As filed with the Securities and Exchange Commission on April 5, 1996
Registration No. 33-13990/811-5148
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 28
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 28
THE WOODWARD FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o NBD Bank
900 Tower Drive
P.O. Box 7058
Troy, Michigan 48007-7058
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(313) 259-0729
W. Bruce McConnel, III
DRINKER BIDDLE & REATH
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Registrant has previously registered an indefinite number of its shares of
beneficial interest under the Securities Act of 1933 pursuant to Rule
24f-2 under the Investment Company Act of 1940. Registrant's Rule 24f-2 Notice
with respect to such shares for the fiscal year ended December 31, 1995 was
filed on February 27, 1996.
This Post-Effective Amendment is being filed to add the Woodward Cash
Management Fund, U.S. Government Securities Cash Management Fund and
Treasury Prime Cash Management Fund, to the Trust's Registration Statement.
The Prospectuses and Statements of Additional Information for the
Woodward Money Market, Government, Treasury Money Market, Tax-Exempt
Money Market, Michigan Tax-Exempt Money Market, Growth/Value, Opportunity,
Intrinsic Value, Capital Growth, International Equity, Equity Index,
Intermediate Bond, Bond, Short Bond, Municipal Bond, Michigan Municipal
Bond and Balanced Funds are not being filed in this Post-Effective Amendment.
<PAGE>
PROSPECTUS
CROSS REFERENCE SHEET
Series D, E, and F Representing Interests in the
Class S and Class I
Shares of the Woodward Cash Management,
U.S. Government Securities Cash Management,
and Treasury Prime Cash Management,
Respectively
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover Page.................................. Cover page
2. Synopsis.................................... Annual Fund
Operating Expenses
3. Financial Highlights........................ Performance and
Yield Information
4. General Description of
Registrant.................................. Cover Page;
Introduction;
Investment
Objectives,
Policies and Risk
Factors; Other
Investment
Policies; Other
Information
5. Management of Registrant ................... Management
5(a) Management's Discussion of Fund's
Performance................................. Inapplicable
6. Capital Stock and Other
Securities.................................. Purchase of
Shares; Redemption
of Shares;
Shareholder
Services;
Dividends and
Distributions;
Taxes; Management;
Other Information
7. Purchase of Securities
Being Offered............................... Purchase of
Shares;
Shareholder
Services;
Management
8. Redemption or Repurchase.................... Redemption of
Shares;
Shareholder
Services
9. Pending Legal Proceedings................... Inapplicable
<PAGE>
THE WOODWARD FUNDS
Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
P R 0 S P E C T U S
___________, 1996
SHARES OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY, FIRST CHICAGO NBD
CORPORATION OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY
GOVERNMENTAL AGENCY. INVESTMENT IN THE TRUST INVOLVES RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THERE CAN BE NO ASSURANCE THAT EACH FUND WILL BE
ABLE TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER SHARE.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
First Chicago Investment Management Company and NBD Bank
Co-Investment Advisers and Co-Administrators
BISYS Fund Services
Distributor and Co-Administrator
Prospectus begins on page 1
<PAGE>
THE WOODWARD FUNDS
PROSPECTUS -- _________, 1996
The Woodward Funds (the "Trust") is an open-end, management investment
company, known as a series fund. By this Prospectus, the Trust is offering
Class I shares ("Institutional Shares") and Class S Shares ("Service Shares")
of three separate diversified, money market series (each, a "Fund"): Cash
Management Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund (collectively, the "Funds"). Each Fund's goal
is to provide investors with as high a level of current income as is
consistent with the preservation of capital and the maintenance of liquidity.
Each Fund is designed for institutional investors, including banks,
acting for themselves or in a fiduciary, advisory, agency, custodial or
similar capacity, public agencies and municipalities. Fund shares may not be
purchased directly by individuals, although institutions may purchase shares
for accounts maintained by individuals.
Each Fund's shares are sold without a sales charge. Investors can
invest or reinvest in or redeem shares at any time without charge or penalty
imposed by the Fund.
Institutional Shares and Service Shares are identical, except as to
the services offered to and expenses borne by each Class. Service Shares bear
certain costs pursuant to a Distribution and Services Plan adopted by the
Board of Trustees.
First Chicago Investment Management Company ("FCIMCO") and NBD Bank
("NBD") serve as each Fund's co-investment adviser (collectively, the
"Co-Investment Advisers") and FCIMCO, NBD and BISYS Fund Services ("BISYS")
serve as co-administrators (collectively, the "Co-Administrators").
BISYS serves as each Fund's distributor.
--------------------
This Prospectus sets forth concisely information about the Trust and
Funds that an investor should know before investing. It should be read and
retained for future reference.
The Statement of Additional Information, dated ________, 1996, which
may be revised from time to time, provides a further discussion of certain
areas in this Prospectus and other matters which may be of interest to some
investors. It has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. For a free copy, write to the Trust at
3435 Stelzer Road, Columbus, Ohio 43219-3035, or call 1-800-370-9446.
-1-
<PAGE>
TABLE OF CONTENTS
ANNUAL FUND OPERATING EXPENSES.......................................... 3
YIELD INFORMATION....................................................... 4
DESCRIPTION OF THE FUNDS................................................ 4
Risk Factors..................................................... 6
MANAGEMENT OF THE TRUST................................................. 7
HOW TO BUY FUND SHARES.................................................. 9
HOW TO REDEEM FUND SHARES............................................... 10
DISTRIBUTION AND SERVICES PLAN.......................................... 11
DIVIDENDS, DISTRIBUTIONS AND TAXES...................................... 12
GENERAL INFORMATION..................................................... 13
APPENDIX................................................................ A-1
-2-
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
The following table is provided to assist investors in understanding
the various estimated costs and expenses that an investor will indirectly incur
as a beneficial owner of shares in the Funds.
<TABLE>
<CAPTION>
U.S. Government
Cash Management Treasury Prime Cash Securities Cash
Fund(1) Management Fund(1) Management Fund(1)
---------------------- ----------------------- ----------------------
Institutional Service Institutional Service Institutional Service
Shares Shares Shares Shares Shares Shares
------------- ------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Management Fees (after fee waivers)...... .13% .13% .12% .12% .14% .14%
12b-1 Fees (distribution and servicing).. None .25% None .25% None .25%
Other Fund Operating Expenses (after
fee waivers and reimbursements)........ .22% .22% .23% .23% .21% .21%
Total Fund Operating Expenses
(after fee waivers and expense
reimbursements)........................ .35% .60% .35% .60% .35% .60%
<FN>
(1) As of the date of this Prospectus, the Fund had not commenced
investment operations and therefore the expenses for the Funds
are estimates only.
</TABLE>
Example:
An investor would pay the following estimated expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
Institutional Service Institutional Service Institutional Service
Shares Shares Shares Shares Shares Shares
------------- ------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year*............................... $ 4 $ 6 $ 4 $ 6 $ 4 $ 6
3 Years*.............................. $11 $19 $11 $19 $11 $19
<FN>
* You would pay the same expenses set forth above on the same investment,
assuming no redemptions at the end of the period.
</TABLE>
- ------------------------------------------------------------------------------
The amounts listed in the examples should not be considered as representative
of past or future expenses and actual expenses may be greater or less than
those indicated. Moreover, while the example assumes a 5% annual return, each
Fund's actual performance will vary and may result in an actual return greater
or less than 5%.
- ------------------------------------------------------------------------------
<PAGE>
The purpose of the foregoing table is to assist investors in understanding the
various estimated costs and expenses borne by the Funds, and therefore
indirectly by investors, the payment of which will reduce investors' return on
an annual basis. The Co-Investment Advisers have undertaken, as to each Fund,
until such time as they give investors at least 90 days' notice to the
contrary, that if, in any fiscal year, aggregate expenses exclusive of taxes,
brokerage, interest on borrowings and (with the prior consent of the
necessary state securities commissions) extraordinary expenses, but
including the investment advisory and administration fees, exceed .35%
and .60% of the value of the average net assets of the Institutional Shares
and the Service Shares, respectively, for the fiscal year, the Trust may
deduct from the payment to be made to the Co-Investment Advisers under
the Investment Advisory or Administration Agreements, or the Co-Investment
Advisers will bear, such excess expense. The expenses noted above,
without fee waivers or expense reimbursement arrangements, would have
been: Management Fees, .20% for each Fund, Other Fund Operating Expenses,
.23% for the Institutional Shares and .24% for the Service Shares of the
Cash Management Fund, 1.03% for the Institutional Shares and .29%
for the Service Shares of the Treasury Prime Cash Management Fund,
and .22% for the Institutional Shares and .24% for the Service
Shares of the U.S. Government Securities Cash Management Fund;
and Total Fund Operating Expenses, .43% for the Institutional Shares
and .69% for the Service Shares of the U.S. Government Securities Cash
Management Fund, and Total Fund Operating Expenses, .43% for the
Institutional Shares and .69% for the Service Shares of the Cash
Management Fund, 1.23% for the Institutional Shares and .74% for
the Service Shares of the Treasury Prime Cash Management Fund, and
.42% for the Institutional Shares and .69% for the Service Shares
of the U.S. Government Securities Cash Management Fund. See
"Management of the Trust," "How to Buy Fund Shares" and "Distribution
and Services Plan."
3
<PAGE>
YIELD INFORMATION
From time to time, each Fund will advertise its yield and effective
yield. Both yield figures are based on historical earnings and are not
intended to indicate future performance. It can be expected that these yields
will fluctuate substantially. The yield of a Fund refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then annualized. That is,
the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage
of the investment. The effective yield is calculated similarly, but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment. Each Fund's yield and
effective yield may reflect absorbed expenses pursuant to any undertaking that
may be in effect. See "Management of the Trust." Both yield figures also take
into account any applicable distribution and service fees. As a result, at
any given time, the performance of the Service Class should be expected to be
lower than that of the Institutional Class. See "Distribution and Services
Plan."
Yield information is useful in reviewing a Fund's performance, but
because yields will fluctuate, under certain conditions such information may
not provide a basis for comparison with domestic bank deposits, other
investments which pay a fixed yield for a stated period of time, or other
investment companies which may use a different method of computing yield.
Comparative performance information may be used from time to time in
advertising or marketing Fund shares, including data from Lipper Analytical
Services, Inc., Bank Rate Monitor(TM), N. Palm Beach, Fla. 33408,
IBC/Donoghue's Money Fund Report(R) and other industry publications.
DESCRIPTION OF THE FUNDS
General
The Trust is a "series fund," which is a mutual fund divided into
separate portfolios. Each portfolio is treated as a separate entity for
certain matters under the Investment Company Act of 1940, as amended (the
"1940 Act"), and for other purposes, and a shareholder of one portfolio is not
deemed to be a shareholder of any other portfolio. As described below, for
certain matters Trust shareholders vote together as a group; as to others they
vote separately by Fund.
<PAGE>
By this Prospectus, two classes of shares of each Fund are being
offered -- Institutional Shares and Service Shares (each such class being
referred to as a "Class"). The Classes are identical, except that Service
Shares are subject to an annual distribution and service fee at the
rate of up to .25% of the value of the average daily net assets of the
Service Class. The fee is payable to the Distributor for advertising,
marketing and distributing Service Shares and for ongoing personal services
to the holders of Service Shares relating to shareholder accounts and services
related to the maintenance of such shareholder accounts pursuant to a
Distribution and Services Plan adopted in accordance with Rule 12b-1 under
the 1940 Act. The Distributor may make payments to certain financial
institutions, securities dealers and other industry professionals
(collectively, "Service Agents") in respect of these services. See
"Distribution and Services Plan." The distribution and service fee paid by
the Service Class will cause such Class to have a higher expense ratio and to
pay lower dividends than the Institutional Class.
WHEN USED IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL
INFORMATION, THE TERMS "INVESTOR" AND "SHAREHOLDER" REFER TO THE INSTITUTION
PURCHASING FUND SHARES AND DO NOT REFER TO ANY INDIVIDUAL OR ENTITY FOR WHOSE
ACCOUNT THE INSTITUTION MAY PURCHASE FUND SHARES.
Investment Objective
Each Fund's goal is to provide investors with as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. Each Fund's investment objective cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of
such Fund's outstanding voting shares. There can be no assurance that the
Fund's investment objective will be achieved. Securities in which the Funds
invest may not earn as high a level of current income as long-term or lower
quality securities which generally have less liquidity, greater market risk
and more fluctuation of market value.
4
<PAGE>
Management Policies
Each Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Trust uses the amortized cost method
of valuing each Fund's securities pursuant to Rule 2a-7 under the 1940 Act,
certain requirements of which are summarized below.
In accordance with Rule 2a-7, each Fund is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less and invest only
in U.S. dollar denominated securities determined in accordance with procedures
established by the Board of Trustees to present minimal credit risks and, in
the case of the Cash Management Fund, which are rated in one of the two highest
rating categories for debt obligations by at least two nationally recognized
statistical rating organizations (or one rating organization if the
instrument was rated by only one such organization) or, if unrated,
are of comparable quality as determined in accordance with procedures
established by the Board of Trustees. The nationally recognized statistical
rating organizations currently rating instruments of the type the Cash
Management Fund may purchase are Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Ratings Group, Division of McGraw Hill ("S&P"), Duff &
Phelps Credit Rating Co., Fitch Investors Service, L.P. ("Fitch"), IBCA
Limited and IBCA Inc., and Thomson BankWatch, Inc. and their rating criteria
are described in the Appendix to the Statement of Additional Information.
For further information regarding the amortized cost method of valuing
securities, see "Determination of Net Asset Value" in the Statement of
Additional Information. There can be no assurance that each Fund will be
able to maintain a stable net asset value of $1.00 per share.
o Cash Management Fund invests in short-term money market obligations,
including securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, certificates of deposit, time deposits,
bankers' acceptances and other short-term obligations issued by domestic
banks, foreign branches of domestic banks, foreign subsidiaries of domestic
banks, domestic and foreign branches of foreign banks and thrift institutions,
repurchase agreements, and high quality domestic and foreign commercial paper
and other eligible short-term obligations, including those with floating or
variable rates of interest. See "Appendix -- Portfolio Securities." In
addition, the Fund is permitted to lend portfolio securities to the extent
described under "Appendix -- Investment Practices." During normal market
conditions, at least 25% of the Fund's total assets will be invested in bank
obligations.
o Treasury Prime Cash Management Fund invests only in securities
issued and guaranteed by the U.S. Government. These securities include U.S.
Treasury securities, which differ in their interest rates, maturities
and times of issuance. See "Appendix -- Portfolio Securities." The
Fund does not invest in repurchase agreements, securities issued by
agencies or instrumentalities of the Federal government or any other
type of money market instrument or security.
o U.S. Government Securities Cash Management Fund invests only in
short-term securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, may enter into repurchase agreements and
may invest in the securities of other mutual funds that invest in the
particular instruments in which the Fund itself may invest, subject
to the requirements of applicable securities laws. See "Appendix --
Portfolio Securities." The Fund also may lend securities from its
portfolio as described under "Appendix -- Investment Practices."
5
<PAGE>
Certain Fundamental Policies
Each fund may not: (i) borrow money, issue senior
securities, or mortgage, pledge or hypothecate its assets except
to the extent permitted under the 1940 Act; (ii) act as an
underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of
portfolio securities; (iii) purchase or sell (a) real estate
or (b) commodities, except, in the case of clauses (a) and
(b), to the extent permitted under the 1940 Act; (iv) make
loans to others (other than through investment in debt
obligations or other instruments referred to in the Fund's
Prospectus), except that the Fund may lend its portfolio
securities in the amount not to exceed 33 1/3% of the value
of its total assets; (v) purchase any securities which would
cause 25% or more of the value of a Fund's total assets at
the time of purchase to be invested in the securities of one
or more issuers conducting their principal business
activities in the same industry, provided that (a) there is
no limitation with respect to (1) instruments issued or
guaranteed by the U.S. Government, any state, territory or
possession of the United States, the District of Columbia or
any of their authorities, agencies, instrumentalities or
political subdivisions, (2) instruments issued by domestic
branches of U.S. banks and (3) repurchase agreements secured
by instruments described in clauses (1) and (2), (b) wholly-
owned finance companies will be considered to be in the
industries of their parents if their activities are
primarily related to financing the activities of the
parents and (c) utilities will be divided according to their
services, for example, gas, gas transmission, electric and
gas, electric and telephone will each be considered a
separate industry and (d) personal credit and business credit
businesses will be considered separate industries, and
further provided that the Cash Management Fund will invest at
least 25% of its total assets in obligations of issuers in
the banking industry or instruments secured by such obliga-
tions except during temporary defensive periods; and (vi)
purchase securities (except U.S. Government securities and
related repurchase agreements) if more than 5% of its assets
in the obligations of any one issuer, except that up to 25%
of the value of the Fund's total assets may be invested
without regard to this 5% limitation. See "Investment Objective
and Management Policies -- Investment Restrictions" in the Statement
of Additional Information.
Additional Non-Fundamental Policy
Each Fund may invest up to 10% of the value of its net assets in
illiquid securities. See "Appendix -- Investment Practices -- Illiquid
Securities" and "Investment Objective and Management Policies -- Investment
Restrictions" in the Statement of Additional Information.
Risk Factors
See also the Appendix beginning on page A-1.
Foreign Securities -- (Cash Management Fund) Since the Cash Management Fund's
portfolio may contain securities issued by foreign branches of domestic and
foreign banks, domestic and foreign branches of foreign banks and thrift
institutions, and commercial paper issued by foreign issuers, the Fund may be
subject to additional investment risks with respect to such securities that
are different in some respects from those incurred by a fund which invests
only in debt obligations of U.S. domestic issuers, although such obligations
may be higher yielding when compared to the securities of U.S. domestic
issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding, taxes on
interest income payable on the securities, the possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on these
securities and the possible seizure or nationalization of foreign deposits.
6<PAGE>
Other Investment Considerations -- Each Fund will attempt to increase yields
by trading to take advantage of short-term market variations. This policy is
expected to result in high portfolio turnover but should not adversely affect
the Funds since each Fund usually will not pay brokerage commissions on
purchases of short-term debt obligations, including U.S. Government
securities. The value of the securities held by each Fund will vary inversely
to changes in prevailing interest rates. Thus, if interest rates have
increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security, if sold, might
be sold at a price greater than its purchase cost. In either instance, if the
security is held to maturity, no gain or loss will be realized.
Each Fund may purchase securities on a "when-issued" basis. These
transactions, which involve a commitment by a Fund to purchase or sell
particular securities with payment and delivery taking place at a future date
(perhaps one or two months later), permit the Fund to lock-in a price or yield
on a security it owns or intends to purchase, regardless of future changes in
interest rates. When-issued transactions involve the risk, however, that the
yield obtained in a transaction may be less favorable than the yield available
in the market when the securities delivery takes place. The Funds do not earn
income with respect to these transactions until the subject securities are
delivered to the Funds. The Funds do not intend to engage in when-issued
purchases for speculative purposes but only in furtherance of their
investment objectives.
Investment decisions for each Fund are made independently from those
of other investment companies or investment advisory accounts that may be
advised by the Co-Investment Advisers. However, if such other investment
companies or managed accounts are prepared to invest in, or desire to dispose
of, securities of the type in which a Fund may invest at the same time as such
Fund, available investments or opportunities for sales will be allocated
equitably to each of them. In some cases, this procedure may adversely affect
the size of the position obtained for or disposed of by the Fund or the price
paid or received by the Fund.
MANAGEMENT OF THE TRUST
Co-Investment Advisers and Co-Administrators
First Chicago Investment Management Company, located at Three First
National Plaza, Chicago, Illinois 60670, and NBD Bank, located at 611 Woodward
Avenue, Detroit, Michigan 48226, are each Fund's Co-Investment Advisers.
FCIMCO is a registered investment adviser and a wholly-owned subsidiary
of The First National Bank of Chicago ("FNBC"), which in turn is a
wholly-owned subsidiary of First Chicago NBD Corporation, a registered
bank holding company. NBD is a wholly-owned subsidiary of First Chicago
NBD Corporation. NBD has been in the business of providing such services
since 1933. Included among NBD's accounts are pension and profit sharing
funds for major corporations and state and local governments,
commingled trust funds and a variety of institutional and personal
advisory accounts, estates and trusts. NBD also acts as investment
adviser for other registered investment company portfolios.
FCIMCO and NBD serve as Co-Investment Advisers for the Trust pursuant
to an Investment Advisory Agreement dated as of April 12, 1996. Under the
Investment Advisory Agreement, FCIMCO and NBD provide the day-to-day
management of each Fund's investments, subject to the overall authority
of the Trust's Board of Trustees and in conformity with Massachusetts law
and the stated policies of the Trust. FCIMCO and NBD are responsible for
making investment decisions for the Trust, placing purchase and sale
orders (which may be allocated to various dealers based on their sales
of Fund shares) and providing research, statistical analysis and
continuous supervision of each Fund's investment portfolio. Under the
Investment Advisory Agreement, FCIMCO and NBD are entitled jointly to a
monthly advisory fee at the annual rate of .20% of each Fund's average
daily net assets.
FCIMCO, NBD and BISYS serve as the Trust's Co-Administrators pursuant
to an Administration Agreement with the Trust. Under the Administration
Agreement, FCIMCO, NBD and BISYS generally assist in all aspects of the
Trust's operations, other than providing investment advice, subject to the
overall authority of the Trust's Board in accordance with Massachusetts law.
Under the terms of the Administration Agreement, FCIMCO, NBD and BISYS are
entitled jointly to a monthly administration fee at the annual rate of
.15% of each Fund's average daily net assets.
Distributor
BISYS Fund Services (the "Distributor"), located at 3435 Stelzer
Road, Columbus, Ohio 43219-3035 serves as the Trust's principal underwriter
and distributor of the Funds' shares.
7<PAGE>
Transfer and Dividend Disbursing Agent and Custodian
NBD is the Trust's Transfer and Dividend Disbursing Agent
(the "Transfer Agent"). NBD, 611 Woodward Avenue, Detroit, Michigan 48226,
is the Trust's custodian ("Custodian"). NBD is a wholly-owned subsidiary of
First Chicago NBD Corporation, a registered bank holding company.
Expenses
All expenses incurred in the operation of the Trust are borne by the
Trust, except to the extent specifically assumed by the Co-Investment Advisers
and Co-Administrators. The expenses borne by the Trust include: organizational
costs, taxes, interest, brokerage fees and commissions, if any, fees of
Trustees who are not officers, directors, employees or holders of 5% or more
of the outstanding voting securities of any investment adviser or
administrator of the Funds, Securities and Exchange Commission fees, state
Blue Sky qualification fees, advisory fees, charges of custodians, transfer
and dividend disbursing agents' fees, certain insurance premiums, industry
association fees, outside auditing and legal expenses, costs of maintaining
the Trust's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of shareholders' reports and meetings, costs of
preparing and printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing shareholders, and any
extraordinary expenses. In addition, Service Shares are subject to an annual
service and distribution fee pursuant to a plan adopted by the Board of
Trustees. See "Distribution and Services Plan." Expenses attributable to a
particular Fund or Class are charged against the assets of that Fund or Class,
respectively, other expenses of the Trust are allocated among the Funds on the
basis determined by the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Fund.
The Co-Investment Advisers have undertaken, as to each Fund, until
such time as it gives investors at least 90 days' notice to the contrary, that
if, in any fiscal year the aggregate expenses of the Fund, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of the
necessary state securities commissions) extraordinary expenses, but including
the investment advisory and administration fees exceed .35% and .60% of the
value of the average net assets of the Institutional Class and the Service
Class, respectively, for the fiscal year, the Trust may deduct from the
payment to be made to the Co-Investment Advisers under the Investment Advisory
Agreement, or the Co-Investment Advisers will bear, such excess expense. The
Co-Administrators may also waive fees under the Administration Agreement.
8
<PAGE>
HOW TO BUY FUND SHARES
Each Fund is designed for institutional investors, including banks
(such as FNBC and NBD), acting for themselves or in a fiduciary, advisory,
agency, custodial or similar capacity, public agencies and municipalities.
Fund shares may not be purchased directly by individuals, although
institutions may purchase shares for accounts maintained by individuals.
Generally, each investor will be required to open a single master account with
the Fund for all purposes. In certain cases, the Trust may request investors
to maintain separate master accounts for shares held by the investor (1) for
its own account, for the account of other institutions and for accounts for
which the institution acts as a fiduciary, and (ii) for accounts for which the
investor acts in some other capacity. An institution may arrange with the
Transfer Agent for sub-accounting services and will be charged directly for
the cost of such services. Certain accounts may be eligible for an automatic
investment privilege, commonly called a "sweep," under which amounts in excess
of a certain minimum held in those accounts will be invested automatically in
shares at pre-determined intervals. Each investor desiring to use this
privilege should consult its bank for details.
