in effect, the Distributor shall
provide the Fund's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to the Plan and
the purposes for which such expenditures were made.
5. The Plan will become effective with respect to Service
Shares of a particular Series (a) on the day before the date the first Service
Share has been sold in a public offering (following approval by written
consent of the sole shareholder of those Service Shares), and (b) upon the
approval by a majority of the Board of Trustees, including a majority of those
Trustees who are not "interested persons" (as defined in the Act) of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements entered into in connection with the Plan (the
"Disinterested Trustees"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of the Plan.
6. Unless sooner terminated in accordance with the terms
hereof, this Plan shall continue until December 31, 1997, and thereafter until
June 30, 1998, and thereafter until June 30 of each succeeding year, so long
as the continuance until June 30, 1998 and each subsequent annual continuation
is specifically approved by the Fund's Board of Trustees in the manner
provided in paragraph 5(b) hereof.
7. This Plan may be amended at any time by the Board of
Trustees, provided that (a) any amendment to increase materially the amount to
be spent for distribution relating to the Service Shares of a Series pursuant
to this Plan shall be effective only upon approval by a vote of a majority of
the outstanding Service Shares affected by such matter, and (b) all material
amendments of the Plan (including any amendment increasing the amount to be
spent for other than distribution
-2-
<PAGE>
such as shareholder and administrative services for beneficial owners of the
Service Shares of a Series) shall become effective only upon approval as
provided in paragraph 5(b) hereof.
8. As to each Series, this Plan is terminable without penalty
at any time by (a) a vote of a majority of the Disinterested Trustees, or (b)
a vote of a majority of the outstanding Service Shares of the Series.
9. While this Plan is in effect, the selection and
nomination of Disinterested Trustees shall be committed to the
discretion of such Disinterested Trustees.
Dated: May 21, 1996
-3-
<PAGE>
EXHIBIT A
NAMES OF SERIES
Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash
Management Fund
<PAGE>
THE WOODWARD FUNDS
CASH MANAGEMENT FUNDS
CLASS S SHARES
Form of Agreement
under
Distribution and Services Plan
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219-3035
Ladies and Gentlemen:
We wish to enter into this Agreement with you for distribution
services with respect to, servicing shareholders of, or administering
shareholder accounts in, the Service Shares of each Series set forth on
Schedule 1 hereto, as such Schedule may be revised from time to time (each, a
"Series"), of The Woodward Funds (the "Fund") of which you are the principal
underwriter as defined in the Investment Company Act of 1940, as amended (the
"Act") and the exclusive agent for the continuous distribution of its shares.
The terms and conditions of this Agreement are as follows:
1. We agree to provide reasonable assistance in connection with
the sale of the Service Shares of a Series, which assistance may include
distributing sales literature, marketing and advertising. If we are restricted
or unable to provide these services, we agree not to perform such services and
not to accept fees therefor. Our acceptance of any fees hereunder shall
constitute our representation (which shall survive any payment of such fees
and any termination of this Agreement and shall be reaffirmed each time we
accept a fee hereunder) that our receipt of such fee is lawful.
2. We agree to provide shareholder and administrative services
for our clients who own Service Shares of any Series ("Clients"), which
services may include, without limitation, answering Client inquiries about the
Fund or any Series; assisting Clients in changing dividend options, account
designations and addresses; performing sub-accounting; establishing and
maintaining shareholder accounts and records; processing purchase and
redemption transactions; investing Client account cash balances automatically
in such shares; providing periodic statements showing a Client's account
balance and integrating such statements with those of other transactions and
balances in the Client's other accounts serviced by us; arranging
- 1 -
<PAGE>
for bank wires; and providing such other information and services as the Fund
reasonably may request, to the extent we are permitted by applicable statute,
rule or regulation. In this regard, you recognize that to the extent we are
subject to the provisions of the Glass-Steagall Act and other laws governing,
among other things, the conduct of activities we may undertake and for which
we may be paid, we intend to perform only those activities as are consistent
with our statutory and regulatory obligations.
3. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space, equipment
and facilities currently used in our business, or all or any personnel
employed by us) as is necessary or beneficial for providing information and
services to shareholders, and to assist in servicing accounts of Clients. We
shall transmit promptly to Clients all communications sent to us for
transmittal to Clients by or on behalf of any Series, the Fund's investment
adviser, custodian or transfer or dividend disbursing agent.
