As filed with the Securities and Exchange Commission on December 30, 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. 39
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 39
PEGASUS FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o NBD Bank
900 Tower Drive
P.O. Box 7058
Troy, Michigan 48007-7058
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(313) 259-0729
W. Bruce McConnel, III
DRINKER BIDDLE & REATH
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[x] on December 31, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
-1-
<PAGE>
Registrant has previously registered an indefinite number of its
shares of beneficial interest under the Securities Act of 1933
pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the fiscal year ended December
31, 1995 was filed on February 27, 1996.
<PAGE>
CROSS REFERENCE SHEET
Class A, Class B and Class I Shares of the:
Managed Assets Conservative Fund, Managed Assets Balanced Fund,
Mid-Cap Opportunity Fund, Growth and Value Fund,
Bond Fund and Money Market Fund, Respectively.
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover Page........................................ Cover page
2. Synopsis.......................................... Fund Expenses;
Background
3. Financial Highlights.............................. Financial
Highlights;
Performance
Information
4. General Description of
Registrant........................................ Cover Page;
Description of
the Funds; General
Information;
Supplemental
Information
5. Management of Registrant ......................... Management
of the Funds
5A. Management's Discussion .......................... Inapplicable
6. Capital Stock and Other
Securities........................................ How to Buy Shares;
How to Redeem
Shares; Dividends
and Distributions;
Taxes; Management
of the Funds;
General Information
7. Purchase of Securities
Being Offered..................................... How to Buy Shares;
Management
of the Funds
8. Redemption or Repurchase.......................... How to Redeem
Shares
9. Pending Legal Proceedings......................... Inapplicable
-3-
<PAGE>
PROSPECTUS December 31, 1996
PEGASUS FUNDS
c/o NBD Bank
900 Tower Drive
Troy, Michigan 48098
24 Hour yield and performance information
Purchase and Redemption orders:
(800) 688-3350
Pegasus Funds (the "Trust") is offering in this Prospectus
Class I shares in the following six investment portfolios (the "Funds"),
divided into four general fund types: Asset Allocation; Equity; Bond; and
Money Market. The Asset Allocation, Equity and Bond Funds are sometimes
collectively referred to as "Non-Money Market Funds."
ASSET ALLOCATION FUNDS BOND FUND
The Managed Assets Conservative Fund The Bond Fund
The Managed Assets Balanced Fund
EQUITY FUNDS MONEY MARKET FUND
The Mid-Cap Opportunity Fund The Money Market Fund
The Growth and Value Fund
By this Prospectus, Class I shares of each Fund are being
offered without a sales charge to certain qualified employee benefit plans.
This Prospectus sets forth concisely information that a
prospective investor should consider before investing. Investors should read
this Prospectus and retain it for future reference. Additional information
about the Trust, contained in a Statement of Additional Information, has been
filed with the Securities and Exchange Commission (the "SEC") and is available
upon request and without charge by writing to the Trust at the above address.
The Statement of Additional Information bears the same date as this Prospectus
and is incorporated by reference into this Prospectus in its entirety.
Investors should recognize that the share price, yield and
investment return of each Fund fluctuate and are not guaranteed.
SHARES OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY, FIRST CHICAGO NBD
<PAGE>
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 THE MONEY MARKET
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.
<PAGE>
TABLE OF CONTENTS
HIGHLIGHTS....................................................... 1
EXPENSE TABLE.................................................... 2
FINANCIAL HIGHLIGHTS............................................. 6
DESCRIPTION OF THE FUNDS......................................... 12
HOW TO BUY SHARES................................................ 22
HOW TO EXCHANGE SHARES........................................... 23
HOW TO REDEEM SHARES............................................. 24
MANAGEMENT OF THE TRUST.......................................... 24
DIVIDENDS AND DISTRIBUTIONS...................................... 27
TAXES............................................................ 27
PERFORMANCE INFORMATION.......................................... 28
GENERAL INFORMATION.............................................. 30
SUPPLEMENTAL INFORMATION.........................................A-1
<PAGE>
HIGHLIGHTS
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
Investment Objectives and Management Policies
Each Fund's investment objective is set forth on page 4 of this
Prospectus. Each Asset Allocation Fund will invest substantially all of its
assets (other than securities it holds as of the date of this Prospectus and
certain other direct investments) in Class I shares in each of the Funds
described in this Prospectus and in Class I shares of the following funds of
the Trust which are also described in this Prospectus and whose shares are
offered by a separate Prospectus ("Additional Pegasus Funds"): Equity Income
Fund, Growth Fund, Small-Cap Opportunity Fund, Intrinsic Value Fund, Equity
Index Fund, International Equity Fund, Intermediate Bond Fund, Short Bond
Fund, Income Fund, and International Bond Fund. The Funds and the Additional
Pegasus Funds in which the Asset Allocation Funds invest are collectively
referred to as the "Underlying Funds."
Investment Adviser
First Chicago NBD Investment Management Company ("FCNIMCO")
serves as each Fund's investment adviser ("Investment Adviser"). Each Fund has
agreed to pay the Investment Adviser an annual fee as set forth under
"Management of the Funds."
How To Buy Shares
First Data Investor Services Group, Inc. serves as the Trust's
Transfer and Dividend Disbursing Agent (the "Transfer Agent").
Class I shares are sold at net asset value with no sales charge
to certain qualified benefit plans, among others. Investors purchasing Class I
shares through their Eligible Retirement Plans (as defined under "How to Buy
Shares") should contact such plans directly for appropriate instructions, as
well as for information about conditions pertaining to the plans and any
related fees. Class I shares may be purchased for an Eligible Retirement Plan
only by a custodian, trustee, investment manager or other entity authorized to
act on behalf of such plan.
See "How to Buy Shares" on page 22 of this Prospectus.
How To Redeem Shares
Generally, investors should contact their plan administrator
for redemption instructions.
See "How to Redeem Shares" on page 24 of this Prospectus.
1
<PAGE>
FUND EXPENSES
The purpose of the following tables is to assist investors in
understanding the various costs and expenses that an investor in a Fund will
bear, the payment of which will reduce an investor's return on an annual
basis.
<TABLE>
<CAPTION>
EXPENSE TABLE
Shareholder Transaction Expenses All Funds
- -------------------------------- ---------
<S> <C>
Maximum Sales Charge
Imposed on Purchases (as a
percentage of offering price) None
Sales Charge on Reinvested
Dividends None
Maximum Deferred Sales
Charge Imposed On Redemptions
(as a percentage of the amount
subject to charge) None
Redemption Fees None
Exchange Fees None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees Total Operating
After Waivers 12b-1 Fees Other Expenses Expenses(1)
-------------- ---------- ----------------- ---------------
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS:
Managed Assets Conservative 0.57% None 0.40% 0.97%
Fund(2)(3)
Managed Assets Balanced Fund(2)(3) 0.61% None 0.35% 0.96%
EQUITY FUNDS:
Mid-Cap Opportunity Fund 0.60% None 0.21% 0.81%(4)
Growth and Value Fund 0.60% None 0.20% 0.80%(4)
BOND FUND:
Bond Fund 0.40% None 0.19% 0.59%(4)
MONEY MARKET FUND:
Money Market Fund 0.29%(4) None 0.19% 0.48%(4)
<FN>
(1) Other Expenses and Total Operating Expenses: for each Fund have been
restated to reflect current expenses; and for the Asset Allocation
Funds include expenses (including management fees) borne indirectly by
those Funds in connection with such Funds' investments in the
Underlying Funds.
2
<PAGE>
(2) Management Fees After Waivers, Other Expenses and Total Operating
Expenses of the Asset Allocation Funds have been calculated based upon
certain assumptions, including assumptions about the allocation of
each Asset Allocation Fund's assets among the Underlying Funds.
Management Fees After Waivers and Other Expenses of the Asset
Allocation Funds will differ from the amounts shown depending upon the
actual allocation of an Asset Allocation Fund's assets among the
Underlying Funds.
(3) The Investment Adviser has undertaken to waive fees and reimburse
expenses until at least April 30, 1997 to the extent Total
Operating Expenses applicable to Class I shares of the Managed Assets
Conservative and Managed Assets Balanced Funds exceed the amount shown
in the table. The Investment Adviser may terminate such fee waivers
and expense reimbursements at any time after April 30, 1997.
Without such waivers and reimbursements, and without changing the
asset allocation assumptions, Management Fees, Other Expenses and
Total Operating Expenses applicable to Class I shares would have been
0.65%, 0.55% and 1.20%, respectively, for the Managed Assets
Conservative Fund and 0.65%, 0.54% and 1.19%, respectively, for the
Managed Assets Balanced Fund. Such amounts would differ depending upon
the actual allocation of an Asset Allocation Fund's assets among the
Underlying Funds.
(4) The Investment Adviser has undertaken to waive fees and reimburse
expenses until at least April 30, 1997 to the extent the Total
Operating Expenses applicable to Class I shares of the Mid-Cap
Opportunity, Growth and Value, Bond and Money Market Funds exceed
0.92%, 1.01%, 0.93%, and 0.50%, respectively. The Investment Adviser
may terminate such fee waivers and expense reimbursements at any time
after April 30, 1997. Without such waivers and reimbursements:
Management Fees applicable to Class I shares of the Money Market Fund
would have been 0.30%; and Total Operating Expenses applicable to
Class I shares of the other above-mentioned Funds would have remained
the same.
</TABLE>
Examples
Based upon the assumptions in the foregoing chart, an investor would pay the
following expenses on a $1,000 investment, assuming (1) 5% annual return and
(2) redemption at the end of each period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Managed Assets Conservative Fund $10 $31 $54 $119
Managed Assets Balanced Fund $10 $31 $53 $118
Mid-Cap Opportunity Fund $ 8 $26 $45 $100
Growth and Value Fund $ 8 $26 $45 $ 99
Bond Fund $ 6 $19 $33 $ 74
Money Market Fund $ 5 $15 $27 $ 60
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLES SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS
THAN THOSE INDICATED. MOREOVER, WHILE EACH EXAMPLE ASSUMES A 5% ANNUAL RETURN,
A FUND'S ACTUAL PERFORMANCE MAY RESULT IN AN ACTUAL RETURN GREATER OR LESS
THAN 5%. THE EXAMPLES DO NOT REFLECT ANY FEES RELATED TO AN INVESTOR'S
EMPLOYEE BENEFIT PLAN.
3
<PAGE>
PEGASUS FUNDS
Asset Allocation Funds
These Funds offer investors a convenient means of investing in
shares of the Underlying Funds in order to achieve a target asset allocation
in the Equity, Debt and Cash Equivalent market sectors:
The Managed Assets Conservative Fund seeks to provide long-term
total return; capital appreciation is a secondary consideration.
The Managed Assets Balanced Fund seeks to achieve long-term
total return through a combination of capital appreciation and current income.
Equity Funds
These Funds will invest principally in common stocks, preferred
stocks and convertible securities, including those in the form of depository
receipts, as well as warrants to purchase such securities (collectively,
"Equity Securities"):
The Mid-Cap Opportunity Fund seeks to achieve long-term capital
appreciation. In seeking to achieve its objective, this Fund will invest
primarily in Equity Securities of companies with intermediate market
capitalizations.
The Growth and Value Fund seeks to achieve long-term capital
growth, with income a secondary consideration. In seeking to achieve its
objective, this Fund will invest primarily in Equity Securities of larger
companies that are attractively priced relative to their growth potential.
Bond Fund
This Fund will invest principally in a broad range of debt
securities ("Debt Securities"). Debt Securities in which the Bond Fund
normally invests include: (i) obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; (ii) corporate, bank and
commercial obligations; (iii) securities issued or guaranteed by foreign
governments, their agencies or instrumentalities; (iv) securities issued by
supranational banks; (v) mortgage backed securities; (vi) securities
representing interests in pools of assets; and (vii) variable-rate bonds, zero
coupon bonds, debentures, and various types of demand instruments. Obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
may include mortgage backed securities, as well as "stripped securities" (both
interest-only and principal-only) and custodial receipts for Treasury
securities:
The Bond Fund seeks to maximize total rate of return by
investing predominantly in intermediate and long-term Debt Securities. During
normal market conditions, the Fund's average weighted portfolio maturity is
expected to be between 6 and 12 years.
Money Market Fund
4
<PAGE>
The Money Market Fund seeks to maintain a net asset value of
$1.00 per share for purchases and redemptions. To do so, the Fund uses the
amortized cost method of valuing its securities pursuant to Rule 2a-7 under
the 1940 Act:
The Money Market Fund seeks to provide a high level of current
income consistent with the preservation of capital and liquidity. This Fund
will invest in high quality "money market" instruments described on page 15.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below provide supplementary information to the
Funds' financial statements contained in their Statement of Additional
Information and set forth certain information concerning the historic
investment results of Fund shares. They present a per share analysis of how
each Fund's net asset value has changed during the periods presented. The
table, with respect to the Managed Assets Conservative Fund for the period
ended December 31, 1995, has been derived from the financial statements which
have been audited by Ernst & Young LLP, such Fund's independent auditors and,
with respect to the Managed Assets Balanced, Mid-Cap Opportunity, Growth and
Value, Bond and Money Market Funds, have been derived from such Funds'
financial statements which have been audited by Arthur Andersen LLP, the
Trust's independent public accountants, whose reports thereon are contained in
the Statement of Additional Information along with the financial statements.
The financial data included in these tables should be read in conjunction with
the financial statements and related notes included in the Statement of
Additional Information. Further information about the performance of the Funds
is available in annual reports to shareholders. The Statement of Additional
Information and annual reports to shareholders may be obtained from the Trust
free of charge by calling (800) 688-3350.
<TABLE>
<CAPTION>
Managed Assets Conservative Fund *
Class I Shares Six Months For the Period
Ended Ended
June 30, December 31,
1996 1995(a)
-------------- --------------
(unaudited)
<S> <C> <C>
Net asset value, beginning of period.......................... $ 14.57 $ 12.42
------- -------
Income from investment operations:
Net investment income..................................... 0.31 0.57
Net realized and unrealized gains on investments.......... 0.28 2.18
------ -------
Total income from investment operations................... 0.59 2.75
------ -------
Less distributions:
From net investment income................................ (0.26) (0.57)
From net realized gains................................... -- (0.03)
-------
Total distributions....................................... (0.26) (0.60)
------- -------
Net asset value, end of period................................ $ 14.90 $ 14.57
======= =======
Total return.................................................. 4.09%++ 22.55%++
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)................. $1,237 $1,294
Ratio of expenses to average net assets................... 0.86%+ 0.77%+
Ratio of net investment income to average net assets...... 4.15%+ 5.12%+
Ratio of expenses to average net assets (b)............... 1.26%(c)+ 1.22%+
Ratio of net investment income to average net assets (b).. 3.76%+ 4.66%+
Portfolio turnover rate................................... 7.44%++ 8.23%++
<FN>
- ---------
* The Fund was formerly known as the Prairie Managed Assets Income Fund, a
separate investment portfolio (the "Prairie Fund") of Prairie Funds, which
was organized as a Massachusetts business trust. On September 21, 1996,
the assets and liabilities of the Prairie Fund were transferred to this
Fund, which had no prior operating history.
(a) For the period March 3, 1995 (initial offering of Class I Shares) through
December 31, 1995.
(b) During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
(c) During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated.
The ratio of net investment income was not affected.
+ Annualized.
++ Not annualized.
</TABLE>
6
<TABLE>
<CAPTION>
Managed Assets Balanced Fund*
Class I Shares
Six Months Year Ended Period Ended
Ended December 31, December 31,
June 30, 1996 1995 1994
------------- ------------ ------------
(unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period. $ 11.24 $ 9.53 $ 10.00
-------- ------- -------
Income from investment operations:
Net investment income.............. 0.18 0.35 0.28
Net realized and unrealized gains
(losses) on investments........... 0.30 1.83 (0.48)
-------- ------- -------
Total from investment operations... 0.48 2.18 (0.20)
------- ------- -------
Less distributions:
From net investment income......... (0.24) (0.35) (0.27)
-------- ------- -------
From net realized gains............ -- (0.12) --
-------- ------- -------
Total distributions................ (0.24) (0.47) (0.27)
-------- ------- -------
Net asset value, end of period....... $ 11.48 $ 11.24 $ 9.53
======== ======= =======
Total return(b)...................... 8.57%(a) 23.18% (1.95%)
Ratios/Supplemental Data:
Net assets, end of period (000's
omitted)........................ $109,854 $93,624 $54,167
Ratio of expenses to average
net assets....................... 0.94%(a) 0.91% 0.85%
Ratio of net investment income
to average net assets............ 3.23%(a) 3.40% 3.41%
Ratio of expenses to average net
assets without fee waivers/reimbursed
expenses.......................... 0.98%(a) 1.09% 1.56%
Ratio of net investment income to
average net assets without fee
waivers/reimbursed expenses...... 3.19%(a) 3.22% 2.70%
Portfolio turnover rate............ 23.88% 31.76% 37.49%
<FN>
- ---------
* Prior to August 26, 1996, the Fund was named the Woodward Balanced Fund.
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Mid-Cap Opportunity Fund*
Class I Shares
June 1, 1991
(Commencement
Six Months Year Ended Year Ended Year Ended Year Ended of Operations)
Ended December 31, December 31, December 31, December 31, to December 31,
June 30, 1996 1995 1994 1993 1992 1991
------------- ------------ ------------ ------------ ------------ -------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.. $ 15.15 $ 13.34 $ 14.49 $ 12.37 $ 10.40 $ 10.00
Income from investment operations:
Net investment income............... 0.02 0.06 0.07 0.10 0.11 0.09
Net realized and unrealized gains
(losses) on investments........... 1.61 2.57 (0.54) 2.87 2.43 0.43
-------- -------- -------- -------- -------- --------
Total from investment operations.... 1.63 2.63 (0.47) 2.97 2.54 0.52
-------- -------- -------- -------- -------- --------
Less distributions:
From net investment income.......... (0.02) (0.06) (0.07) (0.10) (0.11) (0.09)
From net realized gains............. -- (0.76) (0.49) (0.75) (0.46) (0.03)
In excess of realized gains......... -- 0.00 (0.02) 0.00 0.00 0.00
Tax return of capital............... -- 0.00 (0.10) 0.00 0.00 0.00
-------- -------- -------- -------- -------- --------
Total distributions................. (0.02) (0.82) (0.68) (0.85) (0.57) (0.12)
-------- -------- -------- -------- -------- --------
Net asset value, end of period........ $ 16.76 $ 15.15 $ 13.34 $ 14.49 $ 12.37 $ 10.40
======== ========= ========= ======== ======== ========
Total return(b)....................... 21.43%(a) 19.88% (3.27%) 24.01% 24.56% 8.92%(a)
Ratios/Supplemental Data:
Net assets, end of period
(000's omitted).................... $707,061 $650,952 $524,999 $365,665 $166,423 $108,046
Ratio of expenses to average
net assets....................... 0.82%(a) 0.89% 0.90% 0.86% 0.84% 0.84%(a)
Ratio of net investment income
to average net assets............. 0.24%(a) 0.37% 0.53% 0.71% 1.09% 1.56%(a)
Portfolio turnover rate............. 23.58% 53.55% 37.51% 33.99% 34.44% 2.92%
<FN>
- ------------------------
* Prior to September 23, 1996, the name of the Fund was the Woodward
Opportunity Fund.
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Growth and Value Fund*
Class I Shares
June 1, 1991
(Commencement
Six Months Year Ended Year Ended Year Ended Year Ended of Operations)
Ended December 31, December 31, December 31, December 31, to December 31,
June 30, 1996 1995 1994 1993 1992 1991
------------- ----------- ------------ ------------ ------------ ---------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.16 $ 10.67 $ 11.16 $ 10.51 $ 9.86 $ 10.00
Income from investment operations:
Net investment income ............ 0.09 0.21 0.23 0.20 0.22 0.14
Net realized and unrealized gains
(losses) on investments ......... 1.04 2.76 (1.17) 1.24 0.75 (0.14)
--------- ---------- ---------- -------- --------- ----------
Total from investment operations . 1.13 2.97 0.06 1.44 0.97 0.00
-------- ---------- ---------- -------- --------- ----------
Less distributions:
From net investment income ....... (0.08) (0.22) (0.21) (0.20) (0.22) (0.14)
From net realized gains .......... -- (0.26) (0.30) (0.59) (0.10) --
In excess of realized gains ...... -- -- (0.01) -- -- --
Tax return of capital ............ -- -- (0.03) -- -- --
-------- ---------- ---------- -------- --------- ----------
Total distributions .............. (0.08) (0.48) (0.55) (0.79) (0.32) (0.14)
-------- ---------- ---------- -------- --------- ----------
Net asset value, end of period ..... $ 14.21 $ 13.16 $ 10.67 $ 11.16 $ 10.51 $ 9.86
========= ========== ========== ======== ========= ==========
Total return(b) .................... 17.22%(a) 28.04% 0.55% 13.79% 9.87% 0.17%(a)
Ratios/Supplemental Data:
Net assets, end of period
(000's omitted) ................ $ 768,367 $ 737,167 $ 571,371 $429,635 $ 287,345 $ 238,086
Ratio of expenses to average
net assets ..................... 0.80%(a) 0.84% 0.84% 0.83% 0.83% 0.85%(a)
Ratio of net investment income
to average net assets .......... 1.22%(a) 1.73% 2.07% 1.84% 2.20% 2.56%(a)
Portfolio turnover rate .......... 19.58% 26.80% 28.04% 42.31% 16.28% 0.94%
<FN>
- ---------
* Prior to September 23, 1996, the name of the Fund was the Woodward
Growth/Value Fund.
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Bond Fund*
Class I Shares
June 1, 1991
For the (Commencement
Six Months Year Ended Year Ended Year Ended Year Ended of Operations)
Ended December 31, December 31, December 31, December 31, to December 31,
June 30, 1996 1995 1994 1993 1992 1991
------------- ------------ ----------- ----------- ----------- ---------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.45 $ 9.01 $ 10.32 $ 10.25 $ 10.55 $ 10.00
Income from investment operations:
Net investment income.......... 0.33 0.63 0.61 0.76 0.83 0.51
Net realized and unrealized
gains (losses) on investments (0.44) 1.45 (1.31) 0.38 (0.17) 0.57
---------- --------- -------- -------- --------- ---------
Total from investment operations (0.11) 2.08 (0.70) 1.14 0.66 1.08
---------- --------- -------- -------- --------- ---------
Less distributions:
From net investment income..... (0.32) (0.64) (0.59) (0.76) (0.83) (0.51)
From net realized gains........ -- -- (0.02) (0.31) (0.13) (0.02)
---------- --------- -------- -------- --------- ---------
Total distributions............ (0.32) (0.64) (0.61) (1.07) (0.96) (0.53)
---------- --------- -------- -------- --------- ---------
Net asset value, end of period... $ 10.02 $ 10.45 $ 9.01 $ 10.32 $ 10.25 $ 10.55
========== ========= ======== ======== ========= =========
Total return(b).................. (2.09%)(a) 23.75% (6.99%) 11.39% 6.56% 18.45%(a)
Ratios/Supplemental Data
Net assets, end of period
(000's omitted)................. $ 539,772 $ 517,566 $427,168 $501,196 $ 321,758 $ 237,673
Ratio of expenses to average
net assets................... 0.71%(a) 0.74% 0.74% 0.73% 0.73% 0.75%(a)
Ratio of net investment income
to average net assets........ 6.63(a) 6.39% 6.36% 7.20% 8.08% 8.44%(a)
Portfolio turnover rate....... 14.30% 41.91% 75.67% 111.52% 90.45% 8.19%
<FN>
- ---------
* Prior to August 26, 1996, the name of the Fund was the Woodward Bond Fund.
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Money Market Fund*
Class I Shares
For the
Six Months Ended Year Ended Year Ended Year Ended Year Ended
June 30, 1996 December 31, December 31, December 31, December 31,
Unaudited 1995 1994 1993 1992
---------------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning
of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income From Investment
Operations:
Net Investment Income $ 0.0249 $ 0.0549 $ 0.0378 $ 0.0281 $ 0.0347
---------- ---------- ---------- ---------- ----------
Total From Investment
Operations ........... $ 0.0249 $ 0.0549 $ 0.0378 $ 0.0281 $ 0.0347
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends From Net
Investment Income .... $ (0.0249) $ (0.0549) $ (0.0378) $ (0.0281) $ (0.0347)
---------- ---------- ---------- ---------- ----------
Total Distributions .. $ (0.0249) $ (0.0549) $ (0.0378) $ (0.0281) $ (0.0347)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End
of Period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return ............. 5.02(a) 5.63% 3.86% 2.85% 3.58%
Ratios/Supplemental Data
Net Assets, End
of Period
(000's omitted) ...... $1,787,427 $1,639,695 $1,323,040 $1,326,693 $1,095,354
Ratio of Expenses
to Average
Net Assets ........... 0.52%(a) 0.51% 0.47% 0.49% 0.52%
Ratio of Net Investment
Income to Average Net
Assets .............. 4.98%(a) 5.49% 3.78% 2.81% 3.47%
<CAPTION>
January 4, 1988
(Commencement of
Year Ended Year Ended Year Ended Operations) to
December 31, December 31, December 31, December 31,
1991 1990 1989 1988
------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning
of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income From Investment
Operations:
Net Investment Income . $ 0.0579 $ 0.0784 $ 0.0877 $ 0.0730
-------- -------- -------- --------
Total From Investment
Operations .......... $ 0.0579 $ 0.0784 $ 0.0877 $ 0.0730
-------- -------- -------- --------
Less Distributions:
Dividends From Net
Investment Income ... $(0.0579) $(0.0784) $(0.0877) $(0.0730)
-------- -------- -------- --------
Total Distributions .. $(0.0579) $(0.0784) $(0.0877) $(0.0730)
-------- -------- -------- --------
Net Asset Value, End
of Period ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total return ............. 5.95% 8.14% 9.19% 7.55%(a)
Ratios/Supplemental Data
Net Assets, End
of Period
(000's omitted) ...... $775,521 $717,516 $446,466 $250,182
Ratio of Expenses
to Average
Net Assets .......... 0.50% 0.50% 0.51% 0.49%(a)
Ratio of Net Investment
Income to Average Net
Assets .............. 5.79% 7.84% 8.77% 7.30%(a)
<FN>
- ---------
* Prior to September 16, 1996, the name of the Fund was the Woodward Money
Market Fund.
(a) Total returns and ratios are annualized for periods less than one year
for comparability purposes. Actual annual returns and ratios may be less
than or greater than those shown.
</TABLE>
11
<PAGE>
DESCRIPTION OF THE FUNDS
General
The Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Trust currently consists of twenty-six investment portfolios, each
of which consists of a separate pool of assets with separate investment
objectives and policies. This Prospectus, however, describes only six
portfolios. Under the 1940 Act, each Fund is classified as a diversified
investment portfolio (each a "Diversified Fund"). With respect to the
Additional Pegasus Funds, the Equity Income, Growth, Small-Cap Opportunity,
Intrinsic Value, Equity Index, Intermediate Bond, Short Bond and Income Funds
are Diversified Funds and the International Equity and International Bond
Funds are classified as non-diversified investment portfolios (each a
"Non-Diversified Fund").
Investment Objectives and Policies
The investment objective of a Fund may not be changed without
approval of the holders of a majority (as defined in the 1940 Act) of the
Fund's outstanding voting shareholders. See "General Information." Except as
noted below under "Investment Limitations," a Fund's investment policies may
be changed without a vote of shareholders. There can be no assurance that a
Fund will achieve its objective. The following sections should be read in
conjunction with the description of investments in which the Funds may invest,
as set forth in "Supplemental Information."
Asset Allocation Funds
In order to achieve its investment objective, each Asset
Allocation Fund will typically invest its assets in the Underlying Funds
within a predetermined target asset allocation range, as set forth below. The
target asset allocation reflects the extent to which each Asset Allocation
Fund will invest in a particular market segment, and the varying degrees of
potential investment risk and reward represented by each Fund's investments in
those market segments and corresponding Underlying Funds. The Investment
Adviser may alter the target asset allocation and target asset allocation
ranges when it deems appropriate. The assets of each Fund will be allocated
among each of the Underlying Funds in accordance with its investment
objective, the target asset allocation, the Investment Adviser's outlook for
the economy, the financial markets and the relative market valuations of the
Underlying Funds. Substantially all of the assets of the Managed Assets
Conservative and Managed Assets Balanced Funds are currently generally
invested directly in the same types of underlying securities as are
permissible investments for the Underlying Funds. The Asset Allocation Funds
will generally limit their investments to the Underlying Funds, although, as
deemed appropriate by the Investment Adviser, until the Managed Assets
Conservative and Managed Assets Balanced Funds are substantially invested in
the Underlying Funds, such Funds may purchase these underlying securities
directly. The Investment Adviser currently expects that the Managed Assets
Conservative and Managed Assets Balanced Funds' transition to having
substantially all of their assets invested in the Underlying Funds will be
gradual.
In order to meet liquidity needs or for temporary defensive
purposes, each Asset Allocation Fund may invest its assets in shares of the
Money Market Fund and directly in the same type of underlying securities as are
permissible investments for the Money Market Fund.
12
<PAGE>
The Managed Assets Conservative Fund seeks to provide long-term
total return with capital appreciation as a secondary consideration. The
Managed Assets Balanced Fund seeks to achieve long-term total return through a
combination of capital appreciation and current income. The Managed Assets
Conservative Fund is deemed to be more "conservative" than the Managed Assets
Balanced Fund because it has a heavier weighting in Debt Securities and in
Underlying Funds which invest primarily in Debt Securities and a lighter
weighting in Equity Securities and in Underlying Funds which invest primarily
in Equity Securities . In attempting to achieve its asset allocation
objective, except as set forth above, each Asset Allocation Fund will invest
in the Equity, Debt and Cash Equivalent market sectors within the following
ranges:
<TABLE>
<CAPTION>
Target Asset Allocation
Asset Allocation Fund Equity Debt Cash Equivalent
- --------------------- ------ ---- ---------------
<S> <C> <C> <C>
Managed Assets 30% - 50% 50% - 70% 0% - 20%
Conservative Fund
Managed Assets Balanced 50% - 70% 30% - 50% 0% - 20%
Fund
Underlying Funds by Equity Income Fund Intermediate Bond Fund Money Market Fund
Category Growth Fund Bond Fund
Mid-Cap Opportunity Fund Short Bond Fund
Small-Cap Opportunity Fund Income Fund
Intrinsic Value Fund International Bond Fund
Growth and Value Fund
Equity Index Fund
International Equity Fund
</TABLE>
For more information on the Underlying Funds see also the
Statement of Additional Information and other sections of this Prospectus. You
may request a Prospectus for the Additional Pegasus Funds by calling
(800) 688-3350.
Equity Funds
Each Equity Fund invest primarily in publicly traded common
stocks of companies incorporated in the United States, although each such Fund
may also invest up to 25% of its total assests in Equity Securities of foreign
issuers, either directly or through Depository Receipts.
Each Equity Fund may invest in securities convertible into
common stock, such as certain bonds and preferred stocks, and may invest up to
5% of its net assets in other types of securities having common stock
characteristics (such as rights and warrants to purchase equity securities).
In addition, each Equity Fund is permitted to invest up to 5% of its net
assets in lower rated convertible securities. The Equity Funds may also enter
into futures contracts and related options and may utilize options and other
derivative instruments such as equity index swaps, each of which involves
risk. Each Equity Fund may also lend its portfolio securities. Under normal
market conditions, each Equity Fund expects to invest at least 65% of the
value of its total assets in Equity Securities. Each Equity Fund may hold up
to 35% of its total assets in Debt Securities rated "investment grade" or
higher at the time of purchase (i.e., no lower than Baa by Moody's Investors
Service, Inc. ("Moody's), or BBB by Standard and Poor's Ratings Group ("S&P"),
Fitch Investors Service, L.P. ("Fitch") or Duff & Phelps Credit Rating Co.
("Duff") (each a "Rating Agency")), or unrated investments deemed by the
Investment Adviser to be comparable in quality at the time of purchase to
instruments that are so rated. Obligations rated in the lowest of the top four
rating categories (Baa by Moody's or BBB by S&P, Fitch, Duff or IBCA) are
considered to have less capacity to pay interest and repay principal and have
certain speculative characteristics.
13
<PAGE>
The Mid-Cap Opportunity Fund invests in Equity Securities of
companies with market capitalizations of $500 million to $3 billion. The
Investment Adviser believes that there are many companies in this size range
that enjoy enhanced growth prospects, operate in more stable market niches,
and have greater ability to respond to new business opportunities, all of
which increase their likelihood of attaining superior levels of profitability
and investment returns.
The Growth and Value Fund invests primarily in Equity
Securities of companies believed by the Investment Adviser to represent a
value or potential worth which is not fully recognized by prevailing market
prices. The Fund invests in companies which the Investment Adviser believes
have earnings growth expectations that exceed those implied by the market's
current valuation. In addition, the Fund seeks to maintain a portfolio of
companies whose earnings will increase at a faster rate than those within the
general equity market.
Bond Funds
The Bond Fund invests in a portfolio of U.S. dollar denominated
Debt Securities of domestic and foreign issuers. The Fund's average weighted
portfolio maturity is expected to be between 6 and 12 years.
The Bond Funds will invest at least 65% of the value
of its total assets under normal market conditions in Debt Securities. When
the Investment Adviser believes it advisable for temporary defensive purposes
or in anticipation of otherwise investing cash positions, the Bond Fund may
invest in Cash Equivalent Securities. Most obligations acquired by the Fund
will be issued by companies or governmental entities located within the United
States. Up to 15% of the total assets of the Bond Fund may be invested in
dollar denominated debt obligations (including Cash Equivalent Securities) of
foreign issuers. In addition, the Bond Fund may engage in futures and options
transactions and other derivative instruments, such as interest rate swaps and
forward contracts, and lend its portfolio securities each of which involves
risk See "Risk Factors" below and "Supplemental Information."
The Debt Securities in which the Bond Fund may invest will be
rated investment grade at the time of purchase, or if unrated, will be deemed
by the Investment Adviser to be comparable in quality at the time of purchase
to instruments that are so rated. By so restricting its investments, the
Fund's ability to maximize total rate of return will be limited. See "Risk
Factors--Lower Rated Securities.
14
<PAGE>
Money Market Fund
The Money Market Fund invests in the following high quality
"money market" instruments: (1) Obligations issued or guaranteed as to payment
of principal and interest by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Obligations"); (2) U.S. dollar denominated
obligations issued or guaranteed by the government of Canada, a Province of
Canada, or an instrumentality or political subdivision thereof; (3)
certificates of deposit, bankers' acceptances and time deposits of U.S. banks
or other U.S. financial institutions (including foreign branches of such banks
and institutions) having total assets in excess of $1 billion and which are
members of the Federal Reserve System or the Federal Deposit Insurance
Corporation ("FDIC"); (4) certificates of deposit, bankers' acceptances and
time deposits of foreign banks and U.S. branches of foreign banks having
assets in excess of the equivalent of $1 billion; (5) commercial paper, other
short-term obligations and variable rate master demand notes, bonds,
debentures and notes; and (6) repurchase agreements relating to the above
instruments.
