THE WOODWARD FUNDS
c/o NBD Bank
900 Tower Drive
P.O. Box 7058
Troy, Michigan 48007-7058
June 12, 1996
Dear Woodward Government Fund Shareholder:
The Board of Trustees of the Woodward Government Fund ("Government
Fund") has called a Special Meeting of Shareholders on July 31, 1996
concerning matters that are important to you.
As you may be aware, First Chicago Corporation recently completed a
merger with NBD Bancorp, Inc. ("NBD") on December 1, 1995. As a result, the
new organization has since taken steps to consolidate the mutual fund
investment advisory activities of both bank holding companies.
As the next step in the consolidation process, you are asked to
consider and approve a proposed Plan of Reorganization (the "Reorganization
Plan"). The Reorganization Plan provides that the Woodward Government Fund
transfer substantially all its assets and liabilities to the Woodward Treasury
Money Market Fund ("Treasury Fund"). The transaction is expected to occur on
or after August 12, 1996.
What do these changes mean to you?
o The value of the shares you hold at the time of the Reorganization
will not change as a result of the transaction, and will be the same
immediately after the Reorganization.
o The Reorganization will be tax-free and will not involve any sales
loads, commissions or transaction charges.
o The investment objective and policies of the Treasury Fund are
substantially similar to your Government Fund's current investment
objective and policies, except as stated in the enclosures.
o Shareholders will benefit from improved shareholder servicing and the
elimination of redundant administration of the Funds.
<PAGE>
AS A RESULT, THE WOODWARD FUNDS BOARD OF TRUSTEES HAS VOTED IN FAVOR
OF THE PROPOSED REORGANIZATION PLAN AND STRONGLY ENCOURAGES THAT YOU VOTE
"FOR" THE PROPOSAL AS WELL.
The Reorganization Plan and other related matters are discussed in
detail in the enclosed materials, which you should read carefully.
Voting Instructions
Enclosed is a proxy card for the meeting. We urge you to read the
enclosed proxy statement and to vote by completing, signing and returning the
enclosed proxy ballot form in the prepaid envelope. Please vote and return
EACH proxy card you receive. EVERY VOTE COUNTS.
First Chicago NBD Corporation is pleased with the opportunities the
Reorganization will provide to better serve its mutual fund investors. If you
have any questions, your account manager will be happy to assist you. Thank
you for your cooperation.
Sincerely,
/s/ Earl I. Heenan, Jr.
-----------------------
Earl I. Heenan, Jr.
President
The Woodward Funds
<PAGE>
THE WOODWARD FUNDS
c/o NBD Bank
900 Tower Drive
P.O. Box 7058
Troy, MI 48007-7058
(800) 626-7091
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF THE WOODWARD GOVERNMENT FUND
To be held on July 31, 1996
To the Shareholders of the Woodward Government Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the
Shareholders of the WOODWARD GOVERNMENT FUND (the "Government Fund"), an
investment portfolio offered by The Woodward Funds (the "Trust" or
"Woodward"), will be held in the Family Dining Room of the Detroit Club, 712
Cass Avenue, Detroit, Michigan on July 31, 1996 at 10:30 a.m. (Eastern
Time) for the following purposes:
ITEM 1. To consider and act upon a proposal to approve a
Plan of Reorganization and the transactions
contemplated thereby, including the transfer of
substantially all of the assets and liabilities of
the Trust's Government Fund to the Trust's
Treasury Money Market Fund (the "Treasury Fund"),
in exchange for Class A or Class I shares, as
applicable, of the Treasury Fund, and a
liquidating distribution of such shares to
shareholders of the Government Fund according to
their respective interests.
ITEM 2. To transact such other business as may properly come
before the Special Meeting or any adjournment thereof.
YOUR TRUSTEES RECOMMEND THAT YOU VOTE IN FAVOR OF
ITEM 1.
The proposed reorganization and related matters are described
in the attached Combined Prospectus/Proxy Statement. Appendix A to the
Combined Prospectus/Proxy Statement is a copy of the Plan of Reorganization.
Shareholders of record as of the close of business on June 18,
1996 are entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY
THE BOARD OF TRUSTEES OF THE TRUST.
-i-
<PAGE>
THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING. PROXIES MAY BE
REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO THE TRUST A
WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING
THE SPECIAL MEETING AND VOTING IN PERSON.
--------------------------------
W. Bruce McConnel, III
Secretary
June 12, 1996
-ii-
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
Dated June 12, 1996
THE WOODWARD FUNDS
c/o NBD Bank
900 Tower Drive
P.O. Box 7058
Troy, Michigan 48007-7058
(800) 626-7091
This Combined Prospectus/Proxy Statement is furnished in connection
with the solicitation of proxies by the Board of Trustees of The Woodward
Funds (the "Trust" or "Woodward") in connection with a Special Meeting (the
"Meeting") of Shareholders ("Shareholders") of the Trust's Government Fund
(the "Government Fund") to be held on July 31, 1996, at 10:30 a.m. (Eastern
Time) in the Family Dining Room of the Detroit Club, 712 Cass Avenue,
Detroit, Michigan, at which Shareholders of the Government Fund will be
asked to consider and approve a proposed Plan of Reorganization dated
May 21, 1996 and the matters contemplated therein. A copy of the Plan of
Reorganization is attached as Appendix A.
The Trust is an open-end, management investment company currently
offering seventeen investment portfolios. The Government Fund and the Treasury
Money Market Fund (the "Treasury Fund") (together, the "Funds") are separate
investment portfolios of the Trust which have similar investment objectives
and policies. In addition, the purchase and redemption policies of the Funds
are the same and the service providers for the Funds are the same.
The Plan of Reorganization provides that substantially all the assets
and liabilities of the Government Fund will be transferred to the Treasury
Fund in exchange for Class A or Class I shares, as applicable, of the Treasury
Fund, and that the Government Fund will make a liquidating distribution of
such shares so that each Shareholder of the Government Fund will hold,
immediately after the effective time of the Reorganization, full and
fractional Class A or Class I shares of the Treasury Fund having the same
aggregate net asset value as the Shareholder had in the Government Fund
immediately before the transaction. This transaction is referred to herein
as the "Reorganization."
This Combined Prospectus/Proxy Statement sets forth the information
that a Shareholder of the Government Fund should know before voting on the
Plan of Reorganization and should be retained for future reference. The
Prospectus dated April 15, 1996 relating to the Funds, which describes their
operations, accompanies this Combined Prospectus/Proxy Statement. Additional
information is set forth in the Statement of Additional Information relating
to the Funds, also dated April 15, 1996. Each of these documents is on file
with the Securities and
<PAGE>
Exchange Commission (the "SEC"), and is available without charge upon oral or
written request by writing or calling the Trust at the address or telephone
number indicated above.
This Combined Prospectus/Proxy Statement constitutes the Proxy
Statement of the Government Fund for the meeting of its Shareholders, and the
Prospectus for the shares of the Treasury Fund that have been registered with
the SEC and are to be issued in connection with the Reorganization.
This Combined Prospectus/Proxy Statement is expected to be sent to
Shareholders of the Government Fund on or about June 24, 1996.
THE SECURITIES OF THE WOODWARD FUNDS 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 COMBINED PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE WOODWARD FUNDS.
SHARES OF THE WOODWARD FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, NBD BANK, FIRST NATIONAL BANK OF CHICAGO, OR ANY OF THEIR
AFFILIATES. SHARES OF THE WOODWARD FUNDS ARE NOT FEDERALLY INSURED BY,
GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE WOODWARD FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. THERE
IS NO ASSURANCE THAT THE WOODWARD GOVERNMENT FUND OR TREASURY MONEY MARKET
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
-2-
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY ................................................................. 4
Reasons for the Reorganization................................... 4
Federal Income Tax Consequences.................................. 4
Overview of the Funds............................................ 4
Certain Arrangements with Service Providers...................... 4
Comparative Fee Table............................................ 6
Expense Ratios................................................... 8
Expense Caps..................................................... 8
Purchase and Redemption Information, Dividends,
Exchange Privileges, Distribution and Pricing............. 8
Voting Information............................................... 8
RISK FACTORS............................................................. 9
INFORMATION RELATING TO THE PROPOSED REORGANIZATION...................... 9
Description of the Plan of Reorganization........................ 9
Board Consideration............................................. 10
Capitalization................................................... 10
Federal Income Tax Consequences.................................. 11
COMPARISON OF THE FUNDS.................................................. 11
Investment Policies and Risk Factors. ........................... 11
Investment Limitations........................................... 12
Other Information................................................ 13
INFORMATION RELATING TO VOTING MATTERS................................... 13
General Information.............................................. 13
Shareholder and Board Approval................................... 13
Appraisal Rights................................................. 17
Quorum .......................................................... 17
Annual Meetings.................................................. 17
ADDITIONAL INFORMATION ABOUT THE TRUST................................... 18
LITIGATION............................................................... 18
FINANCIAL STATEMENTS..................................................... 18
OTHER BUSINESS........................................................... 18
SHAREHOLDER INQUIRIES.................................................... 18
APPENDIX A - Plan of Reorganization......................................A-1
<PAGE>
SUMMARY
The following is a summary of certain information relating to the
Reorganization, and the parties thereto, and is qualified by reference to the
more complete information contained elsewhere in this Combined
Prospectus/Proxy Statement, the Prospectus and Statement of Additional
Information of the Funds, and the Plan of Reorganization attached to this
Combined Prospectus/Proxy Statement as Appendix A. The Trust's Annual Report
to Shareholders may be obtained free of charge by calling 1-800-688-3350 or
writing P.O. Box 7058, Troy, Michigan 48007-7058.
Reasons for the Reorganization. NBD Bank ("NBD") currently provides
investment advisory and certain other services to the Trust, including both
the Government and Treasury Funds. First Chicago Investment Management Company
("FCIMCO") currently provides investment advisory services to Prairie Funds,
Prairie Municipal Bond Fund, Inc., Prairie Intermediate Bond Fund and Prairie
Institutional Funds, each an open-end management investment company
(collectively, "Prairie"). The primary impetus behind the Reorganization is
the recently completed merger between NBD Bancorp, Inc., the parent of NBD
Bank ("NBD"), and First Chicago Corporation, the parent of FCIMCO. This
Reorganization is part of a Plan proposed by NBD and FCIMCO the principal
purpose of which is to combine the separate Prairie and Woodward mutual fund
families into a single, larger consolidated group by September 1, 1996
("Woodward/Prairie Combination"). NBD has recommended that the Government Fund
be reorganized as described in this Combined Prospectus/Proxy Statement. In
light of this recommendation, the Board of Trustees of the Trust considered
the reasons therefor and the proposed operations of the combined funds after
the Reorganization, and that the Reorganization will be tax-free and will not
dilute the interests of the Shareholders. Based upon its evaluation of the
relevant information presented to it, and in light of its fiduciary duties
under federal and state law, the Board of Trustees of the Trust, including its
members who are not "interested persons" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act"), has unanimously determined
that the proposed Reorganization is in the best interests of Shareholders and
has authorized the Plan of Reorganization and recommended approval of the
Reorganization by Shareholders. As part of the Woodward/Prairie Combination,
the shareholders of Prairie's U.S. Government Money Market Fund are separately
being asked to approve the reorganization of that Fund into the Treasury Fund,
as well.