4. We agree that neither we nor any of our employees or agents
are authorized to make any representation concerning a Series' shares, except
those contained in the then-current Prospectus and Statement of Additional
Information for such Series, copies of which will be supplied to us. We shall
have no authority to act as the Fund's agent or for you as the Fund's
distributor.
5. In consideration of the services and facilities described
herein, we shall be entitled to receive from you, and you agree to pay to us
with respect to the Service Shares of each Series, the fees set forth opposite
such Series' name on Schedule 1 hereto. We understand that the payment of
these fees has been authorized and will be paid pursuant to a Distribution and
Services Plan approved by the Fund's Board of Trustees and shareholders (the
"Plan"), and any payments pursuant to this Agreement shall be paid only as
long as this Agreement is in effect.
6. You reserve the right, at your discretion and
without notice, to suspend the sale of shares or withdraw the
sale of any Series' shares.
7. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by you or your designee. Unless
sooner terminated, this Agreement will continue until December 31, 1997, and
thereafter until June 30, 1998, and thereafter until June 30 of each
succeeding year, so long as the continuance until June 30, 1998 and each
subsequent annual continuation is specifically approved by the Fund in the
manner described in Section 8 hereof. This Agreement is terminable,
- 2 -
<PAGE>
without penalty, at any time by you (which termination may be by vote of a
majority of the Fund's Disinterested Trustees as defined in Section 8 hereof)
or by us upon notice to the other party hereto.
8. This Agreement has been approved by vote of a majority of
(i) the Fund's Board of Trustees and (ii) those Trustees who are not
"interested persons" (as defined in the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting
on such approval.
9. This Agreement shall be construed in accordance
with the laws of the State of Illinois and is non-assignable by
the parties hereto.
10. All persons dealing with the Fund must look solely to its
property for the enforcement of any claims against it, as none of the Fund's
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into or on its behalf.
11. The obligations of The Woodward Funds entered into in the
name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are not binding upon
any of the Trustees, shareholders or representatives of the Fund personally,
but bind only the Fund property, and all persons dealing with any Series of
shares in the Fund must look solely to the Fund property belonging to such
Series for the enforcement of any claims against the Fund.
12. All communications to you shall be sent to you at
the address set forth above. Any notice to us shall be duly
- 3 -
<PAGE>
given if mailed or telegraphed to us at the address set forth
below.
Very truly yours,
----------------------------------------
Name (Please Print or Type)
----------------------------------------
Address
----------------------------------------
City State Zip Code
Date By:
---------------- -------------------------------------
Authorized Signature
NOTE: Please return both signed copies of this Agreement to
BISYS Fund Services. Upon acceptance one countersigned
copy will be returned for your files.
Accepted:
BISYS FUND SERVICES
Date By:
---------------- --------------------------------------
- 4 -
<PAGE>
SCHEDULE 1
to
Agreement
under
The Woodward Funds
Cash Management Funds
Distribution and Services Plan
between
BISYS FUND SERVICES
and
------------------------------
[Name of Counterparty]
Monthly fee at an
annual rate as a
percentage of
Average Daily Value
of Service Shares
Name of Series owned by Clients*
Cash Management Fund [up to .25 of 1%]
Treasury Prime Cash Management Fund [up to .25 of 1%]
U.S. Government Securities Cash
Management Fund [up to .25 of 1%]
Dated: , 1996
----------------
- ------------------------
* For purposes of determining the fees payable hereunder, the average
daily net asset value of Service Shares shall be computed in the
manner specified in the Fund's then current Prospectus and Statement
of Additional Information relating
to such Service Shares.