The Money Market Fund seeks to maintain a net asset value of
$1.00 per share for purchases and redemptions. To do so, the Fund uses the
amortized cost method of valuing its securities pursuant to Rule 2a-7 under
the 1940 Act, certain requirements of which are summarized below.
The Money Market Fund will only purchase "eligible securities"
that present minimal credit risks as determined by the Investment Adviser
pursuant to guidelines established by the Trust's Board of Trustees. Eligible
securities include: (i) U.S. Government Obligations issued or guaranteed as to
payment of principal and interest by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Obligations"); (ii) securities that are
rated (at the time of purchase) in the two highest categories for such
securities by Rating Agencies; and (iii) certain securities that are not so
rated but are of comparable quality to rated eligible securities as determined
by the Investment Adviser. See "Investment Objectives, Policies and Risk
Factors" in the Statement of Additional Information for a more complete
description of eligible securities. A description of ratings is contained in
the Statement of Additional Information.
The Money Market Fund is managed so that the average maturity
of all instruments in the Fund (on a dollar-weighted basis) will not exceed 90
days. In no event will the Fund purchase any securities which are deemed to
mature more than 13 months from the date of purchase (except for certain
variable and floating rate instruments and securities underlying repurchase
agreements and collateral underlying loans of portfolio securities).
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 the Money Market Fund
will be able to maintain a stable net asset value of $1.00 per share.
Additional Pegasus Funds in Which the Asset Allocation Funds Invest
In order to achieve its target asset allocation in the Equity
and Debt market sectors, each Asset Allocation Fund will invest in the
following Equity Funds and Bond Funds (in addition to the Mid-Cap Opportunity,
Growth and Value, and Bond Funds) which have adopted the same respective
general investment policies described above under "Equity Funds" and "Bond
Funds:"
The Equity Income Fund will invest primarily in
income-producing Equity Securities of domestic issuers. The Investment Adviser
will be particularly alert to companies which pay above-average dividends, yet
offer opportunities for capital appreciation and growth of earnings.
The Growth Fund will invest primarily in Equity Securities of
domestic issuers believed by the Investment Adviser to have above-average
growth characteristics. The Investment Adviser may consider some of the
following factors in making its investment decisions: the development of new
or improved products or services, a favorable outlook for growth in the
industry, patterns of increasing sales and earnings, the probability of
increased operating efficiencies, cyclical conditions, or other signs that the
company is expected to show greater than average earnings growth and capital
appreciation.
The Small-Cap Opportunity Fund invests in Equity Securities of
small domestic issuers with market capitalizations of $100 million to $1
billion. The Investment Adviser will consider some of the following factors in
making its investment decisions: high quality management, significant equity
ownership positions by management, a leading or dominant position in a major
product line, a sound financial position and a relatively high rate of return
on invested capital. The Fund also may invest in companies that offer the
possibility of accelerating earnings growth because of management changes, new
products or structural changes in industry or the economy.
15
The Intrinsic Value Fund invests primarily in Equity Securities
of companies believed by the Investment Adviser to represent a value or
potential worth which is not fully recognized by prevailing market prices. In
selecting investments for the Fund, screening techniques are employed to
isolate issues believed to be attractively priced. The Investment Adviser then
evaluates the underlying earning power and dividend paying ability of these
potential investments. The Fund's holdings are usually characterized by lower
price/earnings, price/cash flow and price/book value ratios and by above
average current dividend yields relative to the equity market.
The Equity Index Fund uses the Standard & Poor's Composite
Stock Price Index ("S&P Index") as a benchmark for comparison because it
represents roughly two-thirds of the market value of all publicly traded
common stocks in the United States, is well known to investors and is a widely
accepted measure of common stock investment returns. The S&P 500 Index
contains a representative sample of common stocks that trade on the New York
and American Stock Exchanges and also contains over-the-counter stocks that
are a part of the National Market System.
The Equity Index Fund seeks to achieve a 95% correlation
coefficient between its performance and that of the S&P 500 Index. Therefore,
the Fund's price changes and total return are expected to closely match
movements in the underlying Index. Deviations from the performance of the S&P
500 Index ("tracking error") may result from shareholder purchases and
redemptions of shares of the Fund that occur daily, as well as from the
expenses borne by the Fund, cash reserves held by the Fund and purchases and
sales of securities made by the Fund to conform its holdings more closely with
those of the S&P 500 Index. In addition, tracking error may occur due to
changes made in the S&P 500 Index and the manner in which the index is
calculated by S&P. In the event the performance of the Fund is not comparable
to the performance of the index, the Board of Trustees will examine the
reasons for the deviation and the availability of corrective measures.
The Equity Index Fund will not be managed by using traditional
economic, financial or market analysis. Instead, the Fund utilizes a sampling
methodology to determine which stocks to purchase or sell in order to closely
replicate the performance of the S&P 500 Index. Stocks are selected for the
Fund based on both capitalization weighting in the index and industry
representation. Larger market capitalization securities in the S&P 500 Index
are added to the Fund according to their relative weight. Smaller
capitalization securities are then added to the Fund in equal weights
according to an analysis of the industry diversification of the S&P 500 Index.
Therefore, while all industry weights in the Fund are essentially matched to
those of the S&P 500 Index, not necessarily all 500 stocks are held in the
Fund. The Fund may invest up to 25% of its assets in the securities of foreign
issuers through Depository Receipts. Pending investment and to meet
anticipated redemption requests, the Fund may hold up to 5% of its total
assets in Cash Equivalent Securities. In addition, up to 5% of the Fund's
total assets may be invested in futures contracts and related options in an
effort to maintain exposure to price movements in the S&P 500 Index pending
investment of funds or while maintaining liquidity to meet potential
shareholder redemptions.
The International Equity Fund will invest primarily in Equity
Securities of foreign issuers, either directly or through Depository Receipts
and similar securities which may be sponsored or unsponsored, located in but
not limited to the United Kingdom and European continent, Japan, other Far
East areas and Latin America. The Fund may also invest in other regions
seeking to capitalize on investment opportunities in other parts of the world.
In addition, the Fund may invest in foreign currency and options on foreign
currency.
The Investment Adviser's investment approach to managing the
International Equity Fund's assets emphasizes active country selection
involving global economic and political assessments together with valuation
analysis of selected countries' securities markets. In situations where an
investment's attractiveness outweighs prospects for currency weakness, the
Investment Adviser may take suitable hedging measures. An index approach is
typically used at the stock selection level.
The Investment Adviser employs quantitative techniques in
conjunction with its judgment and experience to determine the foreign equity
markets that the International Equity Fund will be invested in and the
percentage of total assets the Fund will hold by country. Securities of a
country are selected using a quantitatively-oriented sampling technique
intending to generally replicate the performance of an individual country's
stock market index. The Morgan Stanley Capital International Country Indexes
have, for some time, been the accepted benchmark in the U.S. for international
equity fund country comparisons. The Fund may also invest in individual Equity
Securities which the Investment Adviser believes offer opportunities for
capital appreciation.
16<PAGE>
The International Equity Fund's assets will be invested at all
times in the securities of issuers located in at least three different foreign
countries. Investments in a particular country may exceed 25% of the Fund's
total assets, thus making its performance more dependent upon the political
and economic circumstances of a particular country than a more widely
diversified portfolio.
The Intermediate Bond Fund invests in a portfolio of U.S.
dollar denominated Debt Securities of domestic and foreign issuers which,
under normal market conditions, will have maturities or average lives of up to
15 years. The Fund's average weighted portfolio maturity is expected to be
between 3 and 6 years.
The Short Bond Fund invests in a portfolio of U.S. dollar
denominated Debt Securities of domestic and foreign issuers which, under
normal market conditions, will have maturities or average lives of up to 10
years. The Fund's average weighted portfolio maturity will be limited to a
maximum of 3 years.
The Income Fund invests in a portfolio of U.S. dollar
denominated Debt Securities of domestic and foreign issuers which, under
normal market conditions, will have a dollar-weighted average maturity
expected to range between 3 and 10 years.
The International Bond Fund will invest in Debt Securities of
issuers located throughout the world, except the United States. It may invest
100% of its assets on investments in foreign issuers. The Fund also may invest
in convertible preferred stocks. The Fund may hold foreign currency, engage in
foreign exchange transactions, and may purchase debt securities or hold
currencies in combination with forward currency exchange contracts. The Fund
will be alert to opportunities to profit from fluctuations in currency
exchange rates. The Fund will be particularly alert to favorable arbitrage
opportunities (such as those resulting from favorable interest rate
differentials) arising from the relative yields of the various types of
securities in which the Fund may invest and market conditions generally. The
Fund may invest without restriction in companies in, or governments of,
developing countries. See "Risk Factors--Foreign Securities" below.
Under normal market conditions, at least 65% of the value of
the International Bond Fund's total assets will consist of Debt Securities
rated A or better by a Rating Agency. The remainder of the International Bond
Fund's assets may be invested in Debt Securities rated no lower than B by a
Rating Agency. The Fund also may invest in Debt Securities which, while not
rated, are determined by the Investment Adviser to be of comparable quality to
those rated securities in which the Fund may invest. See "Risk Factors--Lower
Rated Securities."
Investment Limitations
Each Fund and the Additional Pegasus Funds are subject to a
number of investment limitations. Except as noted, the following investment
limitations are matters of fundamental policy and may not be changed with
respect to a particular Fund or Additional Pegasus Fund without the
affirmative vote of the holders of a majority of the outstanding shares of the
Fund or Additional Pegasus Fund. Other investment limitations that cannot be
changed without a vote of shareholders are contained in the Statement of
Additional Information under "Investment Objectives, Policies and Risk
Factors."
Each of the Funds and Additional Pegasus Funds may not:
1. Purchase any securities which would cause 25% or more of the
value of its 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 obligations issued
17
<PAGE>
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, domestic bank
obligations for the Money Market Fund, and repurchase agreements secured by
such instruments, (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, (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.
2. Make loans, except that it may purchase and hold debt
instruments and enter into repurchase agreements in accordance with its
investment objective and policies and may lend portfolio securities in an
amount not exceeding one-third of its total assets.
3. Borrow money, issue senior securities or mortgage, pledge or
hypothecate its assets except to the extent permitted under the 1940 Act.
The Diversified Funds may not purchase securities of any
one issuer (other than securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities) if, immediately after such purchase, more
than 5% of the value of its total assets would be invested in the securities
of such issuer, or more than 10% of the issuer's outstanding voting
securities would be owned by it, except that up to 25% of the value of its
total assets may be invested without regard to these limitations.
Each Asset Allocation Fund will look through to its pro rata
portion of the Underlying Funds' portfolio investments to determine
consistency with its fundamental policies on diversification and
concentration.
Generally, if a percentage limitation is satisfied at the time
of investment, a later increase or decrease in such percentage resulting from
a change in the value of a Fund's portfolio securities will not constitute a
violation of such limitation for purposes of the 1940 Act.
Risk Factors
General
Before selecting a Fund in which to invest, the investor should
assess the risks associated with the types of investments made by the Fund.
Investors should consider each Fund as a supplement to an overall investment
program and should invest only if they are willing to undertake the risks
involved. The following should be read in conjunction with "Supplemental
Information" beginning on page A-1 of this Prospectus, and the Statement of
Additional Information, which provides further discussion of securities in
which the Funds may invest and all the investment risks associated with these
investments.
Equity Securities
(Asset Allocation and All Equity Funds only) The securities of
smaller companies may be subject to more abrupt or erratic market movements
than larger, more established companies, both because the securities typically
are traded in lower volume and because the issuers typically are subject to a
greater degree to changes in earnings and prospects.
Debt Securities
(All Funds and All Additional Pegasus Funds) Investors should
be aware that even though interest-bearing securities are investments which
promise a stable stream of income, the prices of such securities generally are
inversely affected by changes in interest rates and, therefore, are subject to
the risk of market price
18
<PAGE>
fluctuations. The values of Debt Securities also may be affected by changes in
the credit rating or financial condition of the issuing entities. Also, see
"Lower Rated Securities" below and the Appendix in the Statement of Additional
Information.
Municipal Obligations
(Asset Allocation and All Bond Funds only) Investors should be
aware that when a fund's assets are concentrated in obligations payable from
revenues of similar projects or issued by issuers located in the same state,
or in industrial development bonds, it will be subject to the particular risks
(including legal and economic conditions) relating to such securities to a
greater extent than if its assets were not so concentrated.
Payment on Municipal Obligations held by the funds relating to
certain projects may be secured by mortgages or deeds of trust. In the event
of a default, enforcement of a mortgage or deed of trust will be subject to
statutory enforcement procedures and limitations on obtaining deficiency
judgments. Moreover, collection of the proceeds from that foreclosure may be
delayed and the amount of the proceeds received may not be enough to pay the
principal or accrued interest on the defaulted Municipal Obligations.
Lower Rated Securities
(Asset Allocation, All Equity and International Bond Funds
only) Investors should carefully consider the relative risks of investing in
the higher yielding (and, therefore, higher risk) debt securities rated below
investment grade by Moody's, S&P, Fitch or Duff (commonly known as junk
bonds). The International Bond Fund may invest up to 35% of its net assets in
debt securities rated as low as B by Moody's, S&P, Fitch and Duff and unrated
debt securities deemed by the Investment Adviser to be comparable in quality
at the time of purchase to instruments that are so rated. The Equity Funds are
permitted to invest up to 5% of their respective net assets in lower rated
convertible securities.
The market values of certain lower rated debt securities tend
to reflect specific developments with respect to the issuer to a greater
extent than do higher rated securities, which react primarily to fluctuations
in the general level of interest rates, and tend to be more sensitive to
economic conditions than are higher rated securities. Issuers of such debt
securities often are highly leveraged and may not have available to them more
traditional methods of financing.
Securities rated below investment grade generally are not meant
for short-term investing and may be subject to certain risks with respect to
the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated Debt Securities. Securities rated BBB or Baa by a
Rating Agency are judged to have speculative elements; their future cannot be
considered as well assured and often the protection of interest and principal
payments may be very moderate and may face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
Factors adversely affecting the market price and yield of lower rated
securities, including a fund's ability to sell securities in a market that may
be less liquid than the market for higher rated securities, will adversely
affect a fund's net asset value. In addition, the retail secondary market for
these securities may be less liquid than that for higher rated securities;
adverse conditions could make it difficult at times for a fund to sell certain
securities or could result in lower prices than those used in calculating the
fund's net asset value.
The Investment Adviser will continually evaluate these securities and
the ability of the issuers of such securities to pay interest and principal. A
fund's ability to achieve its investment objective may be more dependent on
the Investment Adviser's credit analysis than might be the case for a fund
that invested in higher rated securities. See the Appendix in the Statement of
Additional Information for a general description of securities ratings.
19
<PAGE>
Foreign Securities
(All Funds and All Additional Pegasus Funds) Foreign securities
markets, and especially those of developing countries, generally are not as
developed or efficient as those in the United States. Investment in securities
of foreign issuers, whether made directly or indirectly, involves inherent
risks, such as political or economic instability of the issuer or the country
of issue, the difficulty of predicting international trade patterns, changes
in exchange rates of foreign currencies, the possibility of adverse changes in
investment or exchange control regulations. Foreign securities may also be
less liquid and more volatile than securities of comparable U.S. issuers.
Developing countries have economic structures that are
generally less diverse and mature, and political systems that are less stable,
than those of developed countries. The markets of developing countries may be
more volatile than the markets of more mature economies.
Foreign Currency and Foreign Commodity Transactions
(Asset Allocation, International Equity and International Bond
Funds only) Currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and
other complex factors, as seen from an international perspective. Currency
exchange rates also can be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the United States or abroad.
The foreign currency market offers less protection against
defaults in the forward trading of currencies than is available when trading
currencies on an exchange. Since a forward currency contract is not guaranteed
by an exchange or clearinghouse, a default on the contract would deprive a
fund of unrealized profits or force the fund to cover its commitments for
purchase or resale, if any, at the current market price.
Unlike trading on domestic commodity exchanges, trading on
foreign commodity exchanges is not regulated by the Commodity Futures Trading
Commission (the "CFTC") and may be subject to greater risks than trading on
domestic exchanges. For example, some foreign exchanges are principal markets
so that no common clearing facility exists and an investor may look only to
the broker for performance of the contract. In addition, any profits that a
fund might realize in trading could be eliminated by adverse changes in the
exchange rate, or a fund could incur losses as a result of those changes.
Transactions on foreign exchanges may include both commodities which are
traded on domestic exchanges and those which are not.
Mortgage-Related Securities
(Asset Allocation and All Bond Funds only) No assurance can
be given as to the liquidity of the market for certain mortgage-backed
securities, such as collateralized mortgage obligations and stripped
mortgage-backed securities. Determination as to the liquidity of interest-only
and principal-only fixed mortgage-backed securities issued by the U.S.
Government or its agencies and instrumentalities will be made in accordance
with guidelines established by the Board. Mortgage-related securities may be
considered a derivative instrument.
Derivative Instruments
Each of the Funds and Additional Pegasus Funds may
purchase certain "derivative instruments" in accordance with its respective
investment objective and policies. Derivative instruments are instruments
that derive value from the performance of underlying assets, interest or
currency exchange rates, or indices, and include, but are not limited to,
futures contracts, options, forward currency contracts and structured
20
<PAGE>
debt obligations (including collateralized mortgage obligations and other
types of asset backed securities, "stripped" securities and various floating
rate instruments, including inverse floaters).
Derivative instruments present, to varying degrees, market risk
that the performance of the underlying assets, exchange rates or indices will
decline; credit risk that the dealer or other counterparty to the transaction
will fail to pay its obligations; volatility and leveraging risk that, if
interest or exchange rates change adversely, the value of the derivative
instrument will decline more than the assets, rates or indices on which it is
based; liquidity risk that a fund will be unable to sell a derivative
instrument when it wants because of lack of market depth or market disruption;
pricing risk that the value of a derivative instrument (such as an option)
will not correlate exactly to the value of the underlying assets, rates or
indices on which it is based; and operations risk that loss will occur as a
result of inadequate systems and controls, human error or otherwise. Some
derivative instruments are more complex than others, and for those instruments
that have been developed recently, data are lacking regarding their actual
performance over complete market cycles.
Special Risk Considerations Applicable to the Asset Allocation
Funds
An investment in a mutual fund involves risk and, although the
Asset Allocation Funds will ultimately be substantially invested in the
Underlying Funds, such investment will not eliminate investment risk.
Investing in the Underlying Funds through the Asset Allocation Funds also
involves certain additional expenses and tax considerations that would not be
present in a direct investment in the Underlying Funds. From time to time, the
Underlying Funds may experience relatively large purchases or redemptions due
to asset allocation decisions made by the Investment Adviser for its clients,
including the Asset Allocation Funds. These transactions may have a material
effect on the Underlying Funds because Underlying Funds that experience
redemptions as a result of reallocations may have to sell portfolio securities
and because the Underlying Funds that receive additional cash will have to
invest it. While it is impossible to predict the overall impact of these
transactions over time, there could be adverse effects on portfolio management
to the extent that the Underlying Funds may be required to sell securities at
times when they would not otherwise do so, or receive cash that cannot be
invested in an expeditious manner. There may be tax consequences associated
with the purchase and sale of securities and such sales may also increase
transaction costs. The Investment Adviser is committed to minimizing the
impact of these transactions on the Underlying Funds to the extent it is
consistent with pursuing the investment objectives of the Asset Allocation
Funds. The Investment Adviser will monitor the impact of asset allocation
decisions on the Underlying Funds and, where practicable, an Asset Allocation
Fund will, at any one time, only redeem shares of any Underlying Funds to
reduce its allocation to that particular Underlying Fund in increments of up
to 5% (e.g. from 20% to 15%), except where such redemptions are to meet fund
shareholder redemption requests. The Investment Adviser will nevertheless face
conflicts in fulfilling its responsibilities because of the possible
differences between the interests of its asset allocation clients (including
shareholders of the Asset Allocation Funds) and the interests of the
Underlying Funds. Further information about the investment policies and
objectives of the Underlying Funds is in this section , "Investment Objectives
and Policies," "Risk Factors," "Supplemental Information" and the Statement of
Additional Information.
Other Investment Considerations
The classification of the International Equity and
International Bond Funds as "non-diversified" investment companies means that
the proportion of a fund's assets that may be invested in the securities of
a single issuer is not limited by the 1940 Act. A "diversified" investment
company is required by the 1940 Act generally, with respect to 75% of its
total assets, to invest not more than 5% of such assets in the securities of a
single issuer and to hold not more than 10% of the voting securities of any
single issuer. Each Non-Diversified Fund, however, intends to conduct its
operations so as to qualify as a "regulated investment company" for purposes
of the Internal Revenue Code of 1986, as amended (the "Code"), which requires
that, at the end of each quarter of its taxable year, (i) at least 50% of the
market value of its total assets be invested in cash, U.S. Government
securities, the securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5%
21
<PAGE>
of the value of the fund's total assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its
total assets be invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies). Since a relatively high percentage of a Non-Diversified Fund's
assets may be invested in the securities of a limited number of issuers, some
of which may be within the same industry or economic sector, its portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified
investment company.
HOW TO BUY SHARES
General Information
All orders to purchase shares must be made through your
employer's qualified benefit plan. For more information on how to purchase
shares of the Funds through your employer's plan or limitations on the amount
that may be purchased, please consult your employer.
Class I shares are sold at net asset value to qualified
retirement, profit-sharing or other employee benefit plans with plan assets of
at least $100 million invested in shares of the Funds or other investment
companies or accounts advised by NBD Bank ("NBD") or FCNIMCO ("Eligible
Retirement Plans"), among others. Class I shares are not subject to an annual
service fee, distribution fee or sales charge.
Share certificates will not be issued.
Net Asset Value
As to each Fund, net asset value per Class I share 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. The assets of each Asset Allocation Fund will
eventually consist primarily of shares of the Underlying Funds, which are
valued at their respective net asset values.
Non-Money Market Funds. The net asset value per Class I share
of each Non-Money Market Fund for purposes of pricing and redemption orders is
determined by the Investment Adviser as of the close of trading on the floor
of the New York Stock Exchange ("Exchange") (currently 4:00 p.m., Eastern
Time) on each day the Exchange is open for business (a "Business Day") except:
(i) those holidays which the Exchange observes (currently New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day); and (ii) those business days on which the
Exchange closes prior to the close of its regular trading hours ("Early
Closing Time") in which event the net asset value of each Non-Money Market
Fund will be determined and its shares will be priced as of such Early Closing
Time.
Shares of the Underlying Funds held by the Asset Allocation
Funds are valued by the Asset Allocation Funds at their respective net asset
values. Securities held by the Non-Money Market Funds which are traded on a
recognized U.S. stock exchange are valued at the last sale price on the
national securities market. Securities which are primarily traded on foreign
securities exchanges are generally valued at the latest closing price on their
respective exchanges, except when an occurrence subsequent to the time a value
was established is likely to have changed such value, in which case the fair
value of those securities will be determined through consideration of other
factors by the Investment Adviser under the supervision of the Board of
Trustees. Securities, whether U.S. or foreign, traded on only over-the-counter
markets and securities for which there were no transactions are valued at the
average of the current bid and asked prices. Debt Securities are valued
according to the broadest and most representative market, which ordinarily
will be the over-the-counter markets, whether in the United States or in
foreign countries. Such securities are valued at
22
<PAGE>
the average of the current bid and asked prices. Securities (other than shares
of the Underlying Funds) for which accurate market quotations are not readily
available, and other assets are valued at fair value by the Investment Adviser
under the supervision of the Board of Trustees. Securities (other than shares
of the Underlying Funds) may be valued on the basis of prices provided by
independent pricing services when the Investment Adviser believes such prices
reflect the fair market value of such securities. The prices provided by
pricing services take into account institutional size trading in similar
groups of securities and any developments related to specific securities. For
valuation purposes, the value of assets and liabilities expressed in foreign
currencies will be converted to U.S. dollars equivalent at the prevailing
market rate on the day of valuation. Open futures contracts will be
"marked-to-market."
If an order is received by the Transfer Agent by the close
of trading on the floor of the Exchange or at the Early Closing Time on any
Business Day, shares of the Non-Money Market Funds will be purchased at the
net asset value determined as of such time on that day. Otherwise, shares will
be purchased at the net asset value determined as of the close of trading on
the floor of the Exchange (or at the Early Closing Time) on the next Business
Day.
Money Market Fund. The net asset value per Class I share for
purposes of pricing purchase and redemption orders is determined by the
Investment Adviser as of 3:00 p.m., Eastern Time, on each Business Day except:
(i) those holidays which the Exchange, the Investment Adviser or its bank
affiliates observe (currently New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day); and (ii)
those Business Days on which the Exchange closes at an Early Closing Time in
which event the net asset value of the Money Market Fund will be determined
and its shares will be priced as of such Early Closing Time.
Shares of the Money Market Fund 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 within the Federal Reserve System
which are held in deposit at a Federal Reserve Bank) are received by the
Transfer Agent. If an investor does not remit Federal Funds, his 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.
The assets of the Money Market Fund are valued based upon the
amortized cost method. Although the Trust seeks to maintain the net asset
value per share of the Fund at $1.00, there can be no assurance that the net
asset value will not vary.
HOW TO EXCHANGE SHARES
Subject to any restrictions contained in your employer's
qualified benefit plan, you may exchange Class I shares of the Funds at net
asset value. Please contact your plan administrator or the Transfer Agent for
information on how to exchange your shares.
No fees currently are charged shareholders directly in
connection with exchanges although the Funds reserve the right, upon not less
than 60 days' written notice, to charge shareholders a nominal fee in
accordance with rules promulgated by the SEC. The Funds reserve the right to
reject any exchange request in whole or in part. The exchange privilege may be
modified or terminated at any time upon notice to shareholders.
23
<PAGE>
HOW TO REDEEM SHARES
General Information
Subject to any restrictions imposed by your employer's
qualified benefit plan, you may sell your shares through the plan to the Trust
on any Business Day (as described under "How to Buy Shares"). For more
information on how to redeem shares of the Funds through your employer's plan,
including any charges that may be imposed by the plan, please consult your
employer.
An investor may request redemption of his or her shares by
following instructions pertaining to his or her plan. It is the responsibility
of the entity authorized to act on behalf of the investor's plan to transmit
the redemption order to the Transfer Agent and credit the investor's account
with the redemption proceeds on a timely basis. When a request is received in
proper form, the Trust will redeem the shares at the next determined net asset
value as described above. The Trust imposes no charges when shares are
redeemed. The value of the shares redeemed may be more or less than their
original cost, depending upon the Fund's then-current net asset value.
A Fund ordinarily will make payment for all shares redeemed
within seven days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by SEC rules. The Funds will only redeem
shares for which payment has been received.
MANAGEMENT OF THE TRUST
Trustees and Officers of the Trust
The Board of Trustees of the Trust is responsible for the
management of the business and affairs of the Trust. Information about the
Trustees and officers of the Trust is contained in the Statement of Additional
Information.
Investment Adviser and Co-Administrators
First Chicago NBD Investment Management Company ("FCNIMCO"),
located at Three First National Plaza, Chicago, Illinois 60670 is each Fund's
and Additional Pegasus Fund's Investment Adviser. FCNIMCO is a registered
investment adviser and a wholly-owned subsidiary of The First National Bank of
Chicago ("FNBC"), which in turn is a wholly-owned subsidiary of First Chicago
NBD Corporation ("FCN"), a registered bank holding company. FCNIMCO also acts
as investment adviser for other accounts and registered investment company
portfolios.
FCNIMCO serves as Investment Adviser for the Trust pursuant to
an Investment Advisory Agreement dated as of April 12, 1996. Under the
Investment Advisory Agreement, FCNIMCO provides the day-to-day management of
each Fund's and Additional Pegasus Fund's investments, subject to the overall
authority of the Trust's Board of Trustees and in conformity with
Massachusetts law and the stated policies of the Trust. FCNIMCO is responsible
for making investment decisions for the Trust, placing purchase and sale
orders (which may be allocated to various dealers based on their sales of Fund
and Additional Pegasus Fund shares) and providing research, statistical
analysis and continuous supervision of each Fund's and Additional Pegasus
Fund's investment portfolio.
Under the terms of the Investment Advisory Agreement, the
Investment Adviser is entitled to a monthly fee as a percentage of each Fund's
and Additional Pegasus Fund's daily net assets. Each Fund's and
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<PAGE>
Additional Pegasus Fund's current contractual fee for advisory services and
contractual and advisory fee rates for advisory and administrative services
under prior agreements for the fiscal year ended December 31, 1995 are set
forth below.
<TABLE>
<CAPTION>
Contractual Fee Rate Effective Rate
Contractual Fee Rate For Administration for Advisory
Current for Advisory Services Services for and Administrative Services
Contractual for Year Ended Year Ended for Year Ended
Advisory Fee Rate December 31, 1995 December 31, 1995 December 31, 1995
------------------- --------------------- -------------------- --------------------------
<S> <C> <C> <C> <C>
Asset Allocation Funds:
Managed Assets Conservative Fund+ 0.65% 0.65% 0.15% 0.45%
Managed Assets Balanced Fund+ 0.65% 0.75% * 0.57%
Managed Assets Growth Fund+ 0.65% N/A N/A N/A
Equity Funds:
Equity Income Fund 0.50% 0.50% 0.15% 0.52%
Growth Fund 0.60% 0.65% 0.15% 0.68%
Mid-Cap Opportunity Fund 0.60% 0.75% * 0.75%
Small-Cap Opportunity Fund 0.70% 0.70% 0.15% 0.61%
Equity Index Fund 0.10% 0.10% * 0.10%
Intrinsic Value Fund 0.60% 0.75% * 0.75%
Growth and Value Fund 0.60% 0.75% * 0.75%
International Equity Fund 0.80% 0.75% * 0.67%
Bond Funds:
Intermediate Bond Fund 0.40% 0.65% * 0.65%
Bond Fund 0.40% 0.65% * 0.65%
Short Bond Fund 0.35% 0.65% * 0.59%
Income Fund 0.40% 0.40% 0.15% 0.41%
International Bond Fund 0.70% 0.70% 0.15% 0.21%
Money Market Funds:
Money Market Fund 0.30% 0.45% * 0.44%
of the First of the First
$1 billion, $1 billion,
.275% of next .425% of next
$1 billion, $1 billion,
.25% of amount .40% of amount
in excess of in excess of
$2 billion $2 billion
<FN>
- ---------
+ See Note 3 to the "Annual Fund Operating Expenses" for information
about the Investment Adviser's undertaking for fee waivers and
reimbursements relating to Class I Shares.
* For the fiscal year ended December 31, 1995, such Funds and the
Additional Pegasus Funds incurred no separate administration fee in
addition to the advisory fee for administrative services rendered by
NBD under the prior investment advisory agreement.
</TABLE>
Although the fee payable by the International Equity Fund is
higher than the fee payable by other funds, the Investment Adviser believes
that it is within the range of fees payable by funds with comparable
investment objectives and policies.
Claude B. Erb, First Vice President and Director of Investment Planning, is
primarily responsible for the day- to-day management of the Asset Allocation
Funds and the International Bond Fund. Mr. Erb has served
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<PAGE>
as Deputy Chief Investment Officer and Senior Vice President of Trust Services
of America and TSA Capital Management from 1986 through 1992. Mr. Erb joined
FCN in 1993.
Chris M. Gassen, First Vice President, and F. Richard Neumann, First Vice
President, are primarily responsible for the day-to-day management of the
Equity Income and Intrinsic Value Funds. Mr. Gassen joined FCN in 1985 and Mr.
Neumann joined FCN in 1981.
Ronald L. Doyle, First Vice President, and Joseph R. Gatz, Vice President, are
primarily responsible for the day-to-day management of the Mid-Cap Opportunity
and Small-Cap Opportunity Funds. Mr. Doyle joined FCN in 1982 and Mr. Gatz
joined FCN in 1986.
Jeffrey C. Beard, First Vice President, and Gary L. Konsler, First Vice
President, are primarily responsible for the day-to-day management of the
Growth and Value and Growth Funds. Mr. Beard joined FCN in 1982 and Mr.
Konsler joined FCN in 1973.
Ricardo F. Cipicchio, Vice President, and Mark M. Jackson, Vice President, are
primarily responsible for the day-to-day management of the Income Fund. Mr.
Cipicchio joined FCN in 1989. Mr. Jackson has served as portfolio manager for
Alexander Hamilton Life Insurance Company, 1993-1996, and as portfolio manager
for Public Employees Retirement System of Ohio, 1988-1993. Mr. Jackson joined
FCN in 1996.
Richard P. Kost, First Vice President, and Clyde L. Carter, Jr., Assistant
Vice President, are primarily responsible for the day-to-day portfolio
management of the International Equity Fund. Mr. Kost joined FCN in 1964 and
Mr. Carter joined FCN in 1987.
Douglas S. Swanson, First Vice President, and Mr. Cipicchio are primarily
responsible for the day-to-day management of the Intermediate Bond and Bond
Funds. Mr. Swanson joined FCN in 1983.
Mr. Cipicchio and Christopher J. Nauseda, Vice President, are primarily
responsible for the day-to-day portfolio management of the Short Bond Fund.
Mr. Nauseda joined FCN in 1982.
FCNIMCO and BISYS Fund Services ("BISYS") serve as the Trust's
Co-Administrators pursuant to an Administration Agreement with the Trust.
Under the Administration Agreement, FCNIMCO and BISYS generally assist in all
aspects of the Trust's operations, other than providing investment advice,
subject to the overall authority of the Trust's Board in accordance with
Massachusetts law. Under the terms of the Administration Agreement, FCNIMCO
and BISYS are entitled jointly to a monthly administration fee at the annual
rate of .15% of each Fund's and each Additional Pegasus Fund's average daily
net assets.
Distributor
BISYS, located at 3435 Stelzer Road, Columbus, Ohio 43219-3035,
serves as the Trust's principal underwriter and distributor of its shares.
Transfer and Dividend Disbursing Agent and Custodian
First Data Investor Services Group, Inc., 4400 Computer Drive,
Westborough, Massachusetts 01581-5120, serves as the Trust's Transfer and
Dividend Disbursing Agent. NBD, which is a wholly-owned subsidiary of FCN,
serves as the Trust's custodian (the "Custodian"). NBD conducts its custody
services on behalf of the Trust at 900 Tower Drive, Troy, Michigan 48098.
26
<PAGE>
Expenses
All expenses incurred in the operation of the Trust are borne
by it, except to the extent specifically assumed by the Trust's service
providers. The expenses borne by the Trust include: organizational costs,
taxes, interest, loan commitment fees, interest and distributions paid on
securities sold short, brokerage fees and commissions, if any, fees of Board
members, SEC 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 each Fund'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. Expenses attributable
to a particular Fund are charged against the assets of that Fund; other
expenses of the Trust are allocated among the Funds on the basis determined
by the Board, including, but not limited to, proportionately in relation to
the net assets of the Funds.