Federal Income Tax Consequences. Drinker Biddle & Reath, independent
outside counsel to Woodward and to its Board of Trustees, will issue an
opinion (based on certain assumptions) as of the effective time of the
Reorganization that the transaction will not give rise to the recognition of
income, gain or loss for federal income tax purposes to the Government or
Treasury Fund or their respective Shareholders. See "Information Relating to
the Proposed Reorganization - Federal Income Tax Consequences."
-1-
<PAGE>
Overview of the Funds. The investment objectives of the Funds are
identical. The Government Fund's investment objective is to seek to provide a
high level of current income consistent with the preservation of capital and
liquidity. The Treasury Fund's investment objective also is to seek to provide
a high level of current income consistent with the preservation of capital and
liquidity. The Government Fund pursues its investment objective by investing
in obligations issued or guaranteed as to payment of principal and interest by
the U.S. Government, its agencies or instrumentalities ("U.S. Government
Obligations") and repurchase agreements relating to U.S. Government
Obligations. The Treasury Fund pursues its investment objective by investing
in U.S. Treasury bills, notes, and direct U.S. Treasury obligations having
remaining maturities of 13 months or less and repurchase agreements relating
to U.S. Treasury obligations. See "Comparison of Investment Policies and Risk
Factors" below and in the Prospectus, which is incorporated by reference
herein, for further information on the investment objectives and policies of
the Funds.
Certain Arrangements with Service Providers. NBD currently serves as
investment adviser to both Funds. Under the existing Advisory Agreement, NBD
is entitled to receive an advisory fee from each Fund, computed daily and
payable monthly, at an annual rate of: .45% of the first $1 billion of each
Fund's average daily net assets, plus .425% of the next $1 billion of such
net assets, plus .40% of such net assets in excess of $2 billion.
As investment adviser, NBD presently manages the investments of each
Fund, makes decisions with respect to and places orders for all purchases and
sales of the Fund's securities, and maintains certain records relating to such
purchases and sales.
In connection with the Woodward/Prairie Combination, subject to the
approval of its shareholders, the Trust expects to terminate its existing
Advisory Agreement with NBD and enter into an agreement with NBD and FCIMCO
under which they would jointly provide investment advisory services to
Woodward, including the Treasury Fund. NBD and FCIMCO have advised Woodward's
Board that investment management for The Woodward Funds will be provided by
NBD's investment management staff. For their services, NBD and FCIMCO would be
entitled to receive an advisory fee from each Fund, computed daily and payable
monthly, at the annual rate of .30% of the first $1.0 billion, .275% of the
next $1 billion, and .25% of the Fund's average daily net assets in excess of
$2 billion.
Under the current Advisory Agreement, NBD also provides each Fund with
various administrative services without additional compensation. In connection
with the Woodward/Prairie Combination, it is expected that Woodward will enter
into a new administration agreement with NBD, FCIMCO and BISYS Fund Services
-2-
<PAGE>
("BISYS"), under which these parties will jointly agree to provide
administrative services to Woodward as co-administrators, subject to the
overall authority of Woodward's Board in accordance with Massachusetts law.
BISYS is a wholly-owned subsidiary of The BISYS Group, Inc. and is affiliated
with Concord, the current sub-administrator of Prairie. This new
administration arrangement is expected to be in place at the time of the
Woodward/Prairie Combination. For their services, the Trust will pay to NBD
and FCIMCO, as agents for the three co-administrators, a fee from the Treasury
Fund, computed daily and paid monthly, at the annual rate of .15% of the
average daily net assets of the Treasury Fund. Thus, the amount of the
advisory and administration fees payable by the Treasury Fund following the
Woodward/Prairie Combination would equal the fee payable to NBD by the
Government Fund under the current Advisory Agreement for advisory and other
services.
NBD receives compensation as the Funds' Custodian and Transfer Agent
under separate agreements. As Custodian and as Transfer Agent, NBD (i)
maintains separate accounts in the name of each Fund, (ii) collects and makes
disbursements of money on behalf of each Fund, (iii) issues and redeems shares
of each Fund, (iv) collects and receives all income and other payments and
distributions on account of the portfolio securities of each Fund, (v)
addresses and mails all communications by Woodward to its shareholders,
including reports to shareholders, dividend and distribution notices and proxy
materials for any meeting of shareholders, (vi) maintains shareholder
accounts, (vii) makes periodic reports to the Board of Trustees concerning
Woodward's operations, and (viii) maintains on-line computer capability for
determining the status of shareholder accounts.
For its services as Custodian, NBD is entitled to receive $11.00 for
each clearing and settlement transaction and $12.00 for each accounting and
safekeeping service with respect to investments, in addition to activity
charges for master control and master settlement accounts.
For its services as Transfer Agent, NBD is currently entitled to
receive a minimum annual fee from each Fund of $11,000, $15 annually per
account from each Fund for the preparation of statements of account, and $1.00
for each confirmation of purchase and redemption transactions. Charges for
providing computer equipment and maintaining a computerized investment system
are expected to approximate $350 per month for each Fund.
In connection with the Woodward/Prairie Combination, the Trust expects
to terminate the current Transfer Agency Agreement and to enter into a new
transfer agency agreement with First Data Investor Services Group, Inc.
("First Data").
-3-
<PAGE>
The Trust currently has a Distribution Plan under which the Trust may
incur expenses primarily intended to result in the sale of shares issued by
the Trust in an amount not to exceed .35% per annum of the average daily net
assets of the Trust. Fees are payable by each Fund to First of Michigan
Corporation ("FoM") and Essex National Securities, Inc. ("Essex") for their
distribution services.
Woodward has adopted a Shareholder Servicing Plan under which
servicing agreements may be entered into with banks and financial
institutions, including NBD, FCIMCO, FNBC and their affiliates
("Shareholder Servicing Agents") requiring such institutions to provide
shareholder administrative support services for their customers who
beneficially own Woodward Fund Class A Shares. For these services, Woodward
may pay fees at an annual rate of up to 0.25% of the average daily net
asset value of the Class A Shares held by Shareholder Servicing Agents for
the benefit of their customers. In connection with the Woodward/Prairie
Combination, the Trust is expected to adopt a new Plan under which such
fees will be paid to BISYS. BISYS will enter into agreements with
Shareholder Servicing Agents. NBD, FCIMCO and their affiliates may act as
Shareholder Servicing Agents and receive fees under the new Plan. See
"Management -- Sponsors and Co-Distributors," "Service and Distribution
Plan" and "Shareholder Servicing Plan" in the Woodward Prospectuses
accompanying this Combined Prospectus/Proxy Statement, which are
incorporated herein by reference, for additional information on the
Co-Distributors, the Woodward 12b-1 Plan and the Shareholder Servicing
Plan.
In connection with the Woodward/Prairie Combination, it is expected
that the Distribution Agreement with FoM and Essex will be terminated, and the
current Woodward Distribution Plan and Shareholder Servicing Plan will be
cancelled. At such time, BISYS is expected to enter into a Distribution
Agreement to act as agent for the sale and distribution of shares of the
Trust. No fees would be payable by the Treasury Fund under this agreement.
See "Management--Investment Adviser, Custodian and Transfer Agent" in
the Funds' Prospectus accompanying this Combined Prospectus/Proxy Statement
for additional information.
-4-
<PAGE>
Comparative Fee Table. The table below shows (i) information regarding
the fees and expenses paid by each class of shares of the Government Fund and
the Treasury Fund, as well as the Prairie U.S. Government Money Market Fund
which is expected to reorganize into the Treasury Fund in connection with the
Woodward/Prairie Combination, as of their most recent fiscal years, restated
as of April 15, 1996 for the Funds and April 11, 1996 for the Prairie
U.S. Government Money Market Fund to reflect expenses the Funds and the
Prairie U.S. Government Money Market Fund expect to incur during their
current fiscal years and (ii) estimated fees and expenses on a pro forma
basis giving effect to the Reorganization and the merger of the Prairie
U.S. Government Money Market Fund into the Treasury Fund.
<TABLE>
<CAPTION>
=============================================================================================================================
Prairie U.S.
Government Woodward Government Woodward Treasury
Money Fund Money Market Fund Pro Forma Combined
Market+
- -----------------------------------------------------------------------------------------------------------------------------
Class A Class A Class I Class A Class I Class A Class I
Shares Shares Shares Shares Shares Shares Shares
- -----------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATION EXPENSES
(as a percentage of average
net assets)
<S> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .40% .45% .45% .45% .45% .30% .30%
12b-1 Fees N/A .007% .007% .024% .024% N/A N/A
Other Expenses
(after fee waivers and/or
expense reimbursements) .40%(1)(4) .293%(2)(5) .083% .276%(2)(5) .076% .43%(1) .18%(3)
Total Operating Expenses
(after fee waivers and/or
expense reimbursements) .80%(4) .75%(5) .54% .75%(5) .55% .73% .48%
<FN>
=============================================================================
- --------------------------
+ The Prairie U.S. Government Money Market Fund is expected to merge
into the Woodward Treasury Fund in connection with the
Woodward/Prairie Combination which is expected to take place at
approximately the same time as the Reorganization. The merger of the
Prairie U.S. Government Money Market Fund into the Woodward Treasury
Fund and the Reorganization of the Woodward Government and Treasury
Funds will occur only if the shareholders of the appropriate funds
approve each transaction.
(1) Includes administration fees of 0.15% and shareholder servicing fees
of 0.25%.
(2) Includes shareholder servicing fees of 0.25%.
(3) Includes administration fees of 0.15%.
(4) Absent voluntary waivers and expense reimbursements, which can be
terminated at any time, the other expenses and total operating
expenses for the Class A Shares of the Prairie U.S. Government Money
Market Fund would have been 0.67% and 1.07%, respectively.
-5-
<PAGE>
(5) Absent voluntary waivers and expense reimbursements, which can be
terminated at any time, the other expenses and total operating
expenses for the Class A Shares of the Government Fund would have been
.30% and .757%, respectively, and for the Treasury Fund, such expenses
would have been .312% and .786%, respectively.
</TABLE>
Example: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prairie U.S. Government
Money Market Fund
Class A Shares $8 $26 $44 $99
Woodward Government Fund
Class A Shares $8 $24 $42 $93
Class I Shares $6 $17 $30 $68
Woodward Treasury Money Market Fund
Class A Shares $8 $24 $42 $93
Class I Shares $6 $18 $31 $69
Pro Forma Combined
Class A Shares $7 $23 $41 $91
Class I Shares $5 $15 $27 $61
</TABLE>
-6-
<PAGE>
Expense Ratios. The following table sets forth the ratios of operating
expenses to average net assets of the Funds and the Prairie U.S. Government
Money Market Fund for the fiscal year ended December 31, 1995:
<TABLE>
<CAPTION>
Fiscal Year Ended December 31, 1995
========================================================================================================
Ratio of Operating Ratio of Operating
Expenses to Average Expenses to Average
Net Assets After Fee Net Assets Absent Fee
Waivers and Expense Waivers and Expense
Reimbursements Reimbursements
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Woodward Government Fund N/A 0.51%
Woodward Treasury Money N/A 0.53%
Market Fund
Prairie U.S. Government 0.78% 1.07%
Money Market Fund
</TABLE>
==============================================================================
Expense Caps. Although under no contractual obligation, NBD, FCIMCO
and BISYS have informed Woodward that they expect to waive fees and reimburse
expenses for the current fiscal year ending December 31, 1996 to the extent
the total operating expenses of each class of the Treasury Fund exceed the
following amounts: .75% for Class A Shares and .50% for Class I Shares.