The minimum initial investment is $1,000,000 or any lesser amount if,
in the Distributor's opinion, the investor has adequate intent and
availability of funds to reach a future level of investment of $1,000,000.
There is no minimum for subsequent purchases. The initial investment must be
accompanied by the Account Application. The Trust reserves the right to offer
Fund shares without regard to the minimum purchase requirements to qualified
or non-qualified employee benefit plans. The Trust does not impose any sales
charges in connection with purchases of Fund shares, although Service Agents
and other institutions may charge their clients fees in connection with
purchases for the accounts of their clients. These fees would be in addition
to any amounts which might be received under the Distribution and Services
Plan. Service Agents may receive different levels of compensation for
selling different classes of shares. The Fund does not issue share
certificates. The Trust reserves the right to reject any purchase order.
Fund shares may be purchased by wire, by telephone or through
compatible computer facilities. All payments should be made in U.S. dollars
and, to avoid fees and delays, should be drawn only on U.S. banks. Investors
may telephone orders for purchases of Fund shares by calling 1-800-370-9446.
For instructions concerning purchases and to determine whether their computer
facilities are compatible with the Trust's, investors should call
1-800-370-9446.
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Fund shares are sold on a continuous basis at the net asset value per
share next determined after an order in proper form and Federal Funds (monies
of member banks in the Federal Reserve System which are held on deposit at a
Federal Reserve Bank) are received by the Transfer Agent. If an investor does
not remit Federal Funds, its payment must be converted into Federal Funds.
This usually occurs within one business day of receipt of a bank wire and
within two business days of receipt of a check drawn on a member bank of the
Federal Reserve System. Checks drawn on banks which are not members of the
Federal Reserve System may take considerably longer to convert into Federal
Funds. Prior to receipt of Federal Funds, the investor's money will not be
invested.
Net asset value per share is determined as of 12:00 noon, Central time
for the Treasury Prime Cash Management Fund, and 2:00 p.m., Central time, for
the Cash Management Fund and U.S. Government Securities Cash Management Fund,
on each Fund business day (which, as used herein, shall include each day that
the New York Stock Exchange is open for business, except Martin Luther King,
Jr. Day, Columbus Day and Veterans Day). Net asset value per share of each
Class is computed by dividing the value of the Fund's net assets represented
by such Class (i.e., the value of its assets less liabilities) by the total
number of shares of such Class outstanding. See "Determination of Net Asset
Value" in the Statement of Additional Information.
Investors whose payments are received in or converted into Federal
Funds by 12:00 noon, Central time, for the Treasury Prime Cash Management Fund
or 2:00 p.m., Central time, for the Cash Management Fund and U.S. Government
Securities Cash Management Fund, by the Transfer Agent will receive the
dividend declared that day. Investors whose payments are received in or
converted into Federal Funds by the Transfer Agent after 12:00 noon, Central
time, for the Treasury Prime Cash Management Fund or 2:00 p.m., Central time,
for the Cash Management Fund and U.S. Government Securities Cash Management
Fund, will begin to accrue dividends on the following business day.
Federal Regulations require that an investor provide a certified
Taxpayer Identification Number ("TIN") upon opening or reopening an account.
See "Dividends, Distributions and Taxes" and the Account Application for
further information concerning this requirement. Failure to furnish a
certified TIN to the Trust could subject an investor to a $50 penalty imposed
by the Internal Revenue Service (the "IRS").
HOW TO REDEEM FUND SHARES
An investor may redeem all or any portion of the shares in the
investor's account on any Fund business day at the net asset value next
determined after a redemption request in proper form is received
by the Transfer Agent. Therefore, redemptions will be effected on
the same day the redemption order is received only if such order is received
prior to 12:00 noon, Central time, for the Treasury Prime Cash Management Fund
or 2:00 p.m., Central time, for the Cash Management Fund and U.S. Government
Securities Cash Management Fund, on any Fund business day. Shares that are
redeemed earn dividends up to and including the day prior to the day the
redemption is effected. The proceeds of a redemption will be paid in Federal
Funds ordinarily on the Fund business day the redemption is effected, but in
any event within seven days. Payment for redemption requests received before
12:00 noon, Central time, for the Treasury Prime Cash Management Fund or 2:00
p.m., Central time, for the Cash Management Fund and U.S. Government
Securities Cash Management Fund, ordinarily is made in Federal Funds wired to
the redeeming shareholder on the same Fund business day. Payment for redeemed
shares for which a redemption order is received after such time on a Fund
business day is made in Federal Funds wired to the redeeming shareholder on
the next Fund business day following redemption. To allow the Co-Investment
Advisers to manage the Funds' portfolios more effectively, investors are urged
to make redemption requests as early in the day as possible. In making
redemption requests, the names of the registered shareholders and their
account numbers must be supplied. Although each Fund generally retains the
right to pay the redemption price of its shares in kind with securities
(instead of cash), the Trust has filed an election under Rule 18f-1 under the
1940 Act committing to pay in cash all redemptions by a shareholder of record
up to the amounts specified in such rule (in most cases approximately
$250,000).
10<PAGE>
A wire redemption may be requested by telephone or wire to
NBD, 611 Woodward Avenue, Detroit, Michigan 48226. For telephone redemptions,
please call 1-800-370-9446.
An investor may redeem shares by telephone if the investor has checked
the appropriate box on the Account Application. By selecting a telephone
redemption privilege, an investor authorizes the Transfer Agent to act on
telephone instructions from any person representing himself or herself to be
an authorized representative of the investor and reasonably believed by the
Transfer Agent to be genuine. The Trust will require the Transfer Agent to
employ reasonable procedures, such as requiring a form of identification, to
confirm that instructions are genuine and, if it does not follow such
procedures, the Trust or the Transfer Agent may be liable for any losses due
to unauthorized or fraudulent instructions. Neither the Trust nor the Transfer
Agent will be liable for following telephone instructions reasonably believed
to be genuine.
The Trust makes available to institutions the ability to
redeem shares through compatible computer facilities. Investors
desiring to redeem shares in this manner should call 1-800-370-9446 to
determine whether their computer facilities are compatible and to receive
instructions for redeeming shares in this manner.
The right of any investor to receive payments with respect to any
redemption may be suspended or the payment of the redemption proceeds
postponed during any period in which the New York Stock Exchange is closed
(other than weekends or holidays) or trading on such Exchange is restricted
or, to the extent otherwise permitted by the 1940 Act, if an emergency exists.
DISTRIBUTION AND SERVICES PLAN
(Service Shares Only)
Service Shares are subject to a Distribution and Services
Plan adopted by the Board of Trustees pursuant to Rule 12b-1 under
the 1940 Act. Under the Distribution and Services Plan, each Fund pays
the Distributor for advertising, marketing and distributing such
shares and/or the provision of shareholder and administrative services
for the beneficial owners of such shares a fee at the annual rate of
up to .25% of the average daily net asset value of the Service Class.
The support services provided may include personal services relating to
shareholder accounts, providing reports and other information, and
services related to the maintenance of such shareholder accounts. Under
the Distribution and Services Plan, BISYS may make payments to Service
Agents in respect of these services. FCIMCO, FNBC, NBD and their affiliates
may act as Service Agents and receive fees under the Distribution and Services
Plan. BISYS determines the amounts to be paid to Service Agents. The
distribution services provided are activities primarily intended to result
in the sale of Service Shares.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund ordinarily declares dividends from net investment income on
each Fund business day. Fund shares begin earning income dividends on the day
the purchase order is effective. Dividends usually are paid on the last
calendar day of each month, and are automatically reinvested in additional
shares of the Fund from which they were paid at net asset value or, at the
investor's option, paid in cash. Each Fund's earnings for Saturdays, Sundays
and holidays are declared as dividends on the preceding business day. If an
investor redeems all shares in its account at any time during the month, all
proceeds and dividends to which the investor is entitled will be paid.
Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but a Fund may make distributions on a
more frequent basis to comply with the distribution requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), in all events
in a manner consistent with the provisions of the 1940 Act. No Fund
will make distributions from net realized securities gains unless
capital loss carryovers, if any, have been utilized or have expired.
Investors may choose whether to receive distributions in cash or to reinvest
in additional shares of the Fund from which they were paid at net asset
value. All expenses are accrued daily and deducted before declaration of
dividends to investors. Dividends paid by each Class will be calculated at the
same time and in the same manner and will be of the same amount, except that
the expenses attributable solely to the Institutional Class or the Service
Class will be borne exclusively by such Class. Service Shares will receive
lower per share dividends than Institutional Shares because of the higher
expenses borne by the Service Class. See "Annual Fund Operating Expenses."
Dividends paid by the Funds derived from net investment income,
together with distributions from any net realized short-term securities gains
and all or a portion of any gain realized from the sale or other disposition
of certain market discount bonds, will be taxable to U.S. investors as
ordinary income whether or not reinvested in additional Fund shares.
Distributions from net realized long-term securities gains, if any, will be
taxable as long-term capital gains for Federal income tax purposes if the
beneficial holder of Fund shares is a citizen or resident of the United
States, regardless of how long investors have held shares and whether such
distributions are received in cash or reinvested in additional shares.
Dividends and distributions attributable to interest from direct
obligations of the United States and paid by the Treasury Prime Cash
Management Fund generally are not subject to state personal income tax. The
Trust intends to provide shareholders of the Treasury Prime Cash Management
Fund with a statement which sets forth the percentage of dividends and
distributions paid by the Fund that is attributable to interest income from
direct obligations of the United States.
Dividends paid by a Fund derived from net investment income, together
with distributions from net realized short-term securities gains and all or a
portion of any gain realized from the sale or other disposition of certain
market discount bonds, paid by such Fund to a foreign investor who is the
beneficial owner of such Fund's shares generally are subject to U.S.
nonresident withholding taxes at the rate of 30%, unless the foreign investor
claims the benefit of a lower rate specified in a tax treaty. Distributions
from net realized long-term securities gains paid by the Fund to such foreign
investor generally will not be subject to U.S. nonresident withholding tax.
However, such distributions may be subject to backup withholding, as described
below, unless the foreign investor certifies his non-U.S. resident status.
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Federal regulations generally require the Trust to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and
distributions from net realized securities gains paid to a shareholder if such
shareholder fails to certify either that the TIN furnished in connection with
opening an account is correct, or that such shareholder has not received
notice from the IRS of being subject to backup withholding as a result of a
failure to properly report taxable dividend or interest income on a Federal
income tax return. Furthermore, the IRS may notify the Trust to institute
backup withholding if the IRS determines a shareholder's TIN is incorrect or
if a shareholder has failed to properly report taxable dividend and interest
income on a Federal income tax return.
A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the record
owner of the account and may be used to offset the record owner's tax
liability on his/her Federal income tax return.
Notice as to the tax status of dividends and distributions will he
mailed to investors annually. Each investor also will receive periodic
summaries of its account which will include information as to dividends and
distributions from securities gains, if any, paid during the year. No dividend
will qualify for the dividends received deduction allowable to certain U.S.
corporations.
Each Fund intends to qualify as a "regulated investment company" under
the Code. Qualification as a regulated investment company generally relieves
the Fund of any liability for Federal income tax to the extent its earnings are
distributed in accordance with applicable provisions of the Code. Each
Fund is subject to a non-deductible 4% excise tax, measured with respect to
certain undistributed amounts of taxable income and capital gains, if any.
Each investor and beneficial shareholder should consult its tax
adviser regarding questions as to Federal, state or local taxes.
GENERAL INFORMATION
The Trust was organized as a business trust on April 21, 1987 under a
Declaration of Trust. As of the date hereof, the Trust is a series fund
having twenty series of shares of beneficial interest, each of which
evidences an interest in a separate investment portfolio. The Declaration
of Trust permits the Board of Trustees to issue an unlimited number
of full and fractional shares and to create an unlimited number of series
of shares ("Series") representing interests in a portfolio and an unlimited
number of classes of shares within a Series. In addition to the Funds
described herein, the Trust offers the following investment portfolios:
the Woodward Intermediate Bond Fund, Bond Fund, Short Bond Fund,
Municipal Bond Fund, Michigan Municipal Bond Fund, Growth/Value Fund,
Opportunity Fund, Intrinsic Value Fund, Capital Growth Fund, Balanced
Fund, International Equity Fund, Equity Index Fund, Money Market Fund,
Government Fund, Treasury Money Market Fund, Tax-Exempt Money Market Fund and
Michigan Tax-Exempt Money Market Fund.
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Shareholders are entitled to one vote for each full share held, and a
proportionate fractional vote for each fractional share held, and each Series
entitled to vote on a matter will vote thereon in the aggregate and not by
Series, except as otherwise expressly required by law or when the Board of
Trustees determines that the matter to be voted on affects only the interests
of shareholders of a particular Series. In addition, shareholders of each of
the Series have equal voting rights except that only shares of a particular
class within a Series are entitled to vote on matters affecting only that
class. Voting rights are not cumulative, and accordingly the holders of more
than 50% of the aggregate number of shares of all Trust portfolios may elect
all of the Trustees.
As of the date of this Prospectus, the Distributor owned all the
outstanding shares of the Cash Management Fund, Treasury Prime Cash Management
Fund and U.S. Government Securities Cash Management Fund. It is contemplated
that the public offering of the shares of each Fund will reduce the
Distributor's holdings to less than 5% of the total shares outstanding of
the Fund.
Because NBD serves the Trust as both Custodian and as a Co-Investment
Adviser, the Trustees have established a procedure requiring three annual
verifications, two of which are unannounced, of all investments held pursuant
to the Custodian Agreement, to be conducted by the Trust's independent
accountants.
The Trust does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Trust's By-laws provide that special meetings of shareholders of any Series
shall be called at the written request of shareholders entitled to cast at
least 10% of the votes of a Series entitled to be cast at such meeting. The
Trust also stands ready to assist shareholder communications in connection
with any meeting of shareholders as prescribed in Section 16(c) of the 1940
Act.
The Transfer Agent maintains a record of each investor's ownership and
sends confirmations and statements of account.
Investor inquiries may be made by writing to the Trust at the address
shown on the front cover or by calling the telephone number shown on the front
cover.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
TRUST'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUNDS'
SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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APPENDIX
Portfolio Securities
To the extent set forth in this Prospectus and except as noted below,
each Fund may invest in the following securities:
U.S. Treasury Securities -- Each Fund may invest in U.S Treasury
securities which include Treasury Bills, Treasury Notes and Treasury Bonds
that differ in their interest rates, maturities and times of issuance.
Treasury Bills have initial maturities of one year or less; Treasury Notes
have initial maturities of one to ten years; and Treasury Bonds generally have
initial maturities of greater than ten years.
U.S. Government Securities -- In addition to U.S. Treasury securities,
each Fund, except the Treasury Prime Cash Management Fund, may invest in
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury; others, such as
those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the agency
or instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest. Interest
may fluctuate based on generally recognized reference rates or the
relationship of rates. While the U.S. Government provides financial support to
such U.S. Government-sponsored agencies or instrumentalities, no assurance can
be given that it will always do so, since it is not so obligated by law. Each
Fund will invest in such securities only when the Trust is satisfied that the
credit risk with respect to the issuer is minimal.
Stripped U.S. Treasury Securities and U.S. Government Securities--The
Treasury Prime Cash Management and U.S. Government Securities Cash Management
Funds may invest in stripped U.S. Treasury Securities and the U.S. Government
Securities Cash Management Fund may invest in stripped U.S. Government
Securities, where the principal and instrument components are traded
independently under the Separate Trading of Registered Interest and Principal
Securities program ("STRIPS"). Under STRIPS, the principal and interest
components are individually numbered and separately issued by the U.S. Treasury
at the request of depository financial institutions, which then trade the
component parts independently. These obligations are usually issued at a
discount to their "face value," and because of the manner in which principal
and interest are returned, may exhibit greater volatility than more
conventional debt securities.
Repurchase Agreements -- Each Fund, except the Treasury Prime Cash
Management Fund, may enter into repurchase agreements, which involve the
acquisition by a Fund of an underlying debt instrument, subject to an
obligation of the seller to repurchase, and such Fund to resell, the
instrument at a fixed price usually not more than one week after its purchase.
Certain costs may be incurred by a Fund in connection with the sale of the
securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Fund may be delayed or limited. [Pursuant to an order obtained from the
Securities and Exchange Commission, each Fund also is permitted to enter into
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overnight repurchase agreements with FNBC or an affiliate of FNBC subject to
the terms and conditions of such order.]
Bank Obligations -- The Cash Management Fund will invest in bank
obligations, including certificates of deposit, time deposits, bankers'
acceptances and other short-term obligations of domestic banks, foreign
subsidiaries of domestic banks, foreign branches of domestic banks, and
domestic and foreign branches of foreign banks and thrift institutions.
Certificates of deposit are negotiable certificates evidencing the obligation
of a bank to repay funds deposited with it for a specified period of time.
Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Bankers' acceptances
are credit instruments evidencing the obligation of a bank to pay a draft
drawn on it by a customer. These instruments reflect the obligation both of
the bank and of the drawer to pay the face amount of the instrument upon
maturity. The other short-term obligations may include uninsured, direct
obligations, bearing fixed, floating or variable interest rates.
Commercial Paper and other Short-Term Obligations -- The
Cash Management Fund may invest in commercial paper, which consists of
short-term, unsecured promissory notes issued to finance short-term credit
needs. The commercial paper purchased by the Fund will consist only of direct
obligations issued by domestic and foreign entities. The other short-term
obligations in which the Fund may invest consist of high quality, U.S. dollar
denominated short-term bonds and notes (including variable amount master
demand notes) issued by domestic and foreign corporations bearing fixed,
floating or variable interest rates.
Floating and Variable Rate Obligations -- The Cash Management
Fund may purchase floating and variable rate demand notes and bonds,
which are obligations ordinarily having stated maturities in excess of 13
months, but which permit the holder to demand payment of principal at any
time, or at specified intervals not exceeding 13 months, in each case upon not
more than 30 days' notice. Variable rate demand notes include master demand
notes which are obligations that permit the Fund to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct
arrangements between the Fund, as lender, and the borrower. The interest rates
on these notes fluctuate from time to time. The issuer of such obligations
normally has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations plus accrued
interest upon a specified number of days' notice to the holders of such
obligations. The interest rate on a floating
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rate demand obligation is based on a known lending rate, such as a bank's
prime rate, and is adjusted automatically each time such rate is adjusted. The
interest rate on a variable rate demand obligation is adjusted automatically
at specified intervals. Frequently, such obligations are secured by letters of
credit or other credit support arrangements provided by banks. Because these
obligations are direct lending arrangements between the lender and borrower,
it is not contemplated that such instruments generally will be traded, and
there generally is no established secondary market for these obligations,
although they are redeemable at face value. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations frequently
are not rated by credit rating agencies and, if not so rated, the Fund may
invest in them only if the Co-Investment Advisers determine that at the time
of investment the obligations are of comparable quality to the other
obligations in which the Fund may invest. The Co-Investment Advisers, on
behalf of the Fund, will consider on an ongoing basis the creditworthiness of
the issuers of the floating and variable rate demand obligations held by the
Fund. The Fund will not invest more than 10% of the value of its net assets in
floating or variable rate demand obligations as to which it cannot exercise
the demand feature on not more than seven days' notice if there is no
secondary market available for these obligations, and in other securities that
are illiquid.
Investment Company Securities -- Each of the Cash Management and U.S.
Government Securities Cash Management Funds may invest in securities
issued by other investment companies which principally invest in
securities of the type in which the Fund invests. Under the 1940 Act, a
Fund's investments in such securities, subject to certain exceptions,
currently are limited to (i) 3% of the total voting stock of any one
investment company, (ii) 5% of the Fund's total assets with respect to any one
investment company, and (iii) 10% of the Fund's total assets in the aggregate.
Investments in the securities of other investment companies may involve
duplication of advisory fees and certain other expenses.
Investment Practices
Lending Portfolio Securities -- From time to time, each of the Cash
Management Fund and U.S. Government Securities Cash Management Fund may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the relevant Fund's total
assets. In connection with such loans, each of these Funds will receive
collateral consisting of cash or U.S. Government securities or, with respect
to the Cash Management Fund only, irrevocable letters of credit issued by
financial institutions.
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Such collateral will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Each of these Funds
can increase its income through the investment of such collateral. Each of
these Funds continues to be entitled to payments in amounts equal to the
interest and other distributions payable on the loaned security and receives
interest on the amount of the loan. Such loans will be terminable at any time
upon specified notice. A Fund might experience risk of loss if the institution
with which it has engaged in a portfolio loan transaction breaches its
agreement with such Fund.
Illiquid Securities -- Each Fund may invest up to 10% of the value of
its assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with its investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating and variable rate demand obligations as to which the
Fund cannot exercise the related demand feature described above on not more
than seven days' notice or as to which there is no secondary market and
repurchase agreements providing for settlement in more than seven days after
notice. As to these securities, a Fund is subject to a risk that should such
Fund desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of such Fund's net assets
could be adversely affected.
Borrowing Money -- As a fundamental policy, the Treasury Prime Cash
Management Fund is permitted to borrow money to the extent permitted under the
1940 Act. However, the Fund currently intends to borrow money from banks for
temporary or emergency (not leveraging) purposes in an amount up to 15% of the
value of its total assets (including the amount borrowed) valued at the lesser
of cost or market, less liabilities (not including the amount borrowed) at the
time the borrowing is made. While borrowings exceed 5% of the Fund's total
assets, the Fund will not make any additional investments.
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THE WOODWARD FUNDS
Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash Management Fund
INSTITUTIONAL And SERVICE SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
_________, 1996
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This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of
Cash Management Fund, Treasury Prime Cash Management Fund and U.S. Government
Securities Cash Management Fund (each, a "Fund") of The Woodward Funds (the
"Trust"), dated _________, 1996, as it may be revised from time to time. To
obtain a copy of the Funds' Prospectus, please write to the Trust at 3435
Stelzer Road, Columbus, Ohio 43219-3035, or call toll free 1-800-370-9446.
First Chicago Investment Management Company ("FCIMCO") and NBD Bank
("NBD") serve as each Fund's co-investment advisers (collectively, the
"Co-Investment Advisers") and, FCIMCO, NBD and BISYS Fund Services serve as
co-administrators.
BISYS Fund Services is the distributor (the "Distributor") and BISYS,
FCIMCO and NBD serve as co-administrators of the Funds' shares.
TABLE OF CONTENTS
Page
----
Investment Objective and Management Policies.......................... B-2
Management of the Trust............................................... B-6
Management Arrangements............................................... B-9
Distribution and Services Plan........................................ B-10
Purchase of Fund Shares............................................... B-11
Redemption of Fund Shares............................................. B-11
Determination of Net Asset Value...................................... B-12
Portfolio Transactions................................................ B-13
Dividends, Distributions and Taxes.................................... B-13
Yield Information..................................................... B-14
Information About the Trust........................................... B-14
Counsel and Independent Auditors...................................... B-15
Appendix.............................................................. B-16
Financial Statements.................................................. B-
Report of Independent Auditors........................................ B-
B-1
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTIONS IN THE FUNDS' PROSPECTUS ENTITLED "DESCRIPTION
OF THE FUNDS" AND "APPENDIX."
Portfolio Securities and Investment Practices
Bank Obligations. (Cash Management Fund) Domestic commercial banks
organized under Federal law are supervised and examined by the Comptroller of
the Currency and are required to be members of the Federal Reserve System and
to have their deposits insured by the Federal Deposit Insurance Corporation
(the "FDIC"). Domestic banks organized under state law are supervised and
examined by state banking authorities but are members of the Federal Reserve
System only if they elect to join. In addition, state banks whose certificates
of deposit ("Cds") may be purchased by the Fund are insured by the FDIC
(although such insurance may not be of material benefit to the Fund, depending
on the principal amount of the Cds of each bank held by the Fund) and are
subject to Federal examination and to a substantial body of Federal law and
regulation.
Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks, and domestic and foreign branches of foreign
banks, such as Cds and time deposits ("Tds"), may be general obligations of
the parent banks in addition to the issuing branch, or may be limited by the
terms of a specific obligation and governmental regulation. Such obligations
are subject to different risks than are those of domestic banks. These risks
include foreign economic and political developments, foreign governmental
restrictions that may adversely affect payment of principal and interest on
the obligations, foreign exchange controls and foreign withholding and other
taxes on interest income. These foreign branches and subsidiaries are not
necessarily subject to the same or similar regulatory requirements that apply
to domestic banks, such as mandatory reserve requirements, loan limitations,
and accounting, auditing and financial recordkeeping requirements. In
addition, less information may be publicly available about a foreign branch of
a domestic bank or about a foreign bank than about a domestic bank.
Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by Federal or state
regulation as well as governmental action in the country in which the foreign
bank has its head office. A domestic branch of a foreign bank with assets in
excess of $1 billion may be subject to reserve requirements imposed by the
Federal Reserve System or by the state in which the branch is located if the
branch is licensed in that state.
The Fund may purchase Cds issued by banks, savings and loan
associations and similar thrift institutions with less than
B-2
<PAGE>
$1 billion in assets, which are members of the FDIC, provided the Fund
purchases any such Cd in a principal amount of not more than $100,000, which
amount would be fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC. Interest payments on such
a Cd are not insured by the FDIC. The Fund will not own more than one such Cd
per such issuer.
Foreign Securities. (Cash Management Fund) Foreign securities markets
generally are not as developed or efficient as those in the United States.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable U.S. issuers. Similarly, volume and liquidity in most
foreign securities markets are less than in the United States and, at times,
volatility of price can be greater than in the United States.
Furthermore, some of these securities are subject to brokerage taxes
levied by foreign governments, which have the effect of increasing the cost of
such investment and reducing the realized gain or increasing the realized loss
on such securities at the time of sale. Custodial expenses for a portfolio of
non-U.S. securities generally are higher than for a portfolio of U.S.
securities. Income earned or received by the Cash Management Fund from sources
within foreign countries may be reduced by withholding and other taxes.
Repurchase Agreements. (Cash Management Fund and U.S. Government
Securities Cash Management Fund) The Trust's custodian or subcustodian will
have custody of, and will hold in a segregated account, securities acquired by
a Fund under a repurchase agreement. Repurchase agreements are considered by
the staff of the Securities and Exchange Commission to be loans by the Fund
that enters into them. Each Fund will enter into repurchase agreements
only with registered or unregistered securities dealers or banks with
total assets in excess of one billion dollars, with respect to securities
of the type in which such Fund may invest, and will require that additional
securities be deposited with it if the value of the securities purchased
should decrease below the resale price. The Co-Investment Advisers will
monitor on an ongoing basis the value of the collateral to assure that it
always equals or exceeds the repurchase price. Each of these Funds will
consider on an ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements.
Illiquid Securities. If a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the Securities Act
of 1933, as amended, for certain restricted securities held by a Fund, the
Trust intends to treat such securities as liquid securities in accordance with
procedures approved by the Trust's Board of Trustees. Because it is not
possible to predict with assurance how the market for restricted
securities pursuant to Rule 144A will develop, the Trust's Board of Trustees
has directed the Co-Investment Advisers to monitor carefully each Fund's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that, for a period of time, qualified institutional buyers cease
purchasing restricted securities pursuant to Rule 144A, a Fund's investing in
such securities may have the effect of increasing the level of illiquidity in
its investment portfolio during such period.
B-3<PAGE>
Lending Portfolio Securities. (Cash Management Fund and U.S.
Government Securities Cash Management Fund) To a limited extent, each of these
Funds may lend its portfolio securities to brokers, dealers and other
financial institutions, provided it receives cash collateral which at all
times is maintained in an amount equal to at least 100% of the current market
value of the securities loaned. By lending its portfolio securities, the Fund
can increase its income through the investment of the cash collateral. For
purposes of this policy, the Trust considers collateral consisting of U.S.
Government securities or, in the case of the Cash Management Fund only,
irrevocable letters of credit issued by banks whose securities meet the
standards for investment by the Fund to be the equivalent of cash. Such loans
may not exceed 33-1/3% of the Fund's total assets. From time to time, the Fund
may return to the borrower or a third party which is unaffiliated with the
Fund, and which is acting as a "placing broker," a part of the interest earned
from the investment of collateral received for securities loaned.
The Securities and Exchange Commission ("SEC") currently requires that
the following conditions must be met whenever portfolio securities are loaned:
(1) the Fund must receive at least 100% cash collateral from the borrower;
(2) the borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Fund must be able
to terminate the loan at any time; (4) the Fund must receive reasonable
interest on the loan, as well as any interest or other distributions payable
on the loaned securities, and any increase in market value; and (5) the Fund
may pay only reasonable custodian fees in connection with the loan. These
conditions may be subject to future modification.
Investment Restrictions
Each Fund has adopted the following investment restrictions as
fundamental investment limitations which cannot be changed, as to a particular
Fund, without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")), of that Fund's
outstanding voting shares. Each Fund may not:
1. Borrow money; issue senior securities, or mortgage, pledge or
hypothecate it assets except to the extent permitted under the 1940 Act.
2. Act as an underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
3. Purchase or sell (a) real estate or (b) commodities, except,in the
case of clauses (a) and (b), to the extent permitted under the 1940 Act.
4. Make loans to others (other than through investment in debt
obligations or other instruments referred to in the Fund's Prospectus), except
that the Fund may lend its portfolio securities in an amount not to exceed 33
1/3% of the value of its total assets.
5. Purchase any securities which would cause 25% or more of the value
of a Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation with
respect to (i) instruments issued or guaranteed by the U.S. Government, any
state, territory or possession of the United States, the District of Columbia
or any of their authorities, agencies, instrumentalities or political
subdivisions, (ii) instruments issued by domestic branches of U.S. banks and
(iii) repurchase agreements secured by instruments described in clauses (i)
and (ii), (b) wholly-owned finance companies will be considered to be in the
industries of their parents if their activities are primarily related to
financing the activities of the parents and (c) utilities will be divided
according to their services, for example, gas, gas transmission, electric and
gas, electric and telephone will each be considered a separate industry and
(d) personal credit and business credit businesses will be considered separate
industries, and further provided that the Cash Management Fund will invest at
least 25% of its total assets in obligations of issuers in the banking
industry or instruments secured by such obligations except during temporary
defensive periods.
B-4<PAGE>
In construing number 5 in accordance with SEC policy, to the extent
permitted, U.S. branches of foreign banks will be considered to be U.S. bank
where they are subject to the same regulation as U.S. banks.
6. Purchase securities (except U.S. Government securities and related
repurchase agreements) if more than 5% of its assets in the obligations of any
one issuer, except that up to 25% of the value of the Fund's total assets may
be invested without regard to this 5% limitation.
Each Fund has adopted the following investment restrictions as
non-fundamental limitations which may be changed, as to a particular Fund, by
the Board of Trustees without approval the approval of by the holders of a
majority, as defined in 1940 Act of that Fund's outstanding voting shares.
Each Fund may not:
1. Purchase securities on margin, except as described in the Fund's
Prospectus or this Statement of Additional Information.
2. Invest in the securities of a company for the purpose of exercising
management or control, but the Fund will vote the securities it owns in its
portfolio as a shareholder in accordance with its views.
3. Purchase, sell or write puts, calls or combinations thereof, except
as described in the Fund's Prospectus or this Statement of Additional
Information.
4. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 10% of the value of the Fund's net assets would be so
invested.
5. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.
6. Invest more than 5% of its assets in the obligations of any one
issuer, except if permitted under Rule 2a-7 under the 1940 Act.
The Cash Management and U.S. Government Securities Cash Management
Funds also may not sell securities short.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values or
assets will not constitute a violation of such restriction.
The Trust may make commitments more restrictive than the restrictions
listed above so as to permit the sale of a Fund's shares in certain states.
Should the Trust determine that a commitment is no longer in the best
interests of a Fund and its shareholders, the Trust reserves the right to
revoke the commitment by terminating the sale of a Fund's shares in the state
involved.
B-5
<PAGE>
MANAGEMENT OF THE TRUST
Trustees and officers of the Trust, together with information as to
their principal business occupations during at least the last five years, are
shown below.
Trustees and Officers of the Trust
*Earl I. Heenan, Jr., Chairman and President
Vice Chairman (since 1988) and President (1955-1988), Detroit Mortgage
& Realty Company; President (1989-1992) and Trustee (since 1966), Cottage
Hospital of Grosse Pointe (affiliate of Henry Ford Health System); Trustee,
Henry Ford Health Sciences Center (since 1987); Trustee, Henry Ford Continuing
Care Corporation (since 1980); Trustee, Earhart Foundation (since 1980).
He is 77 years old, and his address is 333 West Fort Street, Detroit, Michigan
48226.
*Eugene C. Yehle, Trustee and Treasurer
Retired; Director of Investor Relations and Pension Investments, Dow
Chemical Company (1972-1985); Trustee, Alma College (since 1978); Trustee
(since 1977) and Chairman (since 1983), Charles J. Strosacker Foundation;
Trustee (1989-1993), Higgins Lake Foundation. He is 76 years old, and his
address is 4501 Linden Drive, Midland, Michigan 48640.
Will M. Caldwell, Trustee
Retired; Executive Vice President, Chief Financial Officer and
Director, Ford Motor Company (1979-1985); Director, First Nationwide Bank
(1986-1991); Director, Air Products & Chemicals, Inc. (since 1985); Director,
Zurich Holding Company of America (since 1990); Director, The Batts Group,
Ltd. (since 1986); Trustee and Vice Chairman, Detroit Medical Center (1986-
1991); Trustee Emeritus and Chairman of the Pension Investment Sub-Committee,
Detroit Medical Center (since 1991). He is 70 years old, and his address is
2733 Glenbrook Court, Bloomfield Hills, Michigan 48302.
- --------
* Trustees who are "interested persons" of the Trust, as defined
in the 1940 Act.
B-6
<PAGE>
Nicholas J. De Grazia, Trustee
President, Chief Operating Officer and Director, Lionel Trains, Inc.
(since 1990); Vice President-Finance and Treasurer, University of Detroit
(1981-1990); President (1981-1990) and Director (since 1986), Polymer
Technologies, Inc.; President, Florence Development Company (1987-1990);
Chairman (since 1994) and Director (since 1992), Central Macomb County Chamber
of Commerce; Vice Chairman, Michigan Higher Education Facilities Authority
(since 1991). He is 53 years old, and his address is 3650 Shorewood Drive,
North Lakeport, Michigan 48059.
John P. Gould, Trustee
Distinguished Service Professor of Economics of the University of
Chicago Graduate School of Business. From 1983 to 1993, Dean of the University
of Chicago Graduate School of Business. Dean Gould also serves as Director of
Harpor Capital Advisors. Mr. Gould is also a Board member of Prairie Funds,
Prairie Institutional Funds, Prairie Intermediate Bond Fund and Prairie
Municipal Bond Fund, Inc. He is 55 years old, and his address is 1101 East
58th Street, Chicago, Illinois 60637.
Marilyn McCoy, Trustee
Vice President of Administration and Planning of Northwestern
University. From 1981 to 1985, she was the Director of Planning and Policy
Development for the University of Colorado. She also serves on the Board of
Directors of Evanston Hospital, the Chicago Metropolitan YMCA, the Chicago
Network and United Charities. Mrs. McCoy is a member of the Chicago Economics
Club. Mrs. McCoy is also a Board member of Prairie Funds, Prairie
Institutional Funds, Prairie Intermediate Bond Fund and Prairie Municipal
Bond Fund, Inc. She is 47 years old, and her address is 1100 North Lake
Shore Drive, Chicago, Illinois 60611.
Julius L. Pallone, Trustee
President, J.L. Pallone Associates, Consultants (since 1994); Chairman
of the Board (1974-1993), Maccabees Life Insurance Company; President and
Chief Executive Officer, Royal Financial Services (1991-1993); Director,
American Council of Life Insurance of Washington, D.C. (life insurance
industry association) (1988-1993); Director, Crowley, Milner and Company
(department store) (since 1988); Trustee, Lawrence Institute of Technology
(since 1982); Director, Detroit Symphony Orchestra (since 1985); Director,
Oakland Commerce Bank (since 1984) and Michigan Opera Theater (since 1981).
He is 65 years old, and his address is 26957 Northwestern Highway, Suite 288,
Southfield, Michigan 48034.
*Donald G. Sutherland, Trustee
Partner of the law firm Ice, Miller, Donadio & Ryan, Indianapolis,
Indiana. He is 67 years old, and his address is One American Square, 34th
Floor, Indianapolis, Indiana 46204.
- --------
* Trustees who are "interested persons" of the Trust, as defined
in the 1940 Act.
B-7
<PAGE>
Donald L. Tuttle, Trustee
Senior Vice President, Association for Investment Management and
Research (since January 1992); Professor of Finance, Indiana University
(1970-1991); Vice President, Trust & Investment Advisers, Inc. (1990-1991);
Director, Federal Home Loan Bank of Indianapolis (1981 to 1985). He is 62
years old and his address is 5 Boar's Head Lane, Charlottesville,
Virginia 22903.
W. Bruce McConnel, III, Secretary
Partner of the law firm Drinker Biddle & Reath, Philadelphia,
Pennsylvania. He is 53 years old and his address is 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107.
For so long as the plan described in the section captioned
"Distribution and Services Plan" remains in effect, the Trustees of
the Trust who are not "interested persons" of the Trust, as defined in the
1940 Act, will be selected and nominated by the Trustees who are not
"interested persons" of the Trust.
Effective May 1, 1995, each Trustee receives from the Trust and
The Woodward Variable Annuity Fund a total annual fee of $17,000 and a fee
of $2,000 for each Board of Trustees meeting attended. The Chairman is
entitled to additional compensation of $4,250 per year for his services to
the Trusts in that capacity. The fees are allocated aamong the investment
portfolios the Trust and The Woodward Variable Annuity Fund based on their
relative net assets. All Trustees are reimbursed for out-of-pocket expenses
incurred in connection with attendance at meetings. Drinker Biddle & Reath,
of which Mr. McConnel is a partner, receives legal fees as counsel to the
Trust.
B-8<PAGE>
The following table summarizes the compensation for each of the Trustees
for the Trust's fiscal year ending December 31, 1995:
<TABLE>
<CAPTION>
(3)
Total
Compensation
(2) From Trust and
(1) Aggregate Fund Complex**
Name of Board Compensation Paid to Board
Member/Position from Trust* Member
- ----------------------------- ------------ ---------------
<S> <C> <C>
Will M. Caldwell, Trustee $21,250 $21,250(2)+
Nicholas J. DeGrazia,
Trustee 21,250 21,250(2)+
John P. Gould, Trustee *** 30,000(4)+
Earl I. Heenan, Jr.,
Chairman and President 24,437.50 24,437.50(2)+
Marilyn McCoy, Trustee *** 30,000(4)+
Julius L. Pallone, Trustee 21,250 21,250(2)+
Donald G. Sutherland,
Trustee 21,250 21,250(2)+
Donald L. Tuttle, Trustee 21,250 21,250(2)+
Eugene C. Yehle, Trustee
and Treasurer 21,250 21,250(2)+
<FN>
- ----------------------
* Amount does not include reimbursed expenses for attending Board meeting,
which are estimated to be approximately $350 for all Trustees as a group.
** The Fund Complex consists of the Trust, The Woodward Variable Annuity
Fund, Praire Funds, Praire Institutional Funds, Praire Intermediate Bond
Fund and Praire Municipal Bond Fund, Inc.
*** Mr. Gould and Mrs. McCoy were not trustees of the Trust during the
fiscal year ended December 31, 1995.
+ Total number of other investment companies within the Fund Complex from
which the Trustee receives compensation for serving as a trustee.
</TABLE>
Board members and officers of the Trust, as a group, owned less than
1% of any Fund's shares outstanding on March 28, 1996.
MANAGEMENT ARRANGEMENTS
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED "MANAGEMENT OF
THE TRUST."
Investment Advisory Agreement. FCIMCO and NBD provide investment
advisory services pursuant to the Investment Advisory Agreement (the
"Agreement") dated as of April 12, 1996, with the Trust. As to each Fund,
the Agreement is subject to annual approval by (i) the Trust's Board of
Trustees or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Fund, provided that in either event the
continuance also is approved by a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust, FCIMCO or NBD,
by vote cast in person at a meeting called for the purpose of voting on such
approval. As to each Fund, the Agreement is terminable without penalty, on 60
days' notice, by the Trust's Board of Trustees or by vote of the holders of a
majority of such Fund's shares, or, on not less than 90 days' notice, by
FCIMCO or NBD. The Agreement will terminate automatically, as to the relevant
Fund, in the event of its assignment (as defined in the 1940 Act).
FCIMCO and NBD are responsible for investment decisions for each Fund
in accordance with the stated policies of such Fund, subject to the general
supervision of the Trust's Board of Trustees.
B-9
<PAGE>
Under the terms of the Investment Advisory Agreement with the Trust,
FCIMCO and NBD are entitled jointly to a monthly advisory fee at the annual
rate of .20% of each Fund's average daily net assets.
Administration Agreement. Pursuant to an Administration Agreement
dated as of April 12, 1996 with the Trust, FCIMCO, NBD and BISYS assist
in all aspects of the Trust's operations, other than providing investment
advice, subject to the overall authority of the Trust's Board in accordance
with Massachusetts law. Under the terms of the Administration Agreement,
FCIMCO, NBD and BISYS are entitled jointly to a monthly administration fee
at the annual rate of .15% of each Fund's average daily net assets.
The Trust has agreed that neither FCIMCO, NBD nor BISYS will be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which the agreement with FCIMCO, NBD
or BISYS relates, except for a loss resulting from wilful misfeasance, bad
faith or gross negligence on the part of FCIMCO, NBD or BISYS in the
performance of their obligations or from reckless disregard by any of them of
their obligations and duties under the Administration Agreement.
In addition, the Administration Agreement provides that if, in any
fiscal year, the aggregate expenses of a Fund, exceed the expense limitation
of any state having jurisdiction over the Fund, FCIMCO, NBD and BISYS under
the Agreement, or FCIMCO, NBD and BISYS will bear, such excess expense to the
extent required by state law.
The aggregate of the fees payable to FCIMCO, NBD and BISYS is not
subject to reduction as the value of the Fund's net assets increases.
Distribution and Services Plan
(Service Shares Only)
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED "DISTRIBUTION
AND SERVICES PLAN."
Rule 12b-1 (the "Rule") adopted by the Securities and Exchange
Commission under the 1940 Act provides, among other things, that an investment
company may bear expenses of distributing its shares only pursuant to a plan
adopted in accordance with the Rule. The Trust's Board of Trustees has
adopted such a plan (the "Plan") with respect to each Fund's Service
Shares, pursuant to which each Fund pays BISYS a fee of up to .25% of the
average daily net asset value attributable to such Service Shares for
advertising, marketing and distributing such Service Shares and for the
provision of certain services to the holders of such Service Shares. Under
the Plan, BISYS may make payments to certain financial institutions, securities
dealers and other financial industry professionals (collectively, "Service
Agents") in respect of these services. The Board of Trustees believes that
there is a reasonable likelihood that the Plan will benefit each Fund and
the holders of Service Shares.
The Board of Trustees reviews, at least quarterly, a written report of
the amounts expended under the Plan and the purposes for which the
expenditures were made. In addition, such arrangements are approved
annually by a majority of the Trustees, including a majority of the
Trustees who are not "interested persons" of the Trust as defined in
the 1940 Act and have no direct or indirect financial interest in such
arrangements (the "Disinterested Trustees").
Any material amendment to the Plan must be approved by a majority
of the Board of Trustees (including a majority of the Disinterested Trustees).
B-10<PAGE>
PURCHASE OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED "HOW TO BUY
FUND SHARES."
The Distributor. The Distributor serves on a best efforts basis as the
Trust's distributor pursuant to an agreement which is renewable annually.
Using Federal Funds. NBD, the Trust's transfer and dividend
disbursing agent (the "Transfer Agent"), or the Trust may attempt to
notify the investor upon receipt of checks drawn on banks that are not members
of the Federal Reserve System as to the possible delay in conversion into
Federal Funds and may attempt to arrange for a better means of transmitting
the money. If the investor is a customer of a securities dealer, bank or other
financial institution and his order to purchase Fund shares is paid for other
than in Federal Funds, the securities dealer, bank or other financial
institution, acting on behalf of its customer, generally will complete the
conversion into, or itself advance, Federal Funds on the business
day following receipt of the customer order. The order is effective only
when so converted and received by the Transfer Agent. An order for the
purchase of Fund shares placed by an investor with a sufficient
Federal Funds or cash balance in his brokerage account with a securities
dealer, bank or other financial institution will become effective on the day
that the order, including Federal Funds, is received by the Transfer Agent. In
some states, banks or other institutions effecting transactions in Fund shares
may be required to register as dealers pursuant to state law.
REDEMPTION OF FUND SHARES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED "HOW TO REDEEM
FUND SHARES."
Redemption Commitment. The Trust has committed itself to pay in cash
all redemption requests by any shareholder of record of a Fund, limited in
amount during any 90-day period to the lesser of $250,000 or 1% of the value
of such Fund's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such amount,
the Board of Trustees reserves the right to make payments in whole or in part
in securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. In such event, the securities would be valued in the
same manner as the Fund's securities are valued. If the recipient sold such
securities, brokerage charges would be incurred.
Suspension of Redemptions. The right of redemption may be suspended or
the date of payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closing), (b)
when trading in the markets the Fund ordinarily utilizes is restricted, or
when an emergency exists as determined by the Securities and Exchange
Commission so that disposal of the Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other periods
as the Securities and Exchange Commission by order may permit to protect the
Fund's shareholders.
B-11
<PAGE>
DETERMINATION OF NET ASSET VALUE
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED "HOW TO BUY
FUND SHARES."
Amortized Cost Pricing. The valuation of each Fund's portfolio
securities is based upon their amortized cost which does not take into account
unrealized capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument.
The Board of Trustees has established procedures, as a particular
responsibility within the overall duty of care owed to each Fund's investors,
reasonably designed to stabilize the Fund's price per share as computed for
purposes of purchases and redemptions at $1.00. Such procedures include review
of each Fund's portfolio holdings by the Board of Trustees, at such intervals
as it deems appropriate, to determine whether the Fund's net asset value
calculated by using available market quotations or market equivalents deviates
from $1.00 per share based on amortized cost. In such review of the portfolio
of a Fund, investments for which market quotations are readily available
will be valued at the most recent bid price or yield equivalent for such
securities or for securities of comparable maturity, quality and type, as
obtained from one or more of the major market makers for the securities to be
valued. Other investments and assets of the Funds will be valued at fair value
as determined in good faith by the Board of Trustees.
The extent of any deviation between a Fund's net asset value based
upon available market quotations or market equivalents and $1.00 per share
based on amortized cost will be examined by the Board of Trustees. If such
deviation exceeds 1/2 of 1%, the Board of Trustees will consider what actions,
if any, will be initiated. In the event the Board of Trustees determines that
a deviation exists which may result in material dilution or other unfair
results to investors or existing shareholders, it has agreed to take such
corrective action as it regards as necessary and appropriate, including:
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends or
paying distributions from capital or capital gains; redeeming shares in kind;
or establishing a net asset value per share by using available market
quotations or market equivalents.
New York Stock Exchange Closings. The holidays (as observed) on which
the New York Stock Exchange is closed currently are: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
B-12
<PAGE>
PORTFOLIO TRANSACTIONS
Portfolio securities of each Fund ordinarily are purchased directly
from the issuer or from an underwriter or a market maker for the securities.
Ordinarily, no brokerage commissions are paid by the Fund for such purchases.
Purchases from underwriters of portfolio securities may include a concession
paid by the issuer to the underwriter and the purchase price paid to, and
sales price received from, market makers for the securities may reflect the
spread between the bid and asked price. No brokerage commissions have been
paid by any Fund to date.
Transactions are allocated to various dealers by the Trust's
investment personnel in their best judgment. The primary consideration is
prompt and effective execution of orders at the most favorable price. Subject
to that primary consideration, dealers may be selected for research,
statistical or other services to enable FCIMCO or NBD to supplement its own
research and analysis with the views and information of other securities firms
and may be selected based upon their sales of Fund shares.
Research services furnished by brokers through which the Fund effects
securities transactions may be used by FCIMCO or NBD in advising other funds
or accounts it advises and, conversely, research services furnished to FCIMCO
or NBD by brokers in connection with other funds or accounts FCIMCO or NBD
advises may be used by FCIMCO or NBD in advising the Fund. Although it is not
possible to place a dollar value on these services, it is the opinion of
FCIMCO and NBD that the receipt and study of such services should not reduce
FCIMCO's or NBD's overall research expenses.
DIVIDENDS, DISTRIBUTIONS AND TAXES
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN FUNDS' PROSPECTUS ENTITLED "DIVIDENDS,
DISTRIBUTIONS AND TAXES."
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of the gain
realized from the disposition of certain market discount bonds will be treated
as ordinary income under Section 1276 of the Internal Revenue Code of 1986, as
amended.
B-13
<PAGE>
YIELD INFORMATION
The following information supplements and should be read in
conjunction with the section in the Funds' Prospectus entitled "Yield
Information."