- 5 -
Cash Management Fund Class I Shares
The seven-day period ended July 16, 1996
Last 7 daily dividend factors:
Day 1: 0.00013752000
Day 2: 0.00014085900
Day 3: 0.00013688000
Day 4: 0.00013688000
Day 5: 0.00013688000
Day 6: 0.00013951700
Day 7: 0.00014088900
0.00096942500 = Base period Return (bpr)
Annualized Yield = (bpr/1) x 365/7
Annualized Yield = 5.055%
Effective Yield = (bpr+1) 365/7-1
Effective Yield = 5.182%
Cash Management Fund Class S Shares
The seven-day period ended July 16, 1996
Last 7 daily dividend factors:
Day 1: 0.00013069000
Day 2: 0.00013403700
Day 3: 0.00013005500
Day 4: 0.00013005500
Day 5: 0.00013005500
Day 6: 0.00013268900
Day 7: 0.00013406300
0.00092164400 = Base period Return (bpr)
Annualized Yield = (bpr/1) x 365/7
Annualized Yield = 4.806%
Effective Yield = (bpr+1) 365/7-1
Effective Yield = 4.921%
U.S. Government Cash Management Fund Class I Shares
The seven-day period ended July 16, 1996
Last 7 daily dividend factors:
Day 1: 0.00013803000
Day 2: 0.00013831300
Day 3: 0.00013832500
Day 4: 0.00013832500
Day 5: 0.00013832500
Day 6: 0.00013945300
Day 7: 0.00013973600
0.00097050700 = Base period Return (bpr)
0.00097050700
Annualized Yield = (bpr/1) x 365/7
Annualized Yield = 5.061%
Effective Yield = (bpr+1) 365/7-1
Effective Yield = 5.188%
<PAGE>
U.S. Government Cash Management Fund Class S Shares
The seven-day period ended July 16, 1996
Last 7 daily dividend factors:
Day 1: 0.00013122000
Day 2: 0.00013150400
Day 3: 0.00013152000
Day 4: 0.00013152000
Day 5: 0.00013152000
Day 6: 0.00013264300
Day 7: 0.00013444800
0.00092437500 = Base period Return (bpr)
Annualized Yield = (bpr/1) x 365/7
Annualized Yield = 4.820%
Effective Yield = (bpr+1) 365/7-1
Effective Yield = 4.936%
Treasury Cash Management Fund Class I Shares
The seven-day period ended July 16, 1996
Last 7 daily dividend factors:
Day 1: 0.00013067300
Day 2: 0.00013095800
Day 3: 0.00013097200
Day 4: 0.00013097200
Day 5: 0.00013097200
Day 6: 0.00013100200
Day 7: 0.00013082600
0.00091637500 = Base period Return (bpr)
0.00091637500
Annualized Yield = (bpr/1) x 365/7
Annualized Yield = 4.778%
Effective Yield = (bpr+1) 365/7-1
Effective Yield = 4.892%
Treasury Cash Management Fund Class S Shares
The seven-day period ended July 16, 1996
Last 7 daily dividend factors:
Day 1: 0.00012384000
Day 2: 0.00012412500
Day 3: 0.00012413900
Day 4: 0.00012413900
Day 5: 0.00012413900
Day 6: 0.00012416900
Day 7: 0.00012399300
0.00086854400 = Base period Return (bpr)
0.00086854400
Annualized Yield = (bpr/1) x 365/7
Annualized Yield = 4.529%
Effective Yield = (bpr+1) 365/7-1
Effective Yield = 4.631%
Exhibit (18)(c)
Amended 5/21/96
Post-Reorganization
THE WOODWARD FUNDS
(the "Trust")
Amended Rule 18f-3 Plan
(the "Plan")
A. INTRODUCTION
On February 23, 1995, the Securities and Exchange Commission (the
"Commission") adopted Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which permits the creation and operation of a
multi-class distribution structure without the need to obtain an exemptive
order under Section 18 of the 1940 Act. Rule 18f-3, which became effective on
April 3, 1995, requires an investment company to file with the Commission, a
written plan specifying all of the differences among the classes, including
the various services offered to shareholders, the different distribution
arrangements for each class, the methods for allocating expenses relating to
those differences and any conversion features or exchange privileges (an
"18f-3 Plan").
On April 15, 1996, the Board authorized the Trust to operate a
multi-class distribution structure in accordance with Rule 18f-3. In
connection with the proposed reorganization with Prairie Funds, Prairie
Intermediate Bond Fund, Prairie Institutional Funds and Prairie Municipal Bond
Fund, Inc. on or about July 1, 1996 (the "Reorganization"), the Trust desires
to make certain changes to the multi-class distribution structure, as adopted.
The Trust intends to operate its multi-class distribution structure in
accordance with this Amended 18f-3 Plan beginning on the effective date of the
Reorganization.