Purchase and Redemption Information, Dividends, Exchange Privileges,
Distribution and Pricing. The purchase, redemption, exchange privileges and
distribution policies of the Government Fund and Treasury Fund are identical.
For further information, see "Purchase of Shares" and "Redemption of
Shares" in the Funds' Prospectus accompanying this Combined Prospectus/Proxy
Statement.
Voting Information. This Combined Prospectus/Proxy Statement is being
furnished in connection with the solicitation of proxies in connection with
the Special Meeting of Shareholders to be held in the Family Dining Room of
the Detroit Club, 712 Cass Avenue, Detroit, Michigan, on July 31, 1996
at 10:30 a.m. (Eastern Time) (such meeting and any adjournments thereof
hereinafter referred to as the "Meeting") for use at the Meeting. Only
shareholders of record of the Government Fund at the close of business on
June 18, 1996 will be entitled to notice of and to vote at the Meeting. Each
share or fraction thereof is entitled to one vote or fraction thereof. Shares
represented by a properly executed proxy will be voted in accordance with the
-7-
<PAGE>
instructions thereon, or if no specification is made, the persons named as
proxies will vote in favor of the proposal set forth in the Notice of Special
Meeting of Shareholders. Proxies may be revoked at any time before they are
exercised by written notice of revocation or a subsequently executed proxy or
by attending the Meeting and voting in person at the Meeting. For additional
information, including a description of the Shareholder vote required for
approval of the Plan of Reorganization and related transactions contemplated
thereby, see "Information Relating to Voting Matters."
RISK FACTORS
The following discussion highlights the principal risk
factors associated with an investment in the Government Fund and the Treasury
Fund and is qualified in its entirety by the more extensive discussion of
risk factors under "Comparison of the Funds' Investment Policies and Risk
Factors" below and in the Funds' Prospectus and Statement of Additional
Information which are incorporated herein by reference.
Because of the similarities of the investment objectives and policies
of the Funds, management believes that an investment in the Treasury Fund
involves investment risks that are substantially the same as those of the
Government Fund. These investment risks, in general, are those typically
associated with investing in a portfolio of U.S. Treasury bills, notes and
direct U.S. Treasury obligations having remaining maturities of 13 months or
less; U.S. Government obligations; and repurchase agreements relating to such
obligations. Investments by the Treasury Fund typically entail lower risk as
compared with the Government Fund and, accordingly, the Treasury Fund's
yield is expected to be lower than that of the Government Fund's.
Although both Funds seek to maintain a stable net asset value of $1.00
per share, there is no assurance they will be able to do so. There is no
assurance that a Fund will achieve its investment objective.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
The terms and conditions under which the Reorganization may be
consummated are set forth in the Plan of Reorganization. Significant
provisions of this Plan of Reorganization are summarized below; however, this
summary is qualified in its entirety by reference to the Plan of
Reorganization, a copy of which is attached as Appendix A to this Combined
Prospectus/Proxy Statement.
Description of the Plan of Reorganization. The Plan of Reorganization
provides that at the Effective Time of the Reorganization, substantially all
of the assets and liabilities of the Government Fund will be transferred to
the Treasury Fund, so that at and after the Effective Time of the
Reorganization, the assets and liabilities of the Government Fund will become
and
-8-
<PAGE>
be the assets and liabilities of the Treasury Fund. In exchange for such
transfer, the Trust will issue to the Government Fund that number of full and
fractional Class A and Class I Shares of the Treasury Fund that is equal to
the number of full and fractional Class A and Class I Shares of the Government
Fund then outstanding, respectively. The Government Fund will make a
liquidating distribution of such Class A and Class I Shares to its
shareholders. At and after the Effective Time of the Reorganization, all
debts, liabilities, obligations and duties of the Government Fund will attach
to the Treasury Fund and may thereafter be enforced against the Treasury Fund
to the same extent as if they had been incurred by it. If the difference
between the per share net asset values of the Government Fund and the Treasury
Fund equals or exceeds $.0025 at the Effective Time of the Reorganization, as
computed by using such market values in accordance with the policies and
procedures established by the Board of Trustees of the Trust, the Board shall
have the right to postpone the Effective Time of the Reorganization until such
time as the per share difference is less than $.0025.
To facilitate the foregoing, the Trust will establish open accounts in
the name of each Shareholder of the Government Fund representing the number of
Class A and Class I Shares of the Treasury Fund owned by the Shareholder as a
result of the Reorganization. The stock transfer books of the Trust for the
Government Fund will be permanently closed immediately after the close of
business on the business day preceding the Effective Time of the
Reorganization. Redemption requests received thereafter by the Trust with
respect to the Government Fund will be deemed to be redemption requests
for Class A and Class I shares of the Treasury Fund issued in the
Reorganization.
The Reorganization is subject to a number of conditions, including
approval of the Plan of Reorganization and the transactions contemplated
therein by the Shareholders of the Government Fund.
Each Shareholder of the Government Fund will have the right to receive
any unpaid dividends or other distributions that were declared before the
Effective Time of the Reorganization with respect to the shares representing
interests in the Government Fund held by the Shareholder immediately prior to
the Effective Time of the Reorganization. Assuming satisfaction of the
conditions in the Plan of Reorganization, the Effective Time of the
Reorganization will be on August 10, 1996, or such other date as is scheduled
by the Trust.
The Plan of Reorganization and the proposed Reorganization described
therein may be abandoned at any time for any reason prior to the Effective
Time of the Reorganization upon the vote of a majority of the Board of
Trustees of the Trust. The Plan of Reorganization provides further that at any
time prior to or (to
-9-
<PAGE>
the fullest extent permitted by law) after approval of the Plan of
Reorganization by the Shareholders of the Government Fund, the Trust may, upon
authorization by the Board of Trustees of the Trust, and with or without the
approval of the Shareholders, amend any of the provisions of the Plan of
Reorganization.
Board Consideration. The Board of Trustees of the Trust considered the
proposed Reorganization at a meeting held on February 20, 1996. The Board was
advised that because of its greater size, the investment and other operations
of the Treasury Fund were more efficient than those of the Government Fund,
and that management believed that the proposed Reorganization would benefit
the Government Fund and its shareholders. These benefits included: greater
portfolio trading efficiencies (such as quantity discounts), better securities
execution and reduced portfolio volatility resulting from shareholder purchase
and redemption activity.
For these reasons, and those described above under "Summary - Reasons
for the Reorganization," the Plan of Reorganization in the form attached
hereto as Appendix A was unanimously approved by the Board of Trustees at the
meeting held on February 20, 1996.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PLAN OF REORGANIZATION.
Capitalization. Because the Treasury Fund is proposed to be combined
with the Government Fund in the Reorganization and with the Prairie U.S.
Government Money Market Fund in connection with the Woodward/Prairie
Combination, the total capitalization of the Treasury Fund after these
transactions is expected to be greater than the current capitalization of
the Government Fund. The following table sets forth as of December 31, 1995
(i) the capitalization of the Prairie U.S. Government Money Market Fund;
(ii) the capitalization of the Treasury Fund; (iii) the capitalization of
the Government Money Market Fund; and (iv) the pro forma capitalization of
the Treasury Fund as adjusted to give effect to the proposed reorganizations
of the Government Fund, Treasury Fund and Prairie U.S. Government Money
Market Fund. There is, of course, no assurance that these transactions
will be consummated. Moreover, if consummated, the capitalization of the
Treasury Fund is likely to be different at the Effective Time of the
Reorganization as a result of daily share purchase and redemption activity
in the Funds. These pro forma financial statements reflect the scenario
whereby all three portfolios will reorganize. This proposed reorganization
is structured such that all three portfolios will combine or none are to
reorganize.
-10-
<PAGE>
<TABLE>
<CAPTION>
Prairie U.S. Woodward Woodward
Government Money Treasury Money Government Pro Forma
Market Fund Market Fund Fund Combined
---------------- -------------- ---------- ---------
<S> <C> <C> <C> <C>
Total Net Assets $57,264,060 $927,695,502 $474,376,855 $1,459,336,417
Class A Shares $57,264,060 N/A N/A $142,846,537
Class I Shares N/A N/A N/A $1,316,489,880
Single Class Shares N/A $927,695,502 $474,376,855 N/A
Shares Outstanding 57,280,045 927,695,502 474,376,855 1,459,352,402
Class A Shares 57,280,045 N/A N/A 142,862,522
Class I Shares N/A N/A N/A 1,316,489,880
Single Class Shares N/A 927,695,502 474,376,855 N/A
Net Asset Value
Per Share
Class A Shares $1.00 N/A N/A $1.00
Class I Shares N/A N/A N/A $1.00
Single Class Shares N/A $1.00 $1.00 N/A
</TABLE>
Federal Income Tax Consequences. Consummation of the Reorganization is
subject to the condition that the Trust receive an opinion from Drinker Biddle
& Reath, independent outside counsel to the Trust and to its Board of
Trustees, to the effect that for federal income tax purposes: (i) the transfer
of all of the assets and liabilities of the Government Fund (except for a cash
reserve in an amount necessary for the discharge of all known and reasonably
anticipated liabilities of the Government Fund in exchange for shares of the
Treasury Fund and liquidating distributions to shareholders of the Government
Fund so received, as described in the Plan of Reorganization, will constitute
a reorganization within the meaning of Section 368(a)(1)(C) or Section
368(a)(1)(D) of the Internal Revenue Code of 1986, as amended, and with
respect to the Reorganization, the Government Fund will be considered "a party
to a reorganization" within the meaning of Section 368(b) of the Code; (ii) no
gain or loss will be recognized by the Government Fund as a result of such
transactions; (iii) no gain or loss will be recognized by the Treasury Fund as
a result of such transactions; (iv) no gain or loss will be recognized by the
shareholders of the Government Fund on the distribution to them by the Trust
of shares of any Class of the Treasury Fund in exchange for their shares of
any class of the Government Fund; (v) the aggregate basis of the Treasury Fund
shares received by a shareholder of the Government Fund will be the same as
the aggregate basis of the shareholder's Government Fund shares immediately
prior to the Reorganization; (vi) the basis of the Treasury Fund in the assets
of the Government Fund received pursuant to the Reorganization will be the
same as the basis of the assets in the hands of the Government Fund
immediately before the Reorganization; (vii) a shareholder's holding period
for the Treasury Fund shares will be determined by including the period for
which the shareholder held the Government Fund shares exchanged therefor,
provided that the shareholder held such shares as a capital asset; and (viii)
the Treasury Fund's holding period with respect to the assets received in the
Reorganization will include the period for which such assets were held by the
Government Fund.
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<PAGE>
The Trust has not sought a tax ruling from the Internal Revenue
Service ("IRS"). The discussion of the federal tax consequences in the
preceding paragraph is not binding on the IRS and does not preclude the IRS
from adopting a contrary position. Shareholders should consult their own
advisors concerning the potential tax consequences to them, including state
and local income tax consequences.