The imposition of the advisory fee, as well as other operating
expenses, will have the effect of reducing the total return to investors. From
time to time, the Investment Adviser may waive receipt of its fees and/or
voluntarily assume certain expenses of a Fund, which would have the effect of
lowering that Fund's overall expense ratio and increasing total return to
investors at the time such amounts are waived or assumed, as the case may be.
The Fund will not pay the Investment Adviser at a later time for any amounts
which may be waived, nor will the Fund reimburse the Investment Adviser for
any amounts which may be assumed.
DIVIDENDS AND DISTRIBUTIONS
The Managed Assets Balanced, Mid-Cap Opportunity, and Growth
and Value Funds declare quarterly and pay dividends from net investment income,
usually on the last Business Day of the quarter. The Managed Assets
Conservative and Bond Funds declare monthly and pay dividends from net
investment income, usually on the last Business Day of the month.
The Money Market Fund declares dividends from net investment
income on each of its Business Days. Dividends usually are paid on the last
Business Day of each month. Shares begin accruing dividends on the Business
Day on which the purchase order is effective. The earnings for Saturday,
Sunday and holidays are declared as dividends on the preceding Business Day.
Each Fund will make distributions from net realized securities
gains, if any, once a year, but may make distributions on a more frequent
basis to comply with the distribution requirements of the Code, in all events
in a manner consistent with the provisions of the 1940 Act. Dividends are
automatically reinvested in additional Fund shares of the same Class from
which they were paid at net asset value.
TAXES
Each Fund intends to qualify as a "regulated investment
company" under the Code. Such qualification generally will relieve the Funds
of liability for federal income taxes to the extent their earnings are
distributed in accordance with the Code.
Each Fund intends to distribute as dividends substantially all
of its net income each year. Such dividends will be taxable as ordinary income
to each Fund's shareholders, who are not tax-exempt entities or tax-exempt
shareholders, regardless of whether a distribution is received in cash or
reinvested in additional shares. Dividends derived from net capital gains will
be taxable to Fund shareholders, who are not tax-exempt entities or tax-exempt
shareholders, as long-term capital gains, regardless of how long the
shareholders have held the shares and
27
<PAGE>
whether such gains are paid in cash or reinvested in Fund shares.
Distributions by the Funds to employee benefit plans that qualify for
tax-exempt treatment under federal income tax laws will not be subject to
current taxation.
The foregoing discussion summarizes some of the important tax
considerations generally affecting the Funds and their shareholders and is not
intended as a substitute for careful tax planning. Accordingly, potential
investors in the Funds should consult their tax advisers with specific
reference to their own tax situation.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to
shareholders the performance of the Funds may be compared to the performance
of other mutual funds with similar investment objectives and to stock and
other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of
mutual funds. For example, the performance of a Fund's shares may be compared
to data prepared by Lipper Analytical Services, Inc. In addition, the
performance of the Funds may be compared to the Standard & Poor's 500 Index,
an index of unmanaged groups of common stocks, the Consumer Price Index, or
the Dow Jones Industrial Average, a recognized unmanaged index of common
stocks of thirty industrial companies listed on the New York Stock Exchange.
The yields of the Money Market Fund may be compared to the Donoghue's Money
Fund Average which is an average compiled by IBC/Donoghue's Money Fund Report,
a widely recognized independent publication that monitors the performance of
money market funds, or to the average yields reported by the Bank Rate Monitor
for money market deposit accounts offered by the 50 leading banks and thrift
institutions in the top five standard metropolitan statistical areas.
Performance data as reported in national financial publications such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in publications of a local or regional nature, may also be used in comparing
the performance of a Fund.
In the case of the Asset Allocation Funds and the Bond Fund,
"yield" refers to the income generated by an investment in the Fund over a
thirty-day period identified in the advertisement. This income is then
"annualized," i.e., the income generated by the investment during the
respective period is assumed to be earned and reinvested at a constant rate
and compounded semi-annually and is shown as a percentage of the investment.
In the case of the Money Market Fund, "yield" refers to the
income generated by an investment in the Fund over a seven-day period
identified in the advertisement. This income is then "annualized," i.e., the
income generated by the investment during the respective period is assumed to
be generated each week over a 52-week period and is shown as a percentage of
the investment. The Fund may also advertise its "effective yield" which is
calculated similarly but, when annualized, income is assumed to be reinvested,
thereby making the "effective yield" slightly higher because of the
compounding effect of the assumed reinvestment.
The Non-Money Market Funds calculate their total returns on an
"average annual total return" basis for various periods from the date they
commenced investment operations and for other periods as permitted under the
rules of the SEC. Average annual total return reflects the average annual
percentage change in value of an investment in a Fund over the measuring
period. Total returns may also be calculated on an "aggregate total return
basis" for various periods. Aggregate total return reflects the total
percentage change in value over the measuring period. Both methods of
calculating total return also reflect changes in the price of a Fund's shares
and assume that any dividends and capital gain distributions made by the Fund
during the period are reinvested in Fund shares. When considering average
total return figures for periods longer than one year,
28
<PAGE>
it is important to note that a Fund's annual total return for any one year in
the period might have been greater or less than the average for the entire
period.
Performance of the Funds is based on historical earnings and
will fluctuate and is not intended to indicate future performance. The
investment performance of an investment in the Non-Money Market Funds will
fluctuate so that a shareholder's shares, when redeemed, may be worth more or
less than their original cost. A Fund's performance data may not provide a
basis for comparison with bank deposits and other investments which provide a
fixed yield for a stated period of time. Performance data should also be
considered in light of the risks associated with a Fund's portfolio
composition, quality, maturity, operating expenses and market conditions. Any
fees charged by employee benefit plans directly to their participants in
connection with investments in Fund shares will not be reflected in a Fund's
performance calculations.
Historical Performance Information
Composite performance is set forth below for the Class I shares
of the Funds or predecessor funds, as the case may be, for various periods
ended June 30, 1996, except as noted (unaudited).
<TABLE>
<CAPTION>
Average Annual Total Return
-----------------------------------------------------------------------------
1 Year 5 Years 10 Years Since Inception (Inception Date)
-------- ------- -------- -------------------------------
<S> <C> <C> <C> <C>
ASSET ALLOCATION FUNDS*:
Managed Assets Conservative Fund*(1) 16.37% N/A N/A 20.20% (3/03/95)
Managed Assets Balanced Fund* 13.55% N/A N/A 9.65% (12/31/93)
EQUITY FUNDS:
Mid-Cap Opportunity Fund (2) 17.21% 16.65% 12.71% 13.92% (12/31/83)
Growth and Value Fund(2) 22.68% 12.99% 11.28% 13.20% (12/31/83)
BOND FUND:
Bond Fund(2) 6.72% 8.44% 8.42% 10.03% (12/31/83)
<FN>
- ---------
* During the periods noted, the Asset Allocation Funds invested
substantially all of their assets directly in portfolio securities
rather than mutual fund shares. Investing in the Underlyiung Funds
through the Asset Allocation Funds involves certain additional
expenses and tax results that would not be present in a direct
investment in the Underlying Funds. Had these additional expenses and
tax results been reflected, performance would be reduced.
(1) Prior to September 21, 1996, the Managed Assets Conservative Fund had
no prior operating history. Except as noted below, performance for
periods prior to such date is represented by the performance of the
Prairie Managed Assets Income Fund. On September 21, 1996, the assets
and liabilities of this Prairie Fund were transferred to the Managed
Assets Conservative Fund of the Trust. Performance of the Managed
Assets Conservative Fund for periods prior to March 3, 1995 is
represented by the performance of the First Prairie Diversified Assets
Fund. The Prairie Managed Assets Income Fund commenced operations
through a transfer of assets from the First Prairie Diversified Assets
Fund.
(2) Performance of the Mid-Cap Opportunity (6/1/91), Growth and Value
(6/1/91), and Bond (6/1/91) Funds for the periods prior to the
inception dates shown is represented by performance of certain common
trust funds managed by NBD before the effective date of the
registration statement of these Funds. The common trust funds were not
registered under the 1940 Act and were not subject to certain
restrictions that are imposed by the 1940 Act. If the common trust
funds had been registered under the 1940 Act, performance may have
been adversely affected. The common trust funds did not charge any
expenses. Performance of the common trust funds has been restated to
reflect the maximum operating expenses charged by these Funds upon
their inception.
</TABLE>
For the seven day period ended June 30, 1996, the annualized
yields and effective yields for the Class I shares of the Money Market Fund
were 4.953% and 5.075%, respectively.
29
<PAGE>
GENERAL INFORMATION
The Trust was organized as a Massachusetts business trust on
April 21, 1987 under a Declaration of Trust. The Trust is a series fund having
twenty-six 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 or Series:
The Managed Assets Growth Fund The International Bond Fund
The Equity Income Fund The Municipal Bond Fund
The Growth Fund The Intermediate Municipal Bond Fund
The Small-Cap Opportunity Fund The Michigan Municipal Bond Fund
The Intrinsic Value Fund The Treasury Money Market Fund
The Equity Index Fund The Municipal Money Market Fund
The International Equity Fund The Michigan Municipal Money Market Fund
The Intermediate Bond Fund The Cash Management Fund
The Short Bond Fund The U.S. Government Securities Cash
The Income Fund Management Fund
The Treasury Prime Cash Management Fund
Each Fund described herein and the Managed Assets Growth,
Equity Income, Growth, Small-Cap Opportunity, Intrinsic Value, Equity Index,
International Equity, Intermediate Bond, Short Bond, Income, International
Bond, Municipal Bond, Intermediate Municipal Bond and Michigan Municipal Bond
Funds offer three classes of shares: Class A, Class B and Class I. The
Treasury Money Market, Municipal Money Market and Michigan Money Market Funds
offer two classes of shares: Class A and Class I. The Cash Management, U.S.
Government Cash Management and Treasury Prime Cash Management Funds offer two
Classes of shares: Class S and Class I. A sales person and any other person or
institution entitled to receive compensation for selling or servicing shares
may receive different compensation with respect to different classes of shares
in the Series. Each share has $.10 par value, represents an equal
proportionate interest in the related fund with other shares of the same class
outstanding, and is entitled to such dividends and distributions out of the
income earned on the assets belonging to such fund as are declared in the
discretion of the Board of Trustees.
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. Each Asset Allocation Fund will vote its Underlying Fund
shares in proportion to the votes of all other shareholders of each respective
Underlying Fund.
As of October 31, 1996, FCN and its affiliates held
beneficially or of record approximately 80.08%, 79.39%, 82.98% and 90.71% of
the outstanding shares of the Managed Assets Balanced, Mid-Cap Opportunity,
Growth and Value, and Bond Funds, respectively.
30
<PAGE>
Because NBD serves the Trust as Custodian, 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.
No person has been authorized to give any information or to
make any representations other than those contained in this Prospectus and in
the Funds' 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. 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.
31
<PAGE>
SUPPLEMENTAL INFORMATION
Ratings
The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of such
obligations. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, the Investment Adviser also will evaluate
such obligations and the ability of their issuers to pay interest and
principal. Each Fund and Additional Pegasus Fund will rely on the Investment
Adviser's judgment, analysis and experience in evaluating the creditworthiness
of an issuer.
Short-Term Investments
Each Fund and each Additional Pegasus Fund may hold the types
of Cash Equivalent Securities described under Asset Allocation Funds above.
U.S. Government Obligations
U.S. Government obligations include all types of U.S.
Government securities, including U.S. Treasury bonds, notes and bills, and
obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal
Land Banks, the Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Small Business Administration,
Government National Mortgage Association, Federal National Mortgage
Association, General Services Administration, Student Loan Marketing
Association, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Tennessee Valley Authority,
Resolution Funding Corporation and Maritime Administration. U.S. Government
obligations also include interests in the foregoing securities, including
collateralized mortgage obligations guaranteed by a U.S. Government agency or
instrumentality, and in Government-backed trusts which hold obligations of
foreign governments that are guaranteed or backed by the full faith and credit
of the United States.
Obligations of certain U.S. agencies and instrumentalities such
as those of the Government National Mortgage Association, are supported by the
full faith and credit of the U.S. Treasury; others, such as the Export-Import
Bank of the United States, are supported by the right of the issuer to borrow
from the Treasury; others, such as those of the Federal National Mortgage
Association, are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as those
of the Student Loan Marketing Association, are supported only by the credit of
the instrumentality.
Bank Obligations
Bank obligations in which the Funds and the Additional Pegasus
Funds may invest include certificates of deposit, time deposits, bankers'
acceptances, fixed time deposits 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, domestic savings
and loan associations and other banking institutions. With respect to such
securities issued by foreign branches of domestic banks, foreign subsidiaries
of domestic banks, and domestic and foreign branches of foreign banks, the
funds may be subject to additional investment risks that are different in some
respects from those incurred by a fund which invests only in debt obligations
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
A-1
<PAGE>
restrictions which might adversely affect the payment of principal and
interest on these securities and the possible seizure or nationalization of
foreign deposits.
Obligations issued or guaranteed by foreign branches of U.S.
banks (commonly known as "Eurodollar" obligations) or U.S. branches of foreign
banks (commonly known as "Yankee dollar" obligations) may be general
obligations of the parent bank or obligations only of the issuing branch.
Where the obligation is only that of the issuing branch, the parent bank has
no legal duty to pay such obligation. Such obligations would thus be subject
to risks comparable to those which would be present if the issuing branch were
a separate bank. The Money Market Fund will not invest in a Eurodollar
obligation if upon making such investment the total Eurodollar obligations
which are not general obligations of domestic parent banks would thereby
exceed 25% of its total assets.
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.
Time deposits which may be held by the Funds and Additional Pegasus Funds
will not benefit from insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC.
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.
Certain Corporate Obligations
Commercial paper in which the Funds and the Additional Pegasus
Funds may invest consists of short-term, unsecured promissory notes issued by
domestic or foreign entities to finance short-term credit needs.
Variable and Floating Rate Instruments
Each Fund and Additional Pegasus Fund may invest in variable
and floating instruments, including without limitation for each Fund and
Additional Pegasus Fund other than the Money Market Fund, inverse floating
rate debt instruments ("inverse floaters") some of which may be leveraged. The
interest rate of an inverse floater resets in the opposite direction from the
market rate of interest to which it is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values.
The Money Market Fund may purchase rated and unrated variable
and floating rate obligations that have stated maturities in excess of 13
months but, in any event, permit the fund to demand payment of the principal
of the instrument at least once every 13 months on not more than thirty days'
notice (unless the instrument is a U.S. Government Obligation), provided that
the demand feature may be sold, transferred, or assigned only with the
underlying instrument involved. Such instruments may include variable rate
demand notes which are unsecured instruments that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate.
The absence of an active secondary market with respect to
particular variable and floating rate instruments could make it difficult for
a fund to dispose of the instruments if the issuer defaulted on its payment
obligation or during periods that the fund is not entitled to exercise demand
rights, and the fund could, for these or other reasons, suffer a loss with
respect to such instruments. In the absence of an active secondary market,
variable
A-2
<PAGE>
and floating rate instruments held by a fund will be subject to its limitation
on illiquid investments. See "Illiquid Securities."
Repurchase and Reverse Repurchase Agreements
To increase their income, each Fund and Additional Pegasus Fund
may agree to purchase portfolio securities from financial institutions subject
to the seller's agreement to repurchase them at a mutually agreed-upon date
and price ("repurchase agreements"). None of the funds will enter into
repurchase agreements with the Investment Adviser, the Distributor, or any of
their affiliates, except as may be permitted by the SEC. Although the
securities subject to repurchase agreements may bear maturities exceeding 13
months provided the repurchase agreement itself matures in 13 months or less,
the funds generally intend to enter into repurchase agreements which terminate
within seven days after notice by them. The seller under a repurchase
agreement will be required to maintain the value of the securities subject to
the agreement at not less than the repurchase price, marked to market daily.
Default by the seller would, however, expose a fund to possible loss because
of adverse market action or delay in connection with the disposition of the
underlying obligations.
Each Fund and Additional Pegasus Fund may also obtain funds for
temporary purposes by entering into reverse repurchase agreements. Pursuant to
such agreements, the funds will sell portfolio securities to financial
institutions such as banks and broker-dealers and agree to repurchase them at
a particular date and price. Reverse repurchase agreements involve the risk
that the market value of the securities sold by a fund may decline below the
price of the securities it is obligated to repurchase. Whenever a fund enters
into a reverse repurchase agreement, it will place in a segregated custodial
account liquid assets equal to the repurchase price marked to market daily
(including accrued interest) and will subsequently monitor the account to
ensure such equivalent value is maintained.
Lending Portfolio Securities
To increase income or offset expenses, each of the Funds and
Additional Pegasus Funds may lend its portfolio securities to financial
institutions such as banks and broker-dealers in accordance with the
investment limitations described herein. Agreements will require that the
loans be continuously secured by collateral equal at all times in value to at
least the market value of the securities loaned plus accrued interest.
Collateral for such loans may include cash or securities of the U.S.
Government, its agencies or instrumentalities, some which may bear maturities
exceeding 13 months. Such loans will not be made if, as a result, the
aggregate of all outstanding loans of a particular fund exceeds one-third of
the value of its total assets. Loans of securities involve risk of delay in
receiving additional collateral or in recovering the securities loaned or
possible loss of rights in the collateral should the borrower of the
securities become insolvent. In the event a fund is unable to recover the
securities loaned in a particular transaction, it will promptly sell any
collateral which bears a maturity exceeding 13 months. Loans will be made only
to borrowers that provide the requisite collateral comprised of liquid assets
and when, in the Investment Adviser's judgment, the income to be earned from
the loan justifies the attendant risks.
Zero Coupon Obligations
Each Fund and Additional Pegasus Fund may invest in zero
coupon obligations which are discount debt obligations that do not make
periodic interest payments although income is generally imputed to the holder
on a current basis. Such obligations may have higher price volatility than
those which require the payment of interest periodically. The Investment
Adviser will consider the liquidity needs of the funds when any investment in
zero coupon obligations is made.
A-3
<PAGE>
Federal income tax law requires the holder of a zero coupon
security or of certain pay-in-kind bonds to accrue income with respect to
these securities prior to the receipt of cash payments. To maintain its
qualification as a regulated investment company and avoid liability for
federal income taxes, each fund that invests in such securities may be
required to distribute such income accrued with respect to these securities
and may have to dispose of portfolio securities under disadvantageous
circumstances in order to generate cash to satisfy these distribution
requirements. Such fund will not be able to purchase additional incoming
producing securities with cash used to make such distributions and its current
income may be reduced as a result.
When-Issued Purchases and Forward Commitments
Each Fund and Additional Pegasus Fund may purchase portfolio
securities on a "when-issued" basis and may purchase or sell such securities
on a "forward commitment" basis. These transactions, which involve a
commitment by a fund to purchase or sell particular securities with payment
and delivery taking place in the future, beyond the normal settlement date, at
a stated price and yield. Securities purchased on a when-issued basis or
forward commitment basis involve a risk of loss if the value of the security
to be purchased declines prior to the settlement date, or if the value of the
security to be sold increases prior to the settlement date. When a fund enters
into such transactions, the Custodian will maintain in a segregated account
cash or liquid portfolio securities equal to the amount of the commitment. The
funds do not earn income with respect to these transactions until the subject
securities are delivered to them. The funds do not intend to engage in
when-issued purchases and forward commitments for speculative purposes but
only for the purposes of acquiring portfolio securities. Each fund's
when-issued purchases and forward commitments are not expected to exceed 25%
of the value of its total assets absent unusual market conditions. The funds
do not earn income with respect to these transactions until the subject
securities are delivered to them. They do not intend to engage in when-issued
purchases and forward commitments for speculative purposes but only in
furtherance of their investment objectives.
Foreign Securities
Investments by the Funds and the Additional Pegasus Funds in
foreign securities, with respect to certain foreign countries, exposes them to
the possibility of expropriation or confiscatory taxation, limitations on the
removal of funds or other assets or diplomatic developments that could affect
investment within those countries. 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. In addition,
there may be less publicly available information about a non-U.S. issuer, and
non-U.S. issuers generally are not subject to uniform accounting and financial
reporting standards, practices and requirements comparable to those applicable
to U.S. issuers. Because of these and other factors, securities of foreign
companies acquired by the funds may be subject to greater fluctuation in price
than securities of domestic companies.
Since foreign securities often are purchased with and payable
in currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations. Some currency exchange costs may be
incurred when the funds change investments from one country to another.
Furthermore, some securities may be subject to brokerage taxes
levied by foreign governments, which have the effect of increasing the costs
of such investments and reducing the realized gain or increasing the realized
loss on such securities at the time of sale. Income received by a fund from
sources within foreign countries may be reduced by withholding or other taxes
imposed by such countries. Tax conventions between certain countries and the
United States, however, may reduce or eliminate
A-4
<PAGE>
such taxes. All such taxes paid by the funds will reduce their net income
available for distribution to investors.
Depository Receipts
All of the Asset Allocation and Equity Funds may invest in
securities of foreign issuers in the forms of American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs") and similar securities
representing securities of foreign issuers. These securities may not be
denominated in the same currency as the securities they represent. ADRs are
receipts typically issued by a United States bank or trust company evidencing
ownership of the underlying foreign securities and are denominated in U.S.
dollars. Certain such institutions issuing ADRs may not be sponsored by the
issuer. A non-sponsored depository may not provide the same shareholder
information that a sponsored depository is required to provide under its
contractual arrangements with the issuer. EDRs are receipts issued by a
European financial institution evidencing ownership of the underlying foreign
securities and are generally denominated in foreign currencies. Generally,
EDRs, in bearer form, are designed for use in the European securities markets.
Supranational Bank Obligations
The Funds and the Additional Pegasus Funds may invest in
obligations of supranational banks. Supranational banks are international
banking institutions designed or supported by national governments to promote
economic reconstruction, development or trade between nations (e.g., the World
Bank). Obligations of supranational banks may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance that
these commitments will be undertaken or met in the future.
Convertible Securities
Each of the Funds and Additional Pegasus Funds other than the
Money Market Fund may invest in convertible securities. A convertible security
is a security that may be converted either at a stated price or rate within a
specified period of time into a specified number of shares of common stock. By
investing in convertible securities, a fund seeks the opportunity, through the
conversion feature, to participate in the capital appreciation of the common
stock into which the securities are convertible, while earning higher current
income than is available from the common stock.
Securities of Other Investment Companies
Each of the Funds and Additional Pegasus Funds may invest in
securities issued by open-end (and closed-end for all funds other than the
Money Market Fund) investment companies which principally invest in securities
in which such fund invests. Under the 1940 Act, a fund's investment in such
securities, subject to certain exceptions, currently is limited to (i) 3% of
the total voting stock of any one investment company, (ii) 5% of the fund's
net assets with respect to any one investment company and (iii) 10% of the
fund's net assets in the aggregate. Such purchases will be made in the open
market where no commission or profit to a sponsor or dealer results from the
purchase other than the customary brokers' commissions, if any. As a
shareholder of another investment company, a fund would bear, along with other
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the advisory
and other expenses that the fund bears directly in connection with its own
operations.
A-5
<PAGE>
Asset Backed Securities
Asset Backed Securities acquired by the Funds and Additional
Pegasus Funds other than the Money Market Fund consist of both mortgage and
non-mortgage backed securities. Asset backed securities arise through the
grouping by governmental, government-related and private organizations of
loans, receivables and other assets originated by various lenders ("Asset
Backed Securities"), as described below.
The yield characteristics of Asset Backed Securities differ
from traditional debt securities. A major difference is that the principal
amount of the obligations may be prepaid at any time because the underlying
assets (i.e. loans) generally may be prepaid at any time. As a result, if an
Asset Backed Security is purchased at a premium, a prepayment rate that is
faster than expected will reduce yield to maturity, while a prepayment rate
that is slower than expected will have the opposite effect of increasing yield
to maturity. Conversely, if an Asset Backed Security is purchased at a
discount, faster than expected prepayments will increase, while slower than
expected prepayments will decrease, yield to maturity. In calculating the
average weighted maturity of the funds, the maturity of Asset Backed
Securities will be based on estimates of average life.
Prepayments on Asset Backed Securities generally increase with
falling interest rates and decrease with rising interest rates. Prepayment
rates are also influenced by a variety of economic and social factors. In
general, the collateral supporting non-mortgage backed securities is of
shorter maturity than mortgage loans and is less likely to experience
substantial prepayments. Like other fixed income securities, when interest
rates rise the value of an Asset Backed Security with prepayment features may
not increase as much as that of other fixed income securities, and, as noted
above, changes in market rates of interest may accelerate or retard
prepayments and thus affect maturities.
These characteristics may result in higher level of price
volatility for these assets under certain market conditions. In addition,
while the trading market for short-term mortgages and Asset Backed Securities
is ordinarily quite liquid, in times of financial stress the trading market
for these securities sometimes becomes restricted.
Mortgage backed securities represent an ownership interest in a
pool of mortgages, the interest on which is in most cases issued and
guaranteed by an agency or instrumentality of the U.S. Government, although
not necessarily by the U.S. Government itself. Mortgage backed securities
include collateralized mortgage obligations ("CMOs"), real estate investment
trusts ("REITs") and mortgage pass-through certificates.
CMOs provide the holder with a specified interest in the cash
flow of a pool of underlying mortgages or other mortgage backed securities.
Issuers of CMOs ordinarily elect to be taxed as pass-through entities known as
real estate mortgage investment conduits ("REMICs"). CMOs are issued in
multiple classes, each with a specified fixed or floating interest rate and a
final distribution date. The relative payment rights of the various CMO
classes may be structured in a variety of ways. The multiple class securities
may be issued or guaranteed by U.S. Government agencies or instrumentalities,
including the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC"), or issued by trusts formed by private originators of,
or investors in, mortgage loans. Classes in CMOs which the funds may hold are
known as "regular" interests. CMOs also issue "residual" interests, which in
general are junior to and more volatile than regular interests. The funds do
not intend to purchase residual interests.
Mortgage pass-through certificates provide the holder with a
pro rata interest in the underlying mortgages. One type of such certificate in
which the funds may invest is a GNMA Certificate which is backed as to the
timely payment of principal and interest by the full faith and credit of the
U.S. Government. Another type is a FNMA Certificate, the principal and
interest of which are guaranteed only by FNMA itself, not by the
A-6
<PAGE>
full faith and credit of the U.S. Government. Another type is a FHLMC
Participation Certificate which is guaranteed by FHLMC as to timely payment of
principal and interest. However, like a FNMA security, it is not guaranteed by
the full faith and credit of the U.S. Government. Privately issued mortgage
backed securities will carry a rating at the time of purchase of at least A by
S&P or by Moody's or, if unrated, will be in the Investment Adviser's opinion
equivalent in credit quality to such rating. Mortgage backed securities issued
by private issuers, whether or not such obligations are subject to guarantees
by the private issuer, may entail greater risk than obligations directly or
indirectly guaranteed by the U.S. Government.
The above-mentioned funds may also invest in non-mortgage
backed securities including interests in pools of receivables, such as motor
vehicle installment purchase obligations and credit card receivables. Such
securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets.
Such securities may also be debt instruments, which are also known as
collateralized obligations and are generally issued as the debt of a special
purpose entity organized solely for the purpose of owning such assets and
issuing such debt. Non-mortgage backed securities are not issued or guaranteed
by the U.S. Government or its agencies or instrumentalities.
Non-mortgage backed securities involve certain risks that are
not presented by mortgage backed securities. Primarily, these securities do
not have the benefit of the same security interest in the underlying
collateral. Credit card receivables are generally unsecured and the debtors
are entitled to the protection of a number of state and federal consumer
credit laws. Most issuers of motor vehicle receivables permit the servicers to
retain possession of the underlying obligations. If the servicer were to sell
these obligations to another party, there is a risk that the purchaser would
acquire an interest superior to that of the holders of the related motor
vehicle receivables. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state laws,
the trustee for the holders of the motor vehicle receivables may not have an
effective security interest in all of the obligations backing such
receivables. Therefore, there is a possibility that recoveries on repossessed
collateral may not, in some cases, be able to support payments on these
securities.
Stripped Government Obligations
All of the Asset Allocation, Money Market and Bond Funds may
purchase Treasury receipts and other "stripped" securities that evidence
ownership in either the future interest payments or the future principal
payments on U.S. Government obligations. These participations, which may be
issued by the U.S. Government (or a U.S. Government agency or instrumentality)
or by private issuers such as banks and other institutions, are issued at a
discount to their "face value," and may include stripped mortgage backed
securities ("SMBS"), which are derivative multi-class mortgage securities.
Stripped securities, particularly SMBS, may exhibit greater price volatility
than ordinary debt securities because of the manner in which their principal
and interest are returned to investors.
SMBS are usually structured with two classes that receive
different proportions of the interest and principal distributions from a pool
of mortgage backed obligations. A common type of SMBS will have one class
receiving all of the interest, while the other class will receive all of the
principal. However, in some instances, one class will receive some of the
interest and most of the principal while the other class will receive most of
the interest and the remainder of the principal. With respect to investments
in interest only securities, should the underlying obligations experience
greater than anticipated prepayments of principal, a fund may fail to fully
recoup its initial investment in these securities. The market value of the
class consisting entirely of principal payments may be more volatile in
response to changes in interest rates. The yields on a class SMBS that
receives all or most of the interest are generally higher than prevailing
market yields on other mortgage backed obligations because their cash flow
patterns are more volatile. For interest only securities, there is a greater
risk that the initial investment will not be fully recouped.
A-7
<PAGE>
Municipal and Related Obligations
Municipal Obligations that may be acquired by each Asset
Allocation and Bond Fund may include general obligations, revenue obligations,
notes and moral obligations bonds. Each of these funds currently intends to
invest no more than 25% of its total assets in Municipal Obligations. General
obligations are secured by the issuer's pledge of its full faith, credit and
taxing power for the payment of principal and interest. Revenue obligations
are payable only from the revenues derived from a particular facility, class
of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source such as the user of the facility being financed.
Private activity bonds (i.e. bonds issued by industrial development
authorities) are in most cases revenue securities and are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of a
private activity bond is usually directly related to the credit standing of
the private user of the facility involved.
Notes are short-term instruments which are obligations of the
issuing municipalities or agencies and are sold in anticipation of a bond
sale, collection of taxes or receipt of other revenues. Moral obligation bonds
are normally issued by a special purpose public authority. If the issuer of a
moral obligation bond is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer. Municipal Obligations also include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities. The Investment Adviser
will only invest in rated municipal lease/purchase agreements.
There are, of course, variations in the quality of Municipal
Obligations both within a particular classification and between
classifications, and the yields on Municipal Obligations depend upon a variety
of factors, including general money market conditions, the financial condition
of the issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligation and the rating of the
issue.
Stand-By Commitments
Each of the Asset Allocation and Bond Funds may acquire
"stand-by commitments" with respect to Municipal Obligations held in their
portfolios. Under a stand-by commitment, a fund obligates a broker, dealer or
bank to repurchase, at the fund's option, specified securities at a specified
price and, in this respect, stand-by commitments are comparable to put
options. The exercise of a stand-by commitment therefore is subject to the
ability of the seller to make payment on demand. A fund other than the Money
Market Fund will acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes. A fund may pay for stand-by commitments if such action is deemed
necessary, thus increasing to a degree the cost of the underlying Municipal
Obligation and similarly decreasing such securities yield to investors.
Custodial Receipts and Certificates of Participation
Each of the Asset Allocation, Bond and Money Market Funds may
purchase participations in trusts that hold U.S. Treasury securities (such as
TIGRS and CATS) where the trust participations evidence ownership in either
the future interest payments or the future principal payments on the U.S.
Treasury obligations. These participations are normally issued at a discount
to their "face value," and may exhibit greater price volatility than ordinary
debt securities because of the manner in which their principal and interest are
returned to investors.
Options Transactions
Each Fund and Additional Pegasus Fund other than the Money
Market Fund is permitted to invest up to 5% of its assets, represented by the
premium paid, in the purchase of call and put options. Options transactions
are a form of derivative security.
Each of the above-mentioned funds is permitted to purchase call
and put options in respect of specific securities (or groups or "baskets" of
specific securities) in which it may invest. Each Fund may write (i.e., sell)
covered call option contracts on securities owned by it not exceeding 25% of
the market value of its net assets at the time such option contracts are
written. Each of these funds also may purchase call options to enter into
closing purchase transactions. Each also may write covered
A-8
<PAGE>
put option contracts to the extent of 25% of the value of its net assets at
the time such option contracts are written. A call option gives the purchaser
of the option the right to buy, and obligates the writer to sell, the
underlying security at the exercise price at any time during the option
period. Conversely, a put option gives the purchaser of the option the right
to sell, and obligates the writer to buy, the underlying security at the
exercise price at any time during the option period. A covered put option sold
by a fund exposes it during the term of the option to a decline in price of
the underlying security or securities. A put option sold by a fund is covered
when, among other things, cash or liquid securities are placed in a segregated
account with its custodian to fulfill the obligation undertaken.
Each of the funds also may purchase and sell call and put
options on foreign currency for the purpose of hedging against changes in
future currency exchange rates. Call options convey the right to buy the
underlying currency at a price which is expected to be lower than the spot
price of the currency at the time the option expires. Put options convey the
right to sell the underlying currency at a price which is anticipated to be
higher than the spot price of the currency at the time the option expires.
In addition, the Funds and Additional Pegasus Funds other than
the Money Marekt Fund may purchase cash-settled options on interest rate
swaps, interest rate swaps denominated in foreign currency and equity index
swaps. See "Interest Rate and Equity Index Swaps" below. A cash-settled option
on a swap gives the purchaser the right, but not the obligation, in return for
the premium paid, to receive an amount of cash equal to the value of the
underlying swap as of the exercise date. These options typically are purchased
in privately negotiated transactions from financial institutions, including
securities brokerage firms.
Each of the above-mentioned funds may purchase and sell call
and put options on stock indices listed on U.S. securities exchanges or traded
in the over-the-counter market. A stock index fluctuates with changes in the
market values of the stocks included in the index. Because the value of an
index option depends upon movements in the level of the index rather than the
price of a particular stock, whether a fund will realize a gain or loss from
the purchase or writing of options on an index depends upon movements in the
level of stock prices in the stock market generally or, in the case of certain
indices in an industry or market segment, rather than movements in the price
of a particular stock.
Futures Contracts and Options on Futures Contracts
Each Non-Money Market Fund and each Additional Pegasus Fund may
enter into futures contracts and options on futures contracts. All of the
Equity Funds may enter into stock index futures contracts and all of the
Non-Money Market Funds may enter into interest rate futures contracts and
currency futures contracts, and options with respect thereto. See "Options
Transactions" above. These transactions will be entered into as a substitute
for comparable market positions in the underlying securities or for hedging
purposes. A fund may not engage in such transactions if the sum of the amount
of initial margin deposits and premiums paid for unexpired commodity options,
other than for bona fide hedging transactions, would exceed 5% of the
liquidation value of its assets, after taking into account unrealized profits
and unrealized losses on such contracts it has entered into; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%. To
the extent a fund engages in the use of futures and options on futures for
other than bona fide hedging purposes, it may be subject to additional risk.