B. ATTRIBUTES OF CLASSES
Under this Plan, the Trust is authorized to offer those classes of
shares as specified on Schedule A attached hereto.
In general, shares of each class will be identical except for
different expense variables (which may result in different returns for the
classes), certain related rights and certain shareholder services. More
particularly, each class of shares shall represent interests in the same
portfolio of investments of the particular Fund, and shall be identical in all
respects, except for: (a) the impact of expenses assessed to a class pursuant
to (i) a shareholder services plan ("Shareholder Administrative Services
Plan") and/or a distribution plan ("12b-1 Plan") adopted for that class, (ii)
transfer agency expenses
1
<PAGE>
directly attributable to a particular class and (iii) any other incremental
expenses identified from time to time that should be properly allocated to one
class so long as any changes in expense allocations are reviewed and approved
by a vote of the Board of Trustees of the Trust, including a majority of the
independent Trustees; (b) the fact that a class shall vote separately on any
matter submitted to shareholders that pertains to (i) the Shareholder
Administrative Services Plan or 12b-1 Plan adopted for that class and (ii) any
class expense borne by that class; (c) different exchange privileges and
conversion features; (d) the designation of each class; and (e) any different
shareholder services relating to a class.
C. DISTRIBUTION AND SERVICING ARRANGEMENTS
Class A shares: Class A shares shall be available for purchase by the
public through financial institutions such as banks, brokers and dealers.
Class A shares of each Fund, other than the Money Market Funds, shall be
subject to a front-end sales charge which initially shall not exceed 5.0% of
the offering price of Class A shares of each Equity and Managed Assets Fund
(3.0% with respect to the Equity Index Fund) and 4.50% of the offering price
of Class A shares of each Bond Fund (3.0% with respect to the Short Bond,
Intermediate Bond, Income and Intermediate Municipal Bond Funds). Class A
shares initially also will be subject to a fee payable pursuant to a
Shareholder Administrative Services Plan adopted for that class which will not
exceed .25% (on an annual basis) of the average daily net asset value of Class
A shares of each particular Fund beneficially owned by customers of
shareholder organizations providing such shareholder services.
Services provided under the Shareholder Administrative Services Plan
adopted for the class may include (i) aggregating and processing purchase and
redemption requests; (ii) providing a service that invests the assets of
Client accounts pursuant to specific or pre-authorized instructions; (iii)
processing dividend payments; (iv) providing information periodically to
Clients showing their positions; (v) arranging for bank wires; (vi) responding
to Client inquiries; (vii) providing subaccounting or the information
necessary for subaccounting; (viii) if required by law, forwarding shareholder
communications from the Trust (such as proxies, shareholder reports, annual
and semi-annual financial statements and dividend, distribution and tax
notices) to Clients; and (ix) providing such other similar services as may
reasonably be requested to the extent permitted under applicable statutes,
rules or regulations.
Class S shares: Class S shares shall be available for purchase by the
public through financial institutions such as banks, brokers and dealers.
Class S shares of each Fund will not be subject to a front-end sales charge.
Class S shares of the
2
<PAGE>
Institutional Money Market Funds also will initially be subject to a fee
payable pursuant to a 12b-1 Plan adopted for that class which will not exceed
.25% of the average daily net assets attributable to the outstanding Class S
Shares of a Fund.
Services provided under the 12b-1 Plan adopted for Class S of the
Institutional Money Market Funds may include (i) advertising, marketing and
distributing such shares and/or (ii) the provision of shareholder and
administrative services for the beneficial owners of such shares.
Class B shares: Class B shares shall be available for purchase by the
public through financial institutions such as banks, brokers and dealers.
Class B shares of each Fund initially will not be subject to a front-end sales
charge. Class B shares will initially be subject to a contingent deferred
sales charge ("CDSC") which will be payable on certain share redemptions at a
rate which initially will not exceed 5% (3% with respect to the Short Bond,
Intermediate Bond, Income and Intermediate Municipal Bond Funds) of the lower
of (1) the net asset value of the redeemed shares or (2) the original purchase
price of the redeemed shares. Class B shares also will initially be subject to
a fee payable pursuant to a 12b-1 Plan adopted for that class which initially
will not exceed .75% (on an annual basis) of the daily net asset value of the
outstanding Class B shares.