COMPARISON OF THE FUNDS
Investment Policies and Risk Factors. Both of the Funds are classified
as "diversified" portfolios under the 1940 Act. The investment objective and
policies of the Government Fund are substantially the same as those of the
Treasury Fund. The following discussion summarizes some of the investment
policies and risk factors of the Funds and is qualified in its entirety by the
discussion elsewhere herein, and in the Prospectus and Statement of Additional
Information of the Funds incorporated herein by reference.
Both of these Funds are money market funds that seek to maintain a net
asset value of $1.00 per share, although there is no assurance either will be
able to do so.
The Government Fund seeks to achieve its investment objective by
investing only in U.S. Government Obligations and related repurchase
agreements, and the Treasury Fund invests only in U.S. Treasury bills, notes
and direct U.S. Treasury obligations having remaining maturities of 13 months
or less and related repurchase agreements. Investments by the Treasury Fund
typically entail lower risk as compared with the Government Fund and,
accordingly, the Treasury Fund's yield is expected to be lower than that of
the Government Fund.
Each Fund is managed so that the average maturity of all instruments
in the Fund (on a dollar-weighted basis) will not exceed 90 days. In no event
will the Funds purchase any securities which are deemed to mature more than 13
months from the date of purchase (except for certain variable and floating
rate instruments and securities underlying repurchase agreements and
collateral underlying loans of portfolio securities).
Both Funds may agree to purchase portfolio securities which they may
otherwise purchase from financial institutions subject to the seller's
agreement to repurchase them at a mutually agreed-upon date and price
("repurchase agreements"). Neither Fund will enter into repurchase agreements
with NBD, FCIMCO, FoM, Essex, BISYS or any of their affiliates. Although the
securities subject to repurchase agreements may bear maturities exceeding 13
-12-
<PAGE>
months provided the repurchase agreement itself matures in one year or less,
the Funds generally intend to enter into repurchase agreements which terminate
within seven days after notice by the Funds.
The Funds may also borrow funds for temporary purposes by entering
into reverse repurchase agreements. Pursuant to such agreements the Funds will
sell portfolio securities to financial institutions such as banks and
broker-dealers and agree to repurchase them at a particular date and price.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by a Fund may decline below the price of the securities it is
obligated to repurchase.
To increase income or offset expenses, both Funds may lend portfolio
securities to financial institutions such as banks and broker-dealers in
accordance with their investment limitations. Agreements would require that the
loans be continuously secured by collateral equal at all times in value to at
least the market value of the securities loaned plus accrued interest.
The Funds may purchase portfolio securities on a "when-issued" basis
and may purchase or sell such securities on a "forward commitment" basis. They
do not intend to purchase when-issued securities for speculative purposes but
only for the purposes of acquiring portfolio securities. Each Fund's when-
issued purchases and forward commitments are not expected to exceed 25% of the
value of its total assets absent unusual market conditions.
Investment Limitations. Both Funds are subject to a number of
investment limitations which are matters of fundamental policy and may not be
changed with respect to the particular Fund without the affirmative vote of
the holders of a majority of the Fund's outstanding shares. Investment
limitations that are not fundamental may be changed by the Trust's Board of
Trustees.
Neither Fund may borrow money, except from banks or through reverse
repurchase agreements, and except for temporary or emergency purposes and then
only in amounts not exceeding at any one time 20% of the value of its net
assets at the time of the borrowing. A Fund will not purchase securities while
its borrowings (including reverse repurchase agreements) in excess of 5% of
its net assets are outstanding. Borrowings will only be effected in conformity
with the requirements of the 1940 Act. In connection with the Woodward/Prairie
Combination, it is expected that the Treasury Fund will submit to its
shareholders for approval a proposal that would amend the Fund's limitation
regarding borrowing such that it could borrow money to the extent permitted
under the 1940 Act.
Neither will either Fund make loans, except (i) through the purchase
of debt obligations in accordance with its investment objective and policies,
(ii) through repurchase agreements and (iii) through the lending of investment
securities.
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<PAGE>
Each Fund currently has a fundamental policy limiting its investments
in illiquid securities to 10% of its total assets. In connection with the
Woodward/Prairie Combination, it is expected that the Treasury Fund will
propose to its shareholders that the Fund be permitted to change this
limitation to a non-fundamental policy.
In addition, as a matter of fundamental policy, neither Fund may
purchase securities on margin, make short sales of securities or maintain a
short position in any security. In connection with the Woodward/Prairie
Combination, the Treasury Fund intends to propose to its shareholders that
this limitation become a non-fundamental one. The Treasury Fund expects to
make similar proposals to its shareholders with respect to its limitations
regarding investments in other investment companies and for the purpose of
exercising management or control.
Other Information. The Trust is registered as an open-end management
investment company under the 1940 Act. Currently, the Trust has seventeen
separate investment portfolios that have commenced operations.
The Trust is organized as a Massachusetts business trust and, as such,
is subject to the provisions of its Declaration of Trust and By-Laws. Shares
of the Funds: (i) have a per share par value of $.10; (ii) are entitled to one
vote for each full share held and a proportionate fractional vote for each
fractional share held; (iii) will vote in the aggregate and not by class
except as otherwise expressly required by law or the Trust's governing
instruments or when class voting is permitted by the Board of Trustees; and
(iv) are entitled to participate equally (except for payments to shareholder
organizations that are borne by each Fund's Class A and Class I shares) in the
dividends and distributions that are declared with respect to each Fund and in
the net distributable assets of each Fund on liquidation. In addition, shares
of the Funds have no preemptive rights and only such conversion and exchange
rights as the Board of Trustees may grant at its discretion. When issued for
payment as described in their Prospectus, shares of the Funds are fully paid
and non-assessable by the Trust except as required under Massachusetts law.
The Trust is not required under Massachusetts law to hold annual shareholder
meetings and intends to do so only if required by the 1940 Act. Shareholders
have the right to remove trustees. To the extent required by law, the Trust
will assist in shareholder communications in such matters.
The foregoing is only a summary of certain material attributes of the
Funds and their shares. Shareholders may obtain copies of the Trust's
Declaration of Trust and By-Laws from the Trust upon written request at its
principal office.
INFORMATION RELATING TO VOTING MATTERS
General Information. This Combined Prospectus/Proxy Statement is being
furnished in connection with the solicitation of proxies by the Board of
Trustees of the Trust in connection with the Meeting. It is expected that the
solicitation of proxies will be primarily by mail. The Trust's officers may
also solicit proxies by telephone, telegraph, facsimile or personal interview.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by submitting to the Trust a written notice of revocation or a
subsequently executed proxy or by attending the Meeting and electing to vote
in person. In addition, the Trust may retain the services of one or more
outside organizations to aid in the solicitation of
-14-
<PAGE>
proxies. Such organizations normally charge a fee plus out-of-pocket charges.
Only shareholders of record at the close of business on June 18, 1996
will be entitled to vote at the Meeting. On that date, there were outstanding
and entitled to be voted 564,772,441 shares of the Government Fund. Each
share or fraction thereof is entitled to one vote or fraction thereof.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting. For information on
adjournment of the Meeting, see "Quorum" below.
Shareholder and Board Approval. The Plan of Reorganization and the
transactions contemplated thereby are being submitted for approval at the
Meeting by the holders of two-thirds of the outstanding shares of the
Government Fund in accordance with the provisions of the Trust's Declaration
of Trust and By-Laws and the requirements of the 1940 Act.
In tallying shareholder votes, abstentions and broker non-votes
(i.e., proxies sent in by brokers and other nominees that cannot be voted on a
proposal because instructions have not been received from the beneficial
owners) will be counted for purposes of determining whether or not a quorum is
present for purposes of convening the Meeting. As to the Reorganization
proposal, abstentions and broker non-votes will be considered to be a vote
against the Reorganization proposal.
The approval of the shareholders of the Treasury Fund is not being
solicited because their approval or consent is not legally required for the
Reorganization to be consummated.
At June 18, 1996, the name, address, number of shares and percentage
of share ownership of the persons who owned beneficially or of record
more than 5% of the outstanding Class A and Class I shares of the Government
and Treasury Funds is listed below.
<TABLE>
<CAPTION>
Number of Percent of
Name and Address Fund Shares Ownership
---------------- ---- ---------- ----------
<S> <C> <C> <C>
SEC Lending Collateral Government Fund--Class I 39,270,000.00 7.68%
JP Morgan Trust Administration
611 Woodward Avenue
Detroit, MI 48232
NISA Investment Advisors LLC 62,884,960.00 12.30%
330 E. Kilbourn Suite 780
Milwaukee, WI 53202
Michigan Catastrophic Claims Assoc. 40,583,700.00 7.94%
32410 Five Mile Road
Livonia, MI 48154
Wayne Community Living Services Government Fund--Class A 4,425,902.67 8.28%
Metro Place Center
35425 Michigan Avenue
Wayne, MI 48184-1687
Confederation Life-General Treasury Fund--Class I 817,209,897.00 54.79%
260 Interstate North
Atlanta, Georgia 30339
Walter International Congo Inc. Treasury Fund--Class A 5,030,823.92 36.32%
One Jackson Square
Jackson, MI 49201
</TABLE>
At April 11, 1996, the name, address and percentage of share ownership
of the persons who owned beneficially or of record more than 5% of the
outstanding Class A and Class I shares of each other investment portfolio of
the Trust is listed below.
<TABLE>
<CAPTION>
Percent of
Name and Address Fund Ownership
---------------- ---- -----------
<S> <C> <C>
BHC Securities Money Market Fund--Class A 18.30%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
-15-
<PAGE>
<CAPTION>
Percent of
Name and Address Fund Ownership
---------------- ---- -----------
<S> <C> <C>
BHC Securities Tax-Exempt Money Market Fund -- 18.09%
One Commerce Square Class A
2005 Market Street
Philadelphia, PA 19103
Michigan School Asbestos Michigan Tax-Exempt Money Market 13.90%
Trust Fund -- Class I
Humphrey, Farrington,
McClain PC
c/o Scott Manuel
221 W. Lexington
Suite 400
P. O. Box 900
Independence, MS 64051
NBD Bancorp Inc. Bond Fund -- Class I 5.21%
Employees' Savings and
Investment Plan
Trust Administration
611 Woodward Avenue
Detroit, MI 48232
Henry Ford Investment 19.00%
Management-Account
600 Fisher Building
Detroit, MI 48202
BHC Securities Intermediate Bond Fund -- 12.11%
One Commerce Square Class A
2005 Market Street
Philadelphia, PA 19103
BHC Securities Short Bond Fund -- Class A 31.03%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Benjamin J. Soleau 6.44%
543 Adams
Plymouth, MI 48170
Richard A. Poel 7.38%
10 Lakeview Drive
Beale AFB, CA 95903
Richard L. Foersterling 25.95%
1256 Penniman
Plymouth, MI 48170
Michael G. Hall 5.10%
Family Trust
1006 Cumber Road
Ubly, MI 48475
The Wellness Plan Short Bond Fund -- Class I 24.82%
6500 John C. Lodge
Detroit, MI 48202
Kresge Foundation 24.50%
3215 W. Big Beaver
P. O. Box 3151
Troy, MI 48007-3151
BHC Securities Municipal Bond Fund -- Class A 6.32%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Charles J. Lefler Municipal Bond Fund -- Class I 8.81%
Revocable Trust
39740 Walker Court
Northville, MI 48167
Consumer Power 22.57%
212 W. Michigan Avenue
Jackson, MI 49201
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<PAGE>
<CAPTION>
Percent of
Name and Address Fund Ownership
---------------- ---- -----------
<S> <C> <C>
Carol Lefler Revocable Michigan Municipal Bond Fund -- 6.72%
Trust Class I
39740 Walker Court
Northville, MI 48167
BHC Securities Growth/Value Fund -- Class A 11.66%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities Opportunity Fund -- Class A 9.85%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities Intrinsic Value Fund -- Class A 11.90%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities Capital Growth Fund -- Class A 13.64%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
BHC Securities Balanced Fund -- Class A 5.26%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
NBD Bancorp, Inc. Balanced Fund -- Class I 22.81%
Employees' Savings and
Investment Plan
Trust Administration
611 Woodward Avenue
Detroit, MI 48232
Dickinson/Wright Target 12.39%
Benefit
500 Woodward Avenue
Suite 4000
Detroit, MI 48226
Albert Kahn and 5.52%
Associates
7430 Second Avenue
Detroit, MI 48202
BHC Securities Equity Index Fund -- Class A 38.63%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Whirlpool Equity Index Fund -- Class I 28.06%
2000 M-63 North
Benton Harbor, MI 49022
Oakland County 7.75%
Retirement System
1200 North Telegraph
Pontiac, MI 48053
Consumer Power Union 7.84%
Welfare Benefit
212 W. Michigan Avenue
Jackson, MI 49201
McGregor Fund 7.78%
333 West Fort Street
Detroit, MI 48226
-17-
<PAGE>
<CAPTION>
Percent of
Name and Address Fund Ownership
---------------- ---- -----------
<S> <C> <C>
BHC Securities International Equity Fund -- 21.56%
One Commerce Square Class A
2005 Market Street
Philadelphia, PA 19103
Employees Retirement International 34.88%
Plan of NBD Bank Equity Fund--Class A
Trust Administration
611 Woodward Avenue
Detroit, MI 48232
</TABLE>
At June 18, 1996, the directors and officers of the Trust as a
group owned beneficially less than 1% of the outstanding shares of the
Government Fund and the Treasury Fund.