Although none of these funds would be a commodity pool, each would be subject
to rules of the CFTC limiting the extent to which it could engage in these
transactions. Futures and options transactions are a form of derivative
security. In addition, in such situations, if a fund has insufficient cash, it
may have to sell securities to meet daily variation margin requirements. Such
sales of securities may, but will not necessarily, be at increased prices
which reflect the rising market. A fund may have to sell securities at a time
when it may be disadvantageous to do so.
A-9
<PAGE>
Foreign Currency Transactions
The Asset Allocation Funds, International Equity and
International Bond Funds may engage in currency exchange transactions either
on a spot (i.e., cash) basis at the rate prevailing in the currency exchange
market, or through entering into forward contracts to purchase or sell
currencies. A forward currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which must be more than
two days from the date of the contract, at a price set at the time of the
contract. These contracts are entered into in the interbank market conducted
directly between currency traders (typically commercial banks or other
financial institutions) and their customers. They may be used to reduce the
level of volatility caused by changes in foreign currency exchange rates or
when such transactions are economically appropriate for the reduction of risks
in the ongoing management of the funds. Although forward currency exchange
contracts may be used to minimize the risk of loss due to a decline in the
value of the hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such currency
increase. The funds also may combine forward currency exchange contracts with
investments in securities denominated in other currencies.
Each of the above-mentioned funds also may maintain short
positions in forward currency exchange transactions, which would involve an
agreement to exchange an amount of a currency the fund did not currently own
for another currency at a future date in anticipation of a decline in the
value of the currency sold relative to the currency the fund contracted to
receive in the exchange.
Options on Foreign Currency
The Asset Allocation, International Equity and International
Bond Funds may purchase and sell call and put options on foreign currency for
the purpose of hedging against changes in future currency exchange rates. Call
options convey the right to buy the underlying currency at a price which is
expected to be lower than the spot price of the currency at the time the
option expires. Put options convey the right to sell the underlying currency
at a price which is anticipated to be higher than the spot price of the
currency at the time the option expires. The funds may use foreign currency
options for the same purposes as forward currency exchange and futures
transactions, as described herein. See also "Options Transactions" above and
"Risks Associated with Futures, Options and Foreign Currency Transactions and
Options," below.
Risks Associated with Futures, Options and Foreign Currency Transactions and
Options
To the extent a Non-Money Market Fund or an Additional Pegasus
Fund is engaging in a futures or options transaction as a hedging device, due
to the risk of an imperfect correlation between securities in its portfolio
that are the subject of a hedging transaction and the futures contract or
options used as a hedging device, it is possible that the hedge will not be
fully effective. In futures contracts and options based on indices, the risk
of imperfect correlation increases as the composition of the fund involved
varies from the composition of the index. In an effort to compensate for the
imperfect correlation of movements in the price of the securities being hedged
and movements in the price of contracts, the fund may buy or sell futures
contracts and options in a greater or lesser dollar amount than the dollar
amount of the securities being hedged if the historical volatility of the
futures contract has been less or greater than that of the securities. Such
"over hedging" or "under hedging" may adversely affect the fund's net
investment results if market movements are not as anticipated when the hedge
is established.
Successful use of futures and options also is subject to the
Investment Adviser's ability to predict correctly movements in the direction
of securities prices, interest rates, currency exchange rates and other
economic factors. In addition, in such situations, if the fund involved has
insufficient cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may, but will not necessarily,
be at increased prices which reflect the rising market. The fund may have to
sell securities at a time when it may be disadvantageous to do so.
A-10
<PAGE>
Although a fund intends to enter into futures contracts and
options transactions only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. See "Illiquid Securities" below. Many futures
exchanges and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made that day at a
price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contracts prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting the fund to
substantial losses. If it is not possible, or the fund determines not, to
close a futures position in anticipation of adverse price movements, the fund
will be required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the portfolio being
hedged, if any, may offset partially or completely losses on the futures
contract.
Currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and
other complex factors as seen from an international perspective. Currency
exchange rates also can be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the United States or abroad.
The foreign currency market offers less protection against defaults in the
forward trading of currencies than is available when trading in currencies
occurs on an exchange. Since a forward currency contract is not guaranteed by
an exchange or clearinghouse, a default on the contract would deprive a fund
of unrealized profits or force the fund to cover its commitments for purchase
or resale, if any, at the current market price.
Unlike trading on domestic commodity exchanges, trading on
foreign commodity exchanges is not regulated by the CFTC and may be subject to
greater risks than trading on domestic exchanges. For example, some foreign
exchanges are principal markets so that no common clearing facility exists and
a trader may look only to the broker for performance on the contract. In
addition, unless the fund hedges against fluctuations in the exchange rate
between the U.S. dollar and the currencies in which trading is done on foreign
exchanges, any profits that the fund might realize in trading could be
eliminated by adverse changes in the exchange rate, or the fund could incur
losses as a result of those changes. Transactions on foreign exchanges may
include both commodities which are traded on domestic exchanges and those
which are not.
Interest Rate and Equity Index Swaps
Each of the Non-Money Market and Additional Pegasus Funds may
enter into interest rate swaps and equity index swaps, to the extent described
under "Description of the Funds-Management Policies," in pursuit of its
investment objective. Interest rate swaps involve the exchange by a fund with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating-rate payments for fixed-rate payments).
Equity index swaps involve the exchange by a fund with another party of cash
flows based upon the performance of an index or a portion of an index which
usually includes dividends. In each case, the exchange commitments may involve
payments to be made in the same currency or in different currencies. Swaps are
a form of derivative security.
The funds usually will enter into swaps on a net basis. In so
doing, the two payment streams are netted out, with the fund receiving or
paying, as the case may be, only the net amount of the two payments. If a fund
enters into a swap, it would maintain a segregated account in the full amount
accrued on a daily basis of the fund's obligations with respect to the swap.
Each of these funds will enter into swap transactions with counterparties only
if: (i) for transactions with maturities under one year, such counterparty has
outstanding short-term paper rated at least A-1 by S&P, Prime-1 by Moody's,
F-1 by Fitch or Duff-1 by Duff, or (ii) for transactions with maturities
greater than one
A-11
<PAGE>
year, the counterparty has outstanding debt securities rated at least Aa by
Moody's or AA by S&P, Fitch or Duff.
The use of swaps is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio security transactions. There is no limit on the amount of
swap transactions that may be entered into by a Non-Money Market Fund or an
Additional Pegasus Fund. These transactions do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps is limited to the net amount of payments that a
fund is contractually obligated to make. If the other party to a swap
defaults, the relevant fund's risk of loss consists of the net amount of
payments that such fund contractually is entitled to receive.
Illiquid Securities
The Non-Money Market Funds and the Additional Pegasus Funds
will not knowingly invest more than 15% of the value of their respective net
assets in securities that are illiquid and the Money Market Fund will not
knowingly invest more than 10% of the value of its net assets in securities
that are illiquid. Securities having legal or contractual restrictions on
resale or no readily available market, and instruments (including repurchase
agreements, variable and floating rate instruments, GICs and time deposits)
that do not provide for payment to the funds within seven days after notice
are subject to this limitation. Securities that have legal or contractual
restrictions on resale but have a readily available market are not deemed to
be illiquid for purposes of this limitation.
The Non-Money Market Funds and the Additional Pegasus Funds
may purchase securities which are not registered under the Securities Act of
1933, as amended (the "1933 Act"), but which can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the 1933 Act. Any
such security will not be considered to be illiquid so long as it is
determined by the Board of Trustees or the Investment Adviser, acting under
guidelines approved and monitored by the Board, that an adequate trading
market exists for that security. This investment practice could have the
effect of increasing the level of illiquidity in a fund during any period that
qualified institutional buyers become uninterested in purchasing these
restricted securities. The ability to sell to qualified institutional buyers
under Rule 144A is a recent development, and it is not possible to predict how
this market will develop. The Board of Trustees will carefully monitor any
investments by a fund in these securities.
Portfolio Turnover
Generally, the Non-Money Market Funds and the Additional
Pegasus Funds will purchase securities for capital appreciation or investment
income, or both, and not for short-term trading profits. However, a fund may
sell a portfolio investment soon after its acquisition if the Investment
Adviser believes that such a disposition is consistent with or in furtherance
of the fund's investment objective. Fund investments may be sold for a variety
of reasons, such as more favorable investment opportunities or other
circumstances. As a result, such funds are likely to have correspondingly
greater brokerage commissions and other transaction costs which are borne
indirectly by shareholders. Fund turnover may also result in the realization
of substantial net capital gains.
Asset reallocation decisions for the Asset Allocation Funds
typically will generally occur not more than once every month. However, if
market conditions warrant, the Investment Adviser may make more frequent
reallocation decisions which will result in a higher portfolio turnover rate.
The Asset Allocation Funds will purchase or sell shares of the Underlying
Funds: (a) to accommodate purchases and redemptions of each Asset Allocation
Fund's shares; (b) in response to market or other economic conditions; and (c)
to maintain or modify the allocation of each Asset Allocation Fund's assets
among the Underlying Funds within the target asset allocation ranges described
above or as altered by the Investment Adviser from time to time. See
"Taxes--Federal" in the Prospectus and "Additional Information Concerning
Taxes" in the Statement of Additional Information.
A-12
<PAGE>
[This page intentionally left blank]
<PAGE>
CROSS REFERENCE SHEET
Class A, Class B and Class I Shares of the:
Managed Assets Conservative Fund, Managed Assets Balanced Fund,
Managed Assets Growth Fund, Equity Income Fund, Growth Fund,
Mid-Cap Opportunity Fund, Small-Cap Opportunity Fund,
Intrinsic Value Fund, Growth and Value Fund, Equity Index Fund,
International Equity Fund, Intermediate Bond Fund, Bond Fund,
Short Bond Fund, Income Fund, International Bond Fund,
Municipal Bond Fund, Intermediate Municipal Bond Fund
and Michigan Municipal Bond Fund, Respectively.
Statement of Additional
Form N-1A Part B Item Information Caption
- --------------------- -----------------------
10. Cover Page.................................... Cover Page
11. Table of Contents............................. Table of Contents
12. General Information and History............... Description of Shares
13. Investment Objectives and Policies............ Investment Objectives,
Policies and Risk
Factors
14. Management of Registrant...................... Management
15. Control Persons and Principal................. Description of Shares
Holders of Securities
16. Investment Advisory and Other Services........ Management
17. Brokerage Allocation and other Practices...... Investment Objectives,
Policies and Risk
Factors
18. Capital Stock and Other Securities............ Additional Purchase
and Redemption
Information;
Description of Shares
19. Purchase, Redemption and Pricing.............. Additional Purchase and
of Securities Being Offered Redemption Information
20. Tax Status.................................... Additional Information
Concerning Taxes
21. Underwriters.................................. Not Applicable
22. Calculation of Performance Data............... Additional Information
on Performance
23. Financial Statements.......................... Independent
Public Accountants;
Financial Statements
-4-
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
November 20, 1996
for
CLASS A, CLASS B AND CLASS I SHARES
OF THE
MANAGED ASSETS CONSERVATIVE FUND
MANAGED ASSETS BALANCED FUND
MANAGED ASSETS GROWTH FUND
EQUITY INCOME FUND
GROWTH FUND
MID-CAP OPPORTUNITY FUND
SMALL-CAP OPPORTUNITY FUND
INTRINSIC VALUE FUND
GROWTH AND VALUE FUND
EQUITY INDEX FUND
INTERNATIONAL EQUITY FUND
INTERMEDIATE BOND FUND
BOND FUND
SHORT BOND FUND
INCOME FUND
INTERNATIONAL BOND FUND
MUNICIPAL BOND FUND
INTERMEDIATE MUNICIPAL BOND FUND
MICHIGAN MUNICIPAL BOND FUND
of
PEGASUS FUNDS
P.O. Box 5142
Westborough, Massachusetts 01581
(800) 688-3350
This Statement of Additional Information ("Additional
Statement") is meant to be read in conjunction with Pegasus Funds' Prospectus
dated November 20, 1996 pertaining to all classes of shares of the Funds
listed above (the "Prospectus") (each, a "Fund" and collectively, the
"Funds"), as it may be revised from time to time, and is
<PAGE>
incorporated by reference in its entirety into that Prospectus. Because this
Additional Statement is not itself a prospectus, no investment in shares of
the Funds should be made solely upon the information contained herein. Copies
of the Funds' Prospectus may be obtained from any office of the Distributor by
writing or calling the Distributor or the Trust at the address or telephone
number listed above. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.
-2-
<PAGE>
TABLE OF CONTENTS
Page
----
Investment Objectives, Policies and Risk Factors.................... 1
Additional Purchase and Redemption Information...................... 21
Description of Shares............................................... 24
Additional Information Concerning Taxes............................. 33
Management.......................................................... 36
Independent Public Accountants...................................... 47
Counsel............................................................. 48
Additional Information on Performance............................... 48
Appendix A.......................................................... A-1
Appendix B.......................................................... B-1
Financial Statements................................................ FS-1
-i-
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
The following policies supplement the Funds' respective
investment objectives and policies as set forth in the Prospectus.
Additional Information on Fund Instruments
Ratings Information
Attached to this Additional Statement is Appendix A which
contains descriptions of the rating symbols used by Rating Agencies for
securities in which the Funds and the Money Market Fund may invest.
Portfolio Transactions
Subject to the general supervision of the Trust's Board of
Trustees, the Investment Adviser is responsible for, making decisions with
respect to, and placing orders for all purchases and sales of portfolio
securities for each Fund and the Money Market Fund.
The annualized portfolio turnover rate for each Fund and the
Money Market Fund is calculated by dividing the lesser of purchases or sales
of portfolio securities for the reporting period by the monthly average value
of the portfolio securities owned during the reporting period. The calculation
excludes all securities, including options, whose maturities or expiration
dates at the time of acquisition are one year or less. Portfolio turnover may
vary greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of shares and by requirements
which enable the Funds and the Money Market Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making
portfolio decisions, and the Funds and the Money Market Fund may engage in
short term trading to achieve their respective investment objectives.
Purchases of money market instruments are made from dealers,
underwriters and issuers. The Funds and the Money Market Fund currently do not
expect to incur any brokerage commission expense on such transactions because
money market instruments are generally traded on a "net" basis acting as
principal for their own accounts without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities
purchased in underwritten offerings include a fixed amount of compensation to
the underwriter, generally referred to as the underwriter's concession or
discount. When securities are purchased directly from or sold directly to an
issuer, no commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers.
Transactions in the over-the-counter
<PAGE>
market are generally on a net basis (i.e., without commission) through
dealers, or otherwise involve transactions directly with the issuer of an
instrument.
The Funds and the Money Market Fund may participate, if and
when practicable, in bidding for the purchase of portfolio securities directly
from an issuer in order to take advantage of the lower purchase price
available to members of a bidding group. A Fund or the Money Market Fund will
engage in this practice, however, only when the Investment Adviser, in its
sole discretion, believes such practice to be otherwise in the Fund's
interests.
Total brokerage commissions paid by the Funds for the fiscal
years ended December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Managed Assets Conservative Fund $ 13,601 $ 47,110 $ 29,826
Managed Assets Balanced Fund $ 81,178 $123,890 N/A
Equity Income Fund $379,012 N/A N/A
Growth Fund $929,747 N/A N/A
Mid-Cap Opportunity Fund $866,286 $683,613 $330,962
Small-Cap Opportunity Fund $178,632 N/A N/A
Intrinsic Value Fund $209,816 $325,912 $320,121
Growth and Value Fund $504,214 $519,412 $423,124
Equity Index Fund $137,443 $169,830 $ 98,588
International Equity Fund $ 72,856 $ 4,492 N/A
</TABLE>
The Bond Funds and Municipal Bond Funds as well as the Money
Market Fund incurred no brokerage commissions for the fiscal years ended
December 31, 1995, 1994 and 1993. Prior to November 20, 1996, the Managed
Assets Conservative and Managed Assets Balanced Funds invested directly in
portfolio securities. After such date, the Asset Allocation Funds began
investing in shares of the Underlying Funds.
The Advisory Agreement provides that, in executing portfolio
transactions and selecting brokers or dealers, the Investment Adviser will
seek to obtain the best overall terms available for each Fund and the Money
Market Fund. In assessing the best overall terms available for any
transaction, the Investment Adviser shall consider 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 addition, the Agreement
authorizes the Investment Adviser to cause a
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<PAGE>
Fund, or the Money Market Fund, to pay a broker-dealer which furnishes
brokerage and research services a higher commission than that which might be
charged by another broker-dealer for effecting the same transaction, provided
that the Investment Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer, viewed in terms of either the particular
transaction or the overall responsibilities of the Investment Adviser to the
Funds and the Money Market Fund. Such brokerage and research services might
consist of reports and statistics relating to specific companies or
industries, general summaries of groups of stocks or bonds and their
comparative earnings and yields, or broad overviews of the stock, bond and
government securities markets and the economy.
Supplementary research information so received is in addition
to, and not in lieu of, services required to be performed by the Investment
Adviser and does not reduce the advisory fees payable by the Funds and the
Money Market Fund. The Trustees will periodically review any commissions paid
to consider whether the commissions paid over representative periods of time
appear to be reasonable in relation to the benefits. It is possible that
certain of the supplementary research or other services received will
primarily benefit one or more other investment companies or other accounts for
which investment discretion is exercised by the Investment Adviser.
Conversely, a Fund, or the Money Market Fund, may be the primary beneficiary
of the research or services received as a result of portfolio transactions
effected for such other account or investment company.
The Trust will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in or enter into
repurchase or reverse repurchase agreements with the Investment Adviser, the
Distributor or an affiliated person of any of them (as such term is defined in
the 1940 Act) acting as principal, except to the extent permitted under the
1940 Act by the SEC or its staff. In addition, a Fund, or the Money Market
Fund, will not purchase securities during the existence of any underwriting or
selling group relating thereto of which the Distributor or the Investment
Adviser, or an affiliated person of any of them, is a member, except to the
extent permitted under the 1940 Act. Under certain circumstances, the Funds
and the Money Market Fund may be at a disadvantage because of these
limitations in comparison with other investment companies which have similar
investment objectives but are not subject to such limitations.
Investment decisions for each Fund and the Money Market Fund are
made independently from those for the other Funds and for any other investment
companies and accounts advised or managed by the Investment Adviser. Such
other investment companies and accounts may also invest in the same securities
as the Funds and the Money Market Fund. To the extent permitted by law, the
Investment Adviser may aggregate the securities to be sold or purchased for
the Funds and the Money Market Fund with those to be sold or purchased for
other investment companies or accounts in executing transactions. When a
purchase or sale of the same security is made at substantially the same time
on behalf of one or more of the Funds and another investment company or
account, the transaction will be averaged as to price and available
investments allocated as to amount, in a manner which the Investment Adviser
believes to be equitable to each Fund, the Money Market Fund and such other
investment company or account. In some instances, this investment procedure
-3-
<PAGE>
may adversely affect the price paid or received, or the size of the position
obtained or sold.
Investment Techniques
Asset Allocation Funds
In order to achieve its investment objective, each Asset
Allocation Fund will typically invest its assets in the Underlying Funds
within a predetermined target asset allocation range, as set forth in the
Prospectus under "Description of the Fund - Investment Objectives and
Policies - Asset Allocation Funds." Substantially all of the assets of the
Managed Assets Conservative and Managed Assets Balanced Funds are currently
generally invested directly in the same types of underlying securities as are
permissible investments for the Underlying Funds. Except as set forth in the
Prospectus, the Asset Allocation Funds will no longer continue to purchase
these securities and will limit their investments to the Underlying Funds. The
Investment Adviser currently expects that the transition of the Managed Assets
Conservative and Managed Assets Balanced Fund to having substantially all of
their assets invested in the Underlying Funds will be gradual.
Equity Securities
Equity Securities are generally selected by the Equity Funds in
a "bottom-up" manner. "Bottom-up" refers to an analytical approach to
securities selection which first focuses on the company and company-related
matters as contrasted to a "top-down" analysis which first focuses on the
industry or the economy. In the Investment Adviser's opinion, this procedure
may generally be expected to result in a portfolio characterized by lower
price/earnings ratios, above average growth prospects and average market risk.
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Equity Index Fund
The Investment Adviser believes that a sampling methodology
allows the Fund to maintain a close correlation to the performance of the S&P
500 Index while at the same time controlling the portfolio turnover and
transaction costs of the Fund.
Under normal market conditions, the Fund invests substantially
all of its total assets in the common stocks that comprise the S&P 500 Index
in accordance with their relative capitalization and sector weightings as
described above. It is possible, that if an issuer drops in ranking, or is
eliminated entirely from the S&P 500 Index, the Investment Adviser may be
required to sell some or all of the common stock of such issuer then held by
the Fund. Sales of portfolio securities may be made at times when, if the
Investment Adviser is not required to effect purchases and sales of portfolio
securities in accordance with the S&P 500 Index, such securities might not be
sold. Such sales may result in lower prices for such securities than may have
been realized or in losses that may not have been incurred if the Investment
Adviser is not required to effect the purchases and sales. The failure of an
issuer to declare or pay dividends, the institution against an issuer of
materially adverse legal proceedings, the existence or threat of defaults
materially and adversely affecting an issuer's future declaration and payment
of dividends, or the existence of other materially adverse credit factors will
not necessarily be the basis for the disposition of portfolio securities,
unless such event causes the issuer to be eliminated entirely from the S&P 500
Index. The Fund may receive from time to time as part of a "spin-off" or
corporate restructuring of an issuer included in the S&P 500 Index, securities
that are themselves outside of the S&P 500 Index. Such securities will be
disposed of by the Fund in due course consistent with the Fund's investment
objective.
Debt Securities
The Investment Adviser selects Debt Securities based on
anticipated interest rate changes and the use of active management strategies
which may include sector rotation, intra-sector adjustments and yield curve
and convexity considerations. Sector rotation involves the Investment Adviser
selecting among different economic or industry sectors based upon apparent or
relative attractiveness. Thus at times a sector offers yield advantages
relative to other sectors. An intra-sector adjustment occurs when the
Investment Adviser determines to select a particular issue within a sector.
Yield curve considerations involve the Investment Adviser attempting to
compare the relationship between time to maturity and yield to maturity in
order to identify the relative value in the relationship. Convexity
considerations consist of the Investment Adviser seeking securities that rise
in price more quickly, or decline in price less quickly, than the typical
security of that price risk level and therefore enable the Investment Adviser
to obtain an additional return when interest rates change dramatically.
In acquiring particular Debt Securities, the Investment Adviser
may consider, among other things, historical yield relationships between
private and governmental debt securities, intermarket yield relationships
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among various industry sectors, current economic cycles and the attractiveness
and creditworthiness of particular issuers. Depending upon the Investment
Adviser's analysis of these and other factors, a Fund's or the Money Market
Fund's holdings of issues in particular industry sectors may be overweighted or
underweighted when compared to the relative industry weightings in recognized
indices. The value of portfolio holdings can be expected to vary inversely
with changes in prevailing interest rates.
Money Market Fund
The net asset value of the Money Market Fund is determined
as of 3:00 P.M., Eastern Time, on each Business Day. The Money Market Fund
intends to value its portfolio securities based upon their amortized cost in
accordance with Rule 2a-7 under the 1940 Act. Where it is not appropriate to
value a security by the amortized cost method, the security will be valued
either by market quotations, or by fair value as determined by the Board of
Trustees. 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 securities.
Pursuant to Rule 2a-7, the Money Market Fund is required to
maintain a dollar-weighted average portfolio maturity of 90 days or less, to
purchase securities having remaining deemed maturities of 13 months or less,
and to invest only in securities determined by the Board of Trustees to be of
high quality with minimal credit risks. The Board of Trustees has established
procedures designed to stabilize, to the extent reasonably possible, the Money
Market Fund's price per share as computed for the purpose of sales and
redemptions at $1.00. These procedures include review of the investment
holdings by the Board of Trustees, at such intervals as it may deem
appropriate, to determine whether the Money Market Fund's net asset value
calculated by using available market quotations deviates from $1.00 per share
based on amortized cost. The extent of any deviation will be examined by the
Board of Trustees. If the deviation exceeds 1/2 of 1%, the Board of Trustees
will promptly consider what action, 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 may take such corrective actions as it deems necessary and
appropriate to eliminate or reduce, to the extent reasonably practicable, any
such dilution or unfair results. These actions may include selling portfolio
securities prior to maturity to realize capital gains or losses or to shorten
the Fund's average maturity, withholding or reducing dividends, redeeming
shares in kind, splitting, combining or otherwise recapitalizing outstanding
shares or establishing a net asset value per share by using available market
quotations.
The Money Market Fund calculates its dividends based on
daily net investment income. Expenses of the Money Market Fund are accrued
daily. As the Money Market Fund's portfolio securities are normally valued at
amortized cost, unrealized gains or losses on such securities based on their
market values will not normally be recognized. However, should the net asset
value deviate significantly from market value, the Trustees
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could decide to value the securities at market value and then unrealized gains
and losses would be included in net investment income.
The Money Market Fund will purchase only "eligible securities"
that present minimal credit risks as determined by the Investment Adviser
pursuant to guidelines established by the Trust's Board of Trustees. Eligible
securities generally include: (1) securities that are rated by two or more
Rating Agencies (or the only Rating Agency which has issued a rating) in one
of the two highest rating categories for short term debt securities; (2)
securities that have no short term rating, if the issuer has other outstanding
short term obligations that are comparable in priority and security as
determined by the Investment Adviser ("Comparable Obligations") and that have
been rated in accordance with (1) above; (3) securities that have no short
term rating, but are determined to be of comparable quality to a security
satisfying (1) or (2) above, and the issuer does not have Comparable
Obligations rated by a Rating Agency; and (4) obligations that carry certain
types of guarantees. Obligations that carry certain types of conditional
demand features also may be purchased pursuant to similar standards.
Other Investments
Stripped U.S. Government Obligations
Within the past several years, the Treasury Department has
facilitated transfers of ownership of zero coupon securities by accounting
separately for the beneficial ownership of particular interest coupon and
principal payments on Treasury securities through the Federal Reserve
book-entry record-keeping system. The Federal Reserve program as established
by the Treasury Department is known as "STRIPS" or "Separate Trading of
Registered Interest and Principal of Securities." To the extent consistent
with their respective investment objectives, the Bond and Municipal Bond Funds
and the Money Market Fund may purchase securities registered in the STRIPS
program. Under the STRIPS program, these Funds will be able to have their
beneficial ownership of zero coupon securities recorded directly in the
book-entry record-keeping system in lieu of having to hold certificates or
other evidences of ownership of the underlying U.S. Treasury securities.
In addition, the Bond and Municipal Bond Funds may acquire U.S.
Government obligations and their unmatured interest coupons that have been
separated ("stripped") by their holder, typically a custodian bank or
investment brokerage firm. Having separated the interest coupons from the
underlying principal of the U.S. Government obligations, the holder will
resell the stripped securities in custodial receipt programs with a number of
different names, including "Treasury Income Growth Receipts" ("TIGRs") and
"Certificate of Accrual on Treasury Securities" ("CATS"). The stripped
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coupons are sold separately from the underlying principal, which is usually
sold at a deep discount because the buyer receives only the right to receive a
future fixed payment on the security and does not receive any rights to
periodic interest (cash) payments. The underlying U.S. Treasury bonds and
notes themselves are held in book-entry form at the Federal Reserve Bank or,
in the case of bearer securities (i.e., unregistered securities which are
ostensibly owned by the bearer or holder), in trust on behalf of the owners.
Counsel to the underwriters of these certificates or other evidences of
ownership of U.S. Treasury securities have stated that, in their opinion,
purchasers of the stripped securities most likely will be deemed the
beneficial holders of the underlying U.S. Government obligations for federal
tax purposes. The Trust is not aware of any binding legislative, judicial or
administrative authority on this issue.
As described in the Prospectus, such Funds may also purchase
stripped mortgage-backed securities ("SMBS"). SMBS that are interest only or
principal only and not issued by the U.S. Government may be considered
illiquid securities if they can not be disposed of promptly in the ordinary
course of business at a value reasonably close to that used in the calculation
of net asset value per share.
Custodial Receipts and Certificates of Participation
For certain certificates of participation, the Funds and the
Money Market Fund will have the right to demand payment, on not more than 30
days' notice, for all or any part of such Fund's or the Money Market Fund's
participation interest, plus accrued interest. As to these instruments, the
Funds and the Money Market Fund intend to exercise their rights to demand
payment as needed to provide liquidity, to maintain or improve the quality of
their investment portfolio or upon a default (if permitted under the terms of
the instrument).
Bank Obligations
In accordance with their respective investment objectives, each
Fund and the Money Market Fund may purchase bank obligations, which include
bankers' acceptances, negotiable certificates of deposit and non-negotiable
time deposits, including U.S. dollar-denominated instruments issued or
supported by the credit of U.S. or foreign banks or savings institutions.
Although the Funds invest in obligations of foreign banks or foreign branches
of U.S. banks only where the Investment Adviser deems the instrument to
present minimal credit risks, such investments may nevertheless entail risks
that are different from those of investments in domestic obligations of U.S.
banks due to differences in political, regulatory and economic systems and
conditions. All investments in bank obligations are limited to the obligations
of financial institutions having more than $1.0 billion in total assets at the
time of purchase.
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Commercial Paper
Commercial paper, including variable and floating rate notes and
other short term corporate obligations, must be rated in one of the two
highest categories by at least two Rating Agencies, or if not rated, for the
Money Market Fund must have been independently determined by the Investment
Adviser to be of comparable quality, and for the other Funds must have been
issued by a corporation having an outstanding bond issue rated A or higher by
a Rating Agency. Except as provided in the Prospectus for the International
Bond Fund, bonds and other short term obligations (if not rated as commercial
paper) purchased by the Funds must be rated BBB or Baa, or higher, by a Rating
Agency, respectively, or if unrated, be of comparable investment quality in
the judgment of the Investment Adviser.
Variable and Floating Rate Instruments
With respect to variable and floating rate obligations that may
be acquired by each Fund and the Money Market Fund, the Investment Adviser
will consider the earning power, cash flows and other liquidity ratios of the
issuers and guarantors of such notes and will continuously monitor their
financial status to meet payment on demand. The absence of an active secondary
market with respect to particular variable and floating rate instruments could
make it difficult to dispose of instruments if the issuer defaulted on its
payment obligation or during periods that the Fund or the Money Market Fund is
not entitled to exercise its demand rights, and the Fund or the Money Market
Fund could, for these or other reasons, suffer a loss with respect to such
instruments.
Lending Securities
When a Fund or the Money Market Fund lends its securities, it
continues to receive interest or dividends on the securities loaned and may
simultaneously earn interest on the investment of the cash collateral.
Although voting rights, or rights to consent, attendant to securities on loan
pass to the borrower, such loans will be called so that the securities may be
voted by a Fund or the Money Market Fund if a material event affecting the
investment is to occur.
Repurchase Agreements and Reverse Repurchase Agreements
The repurchase price under the repurchase agreements described
in the Prospectus generally equals the price paid by a Fund or the Money
Market Fund plus interest negotiated on the basis of current short term rates
(which may be more or less than the rate on the securities underlying the
repurchase agreement). Securities subject to repurchase agreements are held by
the Trust's Custodian, in the Federal Reserve/Treasury book-entry system or by
another authorized securities depository. Repurchase agreements are considered
to be loans under the 1940 Act.
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Reverse repurchase agreements are considered to be borrowings by
a Fund and by the Money Market Fund under the 1940 Act. At the time a Fund or
the Money Market Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account liquid assets such as U.S. Government
securities or other liquid high-grade debt securities having a value equal to
or greater than the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure that such value is maintained.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by the Fund or the Money Market Fund may decline below the
price of the securities it is obligated to repurchase.
American Depository Receipts ("ADRs")
The Asset Allocation and Equity Funds may invest in ADRs, which
are receipts issued by an American bank or trust company evidencing ownership
of underlying securities issued by a foreign issuer. ADRs may be listed on a
national securities exchange or may trade in the over-the-counter market.
Although ADR prices are denominated in U.S. dollars, the underlying security
may be denominated in a foreign currency. The underlying security may be
subject to foreign government taxes which would reduce the yield on such
securities.
When-Issued Purchases and Forward Commitments
A Fund or the Money Market Fund will purchase securities on a
when-issued basis or purchase or sell securities on a forward commitment basis
only with the intention of completing the transaction and actually purchasing
or selling the securities. If deemed advisable as a matter of investment
strategy, however, a Fund or the Money Market Fund may dispose of or
renegotiate a commitment after it is entered into, and may sell securities it
has committed to purchase before those securities are delivered on the
settlement date. In these cases the Fund or the Money Market Fund may realize
a capital gain or loss.
When a Fund or the Money Market Fund engages in when-issued and
forward commitment transactions, it relies on the other party to consummate
the trade. Failure of such party to do so may result in the Fund's or the
Money Market Fund's incurring a loss or missing an opportunity to obtain a
price considered to be advantageous.
Mortgage Backed Securities
Mortgage Backed Securities Generally. Mortgage backed securities
held by the Asset Allocation, Equity and Bond Funds represent an ownership
interest in a pool of residential mortgage loans. These securities are
designed to provide monthly payments of interest and principal to the
investor. The mortgagor's monthly payments to his lending institution are
"passed-through" to an investor such as the Funds. Most issuers or poolers
provide guarantees of payments, regardless of whether or not the mortgagor
actually makes the payment. The guarantees made by issuers or poolers are
supported by various forms of
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credit, collateral, guarantees or insurance, including individual loan, title,
pool and hazard insurance purchased by the issuers or poolers so that they can
meet their obligations under the policies. Mortgage backed securities issued
by private issuers or poolers, whether or not such securities are subject to
guarantees, may entail greater risk than securities directly or indirectly
guaranteed by the U.S. Government.
Interests in pools of mortgage backed securities differ from
other forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified
call dates. Instead, these securities provide a monthly payment which consists
of both interest and principal payments. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on
their residential mortgage loans, net of any fees paid. Additional payments
are caused by repayments resulting from the sale of the underlying residential
property, refinancing or foreclosure net of fees or costs which may be
incurred. Some mortgage backed securities are described as "modified
pass-through". These securities entitle the holders to receive all interest
and principal payments owed on the mortgages in the pool, net of certain fees,
regardless of whether or not the mortgagors actually make the payments.
Residential mortgage loans are pooled by the Federal Home Loan
Mortgage Corporation ("FHLMC"). FHLMC is a corporate instrumentality of the
U.S. Government and was created by Congress in 1970 for the purpose of
increasing the availability of mortgage credit for residential housing. Its
stock is owned by the twelve Federal Home Loan Banks. FHLMC issues
Participation Certificates ("Pcs"), which represent interests in mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal.