Yield is computed in accordance with a standardized method which
involves determining the net change in the value of a hypothetical
pre-existing Fund account having a balance of one share at the beginning of a
seven calendar day period for which yield is to be quoted, dividing the net
change by the value of the account at the beginning of the period to obtain
the base period return, and annualizing the results (i.e., multiplying the
base period return by 365/7). The net change in the value of the account
reflects the value of additional shares purchased with dividends declared on
the original share and any such additional shares and fees that may be charged
to the shareholder's account, in proportion to the length of the base period
and the Fund's average account size, but does not include realized gains and
losses or unrealized appreciation and depreciation. Effective yield is
computed by adding 1 to the base period return (calculated as described
above), raising that sum to a power equal to 365 divided by 7, and subtracting
1 from the result.
Yields will fluctuate and are not necessarily representative of future
results. Each investor should remember that yield is a function of the type
and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which
the Fund's price per share is determined.
The Cash Management Fund, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund are rated AAAm or AAAmG, as the
case may be, by Standard & Poor's Ratings Group, Division of McGraw Hill and
Aaa by Moody's Investors Service, Inc.
From time to time, advertising materials for the Funds may refer to
FNBC's, NBD's or any of their affiliate's full line of investment products for
the corporate cash market, including sweep services, on-line money market
mutual fund purchases, customized portfolio management, and OASIS, a same-day
sweep product that sweeps funds to an overnight Eurodollar time deposit.
INFORMATION ABOUT THE TRUST
THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE FUNDS' PROSPECTUS ENTITLED "GENERAL
INFORMATION."
Each Fund share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Fund shares have no preemptive, subscription or conversion rights and are
freely transferable.
The Trust will send annual and semi-annual financial statements to all
its shareholders.
B-14
<PAGE>
COUNSEL AND INDEPENDENT AUDITORS
Drinker Biddle & Reath, 1345 Chestnut Street, Philadelphia, PA
19107-3496, serves as the Trust's counsel.
Arthur Andersen LLP, One Detroit Center, 500 Woodward Avenue, Detroit,
Michigan 48226-3424, independent auditors, is auditor of the Trust.
B-15
<PAGE>
APPENDIX
Description of the highest commercial paper, municipal bond and note
and other short- and long-term rating categories assigned by Standard & Poor's
Rating Group ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch
Investors Service, Inc. ("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"),
IBCA Limited and IBCA Inc. ("IBCA") and Thomson BankWatch, Inc. ("BankWatch"):
Commercial Paper Ratings
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt considered short-term in the relevant
market. The following summarizes the rating categories used by Standard and
Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory. However,
the relative degree of safety is not as high as for issues designated "A-1."
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are considered
to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative
capitalization structures with moderate reliance on debt and ample asset
protection; broad margins in earning coverage of fixed financial charges and
high internal cash generation; and well established access to a range
of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuer or related supporting institutions are considered
to have a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
B-16<PAGE>
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:
"F-1+" - Securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues assigned
this rating reflect an assurance of timely payment only slightly less in
degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and "F-1" categories.
Fitch may also use the symbol "LOC" with its short-term ratings to
indicate that the rating is based upon a letter of credit issued by a
commercial bank.
Thomson BankWatch short-term ratings assess the likelihood of an
untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which are issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-dealers. The following summarizes the ratings used by Thomson
BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's highest
rating category and indicates a very high degree of likelihood that principal
and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of safety
regarding timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."
B-17<PAGE>
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1+" - Obligations supported by the highest capacity for timely
repayment.
"A1" - Obligations are supported by the highest capacity for timely
repayment.
"A2" - Obligations are supported by a satisfactory capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Corporate and Municipal Long-Term Debt Ratings
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small degree.
"A" - Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt
in higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid, and
certain other obligations that S & P believes may experience high volatility
or high variability in expected returns due to non-credit risks. Examples of
such obligations are: securities whose principal or interest return is indexed
to equities, commodities, or currencies; certain swaps and options; and
interest only and principal only mortgage securities.
The following summarizes the ratings used by Moody's for
corporate and municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
B-18
<PAGE>
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A" - Bonds possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Con. (---) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally.
These are bonds secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operation experience, (c) rentals which
begin when facilities are completed, or (d) payments to which some other
limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.
(P)... - When applied to forward delivery bonds, indicates that the
rating is provisional pending delivery of the bonds. The rating may be revised
prior to delivery if changes occur in the legal documents or the underlying
credit quality of the bonds.
The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
B-19<PAGE>
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."
"A" - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
To provide more detailed indications of credit quality, the Fitch
ratings from and including "AA" to "C" may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major rating
categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
B-20
<PAGE>
"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions
may increase investment risk albeit not very significantly.
"A" - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions may
lead to increased investment risk.
"BBB" - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in other categories.
IBCA may append a rating of plus (+) or minus (-) to a rating to
denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long term debt and
preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation represents the highest category assigned by
Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk
compared to issues rated in the highest category.
"A" - This designation indicates that the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable
to adverse developments (both internal and external) than obligations with
higher ratings.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
B-21<PAGE>
Municipal Note Ratings
A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality,
with margins of protection ample although not so large as in the preceding
group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
"SG" - Loans bearing this designation are of speculative quality and
lack margins of protection.
Fitch and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.
B-22
<PAGE>
PART C
OTHER INFORMATION
ITEM 24.FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
None
(b) Exhibits:
(1) (a) Amended and Restated Declaration of Trust
dated as of May 1, 1992 is incorporated
herein by reference to exhibit (1)(b) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form
N-1A filed with the Commission on September
8, 1992.
(2) Bylaws of Registrant is incorporated herein
by reference to exhibit (2) of Pre-Effective
Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on July 24, 1987.
(3) None.
(4) None.
(5) (a) Form of Co-Advisory Agreement among
Registrant, NBD Bank ("NBD") and First Chicago
Investment Management Company ("FCIMCO").
(b) Advisory Agreement between Registrant and NBD
Bank dated November 28, 1995.
(6) (a) Form of Distribution Agreement between
Registrant and BISYS Fund Services ("BISYS").
(b) Distribution Agreement dated March 15, 1995
among Registrant, FoM and Essex relating to
Series A, B, C, M, N, O, P, Q, R, S, T, U and
V is incorporated herein by reference to
exhibit (6)(a) of Post-Effective Amendment
No. 25 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 28, 1995.
(7) None.
(8) (a) Amended and Restated Custodian Agreement
dated May 16, 1989 between Registrant and
National Bank of Detroit for Series A, B, C,
D, E, F, G, H, I, J, K and L of the
Registrant is incorporated herein by
reference to exhibit (8)(b) of Post-Effective
Amendment No. 3 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on April 30, 1990.
(b) Addendum No. 1 dated January 23, 1991 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Michigan Tax-Exempt Money Market
Fund (Series M) is incorporated herein by
reference to exhibit (8)(c) of Post-Effective
Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on February 28, 1991.
(c) Addendum No. 2 dated April 28, 1992 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Equity Index Fund (Series N) is
incorporated herein by reference to exhibit
(8)(d) of Post-Effective Amendment No. 10 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
September 8, 1992.
C-1
<PAGE>
(d) Addendum No. 3 dated January 1, 1993 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Treasury Money Market Fund (Series
O) is incorporated herein by reference to
exhibit (8)(e) of Post-Effective Amendment
No. 14 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 29, 1993.
(e) Addendum No. 4 dated February 1, 1993 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Municipal Bond Fund (Series P) and
the Woodward Michigan Municipal Bond Fund
(Series Q) is incorporated herein by
reference to exhibit (8)(f) of Post-Effective
Amendment No. 14 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on April 29, 1993.
(f) Addendum No. 5 dated January 1, 1994 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Balanced Fund (Series R) is
incorporated herein by reference to exhibit
(8)(g) of Post-Effective Amendment No. 22 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on July
29, 1994.
(g) Addendum No. 6 dated July 1, 1994 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Capital Growth and Short Bond Funds
(Series S and U) is incorporated herein by
reference to exhibit (8)(h) of Post-Effective
Amendment No. 23 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on January 27, 1995.
(h) Addendum No. 7 dated November 30, 1994 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward International Equity Fund (Series T)
is incorporated herein by reference to
exhibit (8)(i) of Post-Effective Amendment
No. 25 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 28, 1995.
(i) Form of Addendum No. 8 to the Amended and
Restated Custodian Agreement between
Registrant and NBD relating to the Woodward
Cash Management Fund, Treasury Prime Cash
Management Fund and U.S. Government
Securities Cash Management Fund.
(j) Form of Addendum No. 9 to the Amended and
Restated Custodian Agreement between
Registrant and NBD relating to the Woodward
U.S. Government Income Fund (Series V) is
incorporated herein by reference to exhibit
(8)(k) of Post-Effective Amendment No. 17 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
November 1, 1993.
(k) Global Custody Agreement dated November 21,
1994 between Barclays Bank, PLC and NBD Bank,
N.A. relating to Series A, B, C, M, N, O, P,
Q, R, S, T, U and V is incorporated herein by
reference to exhibit (8)(k) of Post-Effective
Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on July 28, 1995.
C-2
<PAGE>
(9) (a) Form of Co-Administration Agreement among the
Registrant, NBD, FCIMCO and BISYS.
(b) Amended and Restated Transfer Agency and
Dividend Disbursement Agreement dated May 16,
1989 between Registrant and National Bank of
Detroit for Series A, B, C, D, E, F, G, H, I,
J, K and L of the Registrant is incorporated
herein by reference to exhibit (9)(b) of
Post-Effective Amendment No. 3 to the Regis-
trant's Registration Statement on Form N-1A
filed with the Commission on April 30, 1990.
(c) Addendum No. 1 dated January 23, 1991 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the Woodward
Michigan Tax-Exempt Money Market Fund
(Series M) is incorporated herein by
reference to exhibit (9)(c) of Post-Effective
Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on February 28, 1991.
(d) Addendum No. 2 dated April 28, 1992 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the Woodward
Equity Index Fund (Series N) is incorporated
herein by reference to exhibit (9)(d) of
Post-Effective Amendment No. 10 to the
Registrant's Registration Statement on Form N-1A
filed with the Commission on September 8, 1992.
(e) Addendum No. 3 dated January 1, 1993 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the Woodward
Treasury Money Market Fund (Series O) is
incorporated herein by reference to exhibit
(9)(e) of Post-Effective Amendment No. 14 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on April
29, 1993.
(f) Addendum No. 4 dated February 1, 1993 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the Woodward
Municipal Bond Fund (Series P) and the
Woodward Michigan Municipal Bond Fund (Series
Q) is incorporated herein by reference to
exhibit (9)(f) of Post-Effective Amendment
No. 14 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 29, 1993.
(g) Addendum No. 5 dated January 1, 1994 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the Woodward
Balanced Fund (Series R) is incorporated
herein by reference to exhibit (9)(g) of
Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on Form
N-1A filed with the Commission on July 29,
1994.
(h) Addendum No. 6 dated July 1, 1994 to the
Amended and Restated Transfer Agency and
Dividend Disbursement Agreement between
Registrant and NBD relating to the Woodward
Capital Growth, International Equity and
Short Bond Funds (Series S, T and U) is
incorporated herein by reference to exhibit
(9)(h) of Post-Effective Amendment No. 23 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
January 27, 1995.
C-3
<PAGE>
(i) Form of Addendum No. 7 to the Amended and
Restated Transfer Agency and Dividend
Disbursement Agreement between Registrant and
NBD relating to the Woodward Cash Management
Fund, Treasury Prime Cash Management Fund and U.S.
Government Securities Cash Management Fund.
(j) Form of Broker-Dealer Agreement between FoM and
Broker-Dealers is incorporated herein by
reference to exhibit (9)(c) of Post-Effective
Amendment No. 2 to the Registrant's Registration
Statement on Form N-1A filed with the Commission
on March 2, 1989.
(k) Bank Agreement between FoM and BHC Securities,
Inc. dated June 15, 1992 is incorporated herein
by reference to exhibit (9)(h) of Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement on Form N-1A filed with the Commission
on September 8, 1992.
(l) Bank Agreement between FoM and NBD Securities,
Inc. dated June 8, 1992 is incorporated herein by
reference to exhibit (9)(i) of Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement on Form N-1A filed with the Commission
on September 8, 1992.
(m) Revised Shareholder Services Plan including
form of Service Agreement adopted by the
Board of Trustees on November 16, 1993 is
incorporated herein by reference to exhibit
(9)(t) of Post-Effective Amendment No. 22 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on July
29, 1994.
(n) Form of Distribution and Services Plan
including form of Agreement.
*(10) Opinion of Drinker Biddle & Reath, counsel
for the Registrant.
(11) (a) Consent of Arthur Andersen LLP.
(b) Consent of Drinker Biddle & Reath.
(12) None.
(13) Letter dated May 8, 1987 from FoM to the
effect that its purchase of shares of the
Registrant will be made for investment
purposes without any present intention of
redeeming or reselling, is incorporated
herein by reference to exhibit (13) of Pre-
Effective Statement No. 1 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on July 24, 1987.
(14) None.
(15) (a) Revised Service and Distribution Plan
relating to Registrant's distribution
expenses pursuant to Rule 12b-1, effective
April 20, 1994, is incorporated herein by
reference to exhibit (15)(l) of Post-
Effective Amendment No. 22 of the
Registrant's Registration Statement on Form
N-1A filed with the Commission on July 29,
1994.
(16) (a) Schedules of Performance Computations are
incorporated herein by reference to exhibit (16)
of Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A
filed with the Commission on
February 28, 1991.
C-4
<PAGE>
(b) Schedules of Performance Computations with
respect to the Woodward Michigan Tax-Exempt
Money Market Fund, Growth/Value Fund,
Opportunity Fund, Intrinsic Value Fund,
Intermediate Bond Fund and Bond Fund are
incorporated herein by reference to Exhibit
(16)(b) of Post-Effective Amendment No. 7 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
December 3, 1991.
(c) Schedules of Performance Computations with
respect to the Woodward Equity Index Fund and
the Woodward Treasury Money Market Fund are
incorporated herein by reference to Exhibit
16(c) of Post-Effective Amendment No. 14 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on April
29, 1993.
(d) Schedules of Performance Computations with
respect to the Woodward Municipal Bond Fund
and Woodward Michigan Municipal Bond Fund are
incorporated herein by reference to Exhibit
16(d) of Post-Effective Amendment No. 15 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on July
30, 1993.
(e) Schedules of Performance Computations with
respect to the Woodward Balanced Fund are
incorporated herein by reference to Exhibit 16(e)
of Post-Effective Amendment No. 22 to the
Registrant's Registration Statement on Form N-1A
filed with the Commission on July 29, 1994.
(f) Schedules of Performance Computations with
respect to the Woodward Capital Growth and
Short Bond Funds are incorporated herein by
reference to exhibit (16)(f) of Post-
Effective Amendment No. 23 to the
Registrant's Registration Statement on Form
N-1A filed with the Commission on January 27,
1995.
(g) Schedules of Performance Computations with
respect to the Woodward International Equity
Fund is incorporated herein by reference to
exhibit (16)(g) of Post-Effective Amendment
No. 25 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 28, 1995.
(17) None.
(18) None.
- --------
* Registrant's Rule 24f-2 Notice and related Opinion of Counsel relating
to Series D, E and F will be filed with the SEC by March 1, 1997.
C-5
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
Registrant is controlled by its Board of Trustees. However, under the
Investment Company Act of 1940, NBD Bank may be deemed a controlling person of
the Registrant because such entity possesses or shares investment or voting
power with respect to more than 25% of the outstanding shares of the
Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following table sets forth information as to all record
holders of Registrant's securities as of February 29, 1996:
<TABLE>
<CAPTION>
Number
of
Record
Title of Class Holders
-------------- -------
<S> <C>
Series A Shares of beneficial interest ($.10 par value) 651
Series B Shares of beneficial interest ($.10 par value) 3576
Series C Shares of beneficial interest ($.10 par value) 441
Series H Shares of beneficial interest ($.10 par value) 4604
Series I Shares of beneficial interest ($.10 par value) 7947
Series J Shares of beneficial interest ($.10 par value) 1918
Series K Shares of beneficial interest ($.10 par value) 845
Series L Shares of beneficial interest ($.10 par value) 1961
Series M Shares of beneficial interest ($.10 par value) 265
Series N Shares of beneficial interest ($.10 par value) 292
Series O Shares of beneficial interest ($.10 par value) 124
Series P Shares of beneficial interest ($.10 par value) 398
Series Q Shares of beneficial interest ($.10 par value) 680
Series R Shares of beneficial interest ($.10 par value) 882
Series S Shares of beneficial interest ($.10 par value) 651
Series T Shares of beneficial interest ($.10 par value) 243
Series U Shares of beneficial interest ($.10 par value) 29
</TABLE>
ITEM 27. INDEMNIFICATION
Indemnification of Registrant's principal underwriter against certain
losses is provided for in Section 11 of the Distribution Agreement
incorporated herein by reference as Exhibit (6)(l). Indemnification of
Registrant's Custodian is provided for in Article XII of the Amended and
Restated Custodian Agreement incorporated herein by reference as Exhibit
(8)(b). Indemnification of Registrant's Transfer Agent and Dividend Disbursing
Agent is provided for in Article III of the Amended and Restated Transfer
Agency and Dividend Disbursing Agreement incorporated herein by reference as
Exhibit (9)(b). Registrant has obtained from a major insurance carrier a
trustees' and officers' liability policy covering certain types of errors and
omissions. In addition, Section 5.4 of the Registrant's Amended and Restated
Declaration of Trust incorporated herein by reference as Exhibit (1)(b),
provides as follows:
C-6
<PAGE>
5.4 Mandatory Indemnification.
(a) Subject only to the provisions hereof, every person
who is or has been a Trustee, officer, employee or agent of the Trust
and every person who serves at the Trust's request as director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Trust
to the fullest extent permitted by law against all liabilities and
against all expenses reasonably incurred or paid by him in connection
with any debt, claim, action, demand, suit, proceeding, judgment,
decree, liability or obligation of any kind in which he becomes
involved as a party or otherwise or is threatened by virtue of his
being or having been a Trustee, officer, employee or agent of the
Trust or of another corporation, partnership, joint venture, trust or
other enterprise at the request of the Trust and against amounts paid
or incurred by him in the compromise or settlement thereof.
(b) The words "claim", "action", "suit", or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, administrative, legislative, investigative or other,
including appeals), actual or threatened, and the words "liabilities"
and "expenses" shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and
other liabilities.
(c) No indemnification shall be provided here-
under to a Trustee or officer:
(i) against any liability to the Trust or the
Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office ("disabling
conduct");
(ii) with respect to any matter as to which he
shall, by the court or other body by or before which the
proceeding was brought or engaged, have been finally
adjudicated to be liable by reason of disabling conduct;
(iii) in the absence of a final adjudication on
the merits that such Trustee or officer did not engage
in disabling conduct, unless a reasonable determination,
based upon a review of the facts that the person to be
indemnified is not liable by reason of such conduct, is
made:
C-7
<PAGE>
(A) by vote of a majority of a quorum of
the Trustees who are neither Interested Persons nor
parties to the proceedings; or
(B) by independent legal counsel, in a
written opinion.
(d) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any Trustee,
officer, employee or agent may now or hereafter be entitled, shall
continue as to a person who has ceased to be such Trustee, officer,
employee, or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person; provided, however, that
no person may satisfy any right of indemnity or reimbursement granted
herein except out of the property of the Trust, and no other person
shall be personally liable to provide indemnity or reimbursement
hereunder (except an insurer or surety or person otherwise bound by
contract).
(e) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of
the character described in paragraph (a) of this Section 5.4 may be
paid by the Trust prior to final disposition thereof upon receipt of a
written undertaking by or on behalf of the Trustee, officer, employee
or agent to reimburse the Trust if it is ultimately determined under
this Section 5.4 that he is not entitled to indemnification. Such
undertaking shall be secured by a surety bond or other suitable
insurance or such security as the Trustees shall require unless a
majority of a quorum of the Trustees who are neither Interested
Persons nor parties to the proceeding, or independent legal counsel in
a written opinion, shall have determined, based on readily available
facts, that there is reason to believe that the indemnitee ultimately
will be found to be entitled to indemnification.
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer or controlling person of
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, Registrant
C-8
<PAGE>
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
Section 5.1 of the Registrant's Declaration of Trust,
incorporated herein by reference as Exhibit (1), also provided
indemnification of shareholders of the Registrant.
Section 5.1 states as follows:
5.1 Limitation of Personal Liability and Indemnification of
Shareholders. The Trustees, officers, employees or agents of the Trust
shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment
whatsoever, other than such as the Shareholder may at any time agree
to pay by way of subscription to any Shares or otherwise.
No Shareholder or former Shareholder of the Trust shall
be liable solely by reason of his being or having been a Shareholder
for any debt, claim, action, demand, suit, proceeding, judgment,
decree, liability or obligation of any kind, against, or with respect
to, the Trust arising out of any action taken or omitted for or on
behalf of the Trust, and the Trust shall be solely liable therefor and
resort shall be had solely to the Trust Property for the payment or
performance thereof.
Each Shareholder or former Shareholder of the Trust (or
their heirs, executors, administrators or other legal representatives
or, in case of a corporate entity, its corporate or general successor)
shall be entitled to indemnity and reimbursement out of the Trust
Property to the full extent of such liability and the costs of any
litigation or other proceedings in which such liability shall have
been determined, including, without limitation, the fees and
disbursements of counsel if, contrary to the provisions hereof, such
Shareholder or former Shareholder of the Trust shall be held to
personal liability.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
The Registrant's co-investment adviser, NBD, is a state chartered bank
incorporated under the laws of Michigan which is wholly-owned by NBD Bancorp,
Inc., a Delaware corporation. NBD conducts a general banking and trust
business.
C-9
<PAGE>
(a) To the Registrant's knowledge, none of the directors or officers of
NBD, except as set forth below, is or has been at any time during the
Registrant's past two fiscal years, engaged in any other business, profession,
vocation, or employment of a substantial nature, except that certain directors
and officers and certain executives of NBD also hold various positions with,
and are engaged in business for, NBD Bancorp, Inc., which owns all of the
outstanding stock of NBD. Set forth below are the names and principal business
of the directors and certain of the senior executive officers of NBD who are
engaged in any other business, profession, vocation or employment of a
substantial nature.
Terence E. Adderley
President and Chief Executive Officer, Kelly Services, Inc.;
and Director of Kelly Services, Inc. and The Detroit Edison
Company.
James K. Baker
Chairman, Arvin Industries, Inc.; Director of Amcast
Industrial Corporation, Geon Company, CINergy Corp., and
Tokheim Corp.
Don H. Barden
Chairman and President, Barden Companies, Inc.; Director of
National Cable TV Association and C-SPAN, the Cable
Satellite Public Affairs Network.
Siegfrild Buschmann
Chairman and Chief Executive Officer, The Budd Company.
Bernard B. Butcher
Retired Senior Consultant and Director of The Dow Chemical
Company.
John W. Day
Retired Executive Vice President, Allied-Signal, Inc.; and
President, Allied-Signal International, Inc.
Maureen A. Fay, O.P.
President, University of Detroit Mercy.
Charles T. Fisher III
Retired Chairman and President, NBD Bancorp, Inc.; and NBD Bank; and
Director of AMR Corporation , General Motors Corporation, and JANNOCK
Limited (Toronto).
C-10
<PAGE>
Alfred R. Glancy III
Chairman, President, and Chief Executive Officer of MCN
Corporation; Chairman of Michigan Consolidated Gas Company;
and Director of MLX Corp.
Dennis J. Gormley
Chairman, President and Chief Executive Officer, Federal-
Mogul Corporation; and Director of Cooper Tire and Rubber
Company.
Joseph L. Hudson, Jr.
Chairman, Hudson-Webber Foundation.
Verne G. Istock
Chairman and Chief Executive Officer, NBD Bancorp, Inc. and
NBD Bank and Director of Handleman Company; and Kelly
Services, Inc.; Grand Trunk Corp.
Thomas H. Jeffs II
President and Chief Operating Officer, NBD Bancorp, Inc. and
NBD Bank; and Director of MCN Corporation.
John E. Lobbia
Chairman and Chief Executive Officer, The Detroit Edison
Company.
Richard A. Manoogian
Chairman and Chief Executive Officer, Masco Corporation and MascoTech,
Inc.; and Chairman of TriMas Corporation.
William T. McCormick, Jr.
Chairman and Chief Executive Officer, CMS Energy Corporation;
Chairman, Consumers Power Company; and Director of Rockwell
International Corporation and Schlumberger, Ltd.
Thomas E. Reilly, Jr.
Chairman of the Board, Reilly Industries, Inc. and Director
of Lilly Industries, Inc.
Irving Rose
Partner, Edward Rose & Sons (Residential Builders).
Robert C. Stempel
Retired Chairman and Chief Executive Officer, General Motors
Corporation.