Services provided under the 12b-1 Plan adopted for the class may
include (i) soliciting orders for the sale of shares; (ii) preparing or
reviewing, providing advice with respect to, and filing with the federal and
state agencies or other organizations as required by federal, state, and other
applicable laws and regulations, all sales literature (advertisements,
brochures and shareholder communications); and (iii) providing such other
similar services as may reasonably be requested.
Class B shares shall also be subject to a fee payable pursuant to a
Shareholder Administrative Services Plan adopted for that class which shall
not initially exceed .25% (on an annual basis) of the average daily net asset
value of Class B shares of each particular Fund beneficially owned by
customers of shareholder organizations providing such shareholder services.
Services provided under the Shareholder Administrative Services Plan
adopted for the class may include (i) aggregating and processing purchase and
redemption requests; (ii) providing a service that invests the assets of
Client accounts pursuant to specific or pre-authorized instructions; (iii)
processing dividend payments; (iv) providing information periodically to
Clients showing their positions; (v) arranging for bank wires; (vi) responding
to Client inquiries; (vii) providing subaccounting or the information
necessary for subaccounting;
3
<PAGE>
(viii) if required by law, forwarding shareholder communications from the
Trust (such as proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to Clients; and (ix)
providing such other similar services as may reasonably be requested to the
extent permitted under applicable statutes, rules or regulations.
Class I shares: Class I shares shall be available to First Chicago NBD
Corporation and its affiliated and correspondent banks acting on behalf of
their respective customers ("Fiduciary Accounts"), to qualified plans with
plan assets of at least $100 million invested in shares of the Funds of the
Trust set forth on Schedule A or other investment companies or accounts
advised by the Trust's investment adviser, or to shareholders of the Money
Market and Institutional Money Market Funds set forth on Schedule A with
accounts of at least $1 million.
Class I shares of each Fund initially shall not be subject to a
front-end sales charge or a CDSC. Class I shares initially shall not be
subject to a fee pursuant to a Shareholder Administrative Services Plan or
12b-1 Plan.
D. SHAREHOLDER SERVICES
1. Conversion Features: Class I shares held by investors
-------------------
who after purchasing Class I shares withdraw from their
Fiduciary Accounts shall automatically convert to Class
A/S shares, based on the relative net asset value of
each such Class without the imposition of any sales
charge, fee or other charge upon the conversion of
shares. Such shares may be subject to an annual
service fee charged to Class A/S shares.
Class B shares shall automatically convert to Class A shares
approximately eight years (seven years in the case of the Short
Bond Fund) after the date of purchase based on the relative net
asset value of each such Class without the imposition of any
sales charge, fee or other charge upon the conversion of
shares. Such shares shall no longer be subject to fees under
the 12b-1 Plan. At that time, Class B shares that have been
acquired through the investment of dividends and distributions
("Dividend Shares") shall be converted in the proportion that a
shareholder's Class B shares (other than Dividend Shares)
converting to Class A shares bears to the total Class B shares
then held by the shareholder which were not acquired through
the reinvestment of dividends and distributions.
2. Exchange Privileges: Shares of Class A, Class S, Class
B and Class I may be exchangeable for shares of the
same Class of another Fund of the Trust or of other
4
<PAGE>
investment companies advised by First Chicago NBD Corporation
or its affiliates, based on relative net asset values.
Shares of Funds purchased with or without a sales load may be
exchanged without a sales load for shares of other Funds sold
without a sales load.
Shares of Funds purchased without a sales load may be exchanged
for shares of other Funds sold with a sales load, and the
applicable sales load will be deducted.
Shares of Funds purchased with a sales load, shares of Funds
acquired by a previous exchange from shares purchased with a
sales load and additional shares acquired through reinvestment
of dividends or distributions of any such Funds (collectively
referred to herein as "Purchased Shares") may be exchanged for
shares of other Funds sold with a sales load (referred to
herein as "Offered Shares"), provided that, if the sales load
applicable to the Offered Shares exceeds the maximum sales load
that could have been imposed in connection with the Purchased
Shares (at the time the Purchased Shares were acquired),
without giving effect to any reduced loads, the difference will
be deducted.