The Federal National Mortgage Association ("FNMA") is a U.S.
Government sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban
Development. FNMA purchases residential mortgages from a list of approved
seller/servicers which include state and federally-chartered savings and loan
credit unions and mortgage bankers. Pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA.
The principal guarantor of mortgage-backed securities is the
Government National Mortgage Association ("GNMA"). GNMA is a wholly-owned U.S.
Government corporation within the Department of Housing and Urban Development.
GNMA is authorized to guarantee, with the full faith and credit of the U.S
Government, the timely payment of principal and interest on securities issued
by approved institutions and backed by pools of FHA-insured or VA-guaranteed
mortgages.
Commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers also create pass-through pools of conventional residential mortgage
loans. Pools created by such non-governmental
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issuers generally offer a higher rate of interest than government and
government-related pools because there are no direct or indirect government
guarantees of payments in the former pools. Timely payment of interest and
principal of some of these pools is supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance
purchased by the issuer. The insurance and guarantees are issued by
governmental entities, private insurers and the mortgage poolers. There can be
no assurance that the private insurers or mortgage poolers can meet their
obligations under the policies.
The Trust expects that governmental or private entities may
create mortgage loan pools offering pass-through investments in addition to
those described above. The mortgages underlying these securities may be
alternative mortgage instruments, that is, mortgage instruments whose
principal or interest payment may vary or whose terms to maturity may be
shorter than previously customary. As new types of mortgage backed securities
are developed and offered in the market, the Trust may consider making
investments in such new types of securities.
Underlying Mortgages. Pools consist of whole mortgage loans or
participations in loans. The majority of these loans are made to purchasers of
one to four family homes. The terms and characteristics of the mortgage
instruments are generally uniform within a pool but may vary among pools. For
example, in addition to fixed-rate, fixed-term mortgages, the Bond Funds may
purchase pools of variable rate mortgages ("VRM"), growing equity mortgages
("GEM"), graduated payment mortgages ("GPM") and other types where the
principal and interest payment procedures vary. VRMs are mortgages which reset
their interest rate periodically with changes in open market interest rates.
To the extent that a Fund is actually invested in VRMs, its interest income
will vary with changes in the applicable interest rate on pools of VRMs. GPM
and GEM pools maintain constant interest rates, with varying levels of
principal repayment over the life of the mortgage.
All poolers apply standards for qualification to local lending
institutions which originate mortgages for the pools. Poolers also establish
credit standards and underwriting criteria for individual mortgages included
in the pools. In addition, some mortgages included in pools are insured
through private mortgage insurance companies.
Average Life. The average life of pass-through pools varies with
the maturities of the underlying mortgage instruments. In addition, a pool's
term may be shortened by unscheduled or early payments of principal and
interest on the underlying mortgages. The occurrence of mortgage prepayments
is affected by factors including the level of interest rates, general economic
conditions, the location and age of the mortgage and other social and
demographic conditions.
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Returns on Mortgage Backed Securities. Yields on mortgage backed
pass-through securities are typically quoted based on the maturity of the
underlying instruments and the associated average life assumption.
Reinvestment of prepayments may occur at higher or lower
interest rates than the original investment, thus affecting the yields of a
Fund. The compounding effect from reinvestments of monthly payments received
by a Fund will increase its yield to shareholders, compared to bonds that pay
interest semi-annually.
Foreign Currency Transactions
When the Asset Allocation Funds and the International Equity and
International Bond Funds enter into a currency transaction, it will deposit,
if so required by applicable regulations, with its custodian cash or readily
marketable securities in a segregated account of a Fund in an amount at least
equal to the value of the Fund's total assets committed to the consummation of
the forward contract.
At or before the maturity of a forward contract, a Fund either
may sell a security and make delivery of the currency, or retain the security
and offset its contractual obligation to deliver the currency by purchasing a
second contract pursuant to which the Fund will obtain, on the same maturity
date, the same amount of the currency which it is obligated to deliver. If the
Fund retains the security and engages in an offsetting transaction, at the
time of execution of the offsetting transaction, the Fund will incur a gain or
loss to the extent movement has occurred in forward contract prices. Should
forward prices decline during the period between the Fund's entering into a
forward contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, it will realize a gain
to the extent the price of the currency it has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices
increase, the Fund will suffer a loss to the extent the price of the currency
it has agreed to purchase exceeds the price of the currency it has agreed to
sell.
The cost of currency transactions varies with factors such as
the currency involved, the length of the contract period and the market
conditions then prevailing. Because transactions in currency exchange usually
are conducted on a principal basis, no fees or commissions are involved. The
use of forward currency exchange contracts does not eliminate fluctuations in
the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. If a devaluation generally is
anticipated, a Fund may not be able to contract to sell the currency at a
price above the devaluation level it anticipates. The requirements for
qualification as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the "Code"), may cause the Fund to restrict the
degree to which it engages in currency transactions. See "Additional
Information Concerning Taxes."
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Futures Contracts and Related Options
See Appendix B to this Additional Statement for a discussion of
futures contracts and related options.
Options Trading
As stated in the Prospectus, each Fund may purchase and sell
put and call options listed on a national securities exchange and issued by
the Options Clearing Corporation. Such transactions may be effected on a
principal basis with primary reporting dealers in U.S. Government securities
in an amount not exceeding 5% of a Fund's net assets. This is a highly
specialized activity which entails greater than ordinary investment risks.
Regardless of how much the market price of the underlying security increases
or decreases, the option buyer's risk is limited to the amount of the original
investment for the purchase of the option. However, options may be more
volatile than the underlying securities, and therefore, on a percentage basis,
an investment in options may be subject to greater fluctuation than an
investment in the underlying securities. A listed call option gives the
purchaser of the option the right to buy from a clearing corporation, and a
writer has the obligation to sell to the clearing corporation, the underlying
security at the stated exercise price at any time prior to the expiration of
the option, regardless of the market price of the security. The premium paid
to the writer is in consideration for undertaking the obligations under the
option contract. A listed put option gives the purchaser the right to sell to
a clearing corporation the underlying security at the stated exercise price at
any time prior to the expiration date of the option, regardless of the market
price of the security. Put and call options purchased by a Fund will be valued
at the last sale price or, in the absence of such a price, at the mean between
bid and asked prices.
A Fund's obligation to sell a security subject to a covered call
option written by it, or to purchase a security subject to a secured put
option written by it, may be terminated prior to the expiration date of the
option by the Fund executing a closing purchase transaction, which is effected
by purchasing on an exchange an option of the same series (i.e., same
underlying security, exercise price and expiration date) as the option
previously written. Such a purchase does not result in the ownership of an
option. A closing purchase transaction will ordinarily be effected to realize
a profit on an outstanding option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to permit the
writing of a new option containing different terms on such underlying
security. The cost of such a liquidation purchase plus transaction costs may
be greater than the premium received upon the original option, in which event
the Fund will have incurred a loss in the transaction. An option position may
be closed out only on an exchange which provides a secondary market for an
option of the same series. There is no assurance that a liquid secondary
market on an exchange will exist for any particular option. A covered call
option writer, unable to effect a closing purchase transaction, will not be
able to sell the underlying security until the option expires or the
underlying security is delivered upon exercise with the result that the writer
in such circumstances will be
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subject to the risk of market decline in the underlying security during such
period. A Fund will write an option on a particular security only if the
Investment Adviser believes that a liquid secondary market will exist on an
exchange for options of the same series which will permit the Fund to make a
closing purchase transaction in order to close out its position.
When a Fund writes a covered call option, an amount equal to the
net premium (the premium less the commission) received by the Fund is included
in the liability section of the Fund's statement of assets and liabilities as
a deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The
current value of the traded option is the last sale price or, in the absence
of a sale, the average of the closing bid and asked prices. If an option
expires on the stipulated expiration date or if the Fund enters into a closing
purchase transaction, it will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the net premium received when the option is sold)
and the deferred credit related to such option will be eliminated. Any gain on
a covered call option may be offset by a decline in the market price of the
underlying security during the option period. If a covered call option is
exercised, the Fund may deliver the underlying security held by it or purchase
the underlying security in the open market. In either event, the proceeds of
the sale will be increased by the net premium originally received and the Fund
will realize a gain or loss. If a secured put option is exercised, the amount
paid by the Fund involved for the underlying security will be partially offset
by the amount of the premium previously paid to the Fund. Premiums from
expired options written by a Fund and net gains from closing purchase
transactions are treated as short-term capital gains for federal income tax
purposes, and losses on closing purchase transactions are short-term capital
losses.
Stock Index Options
The Asset Allocation and Equity Funds may purchase and write put
and call options on stock indices listed on U.S. securities exchanges or
traded in the over-the-counter market. The International Equity Fund may also
purchase and write put and call options on stock indices listed on foreign
securities exchanges. A stock index fluctuates with changes in the market
values of the stocks included in the index.
Options on stock indices are similar to options on stock except
that (a) the expiration cycles of stock index options are generally monthly,
while those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make
delivery of a stock at a specified price, an option on a stock index gives the
holder the right to receive a cash "exercise settlement amount" equal to (i)
the amount, if any, by which the fixed exercise price of the option exceeds
(in the case of a put) or is less than (in the case of a call) the closing
value of the underlying index on the date of exercise, multiplied by (ii) a
fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the stock index upon which the option is based being greater
than, in the case of a call, or less than, in the case of a put, the exercise
price of the option. The amount of cash received will be equal to such
difference between the
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closing price of the index and the exercise price of the option expressed in
dollars times a specified multiple. The writer of the option is obligated, in
return for the premium received, to make delivery of this amount. The writer
may offset its position in stock index options prior to expiration by entering
into a closing transaction on an exchange or it may let the option expire
unexercised.
Convertible Securities
In general, the market value of a convertible security is the
higher of its "investment value" (i.e., its value as a fixed-income security)
or its "conversion value" (i.e., the value of the underlying shares of common
stock if the security is converted). As a fixed-income security, the market
value of a convertible security generally increases when interest rates
decline and generally decreases when interest rates rise. However, the price
of a convertible security also is influenced by the market value of the
security's underlying common stock. Thus, the price of a convertible security
generally increases as the market value of the underlying stock increases, and
generally decreases as the market value of the underlying stock declines.
Warrants
Each Asset Allocation and Equity Fund may invest up to 5% of its
assets at the time of purchase in warrants and similar rights (other than
those that have been acquired in units or attached to other securities).
Warrants represent rights to purchase securities at a specified price valid
for a specified period of time. The prices of warrants do not necessarily
correlate with the prices of underlying securities.
Municipal and Related Obligations
To the extent consistent with its investment objective, the
Asset Allocation, Bond and Municipal Bond Funds may invest in Municipal
Obligations. There are, of course, variations in the quality of Municipal
Obligations, both within a particular classification and between
classifications, and the yields on Municipal Obligations depend in part on a
variety of factors, including general market conditions, the financial
condition of the issuer, general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating
of the issue. The ratings of Municipal Obligations by Rating Agencies
represent their opinions as to the quality of Municipal Obligations. It should
be emphasized, however, that ratings are general and are not absolute
standards of quality, and Municipal Obligations with the same maturity,
interest rate and rating may have different yields while Municipal Obligations
with the same maturity and interest rate with different ratings may have the
same yield. Subsequent to its purchase by a Fund, a Municipal Obligation may
cease to be rated or its rating may be reduced below the minimum rating
required for purchase by the Fund. The Investment Adviser may consider such an
event in determining whether the Fund should continue to hold the obligation.
-16-
<PAGE>
The payment of principal and interest on most Municipal
Obligations purchased by a Fund will depend upon the ability of the issuers to
meet their obligations. For the purpose of diversification under the 1940 Act,
the identification of the issuer of Municipal Obligations depends on the terms
and conditions of the security. When the assets and revenues of an agency,
authority, instrumentality or other political subdivision are separate from
those of the government creating the subdivision and the security is backed
only by the assets and revenues of the subdivision, such subdivision would be
deemed to be the sole issuer. Similarly, in the case of an industrial
development bond, if that bond is backed only by the assets and revenues of
the non-governmental user, then such non-governmental user would be deemed to
be the sole issuer. If, however, in either case, the creating government or
some other entity guarantees a security, such a guaranty would be considered a
separate security and will be treated as an issue of such government or other
entity.
An issuer's obligations under its Municipal Obligations are
subject to the provisions of bankruptcy, insolvency, and other laws affecting
the rights or remedies of creditors, such as the Federal Bankruptcy Code, and
any laws, that may be enacted by federal or state legislatures extending the
time for payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest or principal of its Municipal
Obligations may be materially adversely affected by litigation or other
conditions.
Certain Municipal Obligations are subject to redemption at a
date earlier than their stated maturity pursuant to call options, which may be
separated from the related Municipal Obligation and purchased and sold
separately.
Certain of the Municipal Obligations held by the Funds may be
insured at the time of issuance as to the timely payment of principal and
interest. The insurance policies will usually be obtained by the issuer of the
Municipal Obligations at the time of original issuance. There is, however, no
guarantee that the insurer will meet its obligations. In addition, such
insurance will not protect against market fluctuations caused by changes in
interest rates and other factors.
The Municipal Bond Funds will purchase tender option bonds only
when the Investment Adviser is satisfied that the custodial and tender option
arrangements, including the fee payment arrangements, will not adversely
affect the tax exempt status of the underlying Municipal Obligations and that
payment of any tender fees will not have the effect of creating taxable income
for the Fund. Based on the tender option bond agreement, that Fund expects to
be able to value the tender option bond at par; however, the value of the
instrument will be monitored by the Investment Adviser to assure that is
valued at fair value.
-17-
<PAGE>
From time to time proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income tax exemption
for interest on Municipal Obligations. For example, pursuant to federal tax
legislation passed in 1986 interest on certain private activity bonds must be
included in an investor's federal alternative minimum taxable income, and
corporate investors must include all tax-exempt interest in their federal
alternative minimum taxable income. The Trust cannot predict what legislation,
if any, may be proposed in Congress in the future as regards the federal
income tax status of interest on Municipal Obligations in general, or which
proposals, if any, might be enacted. Such proposals, if enacted, might
materially adversely affect the availability of Municipal Obligations for
investments by the Funds and their liquidity and value. In such event, the
Board of Trustees would re-evaluate the Funds' investment objectives and
policies and consider changes in their structure or possible dissolution.
Stand-By Commitments
The Asset Allocation, Bond, Municipal Bond and Money Market
Funds may acquire "stand-by commitments" with respect to Municipal Obligations
they hold. Under a stand-by commitment, a dealer agrees to purchase at such
Fund's option specified Municipal Obligations at a specified price. Stand-by
commitments may be exercisable at any time before the maturity of the
underlying Municipal Obligations and may be sold, transferred or assigned only
with the instruments involved.
Such Funds expect that stand-by commitments will generally be
available without the payment of any direct or indirect consideration.
However, if necessary or advisable, they may pay for a stand-by commitment
either separately in cash or by paying a higher price for Municipal
Obligations which are acquired subject to the commitment (thus reducing the
yield to maturity otherwise available for the same securities). Such Funds may
acquire a stand-by commitment unless immediately after the acquisition, with
respect to 75% of its assets not more than 5% of its total assets will be
invested in instruments subject to a demand feature, including stand-by
commitments, with the same institution.
Such Funds intend to enter into stand-by commitments only with
dealers, banks and broker-dealers which, in the Investment Adviser's opinion,
present minimal credit risks. The credit of these dealers, banks and
broker-dealers will be secured by the value of the underlying Municipal
Obligations that are subject to the commitment. Thus, the risk of loss in
connection with a "stand-by commitment" will not be qualitatively different
from the risk of loss faced by a person that is holding securities pending
settlement after having agreed to sell the securities in the ordinary course
of business.
Stand-by commitments will be acquired solely to facilitate
portfolio liquidity and not to exercise rights thereunder for trading
purposes. The acquisition of a stand-by commitment will not affect the
valuation or assumed maturity of
-18-
<PAGE>
the underlying Municipal Obligations which will continue to be valued in
accordance with the amortized cost method. The actual stand-by commitment will
be valued at zero in determining net asset value. Where a stated Fund pays
directly or indirectly for a stand-by commitment, its cost will be reflected
as an unrealized loss for the period during which the commitment is held by
the Fund and will be reflected in realized gain or loss when the commitment
is exercised or expires.
Derivative Securities
The Investment Adviser will evaluate the risks presented by the
derivative instruments purchased by the Funds and the Money Market Fund, and
will determine, in connection with its day-to-day management of the Funds and
the Money Market Fund, how they will be used in furtherance of the Funds' and
the Money Market Fund's investment objectives. It is possible, however, that
the Investment Adviser's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Funds and the
Money Market Fund will, because of the risks discussed above, incur loss as
a result of their investments in derivative instruments.
Additional Investment Limitations
In addition to the investment limitations disclosed in the
Prospectus, the Funds and the Money Market Fund are subject to the following
investment limitations which may not be changed without approval of the
holders of the majority of the outstanding shares of the affected Fund or the
Money Market Fund (as defined under "Description of Shares" below).
Each Fund and the Money Market Fund may not:
1. Purchase or sell real estate, except that each may purchase
securities of issuers which deal in real estate and may purchase securities
which are secured by interests in real estate.
2. Invest in commodities, except that as consistent with a
Fund's investment objective and policies: (a) each Fund and the Money Market
Fund, other than the Intermediate Bond Fund, may purchase and sell options,
forward contracts, futures contracts, including without limitation those
relating to indices, and options on futures contracts or indices; (b) each
Fund and the Money Market Fund may purchase publicly traded securities of
companies engaging in whole or in part in such activities; and (c) the
Intermediate Bond Fund will not purchase or sell commodity contracts, or
invest in oil, gas or mineral exploration or development programs, except that
it may, to the extent appropriate to its investment objective, purchase
publicly traded securities of companies engaging in whole or in part in such
activities and may enter into futures contracts and related options.
-19-
<PAGE>
3. Act as an underwriter of securities within the meaning of the
Securities Act of 1933 except insofar as it might be deemed to be an
underwriter upon the disposition of portfolio securities acquired within the
limitation on purchases of restricted securities and except to the extent that
the purchase of obligations directly from the issuer thereof in accordance
with its investment objective, policies and limitations may be deemed to be
underwriting.
In addition to the above fundamental limitations, the Funds and
the Money Market Fund are subject to the following non-fundamental
limitations, which may be changed without a shareholder vote:
Each Fund and the Money Market Fund may not:
1. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted under the 1940 Act.
2. Write or sell put options, call options, straddles, spreads,
or any combination thereof, except as consistent with a Fund's investment
objective and policies, for transactions in options on securities or indices
of securities, futures contracts and options on futures contracts and in
similar investments.
3. Purchase securities on margin, make short sales of securities
or maintain a short position, except that (a) this investment limitation shall
not apply to its transactions in futures contracts and related options and in
options on securities or indices of securities and similar instruments, and
(b) it may obtain short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities.
4. Purchase securities of companies for the purpose of
exercising control.
5. Invest more than 15% (10% for the Money Market Fund) of its
total assets in illiquid securities.
No Fund intends to purchase securities while its outstanding
borrowings (including reverse repurchase agreements) are in excess of 5% of
its assets. Securities held in escrow or separate accounts in connection with
its investment practices are not deemed to be pledging for purposes of this
limitation.
In order to permit the sale of the Money Market Fund's shares in
certain states, the Trust may make commitments with respect to the Fund more
restrictive than the investment policies and limitations described above and
in its Prospectus. Should the Trust determine that any such commitment is no
longer in the best interests of the Fund, it will revoke the commitment by
terminating sales of the Fund's shares in the state involved and, in the case
of investors in Texas, give notice of such action.
-20-
<PAGE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds are offered and sold on a continuous basis
by the Trust's distributor, BISYS Fund Services ("BISYS"), acting as agent.
An illustration of the computation of the public offering price
per Class A share of the Funds, based on the value of each Fund's total net
assets and total number of shares outstanding on June 30, 1996, is as follows:
-21-
<PAGE>
<TABLE>
<CAPTION>
TABLE
Managed Assets Managed Assets Mid-Cap Intrinsic Growth and International
Balanced Fund Growth Fund* Opportunity Fund Value Fund Value Fund Equity Fund
-------------- -------------- ---------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets................. $9,982,625 $1,000 $77,317,677 $19,491,165 $54,491,670 $1,452,943
---------- ------ ----------- ----------- ----------- ----------
Number of Shares
Outstanding................ 869,237 100 $ 4,614,561 1,499,891 3,833,626 125,578
========== ====== =========== =========== =========== ==========
Net Asset Value Per Share.. $ 11.49 $10.00 $ 16.76 13.00 $ 14.21 $ 11.57
---------- ------ ----------- ----------- ----------- ----------
Sales Charge, 5.00 percent
of offering price (5.26
percent of net asset value
per share)................. $ 0.60 $ 0.53 $ 0.88 $ 0.68 $ 0.75 $ 0.61
---------- ------ ----------- ----------- ----------- ----------
Offering Price to Public... $ 12.09 $10.53 $ $17.64 $ 13.68 $ 14.96 $ 12.18
========== ====== =========== =========== =========== ==========
<CAPTION>
Managed
Assets Small-Cap
Conservative Equity Income Growth Opportunity
Fund Fund Fund Fund
------------ ------------- ------ -----------
<S> <C> <C> <C> <C>
Net Assets................. $56,763,865 $5,097,730 $5,741,437 $1,421,675
----------- ---------- ---------- ----------
Number of Shares
Outstanding................ 3,819,804 398,282 442,055 108,325
=========== ========== ========== ==========
Net Asset Value Per Share $ 14.86 $ 12.80 $ 12.99 $ 13.12
----------- ---------- ---------- ----------
Sales Charge, 5.00 percent
of offering price (5.26
percent of net asset value
per share)................. $ 0.78 $ 0.67 $ 0.68 $ 0.69
----------- ---------- ---------- ----------
Offering Price to Public $ 15.64 $ 13.47 $ 13.67 $ 13.18
=========== ========== ========== ==========
<CAPTION>
Michigan Municipal International Municipal
Bond Fund Bond Fund Bond Fund Bond Fund
--------- ------------------ ------------- ---------
<S> <C> <C> <C> <C>
Net Assets................. $29,254,997 $19,777,098 $643,186 $7,149,023
----------- ----------- -------- ----------
Number of Shares
Outstanding................ 2,920,214 1,929,813 61,294 584,901
=========== =========== ======== ==========
Net Asset Value Per Share $ 10.02 $ 10.25 $ 10.49 $ 12.22
----------- ----------- -------- ----------
Sales Charge, 4.50 percent
of offering price (4.69
percent of net asset value
per share)................. $ 0.47 $ 0.48 $ 0.49 $ 0.57
----------- ----------- -------- ----------
Offering Price to Public $ 10.49 $ 10.73 $ 10.98 $ 12.79
=========== =========== ======== ==========
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
Equity Intermediate
Index Municipal Income Intermediate
Fund Bond Fund Fund Bond Fund
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net Assets........... $6,634,465 $17,339,106 $6,745,881 $11,229,615
---------- ----------- ---------- -----------
Number of Shares
Outstanding.......... 430,914 81,760 1,448,754 1,114,009
========== =========== ========== ===========
Net Asset Value Per Share $ 15.40 $ 11.97 $ 7.81 $ 10.08
---------- ----------- ---------- -----------
Sales Charge, 3.00 percent
of offering price (3.01
percent of net asset value
per share)........... $ 0.46 $ 0.36 $ 0.24 $ 0.30
---------- ----------- ---------- -----------
Offering Price to Public $ 15.86 $ 12.33 $ 8.05 $ 10.38
========== =========== ========== ===========
Short Bond
Fund
----------
<S> <C>
Net Assets........... $825,530
--------
Number of Shares
Outstanding 81,760
========
Net Asset Value Per Share $ 10.10
--------
Sales Charge, 1.00 percent
of offering price (1.01
percent of net asset value
per share)........... $ 0.10
--------
Offering Price to Public $ 10.20
========
<FN>
* Amounts disclosed are a hypothetical illustration of the computation of
the public offering price, based on the value of the Fund's total
assets equal to $1,000, total number of shares outstanding equal to 100
shares and net asset value equal to $10.00.
</TABLE>
Under the 1940 Act, the Trust may suspend the right of
redemption or postpone the date of payment for shares during any period when:
(a) trading on the New York Stock Exchange is restricted by applicable rules
and regulations of the SEC; (b) the Exchange is closed for other than
customary weekend and holiday closings; (c) the SEC has by order permitted
such suspension; or (d) an emergency exists as determined by the SEC. (The
Trust may also suspend or postpone the recordation of the transfer of shares
upon the occurrence of any of the foregoing conditions.)
In addition to the situations described in the Prospectus under
"Redemption of Shares," the Trust may redeem shares involuntarily to reimburse
the Funds for any loss sustained by reason of the failure of a shareholder to
make full payment for shares purchased by the shareholder or to collect any
charge relating to a transaction effected for the benefit of a shareholder
which is applicable to Fund shares as provided in the Prospectus from time to
time.
-23-
<PAGE>
The Trust normally redeems shares for cash. However, the
Trustees may determine that conditions exist making cash payments undesirable.
If they should so determine, redemption payments could be made in securities
valued at the value used in determining net asset value. There may be
brokerage and other costs incurred by the redeeming shareholder in selling
such securities. The Trust has elected to be covered by Rule 18f-1 under the
1940 Act, pursuant to which the Trust is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of net asset value during any 90-day
period for any one shareholder.
Total sales charges paid by shareholders of the Funds for the
fiscal years ended December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Managed Assets Conservative
Fund $ 79,374 * *
Managed Assets Balanced Fund $ 37,984 $286,056 N/A
Managed Assets Growth Fund N/A N/A N/A
Equity Income Fund $ 11,393 N/A N/A
Growth Fund $ 5,937 N/A N/A
Mid-Cap Opportunity Fund $122,061 $544,053 $1,266,118
Small-Cap Opportunity Fund $ 1,857 N/A N/A
Intrinsic Value Fund $ 17,964 $ 87,757 $ 249,653
Growth and Value Fund $ 92,788 $431,841 $ 735,713
Equity Index Fund N/A N/A N/A
International Equity Fund $ 13,659 $ 0 N/A
Intermediate Bond Fund $ 7,877 $ 41,775 $ 391,744
Bond Fund $ 30,433 $203,760 $1,215,391
Short Bond Fund $ 2,848 $ 0 N/A
Income Fund $ 7,948 * *
International Bond Fund $ 1,551 N/A N/A
Municipal Bond Fund $ 8,055 * *
Intermediate Municipal Bond
Fund $ 15,797 * *
Michigan Municipal Bond Fund $105,322 $151,042 N/A
<FN>
- ----------
* Not available
</TABLE>
DESCRIPTION OF SHARES
The Trust is an unincorporated business trust organized under
Massachusetts law on April 21, 1987. The Trust's Declaration of Trust
authorizes the Board of Trustees to divide shares into two or more series,
each series relating to a separate portfolio of investments, and divide the
shares of any series into two or more classes. The number of shares of each
series and/or of a class within each series shall be unlimited. The Trust does
not intend to issue share certificates.
In the event of a liquidation or dissolution of the Trust or an
individual fund, shareholders of a particular fund would be entitled to
receive the assets available for distribution belonging to such fund. If there
are any assets, income, earnings, proceeds or payments, which are not
readily identifiable as belonging to any particular fund, the
-24-
<PAGE>
Trustees shall allocate them among any one or more of the funds as they, in
their sole discretion, deem fair and equitable.
Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Trust shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each fund affected by the matter. A fund is affected by
a matter unless it is clear that the interests of each fund in the matter are
substantially identical or that the matter does not affect any interest of the
fund. Under the Rule, the approval of an investment advisory agreement or any
change in a fundamental investment policy would be effectively acted upon with
respect to a fund only if approved by a majority of the outstanding shares of
such fund. However, the Rule also provides that the ratification of the
appointment of independent accountants, the approval of principal underwriting
contracts and the election of Trustees may be effectively acted upon by
shareholders of the Trust voting together in the aggregate without regard to
particular funds.
When used in the Prospectus or in this Additional Statement, a
"majority" of shareholders means, with respect to the approval of an
investment advisory agreement, a distribution plan or a change in a
fundamental investment policy, the vote of the lesser of (1) 67% of the shares
of the Trust, or the applicable fund, present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by proxy, or
(2) more than 50% of the outstanding shares of the Trust or the applicable
fund.
As of October 31, 1996, the name and address, number and
percentage of class ownership of each person who owned of record 5% or more of
any class of shares is set forth below.
-25-
<PAGE>
NUMBER OF PERCENT OF
BOND FUND -- CLASS I SHARES OUT. SHARES
- -------------------- --------- -----------
HENRY FORD INVESTMENT MANAGEMENT 9,434,657.456 14.08%
ACCOUNT
800 FISHER BUILDING
DETROIT, MI 48202
EAGLE & CO 13,222,261.582 19.73%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
BOND FUND -- CLASS B
- --------------------
DONALDSON, LUFKIN & JENRETTE 20,490.876 78.29%
SECURITIES CORPORATION
P.O. BOX 2052
JERSEY CITY, NJ 07303-9998
INTERMEDIATE BOND FUND -- CLASS I
- ---------------------------------
R L POLK 1,872,801.417 4.96%
1156 BREWERY PARK
DETROIT, MI 48202
INTERMEDIATE BOND FUND -- CLASS A
- ---------------------------------
FCNBD CORPORATION TTEE 121,962.666 9.83%
FBO HORNE BLD SPECIALTIES, INC
401K & PEP U/A DTD 01/01/68
218 E. WESLEY SUITE 2030
WHEATON, IL 60187
INTERMEDIATE BOND FUND -- CLASS B
- ---------------------------------
DONALDSON, LUFKIN & JENRETTE 4,380.979 100.00%
SECURITIES CORPORATION
P.O. BOX 2082
JERSEY CITY, NJ 07303-9998
SHORT BOND FUND -- CLASS I
- --------------------------
THE WELLNESS PLAN 2,342,177.847 13.76%
6500 JOHN C. LODGE
DETROIT, MI 48202
THE WELLNESS PLAN SELF-INS FUND 1,933,756.417 11.36%
6500 JOHN C. LODGE
DETROIT, MI 48202
KRESGE FOUNDATION 4,045,110.690 23.77%
3215 W. BIG BEAVER
P.O. BOX 3151
TROY, MI 48007-3151
SHORT BOND FUND -- CLASS A
- --------------------------
DONALDSON, LUFKIN & JENRETTE 22,270.661 27.49%
SECURITIES CORPORATION
P.O. BOX 2062
JERSEY CITY, NJ 07303-9998
BENJAMIN J. SOLEAU 5,105.618 6.31%
548 ADAMS
PLYMOUTH, MI 48170
RICHARD A. POEL 5,860.919 7.24%
10 LAKEVIEW DRIVE
BEALE AFB, CA 95903
RICHARD L. FOERSTERLING 18,061.630 22.30%
1255 PENNIMAN
PLYMOUTH, MI 48170
SHORT BOND FUND -- CLASS B
- --------------------------
DONALDSON, LUFKIN & JENRETTE 1,996.196 100.00%
SECURITIES CORPORATION
P.O. BOX 2052
JERSEY CITY, NJ 07303-9998
26
<PAGE>
MUNICIPAL BOND FUND -- CLASS I
- ------------------------------
CHARLES J. LEFLER REVOCABLE 531,419.678 1.98%
TRUST
39740 WALKER COURT
NORTHVILLE, MI 48167
CONSUMER POWER 1,992,968.346 7.44%
212 W. MICHIGAN AVENUE
JACKSON, MI 49201
EAGLE & CO 18,836,015.770 70.28%
AMERICAN NATIONAL BANK
MUTIAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
MUNICIPAL BOND FUND -- CLASS A
- ------------------------------
DONALDSON, LUFKIN & JENRETTE 820,883.997 34.25%
SECURITIES CORPORATION
ONE PERSHING PLAZA
JERSEY CITY NJ 07303-9998
MUNICIPAL BOND FUND -- CLASS B
- ------------------------------
DONALDSON, LUFKIN & JENRETTE 27,024.704 59.33%
SECURITIES CORPORATION
ONE PERSHING PLAZA
JERSEY CITY NJ 07303
MICHIGAN MUNICIPAL BOND FUND --
CLASS I
- -------------------------------
CAROL LEFLER REVOCABLE 209,878.635 5.63%
TRUST
39740 WALKER COURT
NORTHVILLE, MI 48167
MICHIGAN MUNICIPAL BOND FUND --
CLASS A
- -------------------------------
JAMES J DONAHEY 102,464.203 5.65%
421 HIGHLAND
ANN ARBOR, MI 48104
MICHIGAN MUNICIPAL BOND FUND --
CLASS B
- -------------------------------
BISYS FUND SERVICES OHIO, INC. 2.000 100.00%
ATTN: FUND ADMINISTRATION
3435 STELZER RD
COLUMBUS, OH 43219-8001
INTERNATIONAL BOND FUND -- CLASS I
- ----------------------------------
EMPLOYEES RETIREMENT PLAN OF 3,052,417.101 63.85%
NBD BANK
TRUST ADMINISTRATION
611 WOODWARD AVENUE
DETROIT, MI 48232
EAGLE & CO 1,704,264.289 35.30%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
INTERNATIONAL BOND FUND -- CLASS A
- ----------------------------------
FIRST CHICAGO TTEE 9,513.726 7.31%
HOPE PUBLISHING COMPANY
380 S. MAIN PL
CAROL STREAM, IL 60188-2448
FIRST CHICAGO-DISCRETIONARY 8,106.009 6.23%
WHEATON OFFICE
ATTN DOUG BRUNKOW
214 E. WESLEY ST STE 2030
WHEATON, IL 60187-5323
27
<PAGE>
INTERNATIONAL BOND FUND -- CLASS B
- ----------------------------------
DONALDSON, LUFKIN & JENRETTE 607.804 53.66%
SECURITIES CORPORATION
P.O. BOX 2052
JERSEY CITY, NH 07303-9998
CONCORD HOLDING CORPORATION INC 426.289 41.34%
ATTN: CORPORATE FINANCE
3435 STELZER RD
COLUMBUS, OH 43219-6004
INCOME FUND -- CLASS I
- ----------------------
EAGLE & CO 25,494,498.128 97.25%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
INCOME FUND -- CLASS A
- ----------------------
FIRST CHICAGO AS TRUSTEE
FBO SOFT SHEEN PRODUCTS INC
RETIREMENT AND INCENTIVE SAVINGS 79,562.728 6.95%
TRUST U/A DTD 08/01/98
107 N CROSS SUITE 2092
WHEATON, IL 60187
FIRST CHICAGO AS TTE
MCDONOUGH ASSOC
218 E WESLEY ST. SUITE 2030 86,504.638 7.56%
WHEATON, IL 60187-4054
CORELINK FINANCIAL, INC.