Peter W. Stroh
Chairman and Chief Executive Officer, The Stroh Companies,
Inc.; Chairman, The Stroh Brewery Company and Director of
Masco Corporation.
C-11
<PAGE>
Ormand J. Wade
Retired Vice Chairman, American Information Technologies
Corporation (Ameritech) and Director of Illinois Tool Works,
Inc.; and Andrew Corp.
(b) The Registrant's co-investment adviser, FCIMCO, is a
registered investment adviser and wholly-owned subsidiary of
The First National Bank of Chicago ("FNBC"), which in turn is a
wholly-owned subsidiary of First Chicago NBD Corporation, a
registered bank holding company.
Registrant is fulfilling the requirement of this Item 28
to provide a list of the officers and directors of First Chicago
Investment Management Company ("FCIMCO"), together with information as
to any other business, profession, vocation or employment of a
substantial nature engaged in by FCIMCO or those of its officers
and directors during the past two years, by incorporating by reference
the information contained in the Form ADV filed with the SEC pursuant
to the Investment Advisers Act of 1940 by FCIMCO (SEC File No. 801-47947).
ITEM 29. PRINCIPAL UNDERWRITERS
(a) FoM is one of the Registrant's principal underwriters. FoM
currently acts as principal underwriter for Renaissance Assets Trust, a
registered investment company. Except for the foregoing, FoM does not act as
principal underwriter, depositor or investment adviser for any other
registered investment company.
(b) The following information is submitted with respect to each
director and officer of FoM, the principal business address of which is 100
Renaissance Center, 26th Floor, Detroit, Michigan
48243:
Position with Position with
Name Underwriter Registrant
---- ------------- -------------
Steve Gasper, Jr. President, Chief None
Executive Officer,
Director
William H. Cuddy Chairman of the Board None
of Directors
Joseph M. Mengden Director None
Craig P. Baker Director None
Geoffrey B. Baker Director None
Gerard M. Lavin Director None
Thomas A. McDonnell Director None
Conrad W. Koski Executive Vice None
President and
Treasurer
Hal H. Smith, III Executive Vice President None
Anthony Calice Senior Vice President None
Lenore P. Denys Senior Vice President None
and Secretary
Ernest J. Gargaro, Jr. Vice President - Tax None
C-12
<PAGE>
Position with Position with
Name Underwriter Registrant
---- ------------- -------------
Incentive Planning/
Qualified Plans
Thomas Enright Vice President None
Ned Evans Vice President None
Martha M. Feazell Vice President None
John Freeman Vice President None
Perry Foor Vice President None
Monica Glinski Vice President None
Michael Gormely Vice President None
Paul Harris Vice President None
Colleen Mahoney Vice President None
Carol McDiarmid Vice President None
Robert H. Stoetzer Vice President None
Diane DeParre Vertin Vice President None
Wayne J. Wright Vice President None
(c) None
(a) Essex is one of the Registrant's principal underwriters. Essex
does not act as principal underwriter, depositor or investment
adviser for any other registered investment company.
(b) The following information is submitted with respect to each
director and officer of Essex, the principal business address
of which is 825 3rd Avenue, 37th Floor, New York, NY 10022:
Position with Position with
Name Underwriter Registrant
---- ------------- -------------
Kevin E. Crowe Chairman and None
Chief Executive Officer
Gerald Cunningham President None
C-13
<PAGE>
Thomas E. Albright Senior Vice President None
Elisa Lanthier Treasurer None
William O'Loughlin Treasurer, Vice None
President
Greg Zytkowicz Secretary, Vice None
President
Robert B. Twomey Vice President None
(c) None
(a) BISYS Fund Services Inc. acts as distributor and administrator
for the Registrant. BISYS Fund Services also distributes the
securities of the American Performance Funds, The Highmark
Group, The Parkstone Group of Funds, The Sessions Group, the
AmSouth Mutual Funds, The Coventry Group, the BB&T Mutual
Funds Group, the MarketWatch Funds, The M.S.D. & T Funds,
Inc., The Riverfront Funds, Inc., the Pacific Capital Funds,
the MMA Praxis Mutual Funds, the Qualivest Funds, Mountain
Square Funds, Mariner Mutual Funds Trust, Mariner Funds Trust
and The Victory Portfolios, each of which is an open-end
management investment company.
(b) To the best of Registrant's knowledge, the partners of
BISYS Fund Services are as follows:
<TABLE>
<CAPTION>
Name and
Principal Positions and Positions and
Business Offices with Offices with
Address BISYS Fund Services Registrant
- -------- ------------------- -------------
<S> <C> <C>
BISYS Fund Services, Inc. Sole General Partner None
150 Clove Road
Little Falls, NJ 07424
WC Subsidiary Corporation Limited Partner None
150 Clove Road
Little Falls, NJ 07424
</TABLE>
(c) None
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
(a) NBD Bank, 611 Woodward Avenue, Detroit, Michigan 48226 and 900
Tower Drive, Troy, Michigan 48098 (records relating to
functions as advisor, custodian, and transfer and dividend
disbursing agent).
(b) First of Chicago Investment Management Company, Three First
National Plaza, Chicago, Illinois 60670 (records relating to
its function as co-advisor and co-administrator).
(c) First of Michigan Corporation, 100 Renaissance Center, 26th
Floor, Detroit, Michigan 48243 (records relating to its
function as co-distributor).
(d) Essex National Securities, Inc., 215 Gateway Road West,
Napa, California 34550-6249 (records relating to its
functions as co-distributor).
(e) BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as distributor
and co-administrator).
(f) Drinker Biddle & Reath, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107-3496 (Registrant's
Declaration of Trust, By-Laws and Minute Books).
C-14
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Inapplicable.
ITEM 32. UNDERTAKINGS
Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees if
requested to do so by the holders of at least 10% of Registrant's outstanding
shares. Registrant will stand ready to assist shareholder communications in
connection with any meeting of shareholders as prescribed in Section 16(c) of
the Investment Company Act of 1940.
Registrant undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's most recent annual report
to shareholders, upon request without charge.
With respect to the Woodward Cash Management, U.S. Government
Securities Cash Management and Treasury Prime Cash Management Funds,
Registrant undertakes to file a post-effective amendment containing current
financial statements (which need not be certified) within four to six months
from the effective date of the filing of this Post-Effective Amendment.
C-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Detroit,
State of Michigan, on the 5th day of April, 1996.
THE WOODWARD FUNDS
Registrant
/s/ Earl I. Heenan, Jr.
Earl I. Heenan, Jr.
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
---------- ----- ----
/s/ Earl I. Heenan, Jr.
- -------------------------
Earl I. Heenan, Jr. Trustee April 5, 1996
/s/ Eugene C. Yehle
- -------------------------
Eugene C. Yehle Trustee April 5, 1996
/s/ Will M. Caldwell
- -------------------------
Will M. Caldwell Trustee April 5, 1996
/s/ Julius L. Pallone
- -------------------------
Julius L. Pallone Trustee April 5, 1996
/s/ Nicholas J. De Grazia
- -------------------------
Nicholas J. De Grazia Trustee April 5, 1996
/s/ Donald G. Sutherland
- -------------------------
Donald G. Sutherland Trustee April 5, 1996
/s/ Donald L. Tuttle
- -------------------------
Donald L. Tuttle Trustee April 5, 1996
/s/ John P. Gould Trustee April 5, 1996
- -------------------
John P. Gould
/s/ Marilyn McCay Trustee April 5, 1996
- -------------------------
Marilyn McCay
C-16
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
- ----------- ------- --------
(5)(a) Form of Co-Advisory Agreement
among Registrant, NBD Bank ("NBD")
and First Chicago Investment Management
Company ("FCIMCO").
(b) Advisory Agreement between Registrant
and NBD Bank, dated November 28, 1995.
(6)(a) Form of Distribution Agreement among
Registrant and BISYS Fund Services
("BISYS").
(8)(i) Form of Addendum No. 8 to the Amended
and Restated Custodian Agreement between
Registrant and NBD relating to the
Woodward Money Market, Government, Tax-
Exempt Money Market, Growth/Value,
Opportunity, Intrinsic Value,
Intermediate Bond, Bond, Michigan Tax-Exempt
Money Market, Equity Index, Treasury
Money Market, Municipal Bond, Michigan
Municipal Bond, Balanced, Capital Growth,
Short Bond, U.S. Government Income,
International Equity, Cash Management,
U.S. Government Securities Cash Management,
Treasury Prime Cash Management,
Equity Income, Small Cap Opportunity,
Intermediate Municipal Bond, Income,
International Bond, Managed Assets
Conservative, Managed Assets Growth and
Major Markets Funds.
(9)(a) Form of Co-Administration Agreement among
the Registrant, NBD, FCIMCO and BISYS.
(i) Form of Addendum No. 7 to the Amended and
Restated Transfer Agency and Dividend
Disbursement Agreement between Registrant
and NBD relating to the Woodward Cash
Management Fund, Treasury Prime Cash
Management Fund and U.S. Government
Securities Cash Management Fund.
(n) Form of Distribution and Services Plan
including form of Agreement.
(11)(a) Consent of Arthur Andersen LLP.
(11)(b) Consent of Drinker Biddle & Reath.
1
EXHIBIT (5)(a)
PROPOSED
CO-ADVISORY AGREEMENT
This Agreement, dated as of the ___ day of ______, 1996, is entered
into by and among NBD Bank ("NBD"), First Chicago Investment Management
Company ("FCIMCO") and The Woodward Funds (the "Trust"), a Massachusetts
business trust registered as an investment company under the Investment
Company Act of 1940 (the
"1940 Act");
WHEREAS, the Trust desires to appoint NBD and FCIMCO to act as
co-advisers to the Trust's investment portfolios listed on Schedule 1 attached
hereto (each a "Fund" and collectively the "Funds").
WHEREAS, NBD and FCIMCO (each an "Adviser" and collectively the
"Advisers") desire to perform investment advisory services on behalf of the
Trust's Funds;
NOW, THEREFORE, the parties hereto intending to be legally bound,
hereby agree as follows:
1. Appointment. (a) The Trust hereby appoints the Advisers to act as
investment co-advisers for each of the Funds of the Trust for the period and
on the terms set forth in this Agreement. The Advisers accept such appointment
and agree to render the services herein set forth, for the compensation herein
provided. The Advisers may, in their discretion, provide such services through
their own employees or the employees of one or more affiliated companies that
are qualified to act as investment adviser to the Trust under applicable law
and are under the common control of First Chicago NBD Corporation provided (i)
that all persons, when providing services hereunder, are functioning as part
of an organized group of persons, and (ii) that such organized group of
persons is managed at all times by persons who are authorized officers of one
or both of the Advisers.
(b) In the event that the Trust establishes one or more
investment portfolios other than the Funds with respect to which it desires to
retain the Advisers to act as investment co-advisers hereunder, the Trust
shall notify the Advisers in writing. If the Advisers are willing to render
such services they shall notify the Trust in writing whereupon, subject to
such shareholder approval as may be required pursuant to Paragraph 8 hereof,
such portfolio shall become a Fund hereunder and the compensation payable by
such new Fund to the Advisers will be as agreed in writing at the time.
2. Management. Subject to the supervision of the Board of Trustees of
the Trust (the "Board"), the Advisers will provide a continuous investment
program for each of the Funds, including investment research and management
with respect to all securities, investments, cash and cash equivalents in each
Fund. The Advisers will determine from time to time what securities and other
investments will be purchased, retained or sold by the Trust for each of its
Funds. The Advisers will provide the services rendered by them hereunder in
accordance with the investment objective and policies of each of the Funds as
stated in their respective prospectuses ("Prospectuses" or a "Prospectus"),
statements of additional information ("SAIs") and all amendments and
supplements thereto, Bylaws, Amended and Restated Declaration of Trust and
resolutions adopted from time to time by the Trust's Board. The Advisers
further agree that they:
(a) will conform with all applicable Rules and Regulations
(hereinafter called the "Rules") of the Securities and
Exchange Commission ("SEC"), and will in addition
conduct their activities under this Agreement in
accordance with other applicable laws;
(b) will place all orders for the purchase and sale of
portfolio securities for the account of each Fund
with brokers or dealers selected by the Advisers.
In executing portfolio transactions and selecting
brokers or dealers, the Advisers will use their
best efforts to seek on behalf of the Trust and
each Fund thereof the best overall terms
available. In assessing the best overall terms
available for any transaction, the Advisers shall
consider all factors they deem relevant, including
the breadth of the market in the security, the
price of the security, the financial condition and
execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both
for the specific transaction and on a continuing
basis. In evaluating the best overall terms
available, and in selecting the broker or dealer
to execute a particular transaction, the Advisers
may also consider the brokerage and research
services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934)
provided to any Fund and/or other accounts over
which the Advisers or an affiliate of the Advisers
exercises investment discretion. The Advisers are
authorized, subject to the prior approval of such
policy by the Trust's Board, to pay to a broker or
dealer who provides such brokerage and research
services a commission for executing a portfolio
transaction for any Fund which is in excess of the
amount of commission another broker or dealer
would have charged for effecting that transaction if,
but only if, such is consistent with applicable law and
the Advisers determine in good faith that such
commission was reasonable in relation to the value of
the brokerage and research services provided by such
broker or dealer -- viewed in terms of that particular
transaction or in terms of the overall responsibilities
of the Advisers to the particular Fund and to the Trust.
In no instance will portfolio securities be purchased
from or sold to the Advisers or the Trust's principal
underwriter for the Funds or an affiliated person of
either, acting as principal or as broker, except as
permitted by law. In executing portfolio transactions
for any Fund, the Advisers, to the extent permitted by
applicable laws and regulations, may but shall not be
obligated to, aggregate the securities to be sold or
purchased with those of other Funds and their other
clients where such aggregation is not inconsistent with
applicable law and the policies set forth in the Funds'
registration statement. In such event, the Advisers will
allocate the securities so purchased or sold, and the
expenses incurred in the transaction, in the manner they
consider to be the most equitable and consistent with
their fiduciary obligations to the Funds and such other
clients;
(c) will maintain a policy and practice of conducting
their investment advisory operations independently
of their commercial banking operations. When the
Advisers make investment recommendations for a
Fund, their investment advisory personnel will not
inquire or take into consideration whether the
issuer of securities proposed for purchase or sale
for the Fund's account are customers of their
commercial departments. In dealing with
commercial customers, the Advisers' commercial
departments will not inquire or take into
consideration whether securities or those
customers are held by the Funds;
(d) will maintain all books and records with respect to the
securities transactions of the Funds; and furnish the
Trust's Board such periodic and special reports as the
Board may request;
(e) will treat confidentially and as proprietary
information of the Trust all records and other
information relative to the Trust and prior or present
shareholders of the Funds or those persons or entities
who respond to inquiries of the Trust's principal
underwriter concerning investment in the Funds and will
not use such records and information for any purpose
other than performance of their responsibilities and
duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall
not be unreasonably withheld and may not be withheld
where the Advisers may be exposed to civil or criminal
contempt proceedings for failure to comply, when
requested to divulge such information by duly
constituted authorities, or when so requested by the
Trust. Nothing contained herein or in any other
agreement executed with the Trust, however, shall
prohibit NBD, FCIMCO and any of their affiliates from
advertising to or soliciting the public generally with
respect to other products or services, including, but
not limited to, any advertising or marketing via radio,
television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement
or solicitation may coincidentally include prior or
present Fund shareholders or those persons or entities
who have responded to inquiries of the Trust's principal
underwriter.
3. Services Not Exclusive. The services rendered by the Advisers
hereunder are not to be deemed exclusive, and the Advisers shall be free to
render similar services to others so long as their services under this
Agreement are not impaired thereby.
4. Expenses. During the term of this Agreement, the Advisers will pay
all expenses incurred by them in connection with their activities under this
Agreement other than the cost of securities purchased for the Funds (including
brokerage commissions, if any).
In addition, if the expenses borne by any Fund in any fiscal year
exceed the applicable expense limitations imposed by the securities
regulations of any state in which the shares are registered or qualified for
sale to the public, the Advisers jointly and severally agree to reimburse such
Fund for a portion of any excess expense in an amount equal to the portion
that the advisory fees otherwise payable by the Fund to the Advisers bear to
the total amount of investment advisory and administration fees otherwise
payable by the Fund. The expense reimbursement obligation of the Advisers is
limited to the amount of their fees hereunder for such fiscal year; provided,
however, that notwithstanding the foregoing, the Advisers shall reimburse such
Fund for a portion of any such excess expenses in an amount equal to the
proportion that the fees otherwise payable to the Advisers bear to the total
investment advisory and administration fees otherwise payable by the Fund
regardless of the amount of such fees payable to the Advisers during such
fiscal year to the extent that the securities regulations of any state in
which the Trust's shares are registered or qualified for sale so require. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
5. Compensation. For the services provided and the expense assumed
pursuant to this Agreement, the Trust will pay the Advisers and the Advisers
will accept as full compensation therefor the fees set forth on Schedule 2
hereof.
6. Sub-Adviser. It is understood that, subject to the prior approval
of the Board of the Trust, the Advisers may employ a sub-adviser(s) to assist
them in the performance of this Agreement, and it is agreed that the Advisers
shall be as fully responsible to the Trust for the acts and omissions of the
sub- adviser(s) as they are for their own acts and omissions. Any compensation
to be paid to such sub-adviser will be paid by the Advisers and the activities
of such subadviser will be subject to the provisions of this Agreement. The
Advisers will use their best effort to cause the sub-adviser(s) to comply with
all of the Advisers' policies, including without limitation, their codes of
ethics and their policies relating to personal trading, brokerage and
securities allocation, soft and hard dollars and compliance.
7. Limitation of Liability of the Advisers. The Advisers shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which this Agreement relates,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Advisers in the
performance of their duties or from reckless disregard by their obligations
and duties under this Agreement. The Advisers agree that their liability,
including the liability of any sub-adviser, under this Agreement as set forth
herein, shall be joint and several. Any person, even though also an officer,
Board member, partner, director, employee or agent of an Adviser, who may be
or become an officer, Board member, partner, employee or agent of the Trust,
shall be deemed, when rendering services to the Trust or acting on any
business of the Trust (other than services or business in connection with the
Advisers' duties as co-advisers hereunder) to be rendering such services to or
acting solely for the Trust and not as an officer, Board member, partner,
director, employee or agent or one under the control or direction of the
Advisers even though paid by either of them.
8. Duration and Termination. This Agreement shall become effective
with respect to a Fund upon approval of this Agreement by vote of a majority
of the outstanding voting securities of such Fund and, unless sooner
terminated as provided herein, shall continue with respect to such Fund until
_____, 199_. Thereafter, if not terminated, this Agreement shall continue with
respect to a Fund for successive annual periods, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Board of the Trust who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Board of the Trust or
by vote of a majority of the outstanding voting securities of such Fund;
provided, however, that this Agreement may be terminated with respect to a
Fund, without the payment of any penalty, by the Board of the Trust or by vote
of a majority of the outstanding voting securities of such Fund on sixty (60)
days' written notice, or by the Advisers, on ninety (90) days' written notice
to the Trust. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested person" and "assignment" shall have the same
meaning as such terms have in the 1940 Act.)
9. Amendment of this Agreement. No provisions in this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party or parties against which enforcement of the change,
discharge or termination is sought, and no amendment to this Agreement
affecting a Fund shall be effective until approved by vote of the holders of a
majority of the outstanding voting securities of such Fund.
10. Names. The names "The Woodward Funds" and "Trustees of The
Woodward Funds" refer, respectively, to the Trust created and the trustees
("Trustees"), as trustees but not individually or personally, acting from time
to time under a Declaration of Trust dated April 21, 1987, as amended on May
1, 1992, which is hereby referred to and a copy of which is on file at the
office of the Secretary of State of the Commonwealth of Massachusetts and at
the principal office of the Trust. The obligations of the Fund entered into in
the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the Trust property, and all persons dealing with any
series of shares in the Trust must look solely to the Trust property belonging
to such series for the enforcement of any claims against the Trust.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Michigan law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE WOODWARD FUNDS
Attest:
_______________________ By: ______________________
NBD BANK
Attest:
_______________________ By: ______________________
(Corporate Seal)
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
Attest:
_______________________ By: _______________________
(Corporate Seal)
<PAGE>
SCHEDULE 1
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
MICHIGAN MUNICIPAL MONEY MARKET FUND
CASH MANAGEMENT FUND
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
TREASURY PRIME CASH MANAGEMENT FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND
EQUITY INDEX FUND
GROWTH AND VALUE FUND
INTRINSIC VALUE FUND
MID CAP OPPORTUNITY FUND
EQUITY INCOME FUND
SMALL CAP OPPORTUNITY FUND
BOND FUND
SHORT BOND FUND
MICHIGAN MUNICIPAL BOND FUND
INTERMEDIATE MUNICIPAL BOND FUND
MUNICIPAL BOND FUND
INCOME FUND
INTERMEDIATE BOND FUND
INTERNATIONAL BOND FUND
MANAGED ASSETS BALANCED FUND
MANAGED ASSETS CONSERVATIVE FUND
MANAGED ASSETS GROWTH FUND
MAJOR MARKETS FUND
<PAGE>
SCHEDULE 2
As compensation for their services hereunder, the Trust will pay an
advisory fee, computed daily and payable monthly, at the following annual
rates for the respective Funds:
<TABLE>
<CAPTION>
========================================================================================
Fund Fee Rate
- ----------------------------------------------------------------------------------------
<S> <C>
Money Market Fund .30% of the first $1.0
Treasury Money Market Fund billion, .275% of the next $1
Michigan Municipal Money billion and .25% of each such
Market Fund Fund's average daily net
Municipal Money Market Fund assets in excess of $2 billion
International Equity Fund .80% of the average net assets
Major Markets Fund of the Fund
Managed Assets Balanced Fund .65% of the average net assets
Managed Assets Conservative of the Fund
Fund
Managed Assets Growth Fund
Municipal Bond Fund .40% of the average net assets
Income Fund of the respective Fund
Intermediate Municipal Bond
Fund
Intermediate Bond Fund
Michigan Municipal Bond
Bond Fund
Short Bond Fund .35% of the average net assets
of the respective Fund
Cash Management Fund .20% of the average net assets
U.S. Government for each Fund
Cash Management Fund
Treasury Prime Cash
Management Fund
Equity Index Fund .10% of the average net assets
of the Fund
International Bond Fund .70% of the average net assets
Small Cap Opportunity Fund of the Fund
Equity Income Fund .50% of the average net assets
of the respective Fund
Growth Fund .60% of the average net assets
Mid Cap Opportunity Fund of the respective Fund
Growth and Value Fund
Intrinsic Value Fund
</TABLE>
<PAGE>
Net asset value shall be computed in accordance with the Funds'
Prospectuses and resolutions of the Trust's Board of Trustees. The fee for the
period from the day of the month this Agreement is entered into until the end
of that month shall be pro-rated according to the proportion which such period
bears to the full monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of a month shall be
pro-rated according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. Such fee as is attributable to each Fund shall be a separate charge
to such Fund and shall be the several (and not joint or joint and several)
obligation of each such Fund.
In addition, the Advisers will receive as compensation under this
Agreement 4/10ths of the gross income earned by each Fund on each loan of its
securities (including capital gains and loss, if any).
EXHIBIT (5)(b)
THE WOODWARD FUNDS
ADVISORY AGREEMENT
This Agreement, dated as of the 28th day of November, 1995, is entered
into between NBD BANK ("NBD" or the "Adviser"), a state chartered bank
incorporated under the laws of Michigan, having its principal office and place
of business at 611 Woodward Avenue, Detroit, Michigan, and THE WOODWARD FUNDS
(the "Trust"), a business trust organized under the laws of the Commonwealth
of Massachusetts, having its principal office and place of business c/o NBD
Bank, 900 Tower Drive, Troy, Michigan;
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain NBD as investment adviser to the
Woodward Government Fund, Woodward Money Market Fund, Woodward Tax-Exempt
Money Market Fund, Michigan Tax-Exempt Fund, Woodward Growth/Value Fund,
Woodward Opportunity Fund, Woodward Intrinsic Value Fund, Woodward
Intermediate Bond Fund, Woodward Bond Fund, Woodward Equity Index Fund,
Woodward Treasury Money Market Fund, Woodward Municipal Bond Fund, Woodward
Michigan Municipal Bond Fund, Woodward Balanced Fund, Woodward Capital Growth
Fund, Woodward International Equity Fund, Woodward Short Bond Fund and
Woodward U.S. Government Income Fund (individually, a "Fund" and collectively,
the "Funds");
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Appointment. (a) The Trust hereby appoints the Adviser
to act as investment adviser for each of the Funds of the Trust
for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
(b) In the event that the Trust establishes one or more investment
portfolios other than the Funds with respect to which it desires to retain the
Adviser to act as investment adviser hereunder, the Trust shall notify the
Adviser in writing. If the Adviser is willing to render such services it shall
notify the Trust in writing whereupon, subject to such shareholder approval as
may be required pursuant to Paragraph 8 hereof, such portfolio shall become a
Fund hereunder and the compensation payable by such new Fund to the Adviser
will be as agreed in writing at the time.