Appraisal Rights. Shareholders are not entitled to any rights of share
appraisal under the Trust's Declaration of Trust, as applicable, or under the
laws of the Commonwealth of Massachusetts in connection with the proposed
Reorganization. Shareholders have, however, the right to redeem from the
Government Fund their shares at net asset value until the Effective Time of
the Reorganization, and thereafter shareholders may redeem from the Trust the
shares acquired by them in the Reorganization at net asset value.
Quorum. In the event that a quorum is not present at the Meeting, or
in the event that a quorum is present at the Meeting but sufficient votes to
approve the Plan of Reorganization are not received, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of a majority of those shares affected by the adjournment that are
represented at the Meeting in person or by proxy. If a quorum is present, the
persons named as proxies will vote those proxies which they are entitled to
vote FOR the Plan of Reorganization, in favor of such adjournments, and will
vote those proxies required to be voted AGAINST such proposals against any
adjournment. A quorum is constituted with respect to the Government Fund by
the presence in person or by proxy of the holders of two-thirds of the
outstanding shares of the Government Fund entitled to vote at the Meeting.
Annual Meetings. The Trust does not presently intend to hold annual
meetings of shareholders for the election of trustees and other business
unless and until such time as less than a majority of the trustees holding
office have been elected by the shareholders, at which time the trustees then
in office will call a shareholders' meeting for the election of trustees.
Shareholders have the right to call a meeting of shareholders to consider the
removal of one or more trustees or for other matters and such meetings will be
called when requested in writing by the
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<PAGE>
holders of record of 10% or more of the Trust's outstanding shares of
beneficial interest. To the extent required by law, the Trust will assist in
shareholder communications on such matters.
ADDITIONAL INFORMATION ABOUT THE TRUST
Information about the Treasury Fund and Government Fund is included in
the Prospectus accompanying this Combined Prospectus/Proxy Statement, which is
incorporated by reference herein. Additional information about the Funds is
included in their Statement of Additional Information dated April 15, 1996,
which has been filed with the SEC. Copies of the Funds' Prospectus and
Statement of Additional Information may be obtained without charge by writing
to Woodward, c/o NBD, P.O. Box 7058, Troy, Michigan 48007, or by calling the
Trust at 1-800-688-3350. The Trust is subject to the informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act, as
applicable, and, in accordance with such requirements, files proxy materials,
reports and other information with the SEC. These materials can be inspected
and copied at the Public Reference Facilities maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices
at 7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
may also be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549, at prescribed rates.
LITIGATION
This Trust is not involved in any litigation or proceeding that is
believed likely to have any material adverse financial effect upon the ability
of the adviser to provide investment advisory services or any material adverse
effect upon the Funds.
FINANCIAL STATEMENTS
The financial highlights and financial statements for the Treasury and
Government Funds for the fiscal year ended December 31, 1995 are contained in
the Trust's Annual Report to Shareholders and in the Trust's Prospectus and
Statement of Additional Information dated April 15, 1996, each of which is
incorporated by reference into this Combined Prospectus/Proxy Statement.
The audited financial statements of the Funds for the fiscal year
ended December 31, 1995 contained in the Trust's annual report and
incorporated by reference in this Combined Prospectus/Proxy Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto and are incorporated herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
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<PAGE>
OTHER BUSINESS
The Trust's Board of Trustees knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting, it
is the intention that proxies which do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Trust in writing at the
address on the cover page of this Combined Prospectus/Proxy Statement or by
telephoning 1-800-626-7091.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
-20-
<PAGE>
APPENDIX A
PLAN OF REORGANIZATION
This PLAN OF REORGANIZATION (the "Plan") is dated as of the 21st
day of May, 1996, and has been adopted by the Board of Trustees of The
Woodward Funds (the "Trust") to provide for the reorganization of its
Government Fund (the "Government Fund") into its Treasury Money Market Fund
(the "Treasury Fund").
A. Background
Each of the Government Fund and the Treasury Fund (individually, a
"Fund," collectively, the "Funds") is a separate, diversified taxable money
market portfolio of the Trust. The Trust is organized as a Massachusetts
business trust and is an open-end management investment company registered
with the Securities and Exchange Commission (the "SEC") under the Investment
Company Act of 1940 (the "1940 Act"). The Board of Trustees of the Trust has
determined that it is in the best interests of the Government Fund and its
shareholders for such Fund to be reorganized through the transfer of all of
its assets and liabilities to the Treasury Fund upon the terms set forth in
this Plan (the "Reorganization").
B. Reorganization
1. At the Effective Time of the Reorganization as defined below in
Section 4 of this Article B, all property of every description, and all
interests, rights, privileges and powers of the Government Fund, subject to
all liabilities of such Government Fund, whether accrued, absolute, contingent
or otherwise (such assets subject to such liabilities are herein referred to
as the "Assets") will be transferred and conveyed by such Government Fund to
the Treasury Fund and will be assumed by such Treasury Fund, such that at and
after the Effective Time of the Reorganization the Assets (including
liabilities) of the Government Fund will become and be the Assets (including
liabilities) of the Treasury Fund. In exchange for the transfer of the Assets
of the Government Fund, the Treasury Fund will contemporaneously issue to the
Government Fund full and fractional Class I and Class A shares of the Treasury
Fund. The number of Class I and Class A shares of the Treasury Fund so issued
will be equal in number to the number of full and fractional Class I and Class
A shares representing interests in the Government Fund outstanding immediately
prior to the Effective Time of the Reorganization, provided that at the
Effective Time of the Reorganization the price per Class I and Class A Share
of the Government Fund and the price per Class I and Class A share of the
Treasury Fund for purposes of sales and redemptions is $1.00 based on the
amortized cost valuation procedures that have been adopted by the Trust. If
the
A-1
<PAGE>
difference between the per share net asset values of the Government Fund and
the Treasury Fund equals or exceeds $.0025 at the Effective Time of the
Reorganization, as computed by using such market values in accordance with the
policies and procedures established by the Board of Trustees of Woodward, the
Board of Trustees of Woodward shall have the right to postpone the Effective
Time of the Reorganization until such time as the per share difference is less
than $.0025. At and after the Effective Time of the Reorganization, all debts,
liabilities, obligations and duties of the Government Fund will attach to the
Treasury Fund as aforesaid and may thenceforth be enforced against the
Treasury Fund to the same extent as if the same had been incurred by it.
2. At the Effective Time of the Reorganization, the Government Fund
will make a liquidating distribution to the holders of its Class I and Class A
shares of the Treasury Fund, such that the number of Class I and Class A
shares of the Treasury Fund that are distributed to a shareholder of the
Government Fund will, as indicated above in Section 1 of this Article B, be
equal in number to the number of full and fractional Class I and Class A
shares representing the interests in the Government Fund held by each such
shareholder immediately prior to the Effective Time of the Reorganization. In
addition, each such shareholder will have the right to receive any unpaid
dividends or other distributions that were declared before the Effective Time
of the Reorganization with respect to the Class I and Class A shares
representing interests in the Government Fund held by the shareholder
immediately prior to the Effective Time of the Reorganization. To facilitate
the foregoing issuance, the Trust will establish open accounts in the name of
each holder of Class I and Class A shares of the Government Fund representing
the number of Class I and Class A shares of the Treasury Fund owned by each
such shareholder as a result of the Reorganization.
3. The stock transfer books of the Trust with respect to the
Government Fund will be permanently closed as of the close of business on the
day immediately preceding the Effective Time of the Reorganization. Redemption
requests received thereafter by the Trust with respect to the Government Fund
will be deemed to be redemption requests for Class I and Class A shares of the
Treasury Fund issued in the Reorganization. If any Government Fund shares held
by a Government Fund shareholder are represented by a share certificate, the
certificate must be surrendered to the Trust's transfer agent for cancellation
before the Treasury Fund shares issued to the shareholder in the
Reorganization will be redeemed.
4. The Effective Time of the Reorganization for purposes of this
Agreement shall be the opening of business, Eastern time, on August 12, 1996,
or at such other time as may be determined by the Board of Trustees or an
authorized officer of the Trust.
A-2
<PAGE>
C. Action by Shareholders of Government Fund
Prior to the Effective Time of the Reorganization and as a condition
thereto, the Board of Trustees of the Trust will call, and the Trust will
hold, a meeting of the shareholders of the Government Fund to consider and
vote upon:
(1) Approval of this Plan and the transactions contemplated
hereby.
(2) Such other matters as may be determined by the Board of
Trustees of the Trust.