P.O. Box 4054
CONCORD, CA 94524-4054 62,622.443 5.47%
FIRST CHICAGO TTEE
HOPE PUBLISHING COMPANY
380 S. MAIN PL 66,414.209 5.80%
CAROL STREAM, IL 60168-2448
INCOME FUND -- CLASS B
- ----------------------
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION, INC.
P.O. BOX 2052 6,291.214 13.36%
JERSEY CITY, NJ 07399
CORELINK FINANCIAL SERVICES
FBO 28052852
P.O. BOX 4064 15,302.676 24.65%
CONCORD, CA 94524-4054
INTERMEDIATE MUNICIPAL BOND FUND --
CLASS I
- -----------------------------------
EAGLE & CO 30,262,832.084 98.56%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
INTERMEDIATE MUNICIPAL BOND FUND --
CLASS A
- -----------------------------------
LEONARD NIEDER & MARY NIEDER JT TEN
8405 N. KILBOURN AVE
LINCOLNWOOD, IL 60646-3434 82,218.286 5.08%
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION, INC.
P.O. BOX 2052 185,233.229 11.44%
JERSEY CITY, NJ 07399
INTERMEDIATE MUNICIPAL BOND FUND --
CLASS B
- -----------------------------------
DONALDSON LUFKIN & JENRETTE 27,220.214 58.33%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303
28
<PAGE>
GROWTH AND VALUE FUND -- CLASS I
- --------------------------------
SAVINGS AND INVESTMENT PLAN 4,574,976.579 9.58%
TRUST ADMINISTRATION
611 WOODWARD AVENUE
DETROIT, MI 48232
GROWTH AND VALUE FUND -- CLASS B
- --------------------------------
DONALDSON LUFKIN & JENRETTE 2,301.226 99.91%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
MID-CAP OPPORTUNITY FUND -- CLASS I
- -----------------------------------
NBD BANCORP, INC. EMPLOYEES' 4,194,111.790 11.69%
SAVINGS AND INVESTMENT PLAN
TRUST ADMINISTRATION
611 WOODWARD AVENUE
DETROIT, MI 48232
EMPLOYEES RETIREMENT PLAN OF 3,572,603.264 9.95%
NBD BANK
TRUST ADMINISTRATION
611 WOODWARD AVENUE
DETROIT, MI 48232
MID-CAP OPPORTUNITY FUND -- CLASS A
- -----------------------------------
MAC AND COMPANY 391,013.626 8.30%
MUTUAL FUNDS OPERATIONS
P.O. BOX 3198
PITTSBURGH, PA 15230
MID-CAP OPPORTUNITY FUND -- CLASS B
- -----------------------------------
DONALDSON LUFKIN & JENRETTE 488.261 99.59%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
SMALL-CAP OPPORTUNITY FUND -- CLASS I
- -------------------------------------
EAGLE & CO 7,635,901.127 94.08%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
SMALL-CAP OPPORTUNITY FUND -- CLASS A
- -------------------------------------
ANTHONY C. KISER 18,995.428 6.48%
630 5th AVE
NEW YORK, NY 10111
SMALL-CAP OPPORTUNITY FUND -- CLASS B
- -------------------------------------
DONALDSON LUFKIN & JENRETTE 2,438.797 57.89%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
GEORGE F. WOLL V & 1,160.093 27.54%
GEORGE F. WOLL JR JWTROS
15510 CRESTVIEW LN
GRANADA HILLS, CA 91344-3110
29
<PAGE>
INTRINSIC VALUE FUND -- CLASS I
- -------------------------------
EMPLOYEES RETIREMENT PLAN OF 5,407,175.280 22.40%
NBD BANK
TRUST ADMINISTRATION
611 WOODDWARD AVENUE
DETROIT, MI 48232
INTRINSIC VALUE FUND -- CLASS B
- -------------------------------
DONALDSON LUFKIN & JENRETTE 6,554.466 99.97%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
GROWTH FUND -- CLASS I
- ----------------------
EMPLOYEES RETIREMENT PLAN OF 4,288,252.530 10.08%
NBD BANK
TRUST ADMINISTRATION
611 WOODDWARD AVENUE
DETROIT, MI 48232
EAGLE & CO 22,771.523.512 53.53%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3802
GROWTH FUND -- CLASS B
- ----------------------
CORELINK FINANCIAL SERVICES 37,605.586 48.05%
FBO 26052852
P.O. BOX 4064
CONCORD, CA 94524-4064
DONALDSON LUFKIN & JENRETTE 12,004.749 15.26%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
MANAGED ASSETS CONSERVATIVE FUND --
CLASS I
- -----------------------------------
EAGLE & CO 82,028.030 100.00%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
MANAGED ASSETS CONSERVATIVE FUND --
CLASS B
- -----------------------------------
DONALDSON LUFKIN & JENRETTE 35,513.531 10.18%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
MANAGED ASSETS BALANCED FUND --
CLASS I
- -------------------------------
NBD BANCORP, INC. EMPLOYEES' 2,185,164.165 24.47%
SAVINGS AND INVESTMENT PLAN
TRUST ADMINISTRATION
611 WOODWARD AVENUE
DETROIT, MI 48232
DICKINSON/WRIGHT TARGET BENEFIT 1,079,372.393 12.09%
500 WOODWARD AVENUE, SUITE 4000
DETROIT, MI 48226
ALBERT KAHN AND ASSOCIATES 429,707.968 4.81%
7430 SECOND AVENUE
DETROIT, MI 48202
KELLY RETIREMENT PLUS TRUST FUND 891,670.812 9.98%
999 WEST BIG BEAVER ROAD
TROY, MI 48084
MANAGED ASSETS BALANCED FUND --
CLASS A
- -------------------------------
CORELINK FINANCIAL, INC 113,844.888 6.02%
P.O. BOX 4054
CONCORD, CA 94524-4054
30<PAGE>
FIRST CHICAGO NBD TTEE 106,962.619 5.66%
WKM ASSOC., INC. EMPLOYEE 401K
107 N. CROSS ST. STE 2092
WHEATON, IL 60187-5317
MANAGED ASSETS BALANCED FUND --
CLASS B
- -------------------------------
DONALDSON LUFKIN & JENRETTE 11,467.524 11.98%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
EQUITY INDEX FUND -- CLASS I
- ----------------------------
WHIRLPOOL 14,545,409.195 28.63%
2000 M-83 NORTH
BENTON HARBOR, MI 49022
OAKLAND COUNTY RETIREMENT SYSTEM 3,311,194.013 6.52%
1200 N. TELEGRAPH
PONTIAC, MI 48053
CONSUMER POWER UNION WELFARE BENEFIT 4,753,008.719 9.36%
212 W. Michigan Avenue
JACKSON, MI 49201
MC GREGOR FUND 2,480,000.895 4.88%
333 WEST FORT STREET
DETROIT, MI 48226
EQUITY INDEX FUND -- CLASS A
- ----------------------------
FCNBD CORPORATION TTEE 108,535.562 14.84%
FBO HORNE BLD SPECIALTIES INC
401K & PSP U/A DTD 01/-1/68
218 E WESLEY SUITE 2030
WHEATON, IL 60187
FCNBD CORPORATION TEE 55,559.054 7.60%
AUGUST NEWSPRINT COMPANY 401(K)
SAVINGS PLAN SU/A DTD 04/01/94
107 N. CROSS SUITE 2092
WHEATON, IL 60187
EQUITY INDEX FUND -- CLASS B
- ----------------------------
DONALDSON LUFKIN & JENRETTE 2,281.522 99.91%
SECURITIES CORPORATION, INC.
P.O. BOX 2052
JERSEY CITY, NJ 07303-2052
INTERNATIONAL EQUITY FUND --
CLASS I
- ----------------------------
EMPLOYEES RETIREMENT PLAN OF 6,183,097.078 19.80%
NBD BANK
TRUST ADMINISTRATION
611 WOODWARD AVENUE
DETROIT, MI 48232
EAGLE & CO 12,269,697.654 39.30%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
INTERNATIONAL EQUITY FUND --
CLASS A
- ----------------------------
CORELINK FINANCIAL, INC 48,145.621 6.62%
P.O. BOX 4054
CONCORD, CA 94524-4054
INTERNATIONAL EQUITY FUND --
CLASS B
- ----------------------------
CORELINK FINANCIAL, INC 11,046.002 11.31%
FBO 28052652
P.O. BOX 4054
CONCORD, CA 94524-4054
31
<PAGE>
EQUITY INCOME FUND -- CLASS I
- -----------------------------
EAGLE & CO 22,671,912.943 97.22%
AMERICAN NATIONAL BANK
MUTUAL FUND PROCESSING UNIT
1 N LA SALLE ST FL 3
CHICAGO, IL 60602-3902
EQUITY INCOME FUND -- CLASS B
- -----------------------------
CORELINK FINANCIAL, INC 20,230.255 14.68%
FBO 28052652
P.O. BOX 4054
CONCORD, CA 94524-4054
As of October 31, 1996, Trussal & Co., a nominee of NBD's
Trust Division, 900 Tower Drive, 10th Floor, Troy, Michigan 48098, held of
record 81.57%, 43.52%, 87.35%, 91.74%, 91.15%, 98.01%, 57.06%, 95.55%,
76.65%, 98.82%, 63.08%, 26.44% and 67.30%, respectively, of the outstanding
shares of the Managed Assets Balanced, Growth, Mid-Cap Opportunity,
Intrinsic Value, Growth and Value, Equity Index, International Equity,
Intermediate Bond, Bond, Short Bond, International Bond, Municipal Bond and
Michigan Municipal Bond Funds, respectively. The Trustees and officers of the
Trust, as a Group, owned less than 1% of the outstanding shares of each Fund.
When issued for payment as described in the Funds' Prospectus
and this Additional Statement, shares of the Funds will be fully paid and
non-assessable by the Trust.
The Declaration of Trust provides that the Trustees, officers,
employees and agents of the Trust will not be liable to the Trust or to a
shareholder, nor will any such person be liable to any third party in
connection with the affairs of the Trust, except as such liability may arise
from his or its own bad faith, willful misfeasance, gross negligence, or
reckless disregard of duties. It also provides that all third parties shall
look solely to the Trust property for satisfaction of claims arising in
connection with the affairs of the Trust. With the exceptions stated, the
Declaration of Trust provides that a Trustee, officer, employee or agent is
entitled to be indemnified against all liability in connection with the
affairs of the Trust.
32
<PAGE>
ADDITIONAL INFORMATION CONCERNING TAXES
Taxes In General
The following summarizes certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the Prospectus. No attempt is made to present a detailed explanation of the
tax treatment of the Funds or their shareholders, and the discussion here and
in the Prospectus is not intended as a substitute for careful tax planning and
is based on tax laws and regulations which are in effect on the date hereof;
such laws and regulations may be changed by legislative or administrative
action. Investors are advised to consult their tax advisers with specific
reference to their own tax situations.
Each Fund is treated as a separate corporate entity under the
Code and intends to qualify as a regulated investment company. As a regulated
investment company, each Fund is exempt from Federal income tax on its net
investment income and realized capital gains which it distributes to
shareholders, provided that it distributes an amount equal to at least the sum
of (a) 90% of its investment company taxable income (net investment income and
the excess of net short-term capital gain over net long-term capital loss, if
any, for the year) and (b) 90% of its net tax-exempt interest income, if any,
for the year (the "Distribution Requirement") and satisfies certain other
requirements of the Code that are described below. Distributions of investment
company taxable income and net tax-exempt interest income made during taxable
year or, under specified circumstances, within twelve months after the close
of the taxable year will satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement,
each Fund must satisfy certain requirements with respect to the source of its
income for a taxable year. At least 90% of the gross income of each Fund must
be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stocks, securities or
foreign currencies, and other income (including but not limited to gains from
options, futures, or forward contracts) derived with respect to the Fund's
business of investing in such stock, securities or currencies. The Treasury
Department may by regulation exclude from qualifying income foreign currency
gains which are not directly related to the Fund's principal business of
investing in stock or securities, or options and futures with respect to stock
or securities. Any income derived by a Fund from a partnership or trust is
treated as derived with respect to the Fund's business of investing in stock,
securities or currencies only to the extent that such income is attributable
to items of income which would have been qualifying income if realized by the
Fund in the same manner as by the partnership or trust.
Another requirement for qualification as a regulated investment
company under the Code is that less than 30% of a Fund's gross income for a
taxable year must be derived from gains realized on the sale or other
disposition of the following investments held for less than three months: (1)
stock and securities (as defined in Section 2(a)(36) of the 1940 Act);
-33-
<PAGE>
(2) options, futures and forward contracts other than those on foreign
currencies; and (3) foreign currencies (and options, futures and forward
contracts on foreign currencies) that are not directly related to a Fund's
principal business of investing in stock and securities (and options and
futures with respect to stocks and securities). Interest (including original
issue discount and accrued market discount) received by a Fund upon maturity
or disposition of a security held for less than three months will not be
treated as gross income derived from the sale or other disposition of such
security within the meaning of this requirement. However, any other income
which is attributable to realized market appreciation will be treated as gross
income from the sale or other disposition of securities for this purpose.
Each Fund will designate any distribution of long term capital
gains as a capital gain dividend in a written notice mailed to shareholders
within 60 days after the close of the Fund's taxable year. Upon the sale or
exchange of Fund shares, if a shareholder has not held such shares for at
least six months, any loss on the sale or exchange of those shares will be
treated as long term capital loss to the extent of the capital gain dividends
received with respect to the shares.
Ordinary income of individuals is taxable at a maximum marginal
rate of 39.6%; however, because of limitations on itemized deductions
otherwise allowable and the phase-out of personal exemptions, the maximum
effective marginal rate of tax for some taxpayers may be higher. An
individual's long term capital gains are taxable at a maximum marginal rate of
28%. For corporations, long term capital gains and ordinary income are both
taxable at a maximum marginal rate of 35%.
A 4% nondeductible excise tax is imposed on regulated
investment companies that fail to currently distribute an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). Each Fund intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year
to avoid liability for this excise tax.
If for any taxable year a Fund does not qualify for the special
federal income tax treatment afforded regulated investment companies, all of
its taxable income will be subject to federal income tax at regular corporate
rates (without any deduction for distributions to its shareholders). In such
event, dividend distributions (whether or not derived from interest on
Municipal Obligations) would be taxable as ordinary income to shareholders to
the extent of the Fund's current and accumulated earnings and profits and
would be eligible for the dividends received deduction for corporations.
Each Fund may be required in certain cases to withhold and
remit to the U.S. Treasury 31% of taxable dividends or gross proceeds realized
upon sale paid to shareholders who have failed to provide a correct tax
identification number in the manner required, who are subject to withholding
by the Internal Revenue Service for failure properly to include on their
return payments of taxable interest or dividends, or who have failed to
certify to the
-34-
<PAGE>
Fund that they are not subject to backup withholding when required to do so or
that they are "exempt recipients."
Depending upon the extent of the Funds' activities in states
and localities in which their offices are maintained, in which their agents or
independent contractors are located or in which they are otherwise deemed to
be conducting business, the Funds may be subject to the tax laws of such
states or localities. In addition, in those states and localities which have
income tax laws, the treatment of the Funds and their shareholders under such
laws may differ from their treatment under federal income tax laws.
As described above and in the Prospectus, the Municipal Bond
Funds are designed to provide investors with current tax-exempt interest
income. The Funds are not intended to constitute a balanced investment program
and are not designed for investors seeking capital appreciation or maximum
tax-exempt income irrespective of fluctuations in principal. Shares of the
Funds would not be suitable for tax-exempt institutions and may not be
suitable for retirement plans qualified under Section 401 of the Code, H.R. 10
plans and IRAs since such plans and accounts are generally tax-exempt and,
therefore, would not only fail to gain any additional benefit from the Fund's
dividends being tax-exempt, but such dividends would be ultimately taxable to
the beneficiaries when distributed to them. In addition, the Fund may not be
appropriate investments for entities which are "substantial users" of
facilities financed by private activity bonds or "related persons" thereof.
"Substantial user" is defined under U.S. Treasury Regulations to include a
non-exempt person who regularly uses a part of such facilities in his trade or
business and (a) whose gross revenues derived with respect to the facilities
financed by the issuance of bonds are more than 5% of the total revenues
derived by all users of such facilities, (b) who occupies more than 5% of the
usable area of such facilities, or (c) for whom such facilities or a part
thereof were specifically constructed, reconstructed or acquired. "Related
persons" include certain related natural persons, affiliated corporations, a
partnership and its partners and an S corporation and its shareholders.
Each Municipal Bond Fund's policy is to pay each year as
federal exempt-interest dividends substantially all of its Municipal
Obligations interest income net of certain deductions. In order for the Fund
to pay exempt-interest dividends with respect to any taxable year, at the
close of each quarter of its taxable year at least 50% of the aggregate value
of the Fund's assets must consist of exempt-interest obligations. After the
close of its taxable year, the Fund will notify its shareholders of the
portion of the dividends paid by it which constitutes an exempt-interest
dividend with respect to such taxable year. However, the aggregate amount of
dividends so designated by the Fund cannot exceed the excess of the amount of
interest exempt from tax under Section 103 of the Code received by the Fund
during the taxable year over any amounts disallowed as deductions under
Sections 265 and 171(a)(2) of the Code. The percentage of total dividends paid
by the Fund with respect to any taxable year which qualify as federal
exempt-interest dividends will be the same for all shareholders receiving
dividends for such year.
-35-
<PAGE>
A percentage of the interest on indebtedness incurred by a
shareholder to purchase or carry a Municipal Bond Fund's shares, equal to the
percentage of the total non-capital gain dividends distributed during the
shareholder's taxable year that are exempt-interest dividends, is not
deductible for federal income tax purposes.
MANAGEMENT
Trustees and Officers of the Trust
The Trustees and executive officers of the Trust, their ages
and their principal occupations for the last five years are set forth below.
Each Trustee has an address at Pegasus Funds, c/o NBD Bank, 900 Tower Drive,
Troy, Michigan 48098. Each Trustee also serves as a trustee of Pegasus
Variable Annuity Fund, a registered investment Company advised by the
Investment Adviser.
Will M. Caldwell, Trustee
Retired; Executive Vice President, Chief Financial Officer and Director, Ford
Motor Company (1979-1985); Director, First Nationwide Bank (1986-1991);
Director, Air Products & Chemicals, Inc. (since 1985); Director, Zurich
Holding Company of America (since 1990); Director, The Batts Group, Ltd.
(since 1986); Trustee and Vice Chairman, Detroit Medical Center (1986-1991);
Trustee Emeritus and Chairman of the Pension Investment Sub-Committee,
Detroit Medical Center (since 1991); Trustee, Pegasus Variable Annuity Fund.
He is 70 years old.
Nicholas J. De Grazia, Trustee
Consultant, Lionel L.L.C. (since 1995); President, Chief Operating Officer and
Director, Lionel Trains, Inc. (1990-1995); Vice President-Finance and
Treasurer, University of Detroit (1981-1990); President (1981-1990) and
Director (1986-1995), Polymer Technologies, Inc.; President, Florence
Development Company (1987-1990); Chairman (since 1994) and Director
(1992-1995), Central Macomb County Chamber of Commerce; Vice Chairman,
Michigan Higher Education Facilities Authority (since 1991); Trustee, Pegasus
Variable Annuity Fund. He is 53 years old.
John P. Gould, Trustee, Chairman of the Board
Steven G. Rothmeier Professor (since January, 1996); Distinguished Service
Professor of Economics of the University of Chicago Graduate School of
Business (since 1984); Dean of the University of Chicago Graduate School of
Business (1983-1993); Member of Economic Club of Chicago and Commercial Club
of Chicago; Director of Harbor Capital Advisors and Dimensional Fund Advisors;
Trustee, Pegasus Variable Annuity Fund. He is 57 years old.
-36-
<PAGE>
Marilyn McCoy, Trustee
Vice President of Administration and Planning of Northwestern University
(since 1985); Director of Planning and Policy Development for the University
of Colorado (1981-1985); Member of the Board of Directors of Evanston
Hospital, Chicago Metropolitan YMCA, Chicago Network and United Charities;
member of the Chicago Economics Club; Trustee, Pegasus Variable Annuity Fund.
She is 48 years old.
Julius L. Pallone, Trustee
President, J.L. Pallone Associates, Consultants (since 1994); Chairman of the
Board (1974-1993), Maccabees Life Insurance Company; President and Chief
Executive Officer, Royal Financial Services (1991-1993); Director, American
Council of Life Insurance of Washington, D.C. (life insurance industry
association) (1988-1993); Director, Crowley, Milner and Company (department
store) (since 1988); Trustee, Lawrence Institute of Technology (since 1982);
Director, Detroit Symphony Orchestra (since 1985); Director, Oakland Commerce
Bank (since 1984) and Michigan Opera Theater (since 1981); Trustee, Pegasus
Variable Annuity Fund. He is 65 years old.
*Donald G. Sutherland, Trustee and President
Partner of the law firm Ice, Miller, Donadio & Ryan, Indianapolis, Indiana;
Trustee, Pegasus Variable Annuity Fund. He is 67 years old.
Donald L. Tuttle, Trustee
Vice President (since 1995), Senior Vice President (1992-1995), Association
for Investment Management and Research; Senior Professor of Finance, Indiana
University (1970-1991); Vice President, Trust & Investment Advisers, Inc.
(1990-1991); Director, Federal Home Loan Bank of Indianapolis (1981-1985);
Trustee, Pegasus Variable Annuity Fund. He is 61 years old.
Mark A. Dillon, Vice President
An employee of the Distributor. He is 33 years old and his address is 3435
Seltzer Road, Columbus, Ohio 43219-3035.
Alaina Metz, Vice President
An employee of the Distributor since June 1995. Prior to joining the
Distributor Ms. Metz was a supervisor at Alliance Capital Management L.P. in
New York. She is 29 years old and her address is 3435 Seltzer Road, Columbus,
Ohio 43219-3035.
-37-
<PAGE>
D'Ray Moore, Treasurer
An employee of the Distributor. She is 37 years old and her address is 3435
Seltzer Road, Columbus, Ohio 43219-3035.
W. Bruce McConnel, III, Secretary
Partner of the law firm Drinker Biddle & Reath, Philadelphia, Pennsylvania. He
is 53 years old, and is address is 1345 Chestnut Street, Philadelphia,
Pennsylvania 19107
- ---------------
* Denotes Interested Trustee
For so long as the plan described in the section captioned
"Distribution and Shareholder Services Plans" remains in effect, the Trustees
of the Trust who are not "interested persons" of the Trust, as defined in the
1940 Act, will be selected and nominated by the Trustees who are not
"interested persons" of the Trust.
Each Trustee receives from the Trust and Pegasus Variable
Annuity Fund a total annual fee of $17,000 and a fee of $2,000 for each Board
of Trustees meeting attended. The Chairman is entitled to additional
compensation of $4,250 per year for his services to the Trusts in that
capacity. These fees are allocated among the investment portfolios of the
Trust and Pegasus 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.
The following table summarizes the compensation for each of the
Trustees for the Trust's fiscal year ended December 31, 1995:
-38-
<PAGE>
<TABLE>
<CAPTION>
(3)
Total
Compensation
(2) From Fund and
Aggregate Fund Complex**
(1) Compensation Paid to Board
Name of Board Member from Fund* Member
- ------------------------------ ------------ ---------------
<S> <C> <C>
Will M. Caldwell, Trustee $21,250 $21,250(2)+
Nicholas J. DeGrazia, Trustee $21,250 $21,250(2)+
John P. Gould, Trustee *** $30,000(4)+
Earl I. Heenan, Jr.,++ $24,437.50 $24,437.50(2)+
Chairman and President
Marilyn McCoy, Trustee *** $30,000(4)+
Julius L. Pallone, Trustee ++ $21,250 $21,250(2)+
Donald G. Sutherland, ++ $21,250 $21,250(2)+
Trustee
Donald L. Tuttle, Trustee ++ $21,250 $21,250(2)+
Eugene C. Yehle, Trustee $21,250 $21,250(2)+
and Treasurer
<FN>
- ---------
* Amount does not include reimbursed expenses for attending Board meetings.
** The Fund Complex consists of the Trust, Pegasus Variable Annuity Fund,
Prairie Funds, Prairie Institutional Funds, Prairie Intermediate Bond Fund and
Prairie Municipal Bond Fund, Inc.
*** Mr. Gould and Ms. McCoy were not trustees of the Trust during the fiscal
year ended December 31, 1995.
+ Total number of investment companies in the Fund Complex from which the
Trustee receives compensation for serving as a trustee.
++ Deferred compensation in the amounts of $24,437.50, $21,250, $21,250, and
$21,250 accrued during Pegasus Funds' fiscal year ended December 31, 1995 for
Messrs. Heenan, Pallone, Sutherland and Tuttle, respectively.
</TABLE>
Investment Adviser
Information about the Investment Adviser and its duties and
compensation as investment adviser is contained in the Prospectus. In
addition, the Investment Adviser is entitled to 4/10ths of the gross income
earned by a Fund on each loan of securities (excluding capital gains and
losses, if any). The Investment Adviser has informed the Trust's Board of
Trustees that since the inception of the Trust neither it nor any of its
affiliates has engaged in and received compensation for any transactions
involving lending of portfolio securities. Furthermore, neither the Investment
Adviser nor any of its affiliates will do so unless permitted by the SEC or
SEC staff.
-39-
<PAGE>
The Investment Adviser's own investment portfolios may include
bank certificates of deposit, bankers' acceptances, corporate debt
obligations, equity securities and other investments any of which may also be
purchased by the Trust. Joint purchase of investments for the Trust and for
the Investment Adviser's own investment portfolios will not be made. The
Investment Adviser's and its affiliates' respective commercial banking
departments may have deposit, loan and other commercial banking relationships
with issuers of securities purchased by the Trust, including outstanding loans
to such issuers which may be repaid in whole or in part with the proceeds of
securities purchased by the Trust.
For the fiscal years ended December 31, 1995, 1994 and 1993, the
Trust paid NBD fees for advisory and administrative services under the
previous investment advisory agreement with NBD on behalf of each Fund and the
Money Market Fund as follows:
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Managed Assets Balanced Fund $ 570,525 $ 260,903 N/A
Mid-Cap Opportunity Fund $4,490,930 $3,670,337 $1,926,219
Intrinsic Value Fund $1,817,833 $1,615,375 $1,119,400
Growth and Value Fund $4,951,664 $4,032,266 $2,624,744
Equity Index Fund $ 411,792 $ 329,438 $ 308,549
International Equity Fund $ 529,312 $ 20,568 N/A
Intermediate Bond Fund $2,650,418 $2,718,286 $2,127,982
Bond Fund $3,121,267 $3,200,907 $2,588,697
Short Bond Fund $ 650,298 $ 112,091 N/A
Michigan Municipal Bond Fund $ 327,020 $ 286,599 $ 0
Money Market Fund $7,225,557 $5,926,507 $6,731,880
</TABLE>
For the fiscal years ended December 31, 1995, 1994 and 1993, NBD
reimbursed the Trust for certain expenses on behalf of the Michigan Municipal
Bond Fund as follows:
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Michigan Municipal Bond Fund $119,481 $120,000 $83,732
</TABLE>
For the fiscal years ended December 31, 1995, 1994 and 1993, NBD
voluntarily waived advisory fees on behalf of the Michigan Municipal Bond Fund
as follows:
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Michigan Municipal Bond Fund N/A $108,612 $146,227
</TABLE>
-40-
<PAGE>
Prior to the Managed Assets Conservative, Equity Income, Growth,
Small-Cap Opportunity, Income, International Bond, Municipal Bond and
Intermediate Municipal Bond Funds' current advisory agreement, FCNIMCO
provided advisory services to such Funds.
For the fiscal period from January 17, 1995 (effective date of
the following Funds' investment advisory agreement with FCNIMCO) through
December 31, 1995, the Funds paid FCNIMCO fees for advisory services and
FCNIMCO voluntarily waived advisory fees as follows:
<TABLE>
<CAPTION>
Annual Fee
Payable As a % Advisory Advisory
of Average Fees Fees
Daily Net Assets Paid Waived
---------------- -------- --------
<S> <C> <C> <C>
Managed Assets Conservative Fund .65% $ 142,517 $178,658
Equity Income Fund .50% $ 829,039 $277,716
Growth Fund .65% $1,399,749 $314,740
Small-Cap Opportunity Fund .70% $ 318,920 $168,733
Income Fund .40% $ 426,638 $185,678
International Bond Fund .70% $ 10,617 $ 68,517
Municipal Bond Fund .40% $ 565,821 $304,953
Intermediate Municipal Bond Fund .40% $ 938,654 $429,888
</TABLE>
Prior to January 17, 1995, FNBC provided management services to
the Managed Assets Conservative, Income, Municipal Bond and Intermediate
Municipal Bond Funds pursuant to a management agreement (the "Prior Management
Agreement"). Under the terms of the Prior Management Agreement, the Funds
agreed to pay FNBC a monthly fee at the annual rate of .65%, .60%, .40% and
.40% of the value of each respective Fund's average daily net assets. For the
fiscal years ended January 31, 1993 and 1994 and the period from February 1,
1994 through January 17, 1995, no fees were paid by the Funds to FNBC pursuant
to various undertakings by FNBC.
Investment decisions for the Trust and other fiduciary accounts
are made by FCNIMCO solely from the standpoint of the independent interest of
the Trust and such other fiduciary accounts. FCNIMCO performs independent
analyses of publicly available information, the results of which are not made
publicly available. In making investment decisions for the Trust, FCNIMCO does
not obtain information from any other division or department of the Investment
Adviser or otherwise, which is not publicly available. FCNIMCO executes
transactions for the Trust only with unaffiliated dealers but such dealers may
be customers of the Investment Adviser's affiliates. The Investment Adviser
may make bulk purchases of securities for the Trust and for other customer
accounts (but not for its own investment portfolio), in which case the Trust
will be charged a pro rata share of the transaction costs incurred in making
the bulk purchase. See "Investment Objectives, Policies and Risk Factors -
Portfolio Transactions" above.
-41-
<PAGE>
FCNIMCO has agreed as Investment Adviser that it will reimburse
the Trust such portions of its fees as may be required to satisfy any expense
limitations imposed by state securities laws or other applicable laws.
Restrictive limitations may be imposed on the Trust as a result of changes in
current state laws and regulations in those states where the Trust has
qualified its shares, or by a decision of the Trustees to qualify the shares
in other states having restrictive expense limitations. To the Trust's
knowledge, of the expense limitations in effect on the date of this Additional
Statement none is more restrictive than two and one-half percent (2-1/2%) of
the first $30 million of a Fund's and the Money Market Fund's average annual
net assets, two percent (2%) of the next $70 million of the average annual net
assets and one and one-half percent (1-1/2%) of the remaining average annual
net assets.
Under the terms of the Advisory Agreement, the Investment Adviser
is obligated to manage the investment of each Fund's and the Money Market
Fund's assets in accordance with applicable laws and regulations, including,
to the extent applicable, the regulations and rulings of the various
regulatory governmental bank agencies.
The Investment Adviser will not accept Trust shares as collateral
for a loan which is for the purpose of purchasing Trust shares, and will not
make loans to the Trust. Inadvertent overdrafts of the Trust's account with
the Custodian occasioned by clerical error or by failure of a shareholder to
provide available funds in connection with the purchase of shares will not be
deemed to be the making of a loan to the Trust by the Investment Adviser.
Under the Advisory Agreement, the Investment Adviser is not
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of such Agreement, 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 Investment Adviser in the
performance of its duties or from its reckless disregard of its duties and
obligations under the Agreement.
Administrators
Pursuant to an Administration Agreement dated as of April 12,
1996 with the Trust, FCNIMCO 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, FCNIMCO and BISYS are entitled jointly
to a monthly administration fee at the annual rate of .15% of each Fund's and
the Money Market Funds average daily net assets.
For the fiscal period ended December 31, 1995, except as
otherwise noted, each of the Managed Assets Conservative, Equity Income,
Growth, Small-Cap Opportunity, Income, International Bond, Municipal Bond and
Intermediate Municipal Bond Funds paid
-42-
<PAGE>
FCNIMCO fees for administrative services, under the Funds' prior
administration agreement, as follows:
-43-
<PAGE>
<TABLE>
<CAPTION>
Administration Administration
Fees Paid Fees Waived
-------------- --------------
<S> <C> <C>
Managed Assets Conservative Fund $ 70,857 $0
Equity Income Fund $332,027 $0
Growth Fund $395,652 $0
Small-Cap Opportunity Fund $104,497 $0
Income Fund $229,619 $0
International Bond Fund $ 12,551 $4,407
Municipal Bond Fund $310,972 $0
Intermediate Municipal Bond Fund $475,635 $0
</TABLE>
The Trust has agreed that neither FCNIMCO nor BISYS will be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which the agreement with FCNIMCO
or BISYS relates, except for a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of FCNIMCO, or BISYS in the performance
of their obligations or from reckless disregard by any of them of their
obligations and duties under the Administration Agreement.
In addition, the Administration Agreement provides that if, in
any fiscal year, the aggregate expenses of a Fund exceed the expense
limitation of any state having jurisdiction over the Fund, FCNIMCO and BISYS
will bear such excess expense to the extent required by state law.
The aggregate of the fees payable to FCNIMCO and BISYS is not
subject to reduction as the value of the Fund's net assets increases.
Distribution and Shareholder Servicing Plans
As stated in the Prospectus, the Trust may enter into Servicing
Agreements with Service Agents which may include the Investment Adviser and
its affiliates. The Servicing Agreements provide that the Service Agents will
render shareholder administrative support services to their customers who are
the beneficial owners of Fund shares in consideration for the Funds' payment
of up to .25% (on an annualized basis) of the average daily net asset value of
the shares beneficially owned by such customers and held by the Service Agents
and, at the Trust's option, it may reimburse the Service Agents' out-of-pocket
expenses. Such services may include: (i) processing dividend and distribution
payments from a Fund; (ii) providing information periodically to customers
showing their share positions; (iii) arranging for bank wires; (iv) responding
to customer inquiries; (v) providing subaccounting with respect to shares
beneficially owned by customers or the information necessary for such
subaccounting; (vi) forwarding shareholder communications; (vii) processing
share exchange and redemption requests from customers; (viii) assisting
customers in changing dividend options, account designations and addresses;
and (ix) other similar services requested by the Trust. Banks acting as
Service Agents are prohibited from engaging in any activity primarily intended
to result in the sale of Fund shares. However, Service Agents other than banks
may be requested to provide marketing assistance (e.g.,
-44-
<PAGE>
forwarding sales literature and advertising to their customers) in connection
with the distribution of Fund shares.
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 Class B Shares, pursuant
to which each Fund pays the Distributor a fee of up to 0.75% of the average
daily net asset value attributable to such Shares for advertising, marketing
and distributing such Shares and for the provision of certain services to the
holders of such Shares. Under the Plan, the Distributor 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 such Shares.