2. Management. Subject to the supervision of the Board of Trustees of
the Trust, the Adviser will provide a continuous investment program for each
of the Funds, including investment research and management with respect to all
securities, investments, cash and cash equivalents in each Fund. The Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold by the Trust for each of its Funds. The Adviser
will provide the services rendered by it hereunder in accordance with the
investment objective and policies of each of the Funds as stated in their
respective Prospectuses and resolutions adopted from time to time by its Board
of Trustees. The Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations
(herein called the "Rules") of the Securities and Exchange
Commission ("SEC"), and will in addition conduct its
activities under this Agreement in accordance with other
applicable law, including but not limited to banking law;
(b) will place all orders for the purchase and sale of
portfolio securities for the account of each Fund with
brokers or dealers selected by the Adviser. In executing
portfolio transactions and selecting brokers or dealers, the
Adviser will use its best efforts to seek on behalf of the
Trust and each Fund thereof the best overall terms available.
In assessing the best overall terms available for any
transaction, the Adviser shall consider all factors it deems
relevant, including the breadth of the market in the
security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker
or dealer to execute a particular transaction, the Adviser
may also consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to any Fund and/or other
accounts over which the Adviser or an affiliate of the
Adviser exercises investment discretion. The Adviser is
authorized, subject to the prior approval of the Trust's
Board of Trustees, to pay to a broker or dealer who provides
such brokerage and research services a commission for
executing a portfolio transaction for any Fund which is in
excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but
only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer -- viewed in terms of that particular transaction or
in terms of the overall responsibilities of the Adviser to
the particular Fund and to the Trust. In no instance will
portfolio securities be purchased from or sold to the Adviser
or the Trust's principal underwriter for the Funds or an
affiliated person of either acting as principal or as broker,
except as permitted by law. In executing portfolio
transactions for any Fund the Adviser, to the extent
permitted by applicable laws and regulations, may but shall
not be obligated to, aggregate the securities to be sold or
purchased with those of other Funds and its other clients
where such aggregation is not inconsistent with the policies
set forth in the Funds' registration statement. In such
event, the Adviser will allocate the securities so purchased
or sold, and the expenses incurred in the transaction, in the
manner it considers to be the most equitable and consistent
with its fiduciary obligations to the Funds and such other
clients;
(c) will not make loans to any person to purchase or carry Fund
shares or make interest bearing loans to the Trust or a Fund;
(d) will not purchase shares of a Fund for its own account;
(e) will maintain a policy and practice of conducting its
investment advisory operations independently of its
commercial banking operations. When the Adviser makes
investment recommendations for a Fund, its investment
advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed for
purchase or sale for the Fund's account are customers of its
commercial department. In dealing with commercial customers,
the Adviser's commercial department will not inquire or take
into consideration whether securities of those customers are
held by the Funds;
(f) will maintain all books and records with respect to the
securities transactions of the Funds; keep books of account
with respect to the Funds; and furnish the Trust's Board of
Trustees such periodic and special reports as the Board may
request;
(g) will compute the net asset value, net income and realized and
unrealized capital gains and losses for each of the Funds
(and each class or series thereof, if applicable) in
accordance with the Prospectuses and resolutions of the
Trust's Board of Trustees;
(h) will monitor the Trust's arrangements with respect to
services provided by certain institutional shareholders
("Shareholder Servicing Agents") to their customers who own
Fund shares pursuant to agreements between the Trust and such
Shareholder Servicing Agents (the "Servicing Agreements"),
including, among other things, reviewing the qualifications
of Shareholder Servicing Agents wishing to enter into
Servicing Agreements with the Trust, assisting in the
execution and delivery of Servicing Agreements, reporting to
the Board of Trustees with respect to the amounts paid or
payable by the Funds from time to time under the Servicing
Agreements and the nature of the services provided by
Shareholder Servicing Agents, and maintaining appropriate
records in connection with its monitoring duties;
(i) will compile data for and prepare with respect to the
Funds timely Notices to the SEC required pursuant to Rule
24f-2 under the 1940 Act and Semi-Annual Reports on Form
N-SAR; coordinate execution and filing by the Trust of all
federal and state tax returns and required tax filings other
than those required to be made by the Trust's custodian and
transfer agent; prepare compliance filings pursuant to state
securities laws with the advice of the Trust's counsel; and
assist to the extent requested by the Trust with the Trust's
preparation of Annual and Semi-Annual Reports to Fund
shareholders and Registration Statements for the Funds (on
Form N-1A or any replacement therefor);
(j) will monitor each Fund's expense accruals and pay all
expenses on proper authorization from each Fund; monitor each
Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended
from time to time; maintain each Fund's fidelity bond as
required by the 1940 Act; and monitor compliance with the
policies and limitations of each Fund as set forth in the
Prospectuses, Statements of Additional Information, Bylaws
and Trust Instrument;
(k) will assist in maintaining office facilities for the Trust at
such location as the Trust shall reasonably determine; and
furnish clerical, accounting and bookkeeping services, and
stationery and office supplies;
(l) will perform all administrative functions for the Trust and
the Funds not otherwise assigned to another person by
contract or otherwise and will generally assist in the
operations of the Trust and the Funds; and
(m) will treat confidentially and as proprietary
information of the Trust all records and other information
relative to the Trust and prior or present shareholders of
the Funds or those persons or entities who respond to
inquiries of the Trust's principal underwriter concerning
investment in the Funds, and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be
withheld where the Adviser may be exposed to civil or
criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. Nothing
contained herein, however, shall prohibit the Adviser from
advertising to or soliciting the public generally with
respect to other products or services, including, but not
limited to, any advertising or marketing via radio,
television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement or
solicitation may coincidentally include prior or present Fund
shareholders or those persons or entities who have responded
to inquiries of the Trust's principal underwriter.
3. Services Not Exclusive. The services rendered by the Adviser
hereunder are not to be deemed exclusive, and the Adviser shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
4. Books and Records. In compliance with the requirements of Rule
31a-3 of the Rules, the Adviser hereby agrees that all records which it
maintains for each Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 the records required to be maintained by Rule 31a-1 of the Rules.
5. Expenses. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of (including brokerage commissions, if any)
securities purchased for the Funds.
In addition, if the expenses borne by any Fund in any fiscal year
exceed the applicable expense limitations imposed by the securities
regulations of any state in which the shares are registered or qualified for
sale to the public, the Adviser shall reimburse such Fund for any such excess
up to the amount of the fees payable by the particular Fund to it during such
fiscal year pursuant to paragraph 6 hereof; provided, however, that
notwithstanding the foregoing, the Adviser shall reimburse such Fund for such
excess expenses regardless of the amount of such fees payable to it during
such fiscal year to the extent that the securities regulations of any state in
which the Trust's shares are registered or qualified for sale so require.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Adviser and the Adviser
will accept as full compensation therefor: (a) 4/10ths of the gross income
earned by each Fund on each loan of its securities (excluding capital gains
and losses, if any); plus (b) with respect to the Woodward Government Fund,
Woodward Money Market Fund, Woodward Tax-Exempt Money Market Fund and Woodward
Treasury Money Market Fund, a fee, computed daily and payable monthly, at the
annual rate of .45% of the first $1.0 billion of each Fund's average daily net
assets, .425% of the next $1.0 billion, and .40% of each Fund's average daily
net assets in excess of $2.0 billion; plus (c) with respect to the Woodward
Growth/Value Fund, Woodward Opportunity Fund, Woodward Intrinsic Value Fund,
Woodward Balanced Fund, Woodward Capital Growth Fund and International Equity
Fund, a fee, computed daily and payable monthly, at the annual rate of .75% of
each Fund's average daily net assets; plus (d) with respect to the Woodward
Intermediate Bond Fund, Woodward Bond Fund, Woodward Municipal Bond Fund,
Woodward Michigan Municipal Bond Fund, Woodward Short Bond Fund and Woodward
U.S. Government Income Fund, a fee, computed daily and payable monthly, at the
annual rate of .65% of each Fund's average daily net assets; plus (e) with
respect to the Woodward Michigan Tax-Exempt Money Market Fund, a fee, computed
daily and payable monthly, at the annual rate of .50% of such Fund's average
daily net assets; plus (f) with respect to the Woodward Equity Index Fund, a
fee computed daily and payable monthly, at the annual rate of .10% of such
Fund's average daily net assets. The fee attributable to each Fund shall be
the several (and not joint or joint and several) obligation of each such Fund.
7. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which this Agreement relates,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
8. Duration and Termination. This Agreement shall become effective
with respect to a Fund upon approval of this Agreement by vote of a majority
of the outstanding voting securities of such Fund and, unless sooner
terminated as provided herein, shall continue with respect to such Fund until
April 30, 1996. Thereafter, if not terminated, this Agreement shall continue
with respect to a Fund for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Trustees of the Trust who are not
parties to this Agreement or "interested persons" of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of such Fund; provided, however, that this
Agreement may be terminated with respect to a Fund, without the payment of any
penalty, by the Board of Trustees of the Trust, by vote of a majority of the
outstanding voting securities of such Fund, or by the Adviser, on 60 days'
written notice to the other party. This Agreement will immediately terminate
in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meaning as such terms have in the 1940 Act.)
9. Amendment of this Agreement. No provisions in this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting a Fund
shall be effective until approved by vote of the holders of a majority of the
outstanding voting securities of such Fund.
10. Names. The names "The Woodward Funds" and "Trustees of The
Woodward Funds" refer, respectively, to the trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated as of April 21, 1987, as amended and restated as of
May 1, 1992, which is hereby referred to and a copy of which is on file at the
Office of the Secretary of State of the Commonwealth of Massachusetts and at
the principal office of the Trust. The obligations of The Woodward Funds
entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities,
and are not binding upon any of the Trustees, shareholders or representatives
of the Trust personally, but bind only the Trust property, and all persons
dealing with any series of shares in the Trust must look solely to the Trust
property belonging to such series for the enforcement of any claims against
the Trust.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Michigan law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE WOODWARD FUNDS
Attest:
/s/ Beth M. Peck By: /s/ Earl I. Heenan, Jr.
- ---------------- -----------------------
Earl I. Heenan, Jr.
President
NBD BANK
Attest:
/s/ Beth M. Peck By: /s/ Richard L. Foersterling
- ---------------- ---------------------------
Richard L. Foersterling
First Vice President
EXHIBIT (6)(a)
PROPOSED
DISTRIBUTION AGREEMENT
This Agreement is made as of this ____ day of ____, 1996 by and
between The Woodward Funds, a Massachusetts business trust (the "Trust") and
BISYS Fund Services Limited Partnership, d/b/a BISYS Fund Services ("BISYS").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end management
investment company;
WHEREAS, the Trust is currently offering shares of beneficial interest
(the "Shares") representing interests in the investment portfolios ("Series")
listed on Schedule 1 attached hereto;
WHEREAS, BISYS is a securities firm engaged inter alia in the business
of selling shares of investment companies either directly to investors or
through other securities dealers;
WHEREAS, the Trust desires to retain BISYS as the distributor
("Distributor") for its Series to provide for the sale and distribution of the
Shares, and BISYS is prepared to provide such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein and intending to be legally bound hereby the parties hereto
agree as follows:
Section 1. Appointment as Distributor.
(a) The Trust hereby appoints BISYS as the exclusive
Distributor and representative of the Trust to act as agent for the sale and
distribution of Shares of each Series described in the currently effective
prospectuses (hereinafter referred to as "Prospectuses" or a "Prospectus") and
registration statement ("Registration Statement") of the Trust. The Trust
during the term of this Agreement shall sell its Shares through BISYS upon the
terms and conditions set forth below.
(b) BISYS shall use its best efforts to solicit orders for the
sale of Shares. It is contemplated that BISYS will enter into sales or
servicing agreements with securities dealers, financial institutions and other
industry professionals, such as investment advisers, accountants and estate
planning firms, and in so doing will act only on its own behalf as principal.
No securities dealer or other person who enters into a servicing agreement
with BISYS shall be authorized to act as an agent for the Trust or its Series
in connection with the offering or sale of Shares to the public or otherwise.
(c) BISYS shall prepare or review, provide advice with respect
to, and file with the federal and state agencies or other organizations as
required by federal, state, and other applicable laws and regulations, all
sales literature (advertisements, brochures and shareholder communications)
for each of the Series and any classes of Shares thereof.
(d) In the event that the Trust establishes one or more
additional investment portfolios other than the Series with respect to which
it desires to retain BISYS to act as the exclusive Distributor and
representative hereunder, the Trust shall notify BISYS in writing. If BISYS is
willing to render such services it shall notify the Trust in writing
whereupon, subject to such approval as may be required pursuant to Section 13
hereof, or any necessary regulatory or shareholder approvals, such portfolio
shall become a Series hereunder and the compensation payable by such new
Series to BISYS will be as agreed in writing at the time.
Section 2. Exclusive Nature of Duties.
BISYS shall be the exclusive representative of the Trust to act
as sponsor and Distributor, except that:
(a) The Trust may, upon written notice to BISYS, from time to
time designate other principal underwriters and distributors of Shares of one
or more Series with respect to areas other than the United States as to which
BISYS may have expressly waived in writing its right to act as such. If such
designation is deemed exclusive, the right of BISYS under this Agreement to
act as agent for the distribution of Shares in the areas so designated shall
terminate, but this Agreement shall remain otherwise in full effect until
terminated in accordance with the other provisions hereof;
(b) The exclusive rights granted to BISYS to act as agent for
the distribution of Shares of the Trust shall not apply to Shares of any
Series issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Trust or the
acquisition by purchase or otherwise of all (or substantially all) the assets
or the outstanding shares of any such company by the Trust;
(c) Such exclusive rights shall also not apply to Shares issued
by the Trust pursuant to reinvestment of dividends and capital gains
distributions; and
(d) The Trust acknowledges that the persons employed by BISYS
to assist in the performance of its duties under this Agreement may not devote
their full time to such service and nothing contained in this Agreement shall
be deemed to limit or restrict BISYS or any of its affiliates' right to engage
in and devote time and attention to other businesses or to render services of
whatever kind or nature.
Section 3. Distribution of Shares of the Trust.
(a) BISYS shall have the right to solicit unconditional orders
for Shares of the Trust. The price which investors shall pay for the Shares so
purchased from the Trust shall be determined as set forth in Section 3(b)
hereof.
(b) The public offering price of the Shares of any Series,
i.e., the price per share at which BISYS may offer Shares to the public, shall
be the public offering price as set forth in the Prospectus relating to such
Shares, which shall be the net asset value thereof, as determined in
accordance with the description thereof contained in the Prospectus relating
to such Shares, plus any sales charge as set forth in the Prospectus.
(c) The Trust, or any agent of the Trust designated in writing
by it, shall be promptly advised of all purchase and redemption orders for
Shares received by BISYS. Procedures may be established by the Trust and BISYS
whereby purchase orders for Shares of any Series are presented directly to the
Trust or an agent designated by the Trust upon the condition that in such
cases it shall be deemed that the sale of the Shares to be purchased is made
pursuant to Section 3 hereof. Any order may be rejected by the Trust in its
sole discretion or by BISYS, as the case may be, provided, however, that BISYS
will not arbitrarily or without reasonable cause refuse to transmit orders for
the purchase of Shares. The Trust (or its agent) will confirm orders in
accordance with the rules and regulations, or any exemptive order, of the
Securities and Exchange Commission, and will make appropriate book entries
pursuant to the instructions of BISYS. Purchase orders are effective when
Federal Funds become available to the Trust or as otherwise stated in the
Prospectus. BISYS agrees to cause such payment and such instructions received
by it to be delivered promptly to the Trust (or its agent).
Section 4. Redemption of Shares by the Trust.
(a) Any of the outstanding Shares may be tendered for
redemption at any time, and the Trust shall redeem the Shares so tendered in
accordance with its obligations and rights as set forth in its Amended and
Restated Declaration of Trust, as amended from time to time, and in accordance
with the applicable provisions contained in the Prospectus relating to such
Shares. The Trust shall pay the total amount of the redemption price pursuant
to the instructions of BISYS as the case may be, and in accordance with the
terms set forth in the Prospectus relating to the Shares being redeemed.
(b) If any Shares sold by the Trust are redeemed or repurchased
by the Trust or by BISYS as agent or are tendered for redemption within seven
business days after the date of confirmation of the original purchase of said
Shares, BISYS, as the case may be, shall forfeit any amount above the net
asset value which it may have received in respect of such Shares, provided
that the portion of such amount reallowed by BISYS to broker/dealers or other
persons shall be repayable to the Trust only to the extent recovered by BISYS
from the broker/dealer or other person concerned. BISYS shall include in the
form of agreement with such broker/dealers and other persons a corresponding
provision for the forfeiture by them of their concession with respect to
Shares sold by them or their principals and redeemed or repurchased by the
Trust or by BISYS, as the case may be, as agent (or tendered for redemption)
within seven business days after the date of confirmation of such initial
purchases.
(c) The right of a shareholder to redeem Shares of any Series,
or to receive payment with respect to any such redemption, upon the
presentation of properly submitted redemption requests in accordance with the
procedures set forth in the Prospectus relating to such Shares, may only be
suspended in accordance with the provisions of the Investment Company Act.
Section 5. Duties and Representations of the Trust.
(a) The Trust shall furnish BISYS from time to time, for use in
connection with the sale of Shares, such information with respect to the Trust
or any relevant Series and the Shares as BISYS may reasonably request.
(b) The Trust shall take, from time to time, all necessary
action to register Shares of each Series under the Securities Act of 1933, as
amended, ("Securities Act") to the end that there will be available for sale
such number of Shares as BISYS may reasonably be expected to sell.
(c) The Trust shall use its best efforts to qualify and
maintain the qualification of an appropriate number of Shares of each Series
for sale under the securities laws of such states as BISYS and the Trust may
approve. Any such qualification may be withheld, terminated or withdrawn by
the Trust at any time in its discretion. As provided in Section 9(c) hereof,
the expense of qualification and maintenance of qualification shall be borne
by the Trust. BISYS shall furnish such information and other material relating
to its respective affairs and activities as may be required by the Trust in
connection with such qualifications. The Trust will not confirm the sale of
any Shares in any jurisdiction in which the Shares are not qualified for offer
and sale unless the offer and sale by BISYS under the circumstances is exempt
from qualification.
(d) The Trust represents to BISYS that all Registration
Statements and Prospectuses filed by the Trust with the Securities and
Exchange Commission under the Securities Act with respect to the Shares have
been carefully prepared in conformity with the requirements of said Act and
rules and regulations of the Securities and Exchange Commission thereunder.
The Trust represents and warrants to BISYS that any Registration Statement and
Prospectus, when such Registration Statement becomes effective, will contain
all statements required to be stated therein in conformity with said Act and
the rules and regulations of said Commission; that all statements of fact
contained in any such Registration Statement and Prospectus will be true and
correct when such Registration Statement becomes effective; and that neither
any Registration Statement nor any Prospectus when such Registration Statement
becomes effective will include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading unless such statement or omission was
made in reliance upon, and in conformity with, written information furnished
to the Trust in connection therewith by or on behalf of BISYS, as the case may
be. The Trust shall not file any amendment to any Registration Statement or
supplement to any Prospectus without giving BISYS reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall in
any way limit the Trust's right to file at any time such amendments to any
Registration Statement or supplements to any Prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
(e) The Trust agrees to advise BISYS promptly in
writing:
(i) of any request by the Securities and Exchange
Commission for amendments to the Registration Statement
or Prospectuses then in effect or for additional
information;
(ii) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the
effectiveness of the Registration Statement or Prospectuses
then in effect or the initiation of any proceeding for that
purpose;
(iii) of the happening of any event which makes untrue any
statement of a material fact made in the Registration Statement
or Prospectuses then in effect or which requires the making of
a change in such Registration Statement or Prospectus in order
to make the statements therein not misleading;
(iv) of all actions of the Securities and Exchange
Commission with respect to any amendments to any Registration
Statement or Prospectuses which may from time to time be filed
with the Securities and Exchange Commission;
(v) of the qualification or withdrawal or ter-
mination of qualification for sale of Shares of any
Series in any jurisdiction; and
(vi) annually on the anniversary of the date of
qualification of Shares of any Series for sale in any
jurisdiction whether or not the Shares continue to be qualified
for sale in such jurisdiction and the number of Shares so
qualified for sale.
Section 6. Duties of BISYS as the Distributor.
(a) BISYS shall devote reasonable time and effort as determined
by it to effect sales of Shares of the Trust, but shall not be obligated to
sell any specific number of Shares. The services of BISYS hereunder are not to
be deemed exclusive and nothing herein contained shall prevent BISYS from
entering into distribution arrangements with other investment companies so
long as the performance of its obligations hereunder is not impaired thereby.
(b) In selling the Shares of the Trust, BISYS shall conform
with the requirements of all federal and state laws and regulations and the
regulations of the National Association of Securities Dealers, Inc. (the
"NASD") relating to the sale of such securities. Neither BISYS nor any other
person is authorized by the Trust to give any information or to make any
representations, other than those contained in the Prospectus for each Series
or any sales literature specifically approved by the Trust for use with
respect to a particular Series.
(c) BISYS shall adopt and follow procedures for the
confirmation of sales to investors and selected dealers, the collection of
amounts payable by investors on such sales and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD
and applicable law, as such requirements may from time to time exist.
Section 7. Selected Dealer Agreements.
(a) BISYS shall have the right, acting only on its own behalf
as principal, to enter into selected dealer agreements with securities dealers
and other persons of its choice ("Selected Dealers") for the sale of Shares;
provided, however, that the form of Selected Dealers agreement shall be
approved by the Trust and that no Selected Dealer entering into a Selected
Dealer agreement with BISYS shall be authorized to act as agent for the Trust
in connection with the offer or sale of its Shares to the public or otherwise.
Shares sold to Selected Dealers shall be for resale by such dealers only in
accordance with the provisions of the Prospectus relating to such Shares.
(b) Within the United States, BISYS shall offer and sell Shares
only to such Selected Dealers as are members in good standing of the NASD.
Section 8. Acceptance of Appointment.
BISYS accepts its appointment as Distributor and agrees during
such period to render such services and to assume the obligations herein set
forth for the compensation herein provided. Unless otherwise expressly
provided or authorized herein, BISYS shall not have any authority to act for
or represent the Trust in any way or otherwise be deemed an agent of the
Trust.
Section 9. Payment of Expenses.
(a) Except as provided in Section 9(d) hereof, BISYS shall pay
without reimbursement by the Trust the costs of its personnel used in
connection with the performance of its obligations hereunder, of providing
necessary office space for the performance of its obligations hereunder and of
all related overhead expenses, of maintaining its own qualification as a
broker under State or Federal laws, and of performing its duties hereunder;
and any fees or commissions pursuant to Selected Dealer agreements described
in Section 7 hereof.
(b) The Trust agrees to pay all costs and expenses in
connection with the registration of Shares under the Securities
Act, as amended, and all expenses in connection with maintaining facilities
for the issue and transfer of Shares and for supplying information, prices and
other data to be furnished by the Trust hereunder, and all expenses in
connection with the preparation and printing of the Trust's Prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders; provided, however, that except as
provided in Section 9(d) hereof, nothing contained herein shall be deemed to
require the Trust to pay any of the costs in connection with the sale of
Shares.
(c) Payments by the Trust relating to any distribution plan
within the meaning of Rule 12b-1 under the Investment Company Act (a "Plan")
adopted by the Trust's Board of Trustees (the "Board of Trustees") shall be
payable to the Distributor or its assignees, all in accordance with the terms
and conditions of such Plan. With respect to payments by the Trust relating to
the Distribution Plan relating to Class B shares: (i) payments to be made by
the Trust to the Distributor pursuant to such Plan as reimbursement of
expenses shall be for direct expenses of the Distributor authorized to be
incurred by the Trust pursuant to paragraph 1 of such Plan, (ii) upon
termination of such Plan, the benefits inuring to the Distributor shall
immediately cease, and (iii) expenses of the Distributor under such Plan in
any fiscal year of the Trust which cannot be paid by the Trust because payment
of such expenses would cause the Trust to exceed the limitation set forth in
paragraph 1 of such Plan during such fiscal year, shall not be payable to the
Distributor in any succeeding fiscal year of the Trust.