Shares of Funds subject to a CDSC that are exchanged for shares
of another Fund will be subject to the higher applicable CDSC
of the two Funds, and for purposes of calculating CDSC rates
and conversion periods, if any, will be deemed to have been
held since the date the shares being exchanged were initially
purchased.
Class B shares of qualified plans under Section 401(k) of the
Internal Revenue Code with at least $1 million or 200 eligible
lives may be exchanged for Class A shares.
3. Automatic Investment Program: Investors may purchase
shares of each Fund with an automatic investment plan
whereby a shareholder may purchase shares at regular
intervals.
E. Methodology for Allocating Expenses Among Classes:
Expenses will be allocated among each class in accordance with
Rule 18f-3.
Dated: March 18, 1996 (as amended May 21, 1996)
5
<PAGE>
SCHEDULE A
The Woodward Funds
18f-3 Plan
The Trust is authorized to offer the following Classes of shares in the
portfolios:
Classes A, B and I in the following Non-Money Market Funds:
Equity Funds
Growth Fund
International Equity Fund
Equity Index Fund
Growth and Value Fund
Intrinsic Value Fund
Mid-Cap Opportunity Fund
Equity Income Fund
Small-Cap Opportunity Fund
Managed Assets Funds
Managed Assets Balanced Fund
Managed Assets Conservative Fund
Managed Assets Growth Fund
Bond Funds
Bond Fund
Short Bond Fund
Intermediate Bond Fund
Municipal Bond Fund
Michigan Municipal Bond Fund
Intermediate Municipal Bond Fund
Income Fund
International Bond Fund
Classes A and I in the following Money Market Funds:
Money Market Fund
Treasury Money Market Fund
Municipal Money Market Fund
Michigan Municipal Money Market Fund
Classes S and I in the following Institutional Money Market Funds:
Cash Management Fund
U.S. Government Securities Cash Management Fund
Treasury Prime Cash Management Fund
6
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000814067
<NAME> WOODWARD FUNDS d/b/a PRAIRIE INSTITUTIONAL FUNDS
<SERIES>
<NAME> CASH MANAGEMENT FUND INSTITUTIONAL SHARES
<NUMBER> 011
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 511,669,669
<INVESTMENTS-AT-VALUE> 511,669,669
<RECEIVABLES> 1,185,264
<ASSETS-OTHER> 272,338
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 513,127,271
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,250,415
<TOTAL-LIABILITIES> 2,250,415
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 511,078,723
<SHARES-COMMON-STOCK> 545,919,032
<SHARES-COMMON-PRIOR> 330,783,145
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 201,867
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 510,876,856
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,568,427
<OTHER-INCOME> 0
<EXPENSES-NET> 824,457
<NET-INVESTMENT-INCOME> 11,743,970
<REALIZED-GAINS-CURRENT> (4,009)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 11,739,961
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,743,970
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,257,882,248
<NUMBER-OF-SHARES-REDEEMED> 1,078,713,778
<SHARES-REINVESTED> 1,127,108
<NET-CHANGE-IN-ASSETS> 180,295,578
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 197,858
<GROSS-ADVISORY-FEES> 428,914
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,001,977
<AVERAGE-NET-ASSETS> 425,417,781
<PER-SHARE-NAV-BEGIN> 0.999
<PER-SHARE-NII> 0.028
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.028
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000814067
<NAME> WOODWARD FUNDS d/b/a PRAIRIE INSTITUTIONAL FUNDS
<SERIES>
<NAME> CASH MANAGEMENT FUND SERVICE SHARES
<NUMBER> 012
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
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<NAME> WOODWARD FUNDS d/b/a PRAIRIE INSTITUTIONAL FUNDS
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<NAME> TREASURY PRIME CASH MANAGEMENT FUND INSTITUTIONAL SHARES
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<NAME> WOODWARD FUNDS d/b/a PRAIRIE INSTITUTIONAL FUNDS
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<NAME> TREASURY PRIME CASH MANAGEMENT FUND SERVICE SHARES
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<NAME> WOODWARD FUNDS d/b/a PRAIRIE INSTITUTIONAL FUNDS
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<NAME> U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND INSTITUTIONAL SHARES
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<NAME> WOODWARD FUNDS d/b/a PRAIRIE INSTITUTIONAL FUNDS
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<NAME> U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND SERVICE SHARES
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