The Board of Trustees reviews, at least quarterly, a written
report of the amounts expended under the Plan and in connection with the
Trust's arrangements with Service Agents 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 and the Trust's arrangements
with Service Agents under the Shareholder Servicing Agreements must be
approved by a majority of the Board of Trustees (including a majority of the
Disinterested Trustees).
As stated in the Prospectus for the Funds, the Trust has
implemented the Servicing Plan described above with respect to Class A and
Class B shares of the Funds only and the Plan with respect to Class B shares
of the Funds only. The Trust will enter into shareholder servicing agreements
with Service Agents pursuant to which services to their customers who
beneficially own Class A and Class B shares of the Funds in consideration for
the payment of up to .25% (on an annualized basis) of the average daily net
asset value of such shares. The Trust has allocated the Servicing Fees which
are attributable to the Class A and Class B shares exclusively to such shares
and the Distribution Fees which are attributable to the Class B shares
exclusively to such shares.
Custodian
As Custodian for the Trust, NBD (i) maintains a separate account
or accounts in the name of each Fund, (ii) collects and makes disbursements of
money on behalf of each Fund, (iii) collects and receives all income and other
payments and distributions on
-45-
<PAGE>
account of the portfolio securities of each Fund, and (iv) makes periodic
reports to the Trust's Board of Trustees concerning the Trust's operations.
For its services as Custodian, NBD is entitled to receive from
the Funds at the following annual rates based on the aggregate market value of
such Funds' portfolio securities, held as Custodian: .03% of the first $20
million; .025% of the next $20 million; .02% of the next $20 million; .015% of
the next $40 million; .0125% of the next $200 million; and .01% of the balance
over $300,000,000. NBD will receive an annual account fee of $1,000 and $1.54
per month per asset held in each of these Funds. In addition, NBD, as
Custodian, is entitled to receive $50 for each cash statement and inventory
statement and $13 for each pass-through certificate payment, $35 for each
option transaction requiring escrow receipts and $20 for all other security
transactions.
Distributor
The shares of the Funds are offered on a continuous basis through
BISYS, which acts under the Distribution Agreement as Distributor for the
Trust. As stated in the Prospectus, the Trust will allocate distribution fees
which are attributable to the Class B shares in a Fund exclusively to such
shares.
Prior to August 26, 1996 (September 16, 1996 for the Money Market
Fund), the Funds' shares were offered on a continuous basis through First of
Michigan Corporation ("FoM") and Essex National Securities, Inc. ("Essex") as
co-distributors of the Trust. For the fiscal years ended December 31, 1995,
1994 and 1993, the Managed Assets Balanced, Mid-Cap Opportunity, Intrinsic
Value, Growth and Value, Equity Index, International Equity, Intermediate
Bond, Bond, Short Bond, Michigan Municipal Bond and Money Market Funds paid
FoM and Essex for their services the following fees:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994 December 31, 1993
--------------------------- --------------------------- ---------------------------
Fees to FoM Fees to Essex Fees to FoM Fees to Essex* Fees to FoM Fees to Essex
----------- ------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Managed Assets Balanced Fund $ 3,804 $ 7,344 $ 1,284 $ 5,646 N/A N/A
Mid-Cap Opportunity Fund $ 29,940 $50,523 $19,861 $40,223 $25,518 N/A
Intrinsic Value Fund $ 12,119 $12,521 $ 8,798 $10,418 $14,822 N/A
Growth and Value Fund $ 33,011 $34,229 $21,826 $27,976 $34,731 N/A
Equity Index Fund $ 20,590 $ 664 $13,455 $ 2,876 $30,631 N/A
International Equity Fund $ 3,676 $ 387 N/A N/A N/A N/A
Intermediate Bond Fund $ 20,388 $ 8,391 $17,302 $10,763 $32,525 N/A
Bond Fund $ 26,762 $24,725 $20,668 $27,439 $39,354 N/A
Short Bond Fund $ 5,002 $ 163 $ 377 $ 537 N/A N/A
Michigan Municipal Bond Fund $ 2,516 $16,695 $ 1,814 $16,068 $ 2,250 N/A
Money Market Fund $119,933 $32,940 $90,197 $25,515 $230,601 N/A
<FN>
- ---------
* Distribution Agreement with Essex commenced on April 20, 1994.
</TABLE>
-46-
<PAGE>
For the fiscal years ended December 31, 1995, 1994 and 1993,
neither FoM nor Essex incurred any expenses with respect to each of the Funds
for the printing and mailing of prospectuses to other than current
shareholders.
Prior to September 21, 1996, the Managed Assets Conservative,
Equity Income, Small-Cap Opportunity, Income, International Bond, and
Intermediate Municipal Bond Funds, and prior to August 26, 1996, the Growth
and Municipal Bond Funds, were distributed by Concord Financial Group, Inc.
Except as otherwise noted, for the period January 17, 1995 (commencement of
operations) through December 31, 1995, the fees paid pursuant to such Funds'
distribution plan with respect to Class B shares of the indicated Fund were as
follows:
<TABLE>
<CAPTION>
Amount of
Fee Paid
---------
<S> <C>
Managed Assets Conservative Fund $5,831
Equity Income Fund $1,283
Growth Fund $ 670
Small-Cap Opportunity Fund $ 56
Income Fund $ 563
International Bond Fund $ 30
Municipal Bond Fund $ 600
Intermediate Municipal Bond Fund $ 824
</TABLE>
Except as otherwise noted, for the period January 17, 1995
(commencement of operations) through December 31, 1995, the fee paid under the
Shareholder Services Plan with respect to Class A and Class B of the indicated
Fund was as follows:
<TABLE>
<CAPTION>
Amount of Fee Paid
------------------------
Class A Class B
------- -------
<S> <C> <C>
Managed Conservative Fund $112,993 $1,837
Equity Income $ 2,475 $ 407
Growth $ 4,568 $ 219
Small-Cap Opportunity Fund $ 741 $ 18
Income Fund $ 5,960 $ 198
International Bond Fund $ 632 $ 39
Municipal Bond $ 16,461 $2,240
Intermediate Municipal Bond $ 38,833 $3,950
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent public accountants, 500
Woodward Avenue, Detroit, Michigan 48226-3424, serves as auditors for the
Trust. The financial statements included in this Statement of Additional
Information and the financial highlights included in the Prospectus, with
respect to the Managed Assets Conservative, Equity Income, Growth, Small-Cap
Opportunity, Income, International Bond, Municipal Bond and Intermediate
Municipal Bond Funds, have been derived from the audited financial
statements of December 31, 1996 which
-47-
<PAGE>
have been audited by Ernst & Young LLP, and, with respect to the Managed
Assets Balanced, Mid-Cap Opportunity, Intrinsic Value, Growth and Value,
Equity Index, International Equity, Intermediate Bond, Bond, Short Bond and
Michigan Municipal Bond Funds, have been derived from such Funds' financial
statements which have been audited by Arthur Andersen LLP, as indicated in
their reports with respect thereto, and are included herein in reliance upon
the authority of said firms as experts in giving said reports. For the period
ended June 30, 1996, the financial statements are unaudited.
COUNSEL
Drinker Biddle & Reath (of which Mr. McConnel, Secretary of the
Trust, is a partner), 1345 Chestnut Street, Philadelphia, Pennsylvania
19107-3496, is counsel to the Trust.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of each class of shares of
each Fund and the yield of each class of shares of the Asset Allocation, Bond
and Municipal Bond Funds for various periods may be quoted in advertisements,
shareholder reports or other communications to shareholders. Performance
information is generally available by calling (800) 688-3350.
Yield Calculations. A Fund's yield is calculated by dividing
the Fund's net investment income per share (as described below) earned during
a 30-day period by the maximum offering price per share on the last day of the
period and annualizing the result on a semi-annual basis by adding one to the
quotient, raising the sum to the power of six, subtracting one from the result
and then doubling the difference. A Fund's net investment income per share
earned during the period is based on the average daily number of shares
outstanding during the period entitled to receive dividends and includes
dividends and interest earned during the period minus expenses accrued for the
period, net of reimbursements.
This calculation can be expressed as follows:
a-b
Yield = 2 [(----- + 1)6 - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.
d = maximum offering price per share on the
last day of the period.
-48-
<PAGE>
For the purpose of determining net investment income earned
during the period (variable "a" in the formula), dividend income on equity
securities held by a Fund is recognized by accruing 1/360 of the stated
dividend rate of the security each day that the security is in the portfolio.
Each Fund calculates interest earned on any debt obligations held in its
portfolio by computing the yield to maturity of each obligation held by it
based on the market value of the obligation (including actual accrued
interest) at the close of business on the last business day of each month, or,
with respect to obligations purchased during the month, the purchase price
(plus actual accrued interest), and dividing the result by 360 and multiplying
the quotient by the market value of the obligation (including actual accrued
interest) in order to determine the interest income on the obligation for each
day of the subsequent month that the obligation is in the portfolio. For
purposes of this calculation, it is assumed that each month contains 30 days.
The maturity of an obligation with a call provision is the next call date on
which the obligation reasonably may be expected to be called or, if none, the
maturity date. With respect to debt obligations purchased at a discount or
premium, the formula generally calls for amortization of the discount or
premium. The amortization schedule will be adjusted monthly to reflect changes
in the market values of such debt obligations.
Undeclared earned income may be subtracted from the maximum
offering price per share (variable "d" in the formula). Undeclared earned
income is the net investment income which, at the end of the 30-day base
period, has not been declared as a dividend, but is reasonably expected to be
and is declared as a dividend shortly thereafter.
For the 30-day period ended June 30, 1996, the yields,
calculated as set forth above, for the Managed Assets Conservative, Managed
Assets Balanced, Equity Income, Intermediate Bond, Bond, Short Bond, Income,
International Bond, Municipal Bond, Intermediate Municipal Bond and Michigan
Municipal Bond Funds were as follows:
<TABLE>
<CAPTION>
Class A Class B Class I
------------------------ ------- -------
With Without
Sales Load Sales Load
---------- ----------
<S> <C> <C> <C> <C>
Managed Assets Conservative Fund* 3.01% 3.15% 2.45% 3.59%
Managed Assets Balanced Fund* N/A N/A N/A N/A
Equity Income Fund 3.11% 3.26% 2.45% 3.74%
Intermediate Bond Fund 6.03% 6.50% N/A 6.50%
Bond Fund 6.55% 7.02% N/A 7.02%
Short Bond Fund 5.08% 5.55% N/A 5.55%
Income Fund 5.06% 5.21% 4.43% 5.55%
International Bond Fund 3.60% 3.77% 2.98% 4.33%
Municipal Bond Fund 4.67% 5.14% N/A 5.14%
Intermediate Municipal Bond Fund 3.65% 3.76% 2.83% 4.12%
Michigan Municipal Bond Fund 4.64% 5.11% N/A 5.11%
<FN>
- ---------
* During the periods noted, these Asset Allocation Funds invested
substantially all of their assets directly in portfolio securities
rather than mutual fund shares. Investing in the Underlying Funds
through the Asset Allocation Funds involves certain additional
expenses and tax results that would not be present in a direct
investment in the Underlying Funds. Had these additional expenses and
tax results been reflected, performance would be reduced.
</TABLE>
-49-
<PAGE>
In addition, the Municipal Bond Funds may advertise their
standardized "tax-equivalent yield," which is computed by: (a) dividing the
portion of the yield (as calculated above) that is exempt from income tax by
one minus a stated income tax rate; and (b) adding the figure resulting from
(a) above to that portion, if any, of the yield that is not tax-exempt.
The tax-equivalent yields for the Municipal Bond Funds for the
30-day period ended June 30, 1996 (assuming a 39.6% federal tax rate for each
Fund and a 4.4% Michigan income tax rate for the Michigan Municipal Bond Fund)
were as follows:
<TABLE>
<CAPTION>
Class A Class B Class I
------------------------------------ ------- -------
With Sales Load Without Sales Load
--------------- ------------------
<S> <C> <C> <C> <C>
Municipal Bond Fund 7.73% 8.20% 5.51% 8.20%
Intermediate Municipal Bond Fund 6.04% 6.22% 4.69% 6.82%
Michigan Municipal Bond Fund 8.34% 8.81% N/A 8.81%
</TABLE>
Total Return Calculations. Each Fund computes its "average
annual total return" for a class by determining the average annual compounded
rates of return during specified periods that equate the initial amount
invested to the ending redeemable value of such investment. This is done by
dividing the ending redeemable value of a hypothetical $1,000 initial payment
by $1,000 and raising the quotient to a power equal to one divided by the
number of years (or fractional portion thereof) covered by the computation and
subtracting one from the result. This calculation can be expressed as follows:
ERV 1/n
T = [(-----) - 1]
P
Where: T = average annual total return.
ERV = ending redeemable value at the end of
the period covered by the computation of a
hypothetical $1,000 payment made at the
beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation,
expressed in terms of years.
-50-
<PAGE>
The Funds compute their aggregate total returns for each class
by determining the aggregate rates of return during specified periods that
likewise equate the initial amount invested to the ending redeemable value of
such investment. The formula for calculating aggregate total return is as
follows:
ERV
T = (------) - 1
P
The calculations of average annual total return and aggregate
total return assume the reinvestment of all dividends and capital gain
distributions on the reinvestment dates during the period, and include all
recurring fees charged to all shareholder accounts, assuming an account size
equal to a Fund's mean (or median) account size for any fees that vary with
the size of the account. The ending redeemable value (variable "ERV" in each
formula) is determined by assuming complete redemption of the hypothetical
investment and the deduction of all nonrecurring charges at the end of the
period covered by the computation. Each Fund's average annual total return may
reflect the deduction of the maximum sales load imposed on purchases.
The aggregate total returns for the Funds or predecessor funds,
as the case may be, for the period since commencement of operations through
the period ended June 30, 1996, if applicable (unaudited), are shown below:
<TABLE>
<CAPTION>
Aggregate Total Aggregate Total
Return From Return From
Inception Inception
Through Through
6/30/96 (with 6/30/96 (with-
Deduction of out Deduction
Maximum Sales for Any Sales
Charge) Charge) Inception Date
--------------- --------------- --------------
<S> <C> <C> <C>
Managed Assets Conservative Fund*(1)
Class A 193.84% 209.42% 1/23/86
Class B 21.78% 25.78% 3/03/95
Class I N/A 27.56% 3/03/95
Managed Assets Balanced Fund*(2)
Class A 19.58% 25.87% 12/31/93
Class B 22.87% 25.87% 12/31/93
Class I 25.87% 28.51% 12/31/93
Equity Income Fund(1)(3)
Class A 1318.98% 1395.68% 3/31/67
Class B 1103.70% 1103.70% 3/31/67
Class I N/A 1641.19% 3/31/67
Growth Fund(3)(4)
Class A 651.58% 690.97% 5/31/68
Class B 541.32% 541.32% 5/31/68
Class I N/A 814.51% 5/31/68
-51-
<PAGE>
<CAPTION>
Aggregate Total Aggregate Total
Return From Return From
Inception Inception
Through Through
6/30/96 (with 6/30/96 (with-
Deduction of out Deduction
Maximum Sales for Any Sales
Charge) Charge) Inception Date
--------------- --------------- --------------
<S> <C> <C> <C>
Mid-Cap Opportunity Fund(2)(3)
Class A 385.12% 410.64% 12/31/83
Class B 410.64% 410.64% 12/31/83
Class I 410.64% 461.59% 12/31/83
Small-Cap Opportunity Fund(1)(3)
Class A 641.50% 680.51% 6/30/72
Class B 552.66% 552.66% 6/30/72
Class I N/A 783.00% 6/30/72
Intrinsic Value Fund(2)(3)
Class A 284.55% 304.78% 12/31/85
Class B 304.78% 304.78% 12/31/85
Class I 304.78% 340.55% 12/31/85
Growth and Value Fund(2)(3)
Class A 347.99% 371.56% 12/31/83
Class B 371.56% 371.56% 12/31/83
Class I 371.56% 420.90% 12/31/83
Equity Index Fund(2)(3)
Class A 378.55% 378.55% 6/30/85
Class B 378.55% 378.55% 6/30/85
Class I 378.47% 388.44% 6/30/85
International Equity Fund(2)(3)
Class A 137.15% 149.63% 4/30/86
Class B 149.63% 149.63% 4/30/86
Class I 149.63% 179.81% 4/30/86
Intermediate Bond Fund(2)(3)
Class A 173.95% 187.62% 12/31/83
Class B 187.62% 187.62% 12/31/83
Class I 187.62% 214.92% 12/31/83
Bond Fund(2)(3)
Class A 214.90% 230.61% 12/31/83
Class B 230.61% 230.61% 12/31/83
Class I 230.61% 262.02% 12/31/83
Short Bond Fund(2)(3)
Class A 149.60% 162.06% 12/31/83
Class B 162.06% 162.06% 12/31/83
Class I 162.06% 187.59% 12/31/83
Income Fund(1)
Class A 14.73% 18.30% 3/05/93
Class B 1.30% 4.18% 5/31/95
Class I N/A 18.94% 3/05/93
International Bond Fund(1)(3)
Class A 90.71% 99.96% 9/30/89
Class B 91.30% 91.30% 9/30/89
Class I N/A 107.88% 9/30/89
Municipal Bond Fund(5)
Class A 84.72% 93.38% 3/01/88
Class B 2.94% 6.94% 4/04/95
Class I N/A 13.14% 2/01/95
-52-
<PAGE>
<CAPTION>
Aggregate Total Aggregate Total
Return From Return From
Inception Inception
Through Through
6/30/96 (with 6/30/96 (with-
Deduction of out Deduction
Maximum Sales for Any Sales
Charge) Charge) Inception Date
--------------- --------------- --------------
<C>
<S> <C> <C>
Intermediate Municipal Bond Fund(1)
Class A 75.53% 80.89% 3/01/88
Class B 6.55% 9.55% 1/30/95
Class I N/A 11.29% 1/30/95
Michigan Municipal Bond Fund(2)
Class A 15.06% 20.47% 1/31/93
Class B 17.47% 20.47% 1/31/93
Class I 20.47% 22.59% 1/31/93
<FN>
- --------
* During the periods noted, these Asset Allocation Funds invested
substantially all of their assets directly in portfolio securities rather
than mutual fund shares. Investing in the Underlying Funds through the
Asset Allocation Funds involves certain additional expenses and tax
results that would not be present in a direct investment in the
Underlying Funds. Had these additional expenses and tax results been
reflected, performance would be reduced.
(1) Prior to September 21, 1996, the Managed Assets Conservative, Equity
Income, Small-Cap Opportunity, Income, International Bond and Intermediate
Municipal Bond Funds had no prior operating history. Except as noted
below, performance for periods prior to such date is represented by the
performance of the Prairie Managed Assets Income, Prairie Equity Income,
Prairie Special Opportunity, Prairie Intermediate Bond, Prairie
International Bond and Prairie Intermediate Municipal Bond Funds,
respectively. On September 21, 1996, the assets and liabilities of these
Prairie Funds were transferred to the above stated respective Funds of the
Trust. Performance of the Managed Assets Conservative Fund and
Intermediate Municipal Bond Fund for periods prior to March 3, 1995 and
March 1, 1988, respectively, is represented by the performance of the
First Prairie Diversified Assets Fund and the Intermediate Series of the
First Prairie Municipal Bond Fund, respectively. The Prairie Managed
Assets Income Fund and Prairie Intermediate Municipal Bond Fund commenced
operations through a transfer of assets from the First Prairie Diversified
Assets Fund and the Intermediate Series of the First Prairie Municipal
Bond Fund, respectively.
(2) With respect to each of the Managed Assets Balanced, Mid-Cap Opportunity,
Intrinsic Value, Growth and Value, Equity Index, International Equity
Fund, Intermediate Bond, Bond, Short Bond and Michigan Municipal Bond
Funds, performance of Class A and Class I shares prior to July 22, 1996 is
identical because they had the same expense ratios. Class B share
performance of these Funds is represented by the performance of the Class
I shares of these Funds, as adjusted by the maximum applicable contingent
deferred sales load. Class I shares have no shareholder servicing or 12b-1
fees unlike Class A shares which effective July 22,1996 have a .25%
shareholder servicing fee and Class B shares which have a .25% shareholder
servicing fee and a .75% 12b-1 fee. Class B share performance for periods
prior to July 22, 1996 has not been adjusted to reflect the differences in
expenses. For Class B shares, had the shareholder servicing and 12b-1 fees
been reflected in performance for such periods, performance would be
reduced.
(3) Performance of the Equity Income, Growth, Small-Cap Opportunity and
International Bond Funds for periods prior to January 27, 1995 is
represented by performance of certain common trust funds managed by FNBC
before the effective date of the registration statement of these Funds.
Performance of the Mid-Cap Opportunity (6/1/91), Intrinsic Value (6/1/91),
Growth and Value (6/1/91), Equity Index (7/10/92), International Equity
(12/3/94), Intermediate Bond (6/1/91), Bond (6/1/91) and Short Bond
(9/17/94) Funds for periods prior to the inception dates shown is
represented by performance of certain common trust funds managed by NBD
before the effective date of the registration statement of these Funds.
The common trust funds were not registered under the 1940 Act and were not
subject to certain restrictions that are imposed by the 1940 Act. If the
common trust funds had been registered under the 1940 Act, performance may
have been adversely affected. The common trust funds did not charge any
expenses. Performance of the common trust funds has been restated to
reflect the maximum operating expenses charged by the predecessor Prairie
Funds upon their inception on January 27, 1995 in the case of the Equity
Income, Growth, Small-Cap Opportunity and International Bond Funds or by
the other Funds upon their inception, as the case may be.
(4) Performance for periods from January 27, 1995 to August 24, 1996 is
represented by the performance of the Prairie Growth Fund. On such date,
the assets and liabilities of the Prairie Growth Fund were transferred to
the Growth Fund.
(5) Performance for periods prior to September 14, 1996 is represented by the
performance of the Prairie Municipal Bond Fund. On such date, the assets
and liabilities of the Prairie Municipal Bond Fund were transferred to the
Municipal Bond Fund.
</TABLE>
The Funds may also from time to time include in advertisements,
sales literature, communications to shareholders and other materials
("Literature") total return figures that are not calculated according to the
formulas set forth above in order to compare more accurately a Fund's
performance with other measures of investment return. For example, in
comparing the Funds' total returns with data published by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc. or Weisenberger Investment
Company Service, or with the performance of an index, the Funds may calculate
their returns for the period of time specified in the advertisement or
communication by assuming the investment of $10,000 in shares and assuming the
reinvestment date. Percentage increases are determined by subtracting the
initial value of the investment from the ending value and by dividing the
remainder by the beginning value. The Funds do not, for these purposes, deduct
from the initial value invested any amount representing sales charges. The
Funds will, however, disclose the maximum sales charge and will also disclose
that the performance data does not reflect sales charges and that inclusion of
sales charges would reduce the performance quoted.
From time to time, references to the Funds may appear in
advertisements and sales literature for certain products or services, offered
by the Investment Adviser, its affiliates or others, through which it is
possible to invest in one or more of the Funds, such as the Investment
Architect wrap account, the Pathmaker variable annuity, and First Choice and
First Choice Select 401(k) products.
-53-
<PAGE>
The Funds may also from time to time include discussions or
illustrations of the effects of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on a Fund
investment are reinvested by being paid in additional Fund shares, any future
income or capital appreciation of a Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid
in cash.
The Funds may also include discussions or illustrations of the
potential investment goals of a prospective investor, investment management
strategies, techniques, policies or investment suitability of a Fund (such as
value investing, market timing, dollar cost averaging, asset allocation,
constant ratio transfer, automatic accounting rebalancing, the advantages and
disadvantages of investing in tax-deferred and taxable instruments), economic
conditions, risk and volatility assessments, the relationship between sectors
of the economy and the economy as a whole, various securities markets, the
effects of inflation and historical performance of various asset classes,
including but not limited to, stocks, bonds and Treasury bills. From time to
time, advertisements for each Asset Allocation Fund may include a discussion
of the target asset allocation ranges and of the Underlying Funds and the
expected ranges of investment in each of the Underlying Funds and may include
a discussion of the current and forseeable investment ranges of the target
asset allocation and the Underlying Funds. From time to time advertisements or
communications to shareholders may summarize the substance of information
contained in shareholder reports (including the investment composition of a
Fund), as well as the view of the Trust as to current market, economy, trade
and interest rate trends, legislative, regulatory and monetary developments,
investment strategies and related matters believed to be of relevance to a
Fund. The Funds may also include in advertisements charts, graphs or drawings
which compare the investment objective, return potential, relative stability
and/or growth possibilities of the Fund and/or other mutual funds, or
illustrate the potential risks and rewards of investment in various investment
vehicles, including but not limited to, stocks, bonds, treasury bills and
shares of a Fund. In addition, advertisements or shareholder communications
may include a discussion of certain attributes or benefits to be derived by an
investment in a Fund and/or other mutual funds, shareholder profiles and
hypothetical investor scenarios, timely information on financial management,
tax and retirement planning and investment alternatives to certificates of
deposit and other financial instruments. Such advertisements or communicators
may include symbols, headlines or other material which highlight or summarize
the information discussed in more detail therein.
-54-
<PAGE>
APPENDIX A
Commercial Paper Ratings
A Standard & Poor's commercial paper rating is a current assessment
of the likelihood of timely payment of debt considered short-term in the
relevant market. The following summarizes the rating categories used by
Standard and Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."
"A-3" - Issue has an adequate capacity for timely payment. It is,
however, somewhat more vulnerable to the adverse effects of changes in
circumstances than an obligation carrying a higher designation.
"B" - Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are
considered to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative
capitalization structures with moderate reliance on debt and ample asset
protection; broad margins in earning coverage of fixed financial charges and
high internal cash generation; and well established access to a range of
financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuer or related supporting institutions are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will 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
A-1
<PAGE>
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
"D-3" - Debt possesses satisfactory liquidity, and other protection
factors qualify issue as investment grade. Risk factors are larger and subject
to more variation.
Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or
interest payments.
A-2
<PAGE>
Fitch short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:
"F-1+" - Securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned
this rating have a satisfactory degree of assurance for timely payment, but
the margin of safety is not as great as the "F-1+" and "F-1" categories.
"F-3" - Securities possess fair credit quality. Issues assigned
this rating have characteristics suggesting that the degree of assurance for
timely payment is adequate; however, near-term adverse changes could cause
these securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues assigned
this rating have characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes in financial
and economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term ratings to
indicate that the rating is based upon a letter of credit issued by a
commercial bank.
Thomson BankWatch short-term ratings assess the likelihood of an
untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which are issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-dealers. The following summarizes the ratings used by Thomson
BankWatch:
"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."
A-3
<PAGE>
"TBW-3" - This designation represents the lowest investment grade
category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher
ratings, capacity to service principal and interest in a timely fashion is
considered adequate.
"TBW-4" - This designation indicates that the debt is regarded as
non-investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1+" - Obligations which posses a particularly strong credit
feature are supported by the highest capacity for timely repayment.
"A1" - Obligations are supported by the highest capacity for timely
repayment.
"A2" - Obligations are supported by a satisfactory capacity for
timely repayment.
"A3" - Obligations are supported by a satisfactory capacity for
timely repayment.
"B" - Obligations for which there is an uncertainty as to the
capacity to ensure timely repayment.
"C" - Obligations for which there is a high risk of default or
which are currently in default.
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-4
<PAGE>
"A" - Debt is considered to have a strong capacity to pay interest
and repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt
in higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher- rated categories.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
"CCC" - Debt has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated to
senior debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no
interest is being paid.
A-5
<PAGE>
"D" - Debt is in payment default. This rating is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This 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 absence of an "r"
symbol should not be taken as an indication that an obligation will exhibit no
volatility or variability in total return.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A" - Bonds possess many favorable investment attributes and are to
be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
A-6
<PAGE>
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing;
"Ca" represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be
in default.
Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
(P)... - When applied to forward delivery bonds, indicates that the
rating is provisional pending delivery of the bonds. The rating may be revised
prior to delivery if changes occur in the legal documents or the underlying
credit quality of the bonds.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols, Aa1, A1, Ba1 and B1.
The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt
rated "B" possesses the risk that obligations will not be met when due. Debt
rated "CCC" is well below investment grade and has considerable uncertainty as
to timely payment of principal, interest or
A-7
<PAGE>
preferred dividends. Debt rated "DD" is a defaulted debt obligation, and the
rating "DP" represents preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the "AA,"
"A," "BBB," "BB" and "B" ratings may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
"AA" - Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+."
"A" - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
To provide more detailed indications of credit quality, the Fitch
ratings from and including "AA" to "BBB" may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major rating
categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse
A-8
<PAGE>
changes in business, economic or financial conditions are unlikely to increase
investment risk substantially.
"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions may increase investment risk, albeit not very significantly.
"A" - Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic or financial conditions
may lead to increased investment risk.
"BBB" - Obligations for which there is currently a low expectation
of investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in other categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one of
these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree
of speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating to
denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely repayment
of principal or interest over the term to maturity of long term debt and
preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation represents the highest category assigned
by Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk
compared to issues rated in the highest category.
"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
A-9
<PAGE>
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned by
Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
Municipal Note Ratings
A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit very strong
or strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
A-10
<PAGE>
"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.
A-11
<PAGE>
APPENDIX B
As stated in their Prospectus, each of the Funds may enter into
futures contracts and related options for hedging purposes.
I. Interest Rate Futures Contracts
Use of Interest Rate Futures Contracts. Bond prices are established
in both the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the
future for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, a Fund may use interest rate futures
as a defense, or hedge, against anticipated interest rate changes and not for
speculation. As described below, this would include the use of futures
contract sales to hedge against expected increases in interest rates and
futures contract purchases to offset the impact of interest rate declines.
Description of Interest Rate Futures Contracts. An interest rate
futures contract sale would create an obligation by a Fund, as seller, to
deliver the specific type of financial instrument called for in the contract
at a specific future time for a specified price. A futures contract purchase
would create an obligation by a Fund, as purchaser, to take delivery of the
specific type of financial instrument at a specific future time at a specific
price. The specific securities delivered or taken, respectively, at settlement
date, would not be determined until at or near that date. The determination
would be in accordance with the rules of the exchange on which the futures
contract sale or purchase was made.
Although interest rate futures contracts by their terms call for
actual delivery or acceptance of securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery
of securities. Closing out a futures contract sale is effected by a Fund's
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and the same delivery date. If the price
in the sale exceeds the price in the offsetting purchase, the Fund is paid the
difference and thus realizes a gain. If the offsetting purchase price exceeds
the sale price, the Fund pays the difference and realizes a loss. Similarly,
the closing out of a futures contract purchase is effected by the Fund's
entering into a futures contract sale. If the offsetting sale price exceeds
the purchase price, the Fund realizes a gain, and if the purchase price
exceeds the offsetting sale price, the Fund realizes a loss.
Interest rate futures contracts are traded in an auction
environment on the floors of several exchanges - principally, the Chicago
Board of Trade, the Chicago Mercantile Exchange and the New York Futures
Exchange. The Fund would deal only in standardized contracts on recognized
exchanges. Each exchange guarantees performance
B-1
<PAGE>
under contract provisions through a clearing corporation, a nonprofit
organization managed by the exchange membership.
A public market now exists in futures contracts covering various
financial instruments including long-term United States Treasury Bonds and
Notes; three-month United States Treasury Bills; and ninety-day commercial
paper. A Fund may trade in any futures contract for which there exists a
public market, including, without limitation, the foregoing instruments.
Examples of Futures Contract Sale. A Fund would engage in an
interest rate futures contract sale to maintain the income advantage from
continued holding of a long-term bond while endeavoring to avoid part or all
of the loss in market value that would otherwise accompany a decline in
long-term securities prices. Assume that the market value of a certain
security in a Fund tends to move in concert with the futures market prices of
long-term United States Treasury bonds ("Treasury bonds"). The Investment
Adviser wishes to hedge the current market value of this portfolio security
until some point in the future. Assume the portfolio security has a market
value of 100, and the Investment Adviser believes that, because of an
anticipated rise in interest rates, the value will decline to 95. The Fund
might enter into futures contract sales of Treasury bonds for an equivalent of
98. If the market value of the portfolio security does indeed decline from 100
to 95, the equivalent futures market price for the Treasury bonds might also
decline from 98 to 93.
In that case, the five-point loss in the market value of the
portfolio security would be offset by the five-point gain realized by closing
out the futures contract sale. Of course, the futures market price of Treasury
bonds might well decline to more than 93 or to less than 93 because of the
imperfect correlation between cash and futures prices mentioned below.
The Investment Adviser could be wrong in its forecast of interest
rates and the equivalent futures market price could rise above 98. In this
case, the market value of the portfolio securities, including the portfolio
security being hedged, would increase. The benefit of this increase would be
reduced by the loss realized on closing out the futures contract sale.
If interest rate levels did not change, the Fund in the above
example might incur a loss of 2 points (which might be reduced by an
offsetting transaction prior to the settlement date). In each transaction,
transaction expenses would also be incurred.
Examples of Futures Contract Purchase. A Fund might engage in an
interest rate futures contract purchase when it is not fully invested in
long-term bonds but wishes to defer for a time the purchase of long-term bonds
in light of the availability of advantageous interim investments, e.g.,
shorter-term securities whose yields are greater than those available on
long-term bonds. A Fund's basic motivation would be to maintain for a time the
income advantage from investing in the short-term securities; the Fund would
be
B-2
<PAGE>
endeavoring at the same time to hedge the effect of all or part of an expected
increase in market price of the long-term bonds that the Fund may purchase.
For example, assume that the market price of a long-term bond that
the Fund may purchase, currently yielding 10%, tends to move in concert with
futures market prices of Treasury bonds. The Investment Adviser wishes to
hedge the current market price (and thus 10% yield) of the long-term bond
until the time (four months away in this example) when it may purchase the
bond. Assume the long-term bond has a market price of 100, and the Investment
Adviser believes that, because of an anticipated fall in interest rates, the
price will have risen to 105 (and the yield will have dropped to about 9 1/2%)
in four months. A Fund might enter into futures contracts purchases of
Treasury bonds for an equivalent price of 98. At the same time, the Fund
could, for example, assign a pool of investments in short-term securities that
are either maturing in four months or earmarked for sale in four months, for
purchase of the long-term bond at an assumed market price of 100. Assume these
short-term securities are yielding 15%. If the market price of the long-term
bond does indeed rise from 100 to 105, the equivalent futures market price for
Treasury bonds might also rise from 98 to 103. In that case, the 5-point
increase in the price that the Fund pays for the long-term bond would be
offset by the 5-point gain realized by closing out the futures contract
purchase.
The Investment Adviser could be wrong in its forecast of interest
rates; long-term interest rates might rise to above 10%; and the equivalent
futures market price could fall below 98. If short-term rates at the same time
fall to 10% or below, it is possible that a Fund would continue with its
purchase program for long-term bonds. The market price of available long-term
bonds would have decreased. The benefit of this price decrease, and thus yield
increase, will be reduced by the loss realized on closing out the futures
contract purchase.