(d) Any contingent deferred sales charges and any charges
pursuant to a Plan which are payable in connection with purchases of Class B
Shares shall be payable to BISYS or its assignees, all in accordance with the
Trust's Registration Statement.
Section 10. Indemnification.
(a) The Trust shall indemnify and hold harmless BISYS, its
respective officers, directors, partners and employees and each person, if
any, who controls BISYS within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934 against
any loss, liability, claim, damage or expense (including the reasonable cost
of investigating or defending any alleged loss, liability, claim, damage or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any Shares, which may be based upon the
Securities Act, or on any other statute or at common law, on the ground that
the Registration Statement or related Prospectus of any Series, as from time
to time amended and supplemented, or the annual or interim reports to
shareholders of any Series, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, written
information furnished to the Trust in connection therewith by or on behalf of
BISYS, as the case may be; provided, however, that in no case (i) is the
indemnity by the Trust in favor of BISYS, its respective officers, directors,
partners and employees and any such controlling person to be deemed to protect
BISYS, its respective officers, directors, partners and employees or any such
controlling persons thereof against any liability to the Trust or its security
holders to which BISYS, its respective officers, directors, partners and
employees or any such controlling persons would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of
its duties or by reason of reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Trust to be liable under its indemnity
agreement contained in this paragraph with respect to any claim made against
BISYS, its respective directors, or any such controlling persons, unless
BISYS, its respective officers, directors, partners and employees or such
controlling persons, as the case may be, shall have notified the Trust in
writing within ten (10) days after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
BISYS, its respective officers, directors, partners or employees or such
controlling persons (or after BISYS, its respective officers, directors,
partners and employees or such controlling persons shall have received notice
of such service on any designated agent), but failure to notify the Trust of
any such claim shall not relieve the Trust from any liability which it may
have to the person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. The Trust will
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any such
liability, but if the Trust elects to assume the defense, such defense shall
be conducted by counsel chosen by the Trust and satisfactory to BISYS, its
respective officers, directors, partners and employees or such controlling
person or persons, defendant or defendants in the suit. In the event the Trust
elects to assume the defense of any such suit and retain such counsel, BISYS,
its respective officers, directors, partners and employees or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees
and expenses of any additional counsel retained by them. In the event the
Trust does not elect to assume the defense of any such suit, it will reimburse
BISYS, its respective officers, directors, partners and employees or such
controlling person or persons, defendant or defendants in the suit, for the
reasonable fees and expenses of any counsel retained by them. The Trust shall
promptly notify BISYS of the commencement of any litigation or proceedings
against it or any of its respective officers or trustees in connection with
the issuance or sale of any of the Shares. The Trust's indemnification
agreement contained in this Section 10(a) and the Trust's representations and
warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of BISYS, its
respective officers, directors, partners and employees or any controlling
person, and shall survive the delivery of any Shares. The indemnity provided
for herein will be in addition to any liability which the Trust may otherwise
have.
(b) BISYS shall indemnify and hold harmless the Trust and each
of its trustees, officers, and employees and each person, if any, who controls
the Trust against any loss, liability, claim, damage, or expense described in
the foregoing indemnity contained in subsection (a) of this Section, but only
with respect to statements or omissions to state a material fact necessary to
make such statements not misleading, made in reliance upon, and in conformity
with, information furnished to the Trust in writing by BISYS or on BISYS's
behalf for use in connection with the Registration Statement or related
Prospectus of any Series, as from time to time amended, or the annual or
interim reports to shareholders of any Series. Additionally, BISYS shall
indemnify and hold harmless the Trust and each of its trustees, officers, and
employees and each person, if any, who controls the Trust against any loss,
liability, claim, damage, or expense resulting from willful misfeasance, bad
faith or gross negligence on the part of BISYS or reckless disregard by BISYS
of its duties under this Agreement. In the event any action shall be brought
against the Trust or any persons so indemnified, in respect of which indemnity
may be sought against BISYS, BISYS shall have the rights and duties given to
the Trust, and the Trust and each person so indemnified shall have the rights
and duties given to BISYS by the provisions of subsection (a) of this Section
10.
Section 11. Certain Administrative Duties of BISYS.
During normal business hours, BISYS shall provide personnel to
respond to questions with respect to the Trust or to refer such inquiries to
appropriate Trust officials.
Section 12. Duration and Termination of this Agreement.
This Agreement shall become effective as of the consummation of
the reorganization of the Prairie Funds and the Trust and shall remain in
force with respect to any particular Series until _________, 199_ and
thereafter from year to year, so long as such continuance is specifically
approved at least annually by (a) by the Board of Trustees of the Trust and
(b) by a majority of those trustees who are not "interested persons" of the
Trust (as defined in the Investment Company Act) and who have no direct or
indirect financial interest in the operation of this Agreement, or related
Service and Distribution Plan or "interested persons" of any person having
such financial interest, cast in person at a meeting called for the purpose of
voting on such approval.
This Agreement may be terminated with respect to any particular
Series at any time, without the payment of any penalty, by a majority of those
trustees of the Trust who are not "interested persons" of the Trust and have
no direct or indirect financial interest in the operation of any Plan adopted
by the Trust or any related agreement thereto, or by vote of a majority of the
outstanding voting securities of the Trust on 60 (sixty) days written notice,
or by BISYS on 90 (ninety) days' written notice to the Trust.
The provisions of Section 10 shall survive any termination of
this Agreement.
Section 13. Amendments.
This Agreement may be amended in writing by the parties hereto
only if such amendment is specifically approved (i) by the Board of Trustees
of the Trust, and (ii) by a majority of those trustees who are not parties to
this Agreement and have no direct or indirect financial interest in the
operation of this Agreement, or "interested persons" of any such party, which
vote must be cast in person at a meeting called for the purpose of voting on
such approval.
Section 14. Definitions of Certain Terms.
The terms "vote of a majority of the outstanding voting
securities", "assignment," and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
Section 15. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of Michigan, without reference to principles of conflicts of law,
and with the applicable provisions of the Investment Company Act. To the
extent the applicable law of the State of Michigan or any of the provisions
herein conflict with the applicable provisions of the Investment Company Act,
the latter shall control.
Section 16. Personal Liability.
The obligations of the Trust entered into in the name or on
behalf thereof by any of the trustees of the Trust, representatives or agents
are made not individually, but in such capacities, and are not binding upon
any of the trustees, shareholders or representatives of the Trust personally,
but bind only the Trust property, and all persons dealing with any series of
shares in the Trust must look solely to the Trust property belonging to such
series for the enforcement of any claims against the Trust.
THE WOODWARD FUNDS
By _____________________________
Its _________________________
BISYS Fund Services Limited Partnership
By: BISYS Fund Services, Inc.,
its general partner
By: ________________________
<PAGE>
SCHEDULE 1
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
MICHIGAN MUNICIPAL MONEY MARKET FUND
CASH MANAGEMENT FUND
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
TREASURY PRIME CASH MANAGEMENT FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND
EQUITY INDEX FUND
GROWTH AND VALUE FUND
INTRINSIC VALUE FUND
MID CAP OPPORTUNITY FUND
EQUITY INCOME FUND
SMALL CAP OPPORTUNITY FUND
BOND FUND
SHORT BOND FUND
MICHIGAN MUNICIPAL BOND FUND
INTERMEDIATE MUNICIPAL BOND FUND
MUNICIPAL BOND FUND
INCOME FUND
INTERMEDIATE BOND FUND
INTERNATIONAL BOND FUND
MANAGED ASSETS BALANCED FUND
MANAGED ASSETS CONSERVATIVE FUND
MANAGED ASSETS GROWTH FUND
MAJOR MARKETS FUND
EXHIBIT (8)(i)
PROPOSED
ADDENDUM NO. 8 TO
AMENDED AND RESTATED
CUSTODIAN AGREEMENT
This Addendum, dated as of the day of , 1996, is
entered into between THE WOODWARD FUNDS (the "Trust"), a Massachusetts
business trust, and NBD BANK ("NBD" or the "Custodian"), a state-chartered
bank incorporated under the laws of Michigan.
WHEREAS, the Trust and NBD have entered into an Amended and
Restated Custodian Agreement dated May 16, 1989 and Addenda Nos. 1, 2, 3, 4,
5, 6 and 7 (the "Custodian Agreement"), pursuant to which the Trust appointed
NBD to act as Custodian to the Trust's Woodward Government Fund, Woodward
Money Market Fund, Woodward Tax-Exempt Money Market Fund, Woodward
Growth/Value Fund, Woodward Opportunity Fund, Woodward Intrinsic Value Fund,
Woodward Intermediate Bond Fund, Woodward Bond Fund, Woodward Michigan
Tax-Exempt Money Market Fund, Woodward Equity Index Fund, Woodward Treasury
Money Market Fund, Woodward Municipal Bond Fund, Woodward Michigan Municipal
Bond Fund, Woodward Balanced Fund, Woodward Capital Growth Fund, Woodward
Short Bond Fund, Woodward U.S. Government Income Fund and Woodward
International Equity Fund;
WHEREAS, Article XIV, Paragraph 9 of the Custodian Agreement
provides that in the event the Trust establishes one or more additional
portfolios with respect to which it desires to retain NBD to act as the
custodian under the Custodian Agreement, the Trust shall so notify NBD in
writing and if NBD is willing to render such services it shall notify the
Trust in writing, and the compensation to be paid to NBD shall be that which
is agreed to in writing by the Trust and NBD pursuant to Article XII,
Paragraph 7 of the Custodian Agreement;
WHEREAS, pursuant to Article XIV, Paragraph 9 of the Custodian
Agreement, the Trust has notified NBD that it intends to establish the
Woodward Cash Management Fund, Woodward U.S. Government Securities Cash
Management Fund, Woodward Treasury Prime Cash Management Fund, Woodward Equity
Income Fund, Woodward Small Cap Opportunity Fund, Woodward Intermediate
Municipal Bond Fund, Woodward Income Fund, Woodward International Bond Fund,
Woodward Managed Assets Conservative Fund, Woodward Managed Assets Growth Fund
and Woodward Major Markets Fund and that it desires to retain NBD to act as
the custodian therefor, and NBD has notified the Trust that it is willing to
serve as custodian for such Funds.
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Appointment. The Trust hereby appoints NBD to act as
Custodian to the Trust for the Woodward Cash Management Fund, Woodward U.S.
Government Securities Cash Management Fund, Woodward Treasury Prime Cash
Management Fund, Woodward Equity Income Fund, Woodward Small Cap Opportunity
Fund, Woodward Intermediate Municipal Bond Fund, Woodward Income Fund,
Woodward International Bond Fund, Woodward Managed Assets Conservative Fund,
Woodward Managed Assets Growth Fund and Woodward Major Markets Fund for the
period and on the terms set forth in the Custodian Agreement. NBD hereby
accepts such appointment and agrees to render the services set forth in the
Custodian Agreement, for the compensation provided in Appendix A hereto.
2. Capitalized Terms. From and after the date hereof, the terms
"Fund" and "Series" as used in the Custodian Agreement shall be deemed to
include the Woodward Cash Management Fund, Woodward U.S. Government Securities
Cash Management Fund, Woodward Treasury Prime Cash Management Fund, Woodward
Equity Income Fund, Woodward Small Cap Opportunity Fund, Woodward Intermediate
Municipal Bond Fund, Woodward Income Fund, Woodward International Bond Fund,
Woodward Managed Assets Conservative Fund, Woodward Managed Assets Growth Fund
and Woodward Major Markets Fund. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Custodian
Agreement.
3. Miscellaneous. Except to the extent supplemented
hereby, the Custodian Agreement shall remain unchanged and in
full force and effect and is hereby ratified and confirmed in all
respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum
as of the date and year first above written.
THE WOODWARD FUNDS
By: _______________________
Earl I. Heenan, Jr.
President
NBD BANK
By: ________________________
Its:________________________
<PAGE>
APPENDIX A
For the services provided pursuant to the Custodian Agreement
with respect to the Woodward Cash Management Fund, Woodward U.S. Government
Securities Cash Management Fund, Woodward Treasury Prime Cash Management Fund,
Woodward Equity Income Fund, Woodward Small Cap Opportunity Fund, Woodward
Intermediate Municipal Bond Fund, Woodward Income Fund, Woodward International
Bond Fund, Woodward Managed Assets Conservative Fund, Woodward Managed Assets
Growth Fund and Woodward Major Markets Fund, the Custodian will accept the
following fees:
(a) With respect to the Woodward Small Cap Opportunity
Fund, Woodward Intermediate Municipal Bond Fund, Woodward Equity Income Fund,
Woodward Managed Assets Conservative Fund, Woodward Managed Assets Growth Fund
and Woodward Income Fund --
Basic Annual Account Charge $1,000
Annual Security Fee
First $20,000,000 = .0003
Next $20,000,000 = .00025
Next $20,000,000 = .0002
Next $40,000,000 = .00015
Next $200,000,000 = .000125
Balance over $300,000,000 = .0001
Asset Fee $1.541 per security held at end of month.
Security Transactions:
$13.00 for each Pass-Through Certificate Payment
$35.00 for Option Transactions requiring Escrow Receipts
$20.00 for all other security transactions
Accounting Statements:
Cash Statement - $50 per statement
Inventories - $50 per inventory
(b) With respect to the Woodward International Bond Fund
and Woodward Major Markets Fund --
Basic Annual Account Charge $1,000
Annual Security Fee
First $100,000,000 = .00125
Next $100,000,000 = .0010
Next $100,000,000 = .0008
Next $100,000,000 = .0007
Balance over $400,000,000 = .0006
Asset Fee $1.541 per security held at end of month.
Foreign Transaction Charges
$150 per transaction - Argentina, Brazil, Chile
$100 per transaction - Taiwan, Thailand
$ 75 per transaction - Denmark, Finland, Italy, Malaysia,
Mexico, Norway, Singapore, South
Korea, Spain, Sweden, Switzerland
$ 65 per transaction - Australia, Austria, Belgium,
Hong Kong, New Zealand
$ 40 per transaction - France, Germany, Ireland, Netherlands
Security Transactions in the U.S.:
$13.00 for each Pass-Through Certificate Payment
$35.00 for Option Transactions requiring Escrow Receipts
$20.00 for all other security transactions
Accounting Statements:
Cash Statement - $50 per statement
Inventories - $50 per inventory
(c) With respect to the Woodward Cash Management
Fund, Woodward U.S. Government Securities Cash Management Fund
and Woodward Treasury Prime Cash Management Fund --
Unit Price
----------
Clearing and settlement transaction $ 11.00
Accounting entry and vault/safekeeping
transactions $ 12.00
Activity Processing
A. Master Control Fund Accounting
Annual maintenance $ 6.25
Debit activity $ .15
Credit activity $ .35
B. Master Settlement Accounting
Account maintenance $ 9.25
Debit activity $ .15
Credit activity $ .35
Check supplies $ 6.25
1. Out-of-Pocket Expenses. In addition to the service fees
above, the Trust will reimburse the Custodian for its out-of-pocket expenses
including, but not limited to, postage, telephone, telex, facsimile, Federal
Express and Federal Reserve wire fees, incurred on behalf of the Trust.
EXHIBIT (9)(a)
PROPOSED
CO-ADMINISTRATION AGREEMENT
AGREEMENT dated as of ________ __, 1996 by and among THE
WOODWARD FUNDS, a Massachusetts business trust (the "Trust"), NBD BANK
("NBD"), a national banking association, and FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY ("FCIMCO"), a registered investment adviser, and BISYS
LIMITED PARTNERSHIP, d/b/a, BISYS FUND SERVICES (each an "Administrator" and
collectively, the "Administrators").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust desires to retain the Administrators to
provide, as co-administrators, certain administration services for the
investment portfolios of the Trust set forth on Schedule 1 hereto (each a
"Fund" and collectively the "Funds") and the Administrators are willing to
furnish such administration services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and intending to be legally bound, it is agreed
between the parties hereto as follows:
1. Appointment of Administrators. The Trust hereby appoints
each of the Administrators jointly to provide administration services for the
Funds on the terms and for the period set forth in this Agreement. The
Administrators each accept such respective appointments and agree to perform
the services and duties set forth in Section 3 below in return for the
compensation provided in Section 5 below.
2. Delivery of Documents. The Trust has furnished each of the
Administrators with copies, properly certified or authenticated, of each of
the following documents and will deliver to each Administrator all future
amendments and supplements, if any:
a. The Trust's Amended and Restated Declaration of
Trust, as filed with the Secretary of the Commonwealth of Massachusetts on May
1, 1992, as amended (the "Declaration of Trust");
b. The Trust's By-Laws, as amended ("Bylaws");
c. Resolutions of the Trust's Board of Trustees ("Board
of Trustees") authorizing the execution and delivery of this Agreement;
d. The Trust's most recent amendment to its registration
statement under the Securities Act of 1933, as amended, and under the 1940 Act
on Form N-1A as filed with the Securities and Exchange Commission (the
"Commission") and supplements thereto, (such amendment as presently in effect
and as amended or supplemented from time to time, is herein called the
"Registration Statement"); and
e. The Trust's most recent prospectus(es) and
statement(s) of additional information and all amendments and supplements
thereto (such prospectus(es) and statement(s) of additional information and
supplements thereto, as presently in effect and as from time to time amended
and supplemented, are herein called the "Prospectus(es)" and the "Statement(s)
of Additional Information", respectively).
3. Services and Duties. The Administrators enter into the
following covenants jointly and severally with respect to their administration
and duties:
a. Subject to the supervision and control of the Trust's
Board of Trustees, the Administrators shall assist in supervising all aspects
of the Funds' operations, other than those investment advisory functions which
are to be performed by the Trust's investment advisers pursuant to the
Co-Advisory Agreement, those services to be performed by the custodian
pursuant to the Trust's Custodian Agreement, those services to be performed by
the distributor pursuant to the Trust's Distribution Agreement and those
services to be performed by the transfer agent pursuant to the Trust's
Transfer and Dividend Disbursing Agency Agreement. In this regard, the
Administrators' responsibilities include:
(1) Assisting in maintaining office
facilities (which may be in the offices of any of the
Administrators or a corporate affiliate but shall be in such
location as the Trust shall reasonably determine);
(2) Furnishing clerical services and
stationary and office supplies;
(3) Providing for the preparing, supervising
and mailing of confirmations for all purchase and redemption
orders to shareholders of record;
(4) Providing and supervising the operation
of an automated data processing system to process purchase
and redemption orders (the Administrators assume
responsibility for the accuracy of the data transmitted for
processing or storage);
(5) Maintaining a procedure external to the
transfer agent's system to reconstruct lost purchase and
redemption data; and
(6) Providing information and distributing
written communications concerning the Funds to their shareholders of
record; handling shareholder problems and calls.
b. The Administrators shall prepare or review all sales
literature (advertisements, brochures and shareholder communications) for the
Funds.
c. The Administrators shall participate to the extent
requested by the Trust and its counsel in the periodic updating of the Trust's
Registration Statement; compile data and accumulate information for and
prepare (i) reports to shareholders of record and the Commission (e.g., Annual
and SemiAnnual Reports on Form N-SAR) and (ii) notices pursuant to Rule 24f-2;
and timely file with the Commission and other federal and state agencies,
reports and documents including, without limitation, Annual and Semi-Annual
Reports on Form N-SAR, notices pursuant to Rule 24f-2 and federal and state
tax returns and required tax filings other than those required to be filed by
the Trust's custodian or transfer agent.
d. The Administrators, after consultation with the
distributor and counsel for the Trust, shall determine the jurisdictions in
which the Trust's shares shall be registered or qualified for sale. The
Administrators shall be responsible registering or qualifying shares for sale
under the securities laws of any state, maintaining such registrations or
qualifications, and for preparing compliance filings pursuant to state
securities laws with the advice of the Trust's counsel. Payment of share
registration fees and any fees for qualifying or continuing the qualification
of the Trust or the Funds as a dealer or broker shall be made by the Trust or
the Funds.
e. The Administrators shall monitor, and assist in
developing compliance procedures for the Funds, which will include without
limitation, procedures to monitor compliance with the Funds' investment
objectives, policies and limitations, tax matters, and applicable laws and
regulations.
f. The Administrators shall assist in monitoring the
regulatory and legislative developments which may affect the Trust; assist in
counseling the Trust with respect to regulatory examinations or investigations
of the Trust; and work with the Trust's counsel in connection with regulatory
matters or litigation.
g. The Administrators agree to maintain all financial
accounts, records, journals, ledgers and schedules for the Trust (other than
those maintained by the Trust's custodian and its transfer agent), and to
install and maintain a system of internal controls appropriate for entities of
the size and complexity of the Trust, and to provide reports, financial
statements and other statistical data as requested from time to time by the
Administrators or by the Trust. In addition, the Administrators shall compute
the Trust's net asset value, net income and net capital gain (loss) in
accordance with the Trust's Prospectus and resolutions of its Board of
Trustees. The Administrators shall act as liaison with the Trust's independent
public accountants and shall provide account analyses, fiscal year summaries
and other audit related schedules. The Administrators shall take all
reasonable action in the performance of its obligations under this Agreement
to assure that the necessary information is made available to such accountants
for the expression of their opinion, as such may be required by the Trust from
time to time.
h. The Administrators shall monitor each Fund's
expenses, including, but not limited to, fund accounting, and shall pay all
expenses on proper authorization from each Fund.
i. The Administrators shall monitor each Fund's status
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended from time to time.
j. The Administrators shall maintain each Fund's
fidelity bond as required by the 1940 Act.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Administrators agree that all records which they maintain for
the Trust are the property of the Trust and further agree to surrender
promptly to the Trust any of such records upon the Trust's request. The
Administrators agree to maintain a back-up set of accounts and records of the
Trust (which back-up shall be updated on at least a weekly basis) at a
location other than that where the original accounts and records are stored.
The Administrators shall assist the Trust, the Trust's independent auditors,
or, upon approval of the Trust, any regulatory body, in any requested review
of the Trust's accounts and records, and reports by the Administrators or
their independent accountants concerning their accounting system and internal
auditing controls will be open to such entities for audit or inspection upon
reasonable request. There shall be no additional fee for these services. The
Administrators further agree to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
If the expenses borne by any Fund in any fiscal year exceed the
applicable expense limitations imposed by the securities regulations of any
state in which the Fund's shares are registered or qualified for sale to the
public, the Administrators agree to reimburse such Fund for a portion of any
such excess expense in an amount equal to the portion that the administration
fees otherwise payable by the Fund to the Administrators bear to the total
amount of the investment advisory and administration fees otherwise payable by
the Fund. The expense reimbursement obligation of the Administrators is
limited to the amount of their fees hereunder for such fiscal year, provided,
however, that notwithstanding the foregoing, the Administrators shall
reimburse such Fund for a portion of any such excess expenses in an amount
equal to the proportion that the fees otherwise payable to the Administrators
bear to the total amount of investment advisory and administration fees
otherwise payable by the Fund regardless of the amount of fees paid to the
Administrators during such fiscal year to the extent that the securities
regulations of any state having jurisdiction over the Fund so require. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
In performing all of their services and duties as co-
administrators, the Administrators will act in conformity with the Declaration
of Trust, Bylaws, Prospectuses and resolutions and other instructions of the
Trust's Board of Trustees and will comply with the requirements of the 1940
Act and other applicable federal or state laws.
4. Services Not Exclusive. The services rendered by the
Administrators hereunder are not to be deemed exclusive, and the
Administrators shall be free to render similar services to others so long as
their services under this Agreement are not impaired thereby.
5. Expenses Assumed as Administrators. The Administrators will
bear all expenses incurred by them in performing their services and duties as
co-administrators, except as otherwise expressly provided herein. Other
expenses to be incurred in the operation of the Funds, including taxes,
interest, brokerage fees and commissions, if any, salaries and fees of
officers and trustees who are not officers, directors, shareholders, or
employees of the Administrators, or the Trust's investment advisers or
distributor for the Funds, Commission fees and state blue sky qualification
fees, advisory, fund accounting and administration fees, charges of custodians
and transfer agents, certain insurance premiums, outside auditing and legal
expenses, costs of maintaining corporate existence, typesetting and printing
of Prospectuses for regulatory purposes and for distribution to current
shareholders of the Fund, costs of shareholders' reports and corporate
meetings, out-of-pocket expenses of obtaining price quotations from third
party pricing services, and any extraordinary expenses, will be borne by the
Trust, provided, however, that the Trust will not bear, directly or
indirectly, the cost of any activity which is primarily intended to result in
the sale of shares of the Funds, other than the costs associated with the sale
of Class B shares of the Fund pursuant to a distribution agreement and
distribution plan.