D. Conditions to the Reorganization
Consummation of this Plan and the Effective Time of the Reorganization
will be subject to:
(1) the approval of the matters referred to in Article C of this
Plan by the shareholders of the Government Fund in the manner
required by law and otherwise deemed necessary or advisable by
the Board of Trustees of the Trust; and
(2) the following additional conditions:
a. The Funds will have received an opinion of Drinker
Biddle & Reath to the effect that:
(i) the Class I and Class A shares of the Treasury Fund
issued pursuant to this Plan will, when issued in accordance
with the provisions hereof, be legally issued, fully paid and
non-assessable; and
(ii) for federal income tax purposes (a) the transfer of
all of the Government Fund's assets hereunder, and the
assumption by the Treasury Fund of the Government Fund's
liabilities, in exchange for shares of each class of such
Treasury Fund, and the distribution of said shares to the
shareholders of such Government Fund, as provided in this
Agreement, will constitute a reorganization within the meaning
of Section 368(a)(1)(C) or 368(a)(1)(D) of the Code and with
respect to the reorganization, the Government Fund and the
Treasury Fund will each be considered "a party to a
reorganization" within the meaning of Section 368(b) of the
Code; (b) in accordance with Sections 361(a), 361(c)(1) and
357(a) of the Code, no gain or loss will be recognized by such
Government Fund as a result of such transactions; (c) in
accordance with Section 1032(a) of the Code, no gain or loss
will be recognized by the Treasury Fund as a result of such
A-3
<PAGE>
transactions; (d) in accordance with Section 354(a)(1) of the
Code, no gain or loss will be recognized by the shareholders of
such Government Fund on the distribution to them by such
Government Fund of shares of any class of the Treasury Fund in
exchange for their shares of the corresponding class of the
Government Fund; (e) in accordance with Section 358(a)(1) of
the Code, the aggregate basis of Treasury Fund shares received
by each shareholder of any class of the Government Fund will be
the same as the aggregate basis of the shareholder's Government
Fund shares immediately prior to the transactions; (f) in
accordance with Section 362(b) of the Code, the basis of the
Government Fund Assets to the Treasury Fund will be the same as
the basis of such Government Fund Assets in the hands of the
Government Fund immediately prior to the exchange; (g) in
accordance with Section 1223(1) of the Code, a shareholder's
holding period for Treasury Fund shares will be determined by
including the period for which the shareholder held the shares
of the Government Fund exchanged therefor, provided that the
shareholder held such shares of the Government Fund as a
capital asset; and (h) in accordance with Section 1223(2) of
the Code, the holding period of the Treasury Fund with respect
to the Government Fund Assets will include the period for which
such Government Fund Assets were held by the Government Fund.
b. All necessary approvals, registrations and
exemptions required under federal and state laws
will have been obtained.
E. Miscellaneous
1. This Plan and the transactions contemplated hereby will
be governed and construed in accordance with the laws of the
Commonwealth of Massachusetts.
2. This Plan and the Reorganization contemplated hereby may be
abandoned at any time for any reason prior to the Effective Time of the
Reorganization upon the vote of a majority of the Board of Trustees of the
Trust.
3. At any time prior to or (to the fullest extent permitted by law)
after approval of this Plan by the shareholders of the Government Fund, the
Trust may, upon authorization by the Board of Trustees and with or without the
approval of shareholders of the Government Fund, amend any of the provisions
of this Plan.
A-4
<PAGE>
PART B
<PAGE>
THE WOODWARD FUNDS
c/o NBD BANK
900 Tower Drive
P.O. Box 7058
Troy, Michigan 48007-7058
STATEMENT OF ADDITIONAL INFORMATION
(1996 Special Meeting of
Shareholders of the Government Fund)
This Statement of Additional Information is not a prospectus but
should be read in conjunction with the Combined Proxy Statement/Prospectus
dated June 12, 1996 for the Special Meeting of Shareholders of the Government
Fund ("Combined Proxy Statement/Prospectus"), an investment portfolio offered
by The Woodward Funds (the "Trust"), to be held on July 31, 1996. Copies of
the Combined Proxy Statement/Prospectus may be obtained at no charge by
writing to the Trust, c/o NBD, P.O. Box 7058, Troy, Michigan 48007, or by
calling Woodward at 1-800-688-3350.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Proxy Statement/Prospectus.
Further information about Class A and Class I shares of the Treasury
Fund and the Class A and Class I shares of the Government Fund is contained in
and incorporated by reference to the Funds' Statement of Additional
Information dated April 15, 1996, a copy of which is included herewith.
The date of this Statement of Additional Information is June 12,
1996.
<PAGE>
TABLE OF CONTENTS
Page
----
General Information.................................................. B-1
-i-
<PAGE>
GENERAL INFORMATION
The shareholders of the Government Fund are being asked to approve or
disapprove a Plan of Reorganization dated as of May 21, 1996 by the Board
of Trustees by Trust and the transactions contemplated thereby. The Plan
contemplates the transfer of all of the assets and liabilities of the Trust's
Government Fund to the Trust's Treasury Fund in exchange for Class A and Class
I shares of the Treasury Fund, and a liquidating distribution of Class A and
Class I shares of the Treasury Fund to shareholders of the Government Fund, so
that each holder of Class A and Class I shares in the Government Fund at the
Effective Time of the Reorganization will receive a like number of full and
fractional Class A and Class I shares in the Treasury Fund.
A Special Meeting of Shareholders of the Government Fund to consider
the Plan of Reorganization and the related transactions will be held in the
Family Dining Room of the Detroit Club, 712 Cass Avenue, Detroit, Michigan,
on July 31, 1996 at 10:30 a.m. (Eastern Time). For further information
about the transaction, see the Combined Proxy Statement/Prospectus.
Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, or distributing securities such
as shares of the Trust, but do not prohibit such a bank holding company or its
affiliates or banks generally from acting as investment adviser, transfer
agent, or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of customers. NBD and financial
intermediaries which agree to provide shareholder support services that are
banks or bank affiliates are subject to such banking laws and regulations.
Should legislative, judicial, or administrative action prohibit or restrict
the activities of such companies in connection with their services to the
Trust, the Trust might be required to alter materially or discontinue its
arrangement with such companies and change its method of operation. It is
anticipated, however, that any resulting change in the Trust's method of
operation would not affect the Funds' net asset value per share or result in
financial loss to any shareholder.
B-1
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
These pro forma financial statements are presented in accordance with the
rules prescribed by the Securities and Exchange Commission (SEC) to reflect
for the benefit of the shareholders of the Woodward and Prairie Funds the
effect of the merger of these Funds had the merger taken place effective for
the year presented in the accompanying pro forma statements.
In accordance with SEC rules, Woodward and Prairie must present a pro forma
balance sheet as of December 31, 1995, and a pro forma statement of income for
the year ended December 31, 1995. The amounts presented for the
Woodward and Prairie Funds reflect the amounts shown on both Woodward's and
Prairie's financial reports filed with the SEC for the year reflected.
The pro forma adjustments are explained in more detail in the footnotes to the
pro forma statements. Under SEC regulations, pro forma adjustments may only be
reflected for the effects which are directly related to the merger, expected
to have a continuing impact and are factually supportable. As such, pro forma
adjustments have been reflected only for those expense items of the funds
which are subject to contractual terms. Increased interest income or other
expense efficiencies resulting from the merger have not been reflected as such
adjustments are not permitted under the current SEC regulations. The pro forma
statements may not be indicative of the results that would have occurred if
the merger had taken place during the year presented, nor may they be
reflective of the results that may be obtained in the future.
These pro forma financial statements only reflect the scenario whereby all
three portfolios will reorganize (combine) since this proposed reorganization
is structured such that all three portfolios must combine or none are to
reorganize.
PFS-1
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Treasury Money Market Fund
Pro Forma Combining Statement of Assets and Liabilites
December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Treasury Woodward U.S. Government Combined
Money Market Government Money Market Adjustments (Note 1)
------------ ------------ ---------------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At Amortized Cost $921,643,450 $469,643,055 $57,441,060 $ -- $ 1,448,727,565
============ ============ =========== ================ ================
At Value $921,643,450 $469,643,055 $57,441,060 $ -- $ 1,448,727,565
Cash 104 320 -- (424)(c) --
Receivable from adviser -- -- -- 57,957 (d) 57,957
Interest receivable 6,544,562 5,112,013 3,973 -- 11,660,548
Deferred organization expenses 6,063 -- 57,957 (57,957)(d) 6,063
Prepaids and other assets 295,486 41,286 60,156 -- 396,928
------------ ----------- ----------- ---------------- ----------------
TOTAL ASSETS 928,489,665 474,796,674 57,563,146 (424) 1,460,849,061
------------ ----------- ----------- ---------------- ----------------
LIABILITIES:
Accrued investment advisory fee 340,328 195,644 13,690 -- 549,662
Accrued distribution fees 5,377 3,417 -- -- 8,794
Accrued custodial fees 869 685 -- -- 1,554
Administration fees payable -- -- 19,610 -- 19,610
Bank overdraft -- -- 111,239 (424)(c) 110,815
Dividends payable 413,557 210,856 20,092 -- 644,505
Other accrued expenses and payables 34,032 9,217 134,455 -- 177,704
----------- ------------ ----------- ----------------- ----------------
TOTAL LIABILITIES 794,163 419,819 299,086 (424) 1,512,644
------------ ------------ ----------- ----------------- ----------------
NET ASSETS $927,695,502 $474,376,855 $57,264,060 $ -- $1,459,336,417
============ ============ =========== ================= ================
Net assets consist of:
Capital shares, at par $ 92,769,550 $ 47,437,686 $ 57,280 $ 5,670,724 (a) $ 145,935,240
Additional paid-in capital 834,925,952 426,939,169 57,222,765 (5,670,724)(a) 1,313,417,162
Accumulated undistributed
net realized (losses) -- -- (15,985) -- (15,985)
----------- ------------ ----------- ----------------- ----------------
TOTAL NET ASSETS $927,695,502 $474,376,855 $57,264,060 $ -- $ 1,459,336,417
============ ============ =========== ================ ================
Class A shares:
Net assets $ -- $ -- $57,264,060 $ 85,582,477 (b) $ 142,846,537
Shares outstanding -- -- 57,280,045 85,582,477 (b) 142,862,522
Net asset value per class A share $ -- $ -- $ 1.00 $ 1.00 $ 1.00
Class I shares:
Net assets $ -- $ -- $ -- $ 1,316,489,880 (b) $ 1,316,489,880
Shares outstanding -- -- -- 1,316,489,880 (b) 1,316,489,880
Net asset value per class I share $ -- $ -- $ -- $ 1.00 $ 1.00
Single class shares:
Net assets $927,695,502 $474,376,855 $ -- $ (1,402,072,357)(b) $ --
Shares outstanding 927,695,502 474,376,855 -- (1,402,072,357)(b) --
Net asset value per single class share $ 1.00 $ 1.00 $ -- $ 1.00 $ --
<FN>
(a) Adjustment to reflect the issuance of Woodward Treasury Money Market
shares in exchange for shares of the Woodward Government and Prairie
U.S. Government Money Market Funds in connection with the proposed
reorganization.
(b) Adjustment reclassifies Woodward Government and Woodward Treasury
Money Market shares to reflect the multi-class environment of the
proposed reorganized entity.
(c) Adjustment to net cash of the Woodward Treasury Money Market and
Woodward Government Funds with overdrafts of the Prairie U.S. Government
Money Market Fund.