6. Compensation.
In consideration of services rendered pursuant to this
Agreement, the Trust will pay to NBD and FCIMCO, as agent for the
Administrators, a fee, computed daily and payable monthly, at the annual rate
of 0.15% of the average daily net assets of each Fund. Net asset value shall
be computed in accordance with the Funds' Prospectuses and resolutions of the
Trust's Board of Trustees. The fee for the period from the day of the month
this Agreement is entered into until the end of that month shall be pro-rated
according to the proportion which such period bears to the full monthly
period. Upon any termination of this Agreement before the end of any month,
the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. Such fee as is
attributable to each Fund shall be a separate charge to such Fund and shall be
the several (and not joint or joint and several) obligation of each such Fund.
The Administrators may from time to time employ or associate
with themselves such person or persons as they may believe to be fitted to
assist them in the performance of this Agreement ("Subcontractors"). The
compensation of such Subcontractors shall be paid by the Administrators, and
no obligation shall be incurred on behalf of the Trust in such respect. The
Administrators shall provide oversight over any Subcontractor(s) who shall in
turn provide services pursuant to an agreement with the Administrators. Any
agreement entered into between the Administrators and a Subcontractor shall
acknowledge that the agreement is for the benefit of the Trust, that the
Subcontractor shall be directly liable and responsible to the Trust for the
performance of its obligations thereunder, and that the Trust may therefore
enforce its rights directly against the Subcontractor. Notwithstanding such
delegation, the Administrators shall continue to be directly liable to the
Trust for the performance of any subcontractor's obligations under such
agreement. In addition to employing Subcontractors, the Administrators may
compensate parties who provide shareholder services or other services pursuant
to contracts entered into directly between such parties and the Trust.
7. Proprietary and Confidential Information. The Administrators
will treat confidentially and as proprietary information of the Trust all
records and other information relative to the Trust and prior or present
shareholders of the Funds or those persons or entities who respond to
inquiries of the Trust's principal underwriter concerning investment in the
Funds and will not use such records and information for any purpose other than
performance of their responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld and may not be withheld where the Administrators may
be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
8. Limitations of Liability. No Administrator shall be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
officer, Board member, partner, director, employee or agent of an
Administrator, who may be or become an officer, Board member, partner,
employee or agent of the Trust, shall be deemed, when rendering services to
the Trust or acting on any business of the Trust (other than services or
business in connection with the Administrators' duties as co-administrators
hereunder) to be rendering such services to or acting solely for the Trust and
not as an officer, Board member, partner, director, employee or agent or one
under the control or direction of the Administrators even though paid by
either of them. The Administrators agree that their liability under this
Agreement, as set forth herein, shall be joint and several.
Whenever, in the course of performing their duties under this
Agreement, the Administrators determine, on the basis of information supplied
to the Administrators by the Trust or its authorized agents, that a violation
of applicable law has occurred or that, to their knowledge, a possible
violation of applicable law may have occurred or, with the passage of time,
would occur, the Administrators shall promptly notify the Trust and its
counsel. Liability arising pursuant to this section shall survive termination
of this agreement.
9. Duration and Termination. This Agreement shall become
effective as of the date first above written and unless sooner terminated as
provided herein, shall continue until ___________, 1998 ("Initial Term").
Thereafter, if not terminated, this Agreement shall continue automatically as
to the Funds for successive terms of one year (each a "Renewal Term"),
provided such continuance is specifically approved at least annually (i) by
the Trust's Board of Trustees or (ii) by a vote of a majority of the
outstanding voting securities of the Funds, and provided further that in
either event such continuance is also approved by a majority of the Trust's
trustees who are not "interested persons" of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested person" and "assignment" shall have the same
meaning as such terms have in the 1940 Act.) On or after the Initial Term,
either party hereto may terminate this Agreement by sixty (60) days prior
written notice to the other party hereto.
The Trust shall have the right to terminate this Agreement
during the Initial Term or any Renewal Term upon forty-five (45) days written
notice if the Administrators materially breach this Agreement. A material
breach means the failure to perform the terms of this Agreement, whether in
one act or omission or a series of acts or omissions, whether or not related,
which (i) results or reasonably could be expected to result in loss or damage,
including expenses, to the Funds exceeding $50,000 in the aggregate, (ii)
results in the institution of civil or criminal proceedings by the Commission
or other regulator, other than a regular audit or examination, (iii)
constitutes gross negligence, bad faith or willful misconduct, (iv)
constitutes a violation of any law, rule or regulation applicable to the
Funds, or the Administrators or any of their affiliates as to which the
Administrators were required to comply under the terms of the Agreement where
the consequences of such violation could reasonably be expected to result in
the institution of civil or criminal proceedings by the Commission or other
governmental authorities against the Funds, or (v) evidences a quantifiable
and material decline in the overall quality of services, provided that the
Administrators shall have the right to cure the breach set forth in this
clause (v) within thirty (30) days after a written notice setting forth in
detail the nature of the breach, has been delivered to the Administrators;
provided the Administrators shall have the right to cure a breach set forth in
this clause (v) if and only if no more than two other quantifiable and
material breaches under this clause (v) have occurred within the twelve (12)
months prior to the delivery of such notice of the breach of this clause.
In the event of the termination of this Agreement, the
Administrators shall use their best efforts to assist in the transfer of their
responsibilities hereunder to any successor administrator and the
Administrators without additional compensation (it being understood that they
would be reimbursed for their reasonable out-of-pocket expenses) shall remain
responsible, which responsibility shall survive termination of this Agreement,
for all regulatory filings, tax returns and other reports which relate to
periods which concluded prior to the termination.
10. Amendment of this Agreement. No provision of this Agreement
may be changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought. If a change or discharge is sought against the
Trust, the instrument must be signed by all three (3) Administrators.
11. Assignment. This Agreement will automatically and
immediately terminate in the event of its "assignment." As used in this
Agreement, the term "assignment" shall have the same meaning as such term has
in the 1940 Act.
12. Notices. All notices and other communications hereunder
shall be in writing, shall be deemed to have been given when received or when
sent by telex or facsimile, and shall be given to the following addresses (or
such other addresses as to which notice is given):
To the Administrators:
NBD Bank
611 Woodward Avenue
Detroit, Michigan
First Chicago Investment Management Company
Three First National Plaza
Chicago, Illinois 60670
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
To the Fund:
The Woodward Funds
c/o W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
13. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of Michigan, without reference to principles of conflicts of law,
and with the applicable provisions of the Investment Company Act. To the
extent the applicable law of the State of Michigan or any of the provisions
herein conflict with the applicable provisions of the 1940 Act, the latter
shall control.
14. Miscellaneous.
a. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
b. The names "The Woodward Funds" and "Trustees of The
Woodward Funds" refer, respectively, to the Trust created and the trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated April 21, 1987, as amended on May 1, 1992, which is
hereby referred to and a copy of which is on file at the office of the
Secretary of State of the Commonwealth of Massachusetts and at the principal
office of the Trust. The obligations of the Trust entered into in the name or
on behalf thereof by any of the trustees, representatives or agents are made
not individually, but in such capacities, and are not binding upon any of the
trustees, shareholders or representatives of the Trust personally, but bind
only the Trust property, and all persons dealing with any series of shares in
the Trust must look solely to the Trust property belonging to such series for
the enforcement of any claims against the Trust.
15. Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
THE WOODWARD FUNDS
By: ___________________________________
NBD BANK
By: ___________________________________
FIRST CHICAGO INVESTMENT MANAGEMENT COMPANY
By:____________________________________
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., general partner
By:________________________________
<PAGE>
SCHEDULE 1
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
MICHIGAN MUNICIPAL MONEY MARKET FUND
CASH MANAGEMENT FUND
U.S. GOVERNMENT SECURITIES CASH MANAGEMENT FUND
TREASURY PRIME CASH MANAGEMENT FUND
GROWTH FUND
INTERNATIONAL EQUITY FUND
EQUITY INDEX FUND
GROWTH AND VALUE FUND
INTRINSIC VALUE FUND
MID CAP OPPORTUNITY FUND
EQUITY INCOME FUND
SMALL CAP OPPORTUNITY FUND
BOND FUND
SHORT BOND FUND
MICHIGAN MUNICIPAL BOND FUND
INTERMEDIATE MUNICIPAL BOND FUND
MUNICIPAL BOND FUND
INCOME FUND
INTERMEDIATE BOND FUND
INTERNATIONAL BOND FUND
MANAGED ASSETS BALANCED FUND
MANAGED ASSETS CONSERVATIVE FUND
MANAGED ASSETS GROWTH FUND
MAJOR MARKETS FUND
EXHIBIT (9)(i)
ADDENDUM NO. 7 TO AMENDED AND RESTATED
TRANSFER AGENCY AND DIVIDEND DISBURSEMENT AGREEMENT
This Addendum, dated as of the ___ day of April, 1996, is
entered into between THE WOODWARD FUNDS (the "Trust"), a Massachusetts
business trust, and NBD BANK ("NBD"), a state-chartered bank incorporated
under the laws of Michigan.
WHEREAS, the Trust and NBD have entered into an Amended and
Restated Transfer Agency and Dividend Disbursement Agreement dated May 16,
1989 (the "Transfer Agency Agreement"), pursuant to which the Trust appointed
NBD to act as transfer agent and dividend disbursing agent (the "Transfer
Agent") to the Trust's Woodward Government Fund, Woodward Money Market Fund,
Woodward Tax-Exempt Money Market Fund, Woodward Government Fiduciary Fund,
Woodward Money Market Fiduciary Fund, Woodward Tax-Exempt Money Market
Fiduciary Fund and Woodward Money Market Employee Benefit Fund (collectively,
the "Money Market Funds"), Woodward Growth/Value Fund, Woodward Opportunity
Fund, Woodward Intrinsic Value Fund, Woodward Intermediate Bond Fund, and
Woodward Bond Fund (each a "Fund");
WHEREAS, Article VII of the Transfer Agency Agreement provides
that in the event the Trust establishes one or more additional portfolios with
respect to which it desires to retain NBD to act as the Transfer Agent under
the Transfer Agency Agreement, the Trust shall so notify NBD in writing and if
NBD is willing to render such services it shall notify the Trust in writing,
and the compensation to be paid to NBD shall be that which is agreed to in
writing by the Trust and NBD;
WHEREAS, pursuant to Article VII of the Transfer Agency
Agreement, the Trust and NBD have entered into Addendum No. 1 to the Transfer
Agency Agreement dated January 23, 1991 relating to the Woodward Michigan
Tax-Exempt Money Market Fund ("Michigan Tax-Exempt Money Market Fund") (also,
a "Money Market Fund" and a "Fund");
WHEREAS, pursuant to Article VII of the Transfer Agency
Agreement, the Trust and NBD have entered into Addendum No. 2 to the Transfer
Agency Agreement dated April 28, 1992, relating to the Woodward Equity Index
Fund ("Equity Index Fund") (also, a "Fund");
WHEREAS, pursuant to Article VII of the Transfer Agency
Agreement, the Trust and NBD have entered into Addendum No. 3 to the Transfer
Agency Agreement dated January 1, 1993, relating to the Woodward Treasury
Money Market Fund ("Treasury Money Market Fund") (also, a "Money Market Fund"
and a "Fund");
WHEREAS, pursuant to Article VII of the Transfer Agency
Agreement, the Trust and NBD have entered into Addendum No. 4 to the Transfer
Agency Agreement dated January 1, 1993, relating to the Woodward Municipal
Bond Fund ("Municipal Bond Fund") and Woodward Michigan Municipal Bond Fund
("Michigan Municipal Bond Fund") (each a "Fund");
WHEREAS, pursuant to Article VII of the Transfer Agency
Agreement, the Trust and NBD have entered into Addendum No. 5 to the Transfer
Agency Agreement dated January 1, 1993, relating to the Woodward Balanced Fund
("Balanced Fund") (also, a "Fund");
WHEREAS, pursuant to Article VII of the Transfer Agency
Agreement, the Trust and NBD have entered into Addendum No. 6 to the Transfer
Agency Agreement dated July 1, 1994 relating to the Woodward Capital Growth
Fund ("Capital Growth Fund"), the Woodward International Equity Fund
("International Equity Fund") and the Woodward Short Bond Fund ("Short Bond
Fund") (each a "Fund");
WHEREAS, pursuant to Article VII of the Transfer Agency
Agreement, the Trust has notified NBD that it has established the Woodward
Cash Management Fund ("Cash Management Fund"), the Woodward Treasury Prime
Cash Management Fund ("Treasury Prime Cash Management Fund") and the Woodward
U.S. Government Securities Cash Management Fund ("U.S. Government Securities
Cash Management Fund") and that it desires to retain NBD to act as the
Transfer Agent therefor, and NBD has notified the Trust that it is willing to
serve as Transfer Agent for the Cash Management Fund, the Treasury Prime Cash
Management Fund and the U.S. Government Securities Cash Management Fund.
NOW THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Appointment. The Trust hereby appoints NBD to act as
Transfer Agent to the Trust for the Treasury Prime Cash Management Fund, U.S.
Government Securities Cash Management Fund for the period and on the terms set
forth in the Transfer Agency Agreement, as amended. NBD hereby accepts such
appointment and agrees to render the services set forth in the Transfer Agency
Agreement, as amended, for the compensation agreed to by the Trust and NBD
pursuant to Article II of the Transfer Agency Agreement, as amended.
2. Capitalized Terms. From and after the date hereof, the terms
"Money Market Fund" and "Fund" as used in the Transfer Agency Agreement, as
amended, shall be deemed to include the Treasury Prime Cash Management Fund,
U.S. Government Securities Cash Management Fund. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the
Transfer Agency Agreement, as amended.
3. Miscellaneous. Except to the extent supplemented hereby, the
Transfer Agency Agreement, as amended, shall remain unchanged and in full
force and effect and is hereby ratified and confirmed in all respects as
supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum
as of the date and year first above written.
THE WOODWARD FUNDS
By: ________________________
Earl I. Heenan, Jr.
President
NBD BANK
By: _______________________
EXHBIIT (9)(n)
THE WOODWARD FUNDS
CASH MANAGEMENT FUNDS
CLASS S SHARES
DISTRIBUTION AND SERVICES PLAN
Introduction: It has been proposed that The Woodward Funds (the
"Fund") adopt a Distribution and Services Plan (the "Plan"), in accordance
with Rule 12b-1 promulgated under the Investment Company Act of 1940, as
amended (the "Act"), under which the Fund would pay the Fund's distributor
(the "Distributor") for (a) advertising, marketing and distributing Class S
shares ("Service Shares") of those Series of the Fund set forth on Exhibit A
hereto, as such Exhibit may be revised from time to time (each, a "Series")
and (b) providing services to holders of Service Shares. The Distributor would
be permitted to pay third parties in respect of these services. If the
proposal is to be implemented, the Act and Rule 12b-1 require that a written
plan describing all material aspects of the proposed financing be adopted by
the Fund.
The Fund's Board of Trustees, in considering whether the Fund
should implement a written plan, has requested and evaluated such information
as it deemed necessary to an informed determination as to whether a written
plan should be implemented and has considered such pertinent factors as it
deemed necessary to form the basis for a decision to use Series' assets for
such purposes.
In voting to approve the implementation of such a plan, the
Board has concluded, in the exercise of its reasonable business judgment and
in light of applicable fiduciary duties, that there is a reasonable likelihood
that the plan set forth below will benefit the Series and holders of its
Service Shares.
The Plan: The material aspects of this Plan are as
follows:
1. The Fund shall pay to the Distributor a fee at the annual
rate of up to 0.25% of the average daily net assets attributable to the
outstanding Service Shares of a Series for (i) advertising, marketing and
distributing such shares and/or (ii) the provision of shareholder and
administrative services for the beneficial owners of such shares. The
Distributor may pay one or more financial institutions, securities dealers and
other industry professionals a fee in respect of these services. The
Distributor shall determine the amounts to be paid to third parties and the
basis on which such payments will be made. Payments to financial institutions,
securities dealers and other industry professionals are subject to compliance
by each such party with the terms of any related Plan agreement between it and
the Distributor.
<PAGE>
2. For the purpose of determining the fees payable under this
Plan, the net asset value of the Service Shares shall be computed in the
manner specified in the Fund's then current prospectus and statement of
additional information describing such Service Shares.
3. Joint distribution financing or other services rendered with
respect to such Service Shares (which may involve other investment funds or
companies that are affiliated persons of the Fund or affiliated persons of the
Distributor) is authorized to the extent permitted by law. All expenses
incurred by the Fund under the Plan for Service Shares of a Series shall be
allocated entirely to such Service Shares, as appropriate. The fee allocated
to a Series or to Service Shares of a Series shall be the several (and not
joint or joint and several) obligation of the Fund.
4. So long as this Plan is in effect, the Distributor shall
provide the Fund's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to the Plan and
the purposes for which such expenditures were made.
5. The Plan will become effective with respect to Service
Shares of a particular Series (a) on the day before the date the first Service
Share has been sold in a public offering (following approval by written
consent of the sole shareholder of those Service Shares), and (b) upon the
approval by a majority of the Board of Trustees, including a majority of those
Trustees who are not "interested persons" (as defined in the Act) of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements entered into in connection with the Plan (the
"Disinterested Trustees"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on the approval of the Plan.
6. Unless sooner terminated in accordance with the terms
hereof, this Plan shall continue until June 30, 1997, and thereafter for so
long as its continuance is specifically approved at least annually by the
Fund's Board of Trustees in the manner provided in paragraph 5(b) hereof.
7. This Plan may be amended at any time by the Board of
Trustees, provided that (a) any amendment to increase materially the amount to
be spent for distribution relating to the Service Shares of a Series pursuant
to this Plan shall be effective only upon approval by a vote of a majority of
the outstanding Service Shares affected by such matter, and (b) all material
amendments of the Plan (including any amendment increasing the amount to be
spent for other than distribution such as shareholder and administrative
services for beneficial
-2-
<PAGE>
owners of the Service Shares of a Series) shall become effective only upon
approval as provided in paragraph 5(b) hereof.
8. As to each Series, this Plan is terminable without penalty
at any time by (a) a vote of a majority of the Disinterested Trustees, or (b)
a vote of a majority of the outstanding Service Shares of the Series.
9. While this Plan is in effect, the selection and
nomination of Disinterested Trustees shall be committed to the
discretion of such Disinterested Trustees.
Dated: __________________, 1996
-3-
<PAGE>
EXHIBIT A
NAMES OF SERIES
Cash Management Fund
Treasury Prime Cash Management Fund
U.S. Government Securities Cash
Management Fund
<PAGE>
THE WOODWARD FUNDS
CASH MANAGEMENT FUNDS
CLASS S SHARES
Form of Agreement
under
Distribution and Services Plan
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219-3035
Ladies and Gentlemen:
We wish to enter into this Agreement with you for distribution
services with respect to, servicing shareholders of, or administering
shareholder accounts in, the Service Shares of each Series set forth on
Schedule 1 hereto, as such Schedule may be revised from time to time (each, a
"Series"), of The Woodward Funds (the "Fund") of which you are the principal
underwriter as defined in the Investment Company Act of 1940, as amended (the
"Act") and the exclusive agent for the continuous distribution of its shares.
The terms and conditions of this Agreement are as follows:
1. We agree to provide reasonable assistance in connection with
the sale of the Service Shares of a Series, which assistance may include
distributing sales literature, marketing and advertising. If we are restricted
or unable to provide these services, we agree not to perform such services and
not to accept fees therefor. Our acceptance of any fees hereunder shall
constitute our representation (which shall survive any payment of such fees
and any termination of this Agreement and shall be reaffirmed each time we
accept a fee hereunder) that our receipt of such fee is lawful.
2. We agree to provide shareholder and administrative services
for our clients who own Service Shares of any Series ("Clients"), which
services may include, without limitation, answering Client inquiries about the
Fund or any Series; assisting Clients in changing dividend options, account
designations and addresses; performing sub-accounting; establishing and
maintaining shareholder accounts and records; processing purchase and
redemption transactions; investing Client account cash balances automatically
in such shares; providing periodic statements showing a Client's account
balance and integrating such statements with those of other transactions and
balances in the Client's other accounts serviced by us; arranging
- 1 -
<PAGE>
for bank wires; and providing such other information and services as the Fund
reasonably may request, to the extent we are permitted by applicable statute,
rule or regulation. In this regard, you recognize that to the extent we are
subject to the provisions of the Glass-Steagall Act and other laws governing,
among other things, the conduct of activities we may undertake and for which
we may be paid, we intend to perform only those activities as are consistent
with our statutory and regulatory obligations.
3. We shall provide such office space and equipment, telephone
facilities and personnel (which may be all or any part of the space, equipment
and facilities currently used in our business, or all or any personnel
employed by us) as is necessary or beneficial for providing information and
services to shareholders, and to assist in servicing accounts of Clients. We
shall transmit promptly to Clients all communications sent to us for
transmittal to Clients by or on behalf of any Series, the Fund's investment
adviser, custodian or transfer or dividend disbursing agent.
4. We agree that neither we nor any of our employees or agents
are authorized to make any representation concerning a Series' shares, except
those contained in the then-current Prospectus and Statement of Additional
Information for such Series, copies of which will be supplied to us. We shall
have no authority to act as the Fund's agent or for you as the Fund's
distributor.
5. In consideration of the services and facilities described
herein, we shall be entitled to receive from you, and you agree to pay to us
with respect to the Service Shares of each Series, the fees set forth opposite
such Series' name on Schedule 1 hereto. We understand that the payment of
these fees has been authorized and will be paid pursuant to a Distribution and
Services Plan approved by the Fund's Board of Trustees and shareholders (the
"Plan"), and any payments pursuant to this Agreement shall be paid only as
long as this Agreement is in effect.
6. You reserve the right, at your discretion and
without notice, to suspend the sale of shares or withdraw the
sale of any Series' shares.
7. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by you or your designee. Unless
sooner terminated, this Agreement will continue until June 30, 1997 and
thereafter will continue automatically for successive annual periods ending on
the 30th of June, provided such continuance is specifically approved at least
annually by the Fund in the manner described in Section 8 hereof. This
Agreement is terminable, without penalty, at any time by you
- 2 -
<PAGE>
(which termination may be by vote of a majority of the Fund's Disinterested
Trustees as defined in Section 8 hereof) or by us upon notice to the other
party hereto.
8. This Agreement has been approved by vote of a majority of
(i) the Fund's Board of Trustees and (ii) those Trustees who are not
"interested persons" (as defined in the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related thereto, cast in person at a meeting called for the purpose of voting
on such approval.
9. This Agreement shall be construed in accordance
with the laws of the State of Michigan and is non-assignable by
the parties hereto.
10. All persons dealing with the Fund must look solely to its
property for the enforcement of any claims against it, as none of the Fund's
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into or on its behalf.
11. The obligations of The Woodward Funds entered into in the
name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are not binding upon
any of the Trustees, shareholders or representatives of the Fund personally,
but bind only the Fund property, and all persons dealing with any Series of
shares in the Fund must look solely to the Fund property belonging to such
Series for the enforcement of any claims against the Fund.
12. All communications to you shall be sent to you at
the address set forth above. Any notice to us shall be duly
- 3 -
<PAGE>
given if mailed or telegraphed to us at the address set forth
below.
Very truly yours,
----------------------------------------
Name (Please Print or Type)
----------------------------------------
Address
----------------------------------------
City State Zip Code
Date ----------------------------- By: ------------------------------------
Authorized Signature
NOTE: Please return both signed copies of this Agreement to
BISYS Fund Services. Upon acceptance one countersigned
copy will be returned for your files.
Accepted:
BISYS FUND SERVICES
Date ----------------------------- By: ------------------------------------
- 4 -
<PAGE>
SCHEDULE 1
to
Agreement
under
The Woodward Funds
Cash Management Funds
Distribution and Services Plan
between
BISYS FUND SERVICES
and
------------------------------
[Name of Counterparty]
Monthly fee at an
annual rate as a
percentage of
Average Daily Value
of Service Shares
Name of Series owned by Clients*
- -------------- -----------------
Cash Management Fund [up to .25 of 1%]
Treasury Prime Cash Management Fund [up to .25 of 1%]
U.S. Government Securities Cash
Management Fund [up to .25 of 1%]
Dated: ---------------- , 1996
- ------------------------
* For purposes of determining the fees payable hereunder, the average
daily net asset value of Service Shares shall be computed in the
manner specified in the Fund's then current Prospectus and Statement
of Additional Information relating
to such Service Shares.
- 5 -
EXHIBIT (11)(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to all references to our
Firm included in or made a part of this Post-Effective Amendment No. 28 to the
Woodward Funds' registration statement on Form N-1A under the Securities
Act of 1933.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Detroit, Michigan,
April 1, 1996
EXHIBIT (11)(b)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference
to our Firm under the caption "Counsel" in the Statement of Additional
Information that is included in Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended.
/s/ Drinker Biddle & Reath
--------------------------
Drinker Biddle & Reath
Philadelphia, Pennsylvania
April 1, 1996