(d) Remaining unamortized organizational costs of the Prairie U.S. Government
Money Market Fund will be assumed by the investment advisor prior to
merger date.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-2
<PAGE>
<TABLE>
<CAPTION>
Prairie/Woodward Funds
Treasury Money Market Fund
Pro Forma Combining Statement of Operations
For the Year Ended December 31, 1995
(Unaudited)
Woodward Prairie Pro Forma
Treasury Woodward U.S. Government Combined
Money Market Government Money Market Adjustments (Note 1)
------------ ---------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $42,755,302 $26,262,034 $ 3,925,073 $ -- $72,942,409
----------- ----------- ----------- ----------- -----------
TOTAL INVESTMENT INCOME 42,755,302 26,262,034 3,925,073 -- 72,942,409
----------- ----------- ----------- ----------- -----------
EXPENSES:
Advisory fees 3,248,535 1,987,590 297,377 $(1,838,383) (a) 3,695,119
Distribution fees 53,755 34,919 -- (88,674) (b) --
Administration fees -- -- 94,631 1,752,929 (a) 1,847,560
Shareholder servicing fees 298,599 60,644 170,762 (196,642) (a) 333,363
Custodian fees and expenses 12,919 8,370 47,037 -- 68,326
Professional fees 48,970 48,970 22,236 (45,176) (c) 75,000
Amortization of organization expenses 8,021 -- 8,303 (8,303) (d) 8,021
Transfer agent fees and expenses 11,445 24,255 37,804 73,504
Marketing expenses 41,925 36,670 -- (78,595) (b) --
Registration, filing fees and other expenses 117,097 58,072 53,977 229,146
----------- ----------- ----------- ---------- -----------
TOTAL EXPENSES 3,841,266 2,259,490 732,127 (502,844) 6,330,039
Expense reimbursements -- -- (198,986) 198,986 (e) --
----------- ----------- ----------- ---------- -----------
NET EXPENSES 3,841,266 2,259,490 533,141 (303,858) 6,330,039
----------- ----------- ----------- ---------- -----------
NET OPERATING INCOME 38,914,036 24,002,544 3,391,932 (303,858) 66,612,370
----------- ----------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gains (losses) on investments -- -- 32,485 -- 32,485
Net change in unrealized appreciation on
investments -- -- -- -- --
----------- ----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS -- -- 32,485 -- 32,485
----------- ----------- ----------- ---------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $38,914,036 $24,002,544 $ 3,424,417 $ 303,858 $66,644,855
=========== =========== =========== ========== ===========
<FN>
(a) Adjustment to reflect the proposed contractual fee structure of Woodward
Treasury Money Market Fund after the reorganization.
(b) Adjustment eliminates expense as these costs will no longer be paid by
the Woodward Treasury Money Market Fund after reorganization.
(c) Reduction reflects expected savings when the three funds become one.
(d) Remaining unamortized organizational costs of the Prairie U.S. Government
Money Market Fund will be assumed by the investment advisor prior to
merger date.
(e) Adjustment to reduce reimbursements from the advisor to reflect the
new fee structure of the Woodward Treasury Money Market Fund after
reorganization.
See Notes to Pro Forma Financial Statements.
</TABLE>
PFS-3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
PRAIRIE/WOODWARD FUNDS
Pro Forma Combining
Treasury Money Market Fund
- ------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
[Unaudited]
- ------------------------------------------------------------------------------
Pro Forma
Woodward Woodward Prairie Combined
Treasury MM Gov't US Gov't MM Face Amount
Face Amount Face Amount Face Amount (Note 1) Description
- ----------- ----------- ------------ ----------- -----------
<C> <C> <C> <C> <C>
U.S. GOVERNMENT AND GOVERNMENT OBLIGATIONS- 32.1%
U.S. Treasury Bills
-- -- 10,000,000 10,000,000 U.S. Treasury Bill
-- -- 5,000,000 5,000,000 U.S. Treasury Bill
-- -- 10,000,000 10,000,000 U.S. Treasury Bill
-- -- 7,500,000 7,500,000 U.S. Treasury Bill
-- -- 7,500,000 7,500,000 U.S. Treasury Bill
3,000,000 -- -- 3,000,000 U.S. Treasury Bill
-- -- 7,500,000 7,500,000 U.S. Treasury Bill
U.S. Treasury Notes
8,000,000 -- -- 8,000,000 U.S.Treasury Note
5,000,000 -- -- 5,000,000 U.S.Treasury Note
14,000,000 5,000,000 -- 19,000,000 U.S.Treasury Note
10,000,000 -- -- 10,000,000 U.S.Treasury Note
20,000,000 -- -- 20,000,000 U.S.Treasury Note
10,000,000 -- -- 10,000,000 U.S.Treasury Note
7,000,000 -- -- 7,000,000 U.S.Treasury Note
-- 15,000,000 -- 15,000,000 U.S.Treasury Note
6,000,000 -- -- 6,000,000 U.S.Treasury Note
15,000,000 -- -- 15,000,000 U.S.Treasury Note
35,000,000 -- -- 35,000,000 U.S.Treasury Note
2,000,000 -- -- 2,000,000 U.S.Treasury Note
4,000,000 -- -- 4,000,000 U.S.Treasury Note
15,000,000 -- -- 15,000,000 U.S.Treasury Note
5,000,000 -- -- 5,000,000 Principal Strip from US Treasury Bond
Agency Obligations
-- 10,000,000 -- 10,000,000 Federal Farm Credit Bank
-- 10,000,000 -- 10,000,000 Federal Farm Credit Bank
-- 4,000,000 -- 4,000,000 Federal Farm Credit Bank
-- 25,000,000 -- 25,000,000 Federal Farm Credit Bank
-- 10,000,000 -- 10,000,000 Federal Farm Credit Bank
-- 10,000,000 -- 10,000,000 Federal Home Loan Bank
-- 19,000,000 -- 19,000,000 Federal Home Loan Bank
-- 24,000,000 -- 24,000,000 Federal Home Loan Bank
-- 2,500,000 -- 2,500,000 Federal Home Loan Bank
-- 5,000,000 -- 5,000,000 Federal Home Loan Bank
-- 2,000,000 -- 2,000,000 Federal Home Loan Bank
-- 5,000,000 -- 5,000,000 Federal Home Loan Bank
-- 6,000,000 -- 6,000,000 Federal Home Loan Bank
-- 15,000,000 -- 15,000,000 Federal Home Loan Mortgage Corp.
-- 8,400,000 -- 8,400,000 Federal National Mortgage Association
-- 5,000,000 -- 5,000,000 FNMA Medium Term Note
-- 18,000,000 -- 18,000,000 FNMA Medium Term Note
-- 25,000,000 -- 25,000,000 FNMA Medium Term Note -- A/R
-- 11,700,000 -- 11,700,000 Studen Loan Mortgage Association -- A/R
-- 10,000,000 -- 10,000,000 Studen Loan Mortgage Association -- A/R
-- 12,500,000 -- 12,500,000 Studen Loan Mortgage Association -- A/R
- ----------- ----------- ---------- -----------
159,000,000 258,100,000 47,500,000 464,600,000 TOTAL U.S. GOVERNMENT AND GOVERNMENT OBLIGATIONS
=========== =========== ========== ===========
PFS-4
<PAGE>
TEMPORARY CASH INVESTMENTS-- 67.9%
Revolving Repurchase Agreements
-- -- 10,200,000 10,200,000 NATIONAL WESTMINSTER
Dated 12/29/95, with a maturity value of $10,206.403
AUBREY LANGSTON, Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 8/31/97 through 11/15/05 at various interest
rates ranging from 4.75% to 13.75%, all held at Chemical
43,000,000 -- -- 43,000,000 Bank)
BEAR STEARNS & Co., INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 5/15/96 through 8/15/23 at various interest
rates ranging from 0.00% to 8.875% all held at the Custodial
215,000,000 -- -- 215,000,000 Trust Co.)
DAIWA SECURITIES AMERICA, INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 4/30/96 through 11/15/01 at various interest rates
ranging from 0.00% to 15.75%, all held at
43,000,000 -- -- 43,000,000 Bank of New York)
FIRST BOSTON , INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury Notes with maturities ranging
from 11/15/96 through 2/15/03 at various interest rates ranging
36,000,000 -- -- 36,000,000 from 4.375% to 6.25%, all held at Chemical Bank)
LEHMAN BROTHERS, INC., Revolving Repurchase Agreement,
(secured by U.S. Treasury Note, 5.875%, 7/31/97, held at Chemical
43,000,000 -- -- 43,000,000 Bank)
MORGAN STANLEY & CO. INC., Revolving Repurchase Agreement,
(secured by U.S. Treasury Note, 6.125%, 5/31/97, held at the Bank
43,000,000 -- -- 43,000,000 of New York)
NATIONSBANK CAPITAL MARKETS, INC., Revolving Repurchase Agreement,
(secured by various U.S. Treasury obligations with maturities
ranging from 2/15/96 through 11/15/05 at various interest rates
ranging from 0.00% to 12.375%, all held at
216,533,000 73,569,000 -- 290,102,000 Chemical Bank)
NIKKO SECURITIES CO. INTERNATIONAL, INC., Revolving Repurchase
Agreement, (secured by various U.S. Treasury obligations with
maturities ranging from 7/31/96 through 8/15/00 at various
interest rates ranging from 0.00% to 8.75%, all
40,000,000 -- -- 40,000,000 held at the Bank of New York)
NOMURA SECURITIES INTERNATIONAL, INC., Revolving Repurchase
Agreement, (secured by various U.S. Treasury obligations with
maturities ranging from 1/18/96 through 9/10/02 at various
interest rates ranging from 0.00% to 8.26%, all
-- 23,000,000 -- 23,000,000 held at the Bank of New York)
NOMURA SECURITIES INTERNATIONAL, INC., Revolving Repurchase
Agreement, (secured by various U.S. Treasury obligations with
maturities ranging from 8/31/97 through 5/15/01 at various
interest rates ranging from 0.00% to 6.00%, all
40,000,000 -- -- 40,000,000 held at the Bank of New York)
SANWA BGK SECURITIES CO., L.P., Revolving Repurchase Agreement,
(secured by U.S. Treasury Note, 5.50%, 11/15/98, held at the Bank
43,000,000 -- -- 43,000,000 of New York)
YAMAICHI, Revolving Repurchase Agreement,(secured by various
U.S. Treasury obligations with maturities ranging from 12/31/95
through 8/15/05 at various interest rates ranging from 0.00% to
-- 115,000,000 -- 115,000,000 11.625%, all held at Chemical Bank)
- ----------- ----------- ---------- -------------
762,533,000 211,569,000 10,200,000 984,302,000 TOTAL TEMPORARY CASH INVESTMENTS
=========== =========== ========== =============
921,533,000 469,669,000 57,700,000 1,448,902,000 TOTAL INVESTMENTS
=========== =========== ========== =============
PFS-5
<PAGE>
<CAPTION>
Pro Forma
Woodward Woodward Combined
Treasury MM Gov't MM Prairie Amortized
Maturity Amortized Amortized Amortized Cost
Description Rate Date Cost Cost Cost (Note 1)
----------- ---- -------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AND GOVERNMENT
OBLIGATIONS-- 32.1%
U.S. Treasury Bills
U.S. Treasury Bill 5.350% * 1/11/96 -- -- 9,985,194 9,985,194
U.S. Treasury Bill 5.320% * 1/18/96 -- -- 4,987,451 4,987,451
U.S. Treasury Bill 5.340% * 1/25/96 -- -- 9,964,400 9,964,400
U.S. Treasury Bill 5.320% * 2/15/96 -- -- 7,450,125 7,450,125
U.S. Treasury Bill 5.300% * 3/7/96 -- -- 7,427,194 7,427,194
U.S. Treasury Bill 6.260% 3/7/96 2,965,955 -- -- 2,965,955
U.S. Treasury Bill 4.820% * 3/14/96 -- -- 7,426,696 7,426,696
U.S. Treasury Notes
U.S.Treasury Note 4.000% 1/31/96 7,988,924 -- -- 7,988,924
U.S.Treasury Note 4.375% 11/15/96 4,943,974 -- -- 4,943,974
U.S.Treasury Note 4.375% 8/15/96 13,873,585 4,957,174 -- 18,830,759
U.S.Treasury Note 4.625% 2/15/96 9,976,935 -- -- 9,976,935
U.S.Treasury Note 5.500% 4/30/96 19,970,088 -- -- 19,970,088
U.S.Treasury Note 5.875% 5/31/96 10,001,983 -- -- 10,001,983
U.S.Treasury Note 6.125% 7/31/96 7,013,918 -- -- 7,013,918
U.S.Treasury Note 7.000% 9/30/96 -- 15,150,150 -- 15,150,150
U.S.Treasury Note 7.250% 11/15/96 6,086,851 -- -- 6,086,851
U.S.Treasury Note 7.500% 2/29/96 15,016,012 -- -- 15,016,012
U.S.Treasury Note 7.875% 2/15/96 35,049,857 -- -- 35,049,857
U.S.Treasury Note 7.875% 7/15/96 2,021,778 -- -- 2,021,778
U.S.Treasury Note 7.875% 7/31/96 4,046,593 -- -- 4,046,593
U.S.Treasury Note 8.000% 10/15/96 15,256,312 -- -- 15,256,312
Principal Strip from
US Treasury Bond 0.000% 5/15/96 4,897,685 -- -- 4,897,685
Agency Obligations
Federal Farm Credit Bank 5.600% 11/1/96 -- 10,002,747 -- 10,002,747
Federal Farm Credit Bank 6.390% 4/17/96 -- 10,022,719 -- 10,022,719
Federal Farm Credit Bank 6.610% 4/12/96 -- 4,006,934 -- 4,006,934
Federal Farm Credit Bank 5.780% 2/9/96 -- 24,998,664 -- 24,998,664
Federal Farm Credit Bank 5.590% 6/7/96 -- 9,998,338 -- 9,998,338
Federal Home Loan Bank 5.770% 11/20/96 -- 9,998,229 -- 9,998,230
Federal Home Loan Bank 5.980% 8/14/96 -- 19,000,000 -- 19,000,000
Federal Home Loan Bank 6.850% 2/28/96 -- 24,012,415 -- 24,012,415
Federal Home Loan Bank 6.300% 3/1/96 -- 2,474,042 -- 2,474,042
Federal Home Loan Bank 5.900% 7/25/96 -- 5,000,000 -- 5,000,000
Federal Home Loan Bank 6.000% 8/16/96 -- 2,000,411 -- 2,000,411
Federal Home Loan Bank 4.840% 8/26/96 -- 4,976,737 -- 4,976,737
Federal Home Loan Bank 5.050% 6/7/96 -- 5,983,328 -- 5,983,328
Federal Home Loan
Mortgage Corp. 6.790% 2/20/96 -- 14,999,678 -- 14,999,678
Federal National Mortgage
Association 5.580% 2/21/96 -- 8,334,074 -- 8,334,074
FNMA Medium Term Note 5.710% 6/10/96 -- 4,998,939 -- 4,998,939
FNMA Medium Term Note 5.500% 6/12/96 -- 17,969,843 -- 17,969,843
FNMA Medium Term
Note -- A/R 5.500% 1/26/96 -- 24,998,973 -- 24,998,973
Studen Loan Mortgage
Association -- A/R 6.060% 7/1/96 -- 11,700,000 -- 11,700,000
Studen Loan Mortgage
Association -- A/R 6.050% 10/4/96 -- 10,000,000 -- 10,000,000
Studen Loan Mortgage
Association -- A/R 6.130% 6/30/96 -- 12,490,660 -- 12,490,661
TOTAL U.S. GOVERNMENT AND ----------- ----------- ---------- -----------
GOVERNMENT OBLIGATIONS 159,110,450 258,074,055 47,241,060 464,425,565
=========== =========== ========== ===========
PFS-6
<PAGE>
TEMPORARY CASH INVESTMENTS-- 67.9%
Revolving Repurchase Agreements
NATIONAL WESTMINSTER 5.650% 1/2/96 -- -- 10,200,000 10,200,000
Dated 12/29/95, with a maturity
value of $10,206.403
AUBREY LANGSTON, Revolving
Repurchase Agreement, (secured
by various U.S. Treasury
obligations with maturities
ranging from 8/31/97 through
11/15/05 at various interest
rates ranging from 4.75% to
13.75%, all held at Chemical
Bank) 5.920% 1/2/96 43,000,000 -- -- 43,000,000
BEAR STEARNS & Co., INC.,
Revolving Repurchase Agreement,
(secured by various U.S. Treasury
obligations with maturities
ranging from 5/15/96 through
8/15/23 at various interest
rates ranging from 0.00% to
8.875% all held at the Custodial
Trust Co.) 5.820% 1/2/96 215,000,000 -- -- 215,000,000
DAIWA SECURITIES AMERICA, INC.,
Revolving Repurchase Agreement,
(secured by various U.S. Treasury
obligations with maturities
ranging from 4/30/96 through
11/15/01 at various interest
rates ranging from 0.00% to
15.75%, all held at
Bank of New York) 5.900% 1/2/96 43,000,000 -- -- 43,000,000
FIRST BOSTON , INC., Revolving
Repurchase Agreement, (secured
by various U.S. Treasury Notes
with maturities ranging from
11/15/96 through 2/15/03 at
various interest rates ranging
from 4.375% to 6.25%, all held
at Chemical Bank) 5.850% 1/2/96 36,000,000 -- -- 36,000,000
LEHMAN BROTHERS, INC.,
Revolving Repurchase Agreement,
(secured by U.S. Treasury Note,
5.875%, 7/31/97, held at
Chemical Bank) 5.920% 1/2/96 43,000,000 -- -- 43,000,000
MORGAN STANLEY & CO. INC.,
Revolving Repurchase Agreement,
(secured by U.S. Treasury Note,
6.125%, 5/31/97, held at the Bank
of New York) 5.870% 1/2/96 43,000,000 -- -- 43,000,000
NATIONSBANK CAPITAL MARKETS,
INC., Revolving Repurchase
Agreement, (secured by various
U.S. Treasury obligations with
maturities ranging from 2/15/96
through 11/15/05 at various
interest rates ranging from
0.00% to 12.375%, all held at
Chemical Bank) 6.000% 1/2/96 216,533,000 73,569,000 -- 290,102,000
NIKKO SECURITIES CO.
INTERNATIONAL, INC.,
Revolving Repurchase Agreement,
(secured by various U.S.
Treasury obligations with
maturities ranging from
7/31/96 through 8/15/00 at
various interest rates
ranging from 0.00% to 8.75%, all
held at the Bank of New York) 5.900% 1/2/96 40,000,000 -- -- 40,000,000
NOMURA SECURITIES INTERNATIONAL,
INC., Revolving Repurchase
Agreement, (secured by various
U.S. Treasury obligations with
maturities ranging from 1/18/96
through 9/10/02 at various
interest rates ranging from
0.00% to 8.26%, all
held at the Bank of New York) 6.000% 1/2/96 -- 23,000,000 -- 23,000,000
PFS-7
<PAGE>
NOMURA SECURITIES INTERNATIONAL,
INC., Revolving Repurchase
Agreement, (secured by various
U.S. Treasury obligations with
maturities ranging from 8/31/97
through 5/15/01 at various
interest rates ranging from
0.00% to 6.00%, all
held at the Bank of New York) 5.960% 1/2/96 40,000,000 -- -- 40,000,000
SANWA BGK SECURITIES CO., L.P.,
Revolving Repurchase Agreement,
(secured by U.S. Treasury Note,
5.50%, 11/15/98, held at the
Bank of New York) 5.900% 1/2/96 43,000,000 -- -- 43,000,000
YAMAICHI, Revolving Repurchase
Agreement,(secured by various
U.S. Treasury obligations with
maturities ranging from 12/31/95
through 8/15/05 at various
interest rates ranging from
0.00% to 11.625%, all held
at Chemical Bank) 6.000% 1/2/96 -- 115,000,000 -- 115,000,000
----------- ----------- ---------- -------------
TOTAL TEMPORARY CASH INVESTMENTS -- 762,533,000 211,569,000 10,200,000 984,302,000
=========== =========== ========== =============
TOTAL INVESTMENTS -- 921,643,450 469,643,055 57,441,060 1,448,727,565
=========== =========== ========== =============
<FN>
* Yield at purchase.
A/R Adjustable Rate
</TABLE>
PFS-8
<PAGE>
PRAIRIE/WOODWARD FUNDS
Notes to Pro Forma Financial Statements
(Unaudited)
(1) Basis of Combination-
The unaudited Pro Forma Combining Schedule of Investments, Pro Forma
Combining Statements of Assets and Liabilities and Pro Forma Combining
Statements of Operations reflect the accounts of the Woodward Treasury
Money Market Fund, Woodward Government Fund and Prairie U.S.
Government Money Market Fund at and for the year ended December 31,
1995. These statements have been derived from the funds' books and
records utilized in calculating daily net asset value at
December 31, 1995.
The pro forma statements give effect to the proposed transfer of the
assets and stated liabilities of the Woodward Government Fund and
Prairie U.S. Government Money Market Fund, in exchange for shares of
the Woodward Treasury Money Market Fund.
In accordance with generally accepted accounting principles, the
historical cost of investment securities will be carried forward to
the Woodward Treasury Money Market Fund and the results of operations
for pre-combination periods for the Woodward Treasury Money Market
Fund will not be restated. The pro forma statements do not reflect the
expenses of any fund in carrying out their obligation under the
Agreement and Plan of Reorganization. Under the terms of the Plan of
Reorganization, the combination of the funds will be taxed as a tax
free business combination and accordingly will be accounted for by a
method of accounting for tax free mergers of investment companies
(sometimes referred to as the pooling without restatement method).
The Pro Forma Combining Schedule of Investments, Statement of Assets
and Liabilities and Statement of Operations should be read in
conjunction with the historical financial statements of the funds
included or incorporated by reference in the Statement of Additional
Information.
(2) Portfolio Valuation-
The Woodward Treasury Money Market Fund, Woodward Government Fund
and Prairie U.S. Government Money Market Fund are stated at amortized
cost which approximates market.
(3) Capital Shares-
The pro forma net asset value per share assumes the issuance of
additional shares of the Woodward Treasury Money Market Fund which
would have been issued at December 31, 1995, in connection with
the proposed reorganization. Because the fund attempts to maintain
a constant net asset value of $1.00 per share, the number of additional
shares assumed to be issued is equal to the number of Woodward
Government and Prairie U.S. Government Money Market shares outstanding.
The pro forma number of shares outstanding of 1,459,352,402 consists
of 531,656,900 additional shares assumed issued in the reorganization
plus 927,695,502 shares of the Woodward Treasury Money Market Fund
outstanding at December 31, 1995.
PFS-9
<PAGE>
(4) Investments-
At December 31, 1995, the Prairie U.S. Government Money Market Fund
had a net capital loss carryforward of approximately $16,000 available
to offset future capital gains. To the extent that this carryforward
loss is used to offset capital gains, it is probable that any gains so
offset will not be distributed.
PFS-10