If, however, short-term rates remained above available long-term
rates, it is possible that a Fund would discontinue its purchase program for
long-term bonds. The yield on short-term securities in the portfolio,
including those originally in the pool assigned to the particular long-term
bond, would remain higher than yields on long-term bonds. The benefit of this
continued incremental income will be reduced by the loss realized on closing
out the futures contract purchase.
In each transaction, expenses would also be incurred.
II. Index Futures Contracts
A stock or bond index assigns relative values to the stocks or
bonds included in the index and the index fluctuates with changes in the
market values of the stocks or bonds included. Some stock index futures
contracts are based on broad market indices, such as the Standard & Poor's 500
or the New York Stock Exchange Composite Index. In contrast, certain exchanges
offer futures contracts on narrower market indices, such as the Standard &
Poor's 100 or indices based on an industry or market segment, such as oil and
gas stocks.
B-3
<PAGE>
Futures contracts are traded on organized exchanges regulated by the Commodity
Futures Trading Commission. Transactions on such exchanges are cleared through
a clearing corporation, which guarantees the performance of the parties to
each contract.
The Equity Funds may sell index futures contracts in order to hedge
against a decrease in market value of its portfolio securities that might
otherwise result from a market decline. A Fund may do so either to hedge the
value of its portfolio as a whole, or to hedge against declines, occurring
prior to sales of securities, in the value of the securities to be sold.
Conversely, the Funds may purchase index futures contracts in anticipation of
purchases of securities. In a substantial majority of these transactions, the
Funds may purchase such securities upon termination of the long futures
position, but a long futures position may be terminated without a
corresponding purchase of securities.
In addition, the Funds may utilize index futures contracts in
anticipation of changes in the composition of their portfolio holdings. For
example, in the event that a Fund expects to narrow the range of industry
groups represented in its holdings it may, prior to making purchases of the
actual securities, establish a long futures position based on a more
restricted index, such as an index comprised of securities of a particular
industry group. The Fund may also sell futures contracts in connection with
this strategy, in order to hedge against the possibility that the value of the
securities to be sold as part of the restructuring of the portfolio will
decline prior to the time of sale.
The following are examples of transactions in stock index futures
(net of commissions and premiums, if any).
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
Portfolio Futures
--------- -------
-Day Hedge is Placed-
Anticipate Buying $62,500 Buying 1 Index Futures
Equity Fund at 125
Value of Futures =
$62,500/Contract
-Day Hedge is Lifted-
Buy Equity Fund with Sell 1 Index Futures at 130
Actual Cost = $65,000 Value of Futures = $65,000/
Increase in Purchase Price = Contract
$2,500 Gain on Futures = $2,500
B-4
<PAGE>
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000
Value of Futures Contract = 125 x $500 = $62,500
Portfolio Beta Relative to the Index = 1.0
Portfolio Futures
--------- -------
-Day Hedge is Placed-
Anticipate Selling $1,000,000 Sell 16 Index Futures at 125
Equity Portfolio Value of Futures = $1,000,000
-Day Hedge is Lifted-
Equity Portfolio-Own Buy 16 Index Futures at 120
Stock with Value = $960,000 Value of Futures = $960,000
Loss in Portfolio Value = $40,000 Gain on Futures = $40,000
If, however, the market moved in the opposite direction, that
is, market value decreased and the Fund had entered into an anticipatory
purchase hedge, or market value increased and the Fund had hedged its stock
portfolio, the results of the Fund's transactions in stock index futures would
be as set forth below.
B-5
<PAGE>
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
Portfolio Futures
--------- -------
-Day Hedge is Placed-
Anticipate Buying $62,500 Buying 1 Index Futures at 125
Equity Portfolio Value of Futures = $62,500/
Contract
-Day Hedge is Lifted-
Buy Equity Portfolio with Sell 1 Index Futures at 120
Actual Cost = $60,000 Value of Futures = $60,000/
Decrease in Purchase Price = $2,500 Contract
Loss on Futures = $2,500
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000 Value of Futures Contract = 125 x $500 =
$62,500 Portfolio Beta Relative to the Index = 1.0
Portfolio Futures
--------- -------
-Day Hedge is Placed-
Anticipate Selling $1,000,000 Sell 16 Index Futures at 125
Equity Portfolio Value of Futures = $1,000,000
-Day Hedge is Lifted-
Equity Portfolio-Own Buy 16 Index Futures at 130
Stock with Value = $1,040,000 Value of Futures = $1,040,000
Gain in Portfolio = $40,000 Loss of Futures = $40,000
B-6
<PAGE>
III. Margin Payments
Unlike when a Fund purchases or sells a security, no price is
paid or received by the Fund upon the purchase or sale of a futures contract.
Initially, the Fund will be required to deposit with the broker or in a
segregated account with the Fund's Custodian an amount of cash or cash
equivalents, the value of which may vary but is generally equal to 10% or less
of the value of the contract. This amount is known as initial margin. The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not
involve the borrowing of funds by the customer to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or good
faith deposit on the contract which is returned to the Fund upon termination
of the futures contract assuming all contractual obligations have been
satisfied. Subsequent payments, called variation margin, to and from the
broker, will be made on a daily basis as the price of the underlying security
or index fluctuates making the long and short positions in the futures
contract more or less valuable, a process known as marking to the market. For
example, when a Fund has purchased a futures contract and the price of the
contract has risen in response to a rise in the underlying instruments, that
position will have increased in value and the Fund will be entitled to receive
from the broker a variation margin payment equal to that increase in value.
Conversely, where a Fund has purchased a futures contract and the price of the
future contract has declined in response to a decrease in the underlying
instruments, the position would be less valuable and the Fund would be
required to make a variation margin payment to the broker. At any time prior
to expiration of the futures contract, the Investment Adviser may elect to
close the position by taking an opposite position, subject to the availability
of a secondary market, which will operate to terminate the Fund's position in
the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the
Fund realizes a loss or gain.
IV. Risks of Transactions in Futures Contracts
There are several risks in connection with the use of futures
by a Fund as a hedging device. One risk arises because of the imperfect
correlation between movements in the price of the future and movements in the
price of the securities which are the subject of the hedge. The price of the
future may move more than or less than the price of the securities being
hedged. If the price of the future moves less than the price of the securities
which are the subject of the hedge, the hedge will not be fully effective but,
if the price of the securities being hedged has moved in an unfavorable
direction, the Fund would be in a better position than if it had not hedged at
all. If the price of the securities being hedged has moved in a favorable
direction, this advantage will be partially offset by the loss on the future.
If the price of the future moves more than the price of the hedged securities,
the Fund involved will experience either a loss or gain on the future which
will not be completely offset by movements in the price of the securities
which are the subject of the hedge. To compensate for the imperfect
correlation of movements in the price of securities being hedged and movements
in the price of futures contracts, a Fund may buy or sell futures contracts in
a greater dollar amount than the dollar amount of securities being hedged
B-7
<PAGE>
if the volatility over a particular time period of the prices of such
securities has been greater than the volatility over such time period of the
future, or if otherwise deemed to be appropriate by the Investment Adviser.
Conversely, a Fund may buy or sell fewer futures contracts if the volatility
over a particular time period of the prices of the securities being hedged is
less than the volatility over such time period of the futures contract being
used, or if otherwise deemed to be appropriate by the Investment Adviser. It
is also possible that, where a Fund has sold futures to hedge its portfolio
against a decline in the market, the market may advance and the value of
securities held by the Fund may decline. If this occurred, the Fund would lose
money on the future and also experience a decline in value in its portfolio
securities.
Where futures are purchased to hedge against a possible
increase in the price of securities before a Fund is able to invest its cash
(or cash equivalents) in securities (or options) in an orderly fashion, it is
possible that the market may decline instead; if the Fund then concludes not
to invest in securities or options at that time because of concern as to
possible further market decline or for other reasons, the Fund will realize a
loss on the futures contract that is not offset by a reduction in the price of
securities purchased.
In instances involving the purchase of futures contracts by a
Fund, an amount of cash and cash equivalents, equal to the market value of the
futures contracts (or options), will be deposited in a segregated account with
the Fund's Custodian and/or in a margin account with a broker to collateralize
the position and thereby ensure that the use of such futures is unleveraged.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and
the securities being hedged, the price of futures may not correlate perfectly
with movement in the cash market due to certain market distortions. Rather
than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. With respect to
financial futures contracts, the liquidity of the futures market depends on
participants entering into off-setting transactions rather than making or
taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced thus producing distortions.
From the point of view of speculators, the deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
also cause temporary price distortions. Due to the possibility of price
distortion in the futures market, and because of the imperfect correlation
between the movements in the cash market and movements in the price of
futures, a correct forecast of general market trends or interest rate
movements by the Investment Adviser may still not result in a successful
hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or
board of trade which provides a secondary market for such futures. Although a
Fund intends to purchase or sell futures only on exchanges or boards of trade
where there appear to be active secondary markets, there is no assurance that
a liquid secondary market on any exchange or board of
B-8
<PAGE>
trade will exist for any particular contract or at any particular time. In
such event, it may not be possible to close a futures investment position, and
in the event of adverse price movements, a Fund would continue to be required
to make daily cash payments of variation margin. However, in the event futures
contracts have been used to hedge portfolio securities, such securities will
not be sold until the futures contract can be terminated. In such
circumstances, an increase in the price of the securities, if any, may
partially or completely offset losses on the futures contract. However, as
described above, there is no guarantee that the price of the securities will
in fact correlate with the price movements in the futures contract and thus
provide an offset on a futures contract.
Further, it should be noted that the liquidity of a secondary
market in a futures contract may be adversely affected by "daily price
fluctuation limits" established by commodity exchanges which limit the amount
of fluctuation in a futures contract price during a single trading day. Once
the daily limit has been reached in the contract, no trades may be entered
into at a price beyond the limit, thus preventing the liquidation of open
futures positions.
Successful use of futures by a Fund is also subject to the
Investment Adviser's ability to predict correctly movements in the direction
of the market. For example, if a Fund has hedged against the possibility of a
decline in the market adversely affecting securities held in its portfolio and
securities prices increase instead, the Fund will lose part or all of the
benefit to the increased value of its securities which it has hedged because
it will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities
to meet daily variation margin requirements. Such sales of securities may be,
but will not necessarily be, at increased prices which reflect the rising
market. A Fund may have to sell securities at a time when it may be
disadvantageous to do so.
V. Options on Futures Contracts
Each Fund may purchase options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing, an option of the same
series, at which time the person entering into the closing transaction will
realize a gain or loss.
Investments in futures options involve some of the same
considerations that are involved in connection with investments in futures
contracts (for example, the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying futures contract will not be fully reflected in the
value of the option purchased. Depending on the pricing of the option compared
to either the
B-9
<PAGE>
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on the underlying
futures contract. Compared to the purchase or sale of futures contracts,
however, the purchase of call or put options on futures contracts may
frequently involve less potential risk to a Fund because the maximum amount at
risk is the premium paid for the options (plus transaction costs). Although
permitted by their investment policies, the Funds do not currently intend to
write futures options, and will not do so in the future absent any necessary
regulatory approvals.
VI. Accounting and Tax Treatment
Accounting for futures contracts and options will be in
accordance with generally accepted accounting principles.
Generally, futures contracts held by a Fund at the close of the
Fund's taxable year will be treated for federal income tax purposes as sold
for their fair market value on the last business day of such year, a process
known as "mark-to-market." Forty percent of any gain or loss resulting from
such constructive sale will be treated as short-term capital gain or loss and
60% of such gain or loss will be treated as long-term capital gain or loss
without regard to the length of time the Fund holds the futures contract ("the
40-60 rule"). The amount of any capital gain or loss actually realized by a
Fund in a subsequent sale or other disposition of those futures contracts will
be adjusted to reflect any capital gain or loss taken into account by the Fund
in a prior year as a result of the constructive sale of the contracts. With
respect to futures contracts to sell, which will be regarded as parts of a
"mixed straddle" because their values fluctuate inversely to the values of
specific securities held by the Fund, losses as to such contracts to sell will
be subject to certain loss deferral rules which limit the amount of loss
currently deductible on either part of the straddle to the amount thereof
which exceeds the unrecognized gain, if any, with respect to the other part of
the straddle, and to certain wash sales regulations. Under short sales rules,
which will also be applicable, the holding period of the securities forming
part of the straddle will (if they have not been held for the long-term
holding period) be deemed not to begin prior to termination of the straddle.
With respect to certain futures contracts, deductions for interest and
carrying charges will not be allowed. Notwithstanding the rules described
above, with respect to futures contracts to sell which are properly identified
as such, a Fund may make an election which will exempt (in whole or in part)
those identified futures contracts from being treated for federal income tax
purposes as sold on the last business day of the Fund's taxable year, but
gains and losses will be subject to such short sales, wash sales, loss
deferral rules and the requirement to capitalize interest and carrying
charges. Under temporary regulations, a Fund would be allowed (in lieu of the
foregoing) to elect either (1) to offset gains or losses from portions which
are part of a mixed straddle by separately identifying each mixed straddle to
which such treatment applies, or (2) to establish a mixed straddle account for
which gains and losses would be recognized and offset on a periodic basis
during the taxable year. Under either election, the 40-60 rule will apply to
the net gain or loss attributable to the futures contracts, but in the case of
a mixed straddle account election, not
B-10
<PAGE>
more than 50% of any net gain may be treated as long-term and no more than 40%
of any net loss may be treated as short-term. Options on futures contracts
generally receive federal tax treatment similar to that described above.
Certain foreign currency contracts entered into by a Fund may
be subject to the "mark-to-market" process and the 40-60 rule in a manner
similar to that described in the preceding paragraph for futures contracts. To
receive such federal income tax treatment, a foreign currency contract must
meet the following conditions: (1) the contract must require delivery of a
foreign currency of a type in which regulated futures contracts are traded or
upon which the settlement value of the contract depends; (2) the contract must
be entered into at arm's length at a price determined by reference to the
price in the interbank market; and (3) the contract must be traded in the
interbank market. The Treasury Department has broad authority to issue
regulations under the provisions respecting foreign currency contracts. As of
the date of this Additional Statement, the Treasury Department has not issued
any such regulations. Other foreign currency contracts entered into by a Fund
may result in the creation of one or more straddles for federal income tax
purposes, in which case certain loss deferral, short sales, and wash sales
rules and the requirement to capitalize interest and carrying charges may
apply.
Some of the Funds' investments may be subject to special rules
which govern the federal income tax treatment of certain transactions
denominated in terms of a currency other than the U.S. dollar or determined by
reference to the value of one or more currencies other than the U.S. dollar.
The types of transactions covered by the special rules include the following:
(1) the acquisition of, or becoming the obligor under, a bond or other debt
instrument (including, to the extent provided in Treasury regulations,
preferred stock); (2) the accruing of certain trade receivables and payables;
and (3) the entering into or acquisition of any forward contract, futures
contract, option or similar financial instrument. The disposition of a
currency other than the U.S. dollar by a U.S. taxpayer is also treated as a
transaction subject to the special currency rules. However, foreign
currency-related regulated futures contracts and nonequity options are
generally not subject to the special currency rules if they are or would be
treated as sold for their fair market value at year-end under the
mark-to-market rules, unless an election is made to have such currency
rules apply. With respect to transactions covered by the special rules,
foreign currency gain or loss is calculated separately from any gain or loss
on the underlying transaction and is normally taxable as ordinary gain or
loss. A taxpayer may elect to treat as capital gain or loss foreign currency
gain or loss arising from certain identified forward contracts, futures
contracts and options that are capital assets in the hands of the taxpayer and
which are not a part of a straddle. In accordance with Treasury regulations,
certain transactions that are part of a "section 988 hedging transaction" (as
defined in the Code and the Treasury regulations) may be integrated and
treated as a single transaction or otherwise treated consistently for purposes
of the Code. "Section 988 hedging transactions" are not subject to the
mark-to-market or loss deferral rules under the Code. Gain or loss
attributable to the foreign currency component of transactions engaged in by a
Fund which are not subject to the special currency rules (such as foreign
equity investments other than certain preferred stocks) will be
B-11
<PAGE>
treated as capital gain or loss and will not be segregated from the gain or
loss on the underlying transaction.
As described more fully in "Additional Information Concerning
Taxes," a regulated investment company must derive less than 30% of its gross
income from gains realized on the sale or other disposition of securities and
certain other investments held for less than three months. With respect to
futures contracts and other financial instruments subject to the
mark-to-market rules, the Internal Revenue Service has ruled in private
letter rulings that a gain realized from such a futures contract or financial
instrument will be treated as being derived from a security held for three
months or more (regardless of the actual period for which the contract or
instrument is held) if the gain arises as a result of a constructive sale
under the mark-to-market rules, and will be treated as being derived from a
security held for less than three months only if the contract or instrument is
terminated (or transferred) during the taxable year (other than by reason of
mark-to-market) and less than three months have elapsed between the date
the contract or instrument is acquired and the termination date. In
determining whether the 30% test is met for a taxable year, increases and
decreases in the value of each Fund's futures contracts and other investments
that qualify as part of a "designated hedge," as defined in the Code, may be
netted.
B-12
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--21.4%
AUTOMOBILES--LEASING--0.8%
Hertz Corp., Junior Subordinate Note.... 6.63% 7/15/00 $500 $ 496,347
-----------
BANKING--2.9%
Chase Manhattan Corp., Subordinate Note. 7.63% 1/15/03 500 514,106
Citicorp, Subordinate Capital Note...... 9.75% 8/1/99 250 270,722
Citicorp, Subordinate Debenture......... 8.63% 12/1/02 350 378,000
NationsBank Corp., Subordinate
Debenture............................. 8.13% 6/15/02 350 368,312
Westpac Banking Limited, Subordinate
Debenture............................. 9.13% 8/15/01 250 272,853
-----------
1,803,993
-----------
BEVERAGES, FOOD & TOBACCO--4.1%
Grand Metro Investment Corp., Guaranteed
Debenture, Yankee Bond................ 9.00% 8/15/11 250 281,719
Philip Morris Cos., Inc., Corporate
Note.................................. 8.63% 3/1/99 500 523,326
Philip Morris Cos., Inc., Corporate
Note.................................. 7.13% 10/1/04 250 246,207
RJR Nabisco, Inc........................ 8.30% 4/15/99 750 780,309
RJR Nabisco, Inc........................ 8.63% 12/1/02 700 711,121
-----------
2,542,682
-----------
CONSUMER GOODS & SERVICES--0.8%
Time Warner, Inc., Corporate Note....... 7.95% 2/1/00 500 512,357
-----------
ENERGY--2.6%
Burlington Resources, Inc.,
Corporate Note........................ 8.50% 10/1/01 250 266,026
Coastal Corp., Senior Debenture......... 10.25% 10/15/04 500 583,193
Occidental Petroleum Corp., Senior Note. 11.13% 8/1/10 400 515,025
Shell Canada Limited, Corporate Note.... 7.38% 6/1/99 250 256,090
-----------
1,620,334
-----------
FINANCIAL SERVICES--6.4%
Barclay American Corp., Senior
Debenture............................. 9.13% 12/1/97 750 776,981
Discover Credit Corp., Medium Term Note. 8.37% 4/28/99 250 260,717
</TABLE>
See Notes to Financial Statements.
FS-1
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
FINANCIAL SERVICES (CONTINUED)
General Motors Acceptance Corp.,
Corporate Note......................... 7.75% 4/15/97 $250 $ 253,092
General Motors Acceptance Corp.,
Corporate Note......................... 7.00% 3/1/00 500 502,302
International Lease Finance,
Corporate Note......................... 8.35% 10/1/98 500 518,744
KFW International Finance, Inc.
Guaranteed Note........................ 8.85% 6/15/99 250 265,801
Progressive Corp., Ohio, Corporate Note.. 6.60% 1/15/04 500 480,172
Salomon Inc., Senior Note................ 7.50% 2/1/03 500 498,559
Wells Fargo & Co., Subordinate Note...... 8.38% 5/15/02 400 425,753
-----------
3,982,121
-----------
HEATH CARE & HOSPITAL MANAGEMENT--0.5%
Multicare Cos., Inc., Subordinate
Debenture, 144A*....................... 7.00% 3/15/03 250 307,500
-----------
RETAIL--0.5%
May Department Stores Co.,
Medium Term Note....................... 9.45% 2/2/99 250 266,112
-----------
STEEL--0.8%
USX-Marathon Group, Corporate Note....... 6.38% 7/15/98 500 496,475
-----------
TECHNOLOGY INDUSTRIES--0.8%
Digital Equipment Corp., Debentures...... 8.63% 11/1/12 500 500,983
-----------
UTILITIES--1.2%
Commonwealth Edison Co., First Mortgage,
Series 81, Corporate Note.............. 8.63% 2/1/22 250 252,818
Pacific Bell, Corporate Note............. 7.00% 7/15/04 500 497,989
-----------
750,807
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $13,172,293)...................... 13,279,711
-----------
</TABLE>
See Notes to Financial Statements.
FS-2
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--19.3%
U.S. Treasury Notes...................... 8.50% 5/15/97 $ 100 $ 102,313
U.S. Treasury Notes...................... 8.13% 2/15/98 500 515,780
U.S. Treasury Notes...................... 6.00% 5/31/98 5,000 4,990,625
U.S. Treasury Notes...................... 6.25% 5/31/00 1,050 1,043,437
U.S. Treasury Notes...................... 6.25% 4/30/01 2,800 2,772,871
U.S. Treasury Notes...................... 8.00% 5/15/01 500 531,406
U.S. Treasury Notes...................... 6.63% 6/30/01 2,000 2,013,122
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $11,927,331)...................... 11,969,554
-----------
U.S. GOVERNMENT AGENCY
OBLIGATIONS--1.5%
Federal National Mortgage Association.... 7.60% 1/10/97 400 404,075
Federal National Mortgage Association.... 8.35% 11/10/99 500 527,511
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $901,091)......................... 931,586
-----------
<CAPTION>
Shares
------
<S> <C> <C> <C> <C>
PREFERRED CONVERTIBLE STOCKS--2.7%
AUTOMOBILES--1.5%
Ford Motor Co., Series A, $4.20.......... 9,000 954,000
-----------
BANKING & FINANCE--1.2%
First USA, Inc., 6.25%................... 15,000 716,250
-----------
TOTAL PREFERRED CONVERTIBLE STOCKS
(COST $1,111,113)....................... 1,670,250
-----------
COMMON STOCKS--43.8%
AUTOMOBILES--1.5%
Ford Motor Co. .......................... 4,000 129,500
General Motors Corp. .................... 14,886 779,654
-----------
909,154
-----------
BANKING & FINANCE--8.2%
Bank of Boston Corp. .................... 21,000 1,039,500
Citicorp................................. 20,718 1,711,825
First Union Corp. ....................... 11,000 669,625
</TABLE>
See Notes to Financial Statements.
FS-3
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
BANKING & FINANCE (CONTINUED)
National City Corp. ............................. 14,302 $ 502,358
NationsBank Corp. ............................... 13,912 1,149,479
-----------
5,072,787
-----------
BEVERAGE, FOOD & TOBACCO--3.3%
Philip Morris Cos., Inc. ........................ 20,000 2,080,000
-----------
COMMUNICATIONS & PUBLISHING--0.2%
360 Communications Co. .......................... 6,666 159,984
-----------
CONGLOMERATES--0.9%
Unilever NV, ADR................................. 4,000 580,500
-----------
ELECTRICAL & ELECTRONIC EQUIPMENT--6.8%
Electronic Data Systems.......................... 16,893 907,999
Hitachi Limited, ADR............................. 9,000 843,750
Hubbell, Inc., Class B........................... 5,000 331,250
Matsushita Electric Industrial Co., Ltd, ADR..... 5,000 930,000
Philips Electronics, ADR......................... 14,000 456,750
Sony Corp., ADR.................................. 11,000 727,375
-----------
4,197,124
-----------
INSURANCE--2.9%
AON Corp. ....................................... 28,500 1,446,375
Exel, Ltd. ...................................... 5,200 366,600
-----------
1,812,975
-----------
OIL & GAS--3.7%
Atlantic Richfield Co. .......................... 5,000 592,500
British Petroleum Ltd., PLC, ADR................. 9,000 961,875
Texaco, Inc. .................................... 9,000 754,875
-----------
2,309,250
-----------
PHARMACEUTICALS--5.8%
Bristol Myers Squibb Co. ........................ 8,000 720,000
Johnson & Johnson Co. ........................... 16,000 792,000
Pfizer, Inc. .................................... 20,000 1,427,500
Warner Lambert Co. .............................. 12,000 660,000
-----------
3,599,500
-----------
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
TELECOMMUNICATIONS--5.3%
British Telecommunications PLC, ADR.... 10,000 $ 537,500
GTE Corp. ............................. 26,000 1,163,500
Sprint Corp. .......................... 20,000 840,000
US West, Inc. ......................... 15,000 478,125
US West Media Group.................... 15,000 273,750
-----------
3,292,875
-----------
UTILITIES--5.2%
Detroit Edison Co. .................... 20,000 617,500
Entergy Corp. ......................... 20,000 567,500
Peco Energy Co. ....................... 25,000 650,000
Texas Utilities Co. ................... 20,000 855,000
United Illuminating Co. ............... 14,000 523,250
-----------
3,213,250
-----------
TOTAL COMMON STOCKS
(COST $19,312,379).................... 27,227,399
-----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--10.4%
U.S. TREASURY BILLS--10.4%
U.S. Treasury Bills (cost $6,457,539).. 5.09%** 3/6/97 $ 6,700 6,457,673
-----------
TOTAL INVESTMENTS--99.1%
(COST $52,881,746)(A)................. 61,536,173
Other assets in excess of liabilities--
0.9%.................................. 537,253
-----------
NET ASSETS--100.0%...................... $62,073,426
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $62,073,426.
* Securities exempt from registration under rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
** Yield at purchase.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $9,312,584
Unrealized depreciation......................................... (658,157)
----------
Net unrealized appreciation..................................... $8,654,427
==========
</TABLE>
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-5
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--66.0%
ALUMINUM--1.1%
Aluminum Co. of America...................... 1,900 $ 109,013
----------
AUTOMOBILES--1.0%
Ford Motor Co. .............................. 3,000 97,125
----------
AUTOMOTIVE PARTS & EQUIPMENT--0.9%
Echlin, Inc. ................................ 2,400 90,900
----------
BANKING--4.2%
BankAmerica Corp. ........................... 1,900 143,925
NationsBank Corp. ........................... 1,700 140,463
State Street Bank............................ 2,600 132,600
----------
416,988
----------
BEVERAGE, FOOD & TOBACCO--5.3%
Anheuser-Busch Cos., Inc. ................... 1,200 90,000
Coca-Cola Co. ............................... 3,200 156,400
PepsiCo, Inc. ............................... 4,000 141,500
Philip Morris Cos., Inc. .................... 1,300 135,200
----------
523,100
----------
BROKERAGE SERVICES--0.8%
Dean Witter, Discover & Co. ................. 1,400 80,150
----------
BUSINESS & DATA PROCESSING EQUIPMENT--1.7%
International Business Machines.............. 1,700 168,300
----------
CHEMICALS--4.1%
E. I. du Pont de Nemours & Co. .............. 1,100 87,038
Monsanto Co. ................................ 3,500 113,750
Morton Int'l. ............................... 2,900 108,025
Praxair, Inc. ............................... 2,300 97,175
----------
405,988
----------
COMPUTERS--MICRO--0.8%
Compaq Computer(b)........................... 1,700 83,725
----------
COMPUTERS--SOFTWARE & PERIPHERALS--2.7%
Computer Association Int'l. ................. 1,550 110,438
Microsoft Corp(b)............................ 1,300 156,162
----------
266,600
----------
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
CONGLOMERATES--4.0%
Allied Signal, Inc. ......................... 1,700 $ 97,113
General Electric Co. ........................ 2,500 216,250
ITT Corp. ................................... 900 59,625
ITT Industries, Inc.(b)...................... 900 22,612
----------
395,600
----------
CONSUMER GOODS--1.2%
Service Corp., Int'l......................... 2,100 120,750
----------
ELECTRICAL EQUIPMENT--1.8%
Emerson Electric Co. ........................ 2,000 180,750
----------
ELECTRONIC EQUIPMENT--1.1%
Motorola, Inc. .............................. 1,700 106,887
----------
FINANCE COMPANIES--1.1%
Federal Home Loan Mortgage Corp. ............ 1,300 111,150
----------
FOOD PROCESSING--0.9%
CPC Int'l, Inc. ............................. 1,300 93,600
----------
FOOD PRODUCTS--0.9%
Earthgrains Co. ............................. 48 1,572
Hershey Foods................................ 1,200 88,050
----------
89,622
----------
HOUSEHOLD & PERSONAL CARE PRODUCTS--1.3%
Proctor & Gamble Co. ........................ 1,400 126,874
----------
INSURANCE--2.0%
American Int'l Group, Inc. .................. 1,500 147,938
ITT Hartford Group(b)........................ 900 47,925
----------
195,863
----------
LEISURE & ENTERTAINMENT--1.1%
Walt Disney Co. ............................. 1,800 113,174
----------
NEWSPAPERS AND PUBLISHING--0.8%
News Corp., Ltd. ADR......................... 3,300 77,550
----------
</TABLE>
See Notes to Financial Statement
FS-7
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
OIL--DOMESTIC--4.1%
Chevron Corp. ............................... 2,300 $ 135,700
Mobil Corp. ................................. 1,200 134,550
Unocal Corp. ................................ 4,100 138,375
----------
408,625
----------
OIL--FIELD SERVICES AND EQUIPMENT--1.0%
Schlumberger, Ltd. .......................... 1,200 101,100
----------
OIL & GAS--2.0%
British Petroleum Co., ADR................... 900 96,188
Royal Dutch Petroleum Co. ................... 700 107,625
----------
203,813
----------
PHARMACEUTICALS--5.6%
Bristol Myers Squibb Co. .................... 1,200 108,000
Johnson & Johnson Co. ....................... 3,000 148,500
Merck & Co., Inc. ........................... 1,800 116,325
Pfizer, Inc. ................................ 1,600 114,200
SmithKline Beecham ADR....................... 1,300 70,688
----------
557,713
----------
POLLUTION CONTROL--1.0%
WMX Technologies, Inc. ...................... 3,000 98,249
----------
RAILROADS--1.2%
CSX Corp. ................................... 2,400 115,799
----------
RESTAURANTS--0.8%
McDonald's Corp. ............................ 1,600 74,800
----------
RETAIL--3.4%
Home Depot, Inc. ............................ 2,400 129,600
May Department Stores Co. ................... 1,500 65,625
Payless Shoesource Inc. ..................... 240 7,620
Wal-Mart Stores, Inc. ....................... 5,400 137,025
----------
339,870
----------
</TABLE>
See Notes to Financial Statements.
FS-8
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- --------- -----------
<S> <C> <C>
TELECOMMUNICATIONS--6.6%
AT&T Corp. ............................. 2,100 $ 130,200
General Instrument Corp.(b)............. 1,300 37,538
GTE Corp. .............................. 3,800 170,050
MCI Communications Corp. ............... 2,800 71,750
NYNEX Corp. ............................ 2,100 99,750
Pacific Telesis Group................... 1,800 60,750
Telcom Corp. New Zealand ADR............ 1,200 80,100
----------
650,138
----------
UTILITIES--1.5%
FPL Group, Inc. ........................ 3,200 147,200
----------
TOTAL COMMON STOCKS
(COST $5,270,362)...................... 6,551,016
----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
----- -------- ---------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--25.4%
U.S. TREASURY NOTES--25.4%
U.S. Treasury Note...................... 6.25% 5/31/00 $950 944,063
U.S. Treasury Note...................... 7.50% 11/15/01 700 730,843
U.S. Treasury Note...................... 6.38% 8/15/02 850 842,295
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $2,547,773)...................... 2,517,201
----------
SHORT-TERM INVESTMENT--5.4%
U.S. TREASURY BILL--5.4%
U.S. Treasury Bill (cost $538,085)...... 5.17%* 11/29/96 550 538,188
----------
TOTAL INVESTMENTS--96.8%
(COST $8,356,220)(A)................... 9,606,405
Other assets in excess of liabilities--
3.2%................................... 313,941
----------
NET ASSETS--100.0%....................... $9,920,346
==========
</TABLE>
- -----------
Percentages indicated are based on net assets of $9,920,346.
* Yield at purchase.
(a) Represents cost for federal income tax purposes and differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $1,290,209
Unrealized depreciation......................................... (40,024)
----------
Net unrealized appreciation..................................... $1,250,185
==========
</TABLE>
(b) Represents non-income producing securities.
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-9
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--83.1%
AUTOMOBILES--0.7%
Ford Motor Co. ............................ 70,000 $ 2,266,250
------------
BANKS--3.2%
Bankers Trust.............................. 90,000 6,648,750
Mercantile Bankshares Corp. ............... 130,000 3,315,000
------------
9,963,750
------------
BEVERAGES, FOOD & TOBACCO--3.8%
Guinness PLC, ADR.......................... 43,900 1,596,156
Philip Morris Cos., Inc. .................. 50,841 5,287,464
UST, Inc. ................................. 141,500 4,846,375
------------
11,729,995
------------
BUSINESS FORMS--1.7%
Deluxe Corp. .............................. 140,000 4,970,000
------------
CHEMICALS--7.4%
ARCO Chemical.............................. 155,000 8,060,000
Dow Chemical............................... 100,000 7,600,000
E.I. du Pont de Nemours & Co. ............. 90,000 7,121,250
------------
22,781,250
------------
CONGLOMERATES--1.4%
Unilevel................................... 30,000 4,353,750
------------
CONSUMER PRODUCTS--2.7%
Clorox Co. ................................ 90,000 7,976,250
------------
DEFENSE--1.6%
Lockheed Martin............................ 60,000 5,040,000
------------
ELECTRICAL EQUIPMENT--3.2%
Emerson Electric Co. ...................... 48,000 4,338,000
Hubbell, Inc., Class B..................... 20,000 1,325,000
Thomas & Betts Corp. ...................... 110,000 4,125,000
------------
9,788,000
------------
FINANCIAL SERVICES, MORTGAGE--3.3%
Federal National Mortgage Assn. ........... 302,000 10,117,000
------------
</TABLE>
See Notes to Financial Statements.
FS-10
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
FOREST & PAPER PRODUCTS--1.3%
Weyerhaeuser Co.(b)......................... 95,000 $ 4,037,500
------------
INSURANCE--9.4%
American National Insurance................. 87,200 5,668,000
AON Corp. .................................. 70,000 3,552,500
FPL Group................................... 75,000 3,450,000
Home Beneficial............................. 59,800 1,569,750
Lincoln National Corp. ..................... 100,000 4,625,000
Ohio Casualty............................... 49,000 1,702,750
Old Republic International.................. 328,650 7,065,975
SAFECO...................................... 33,500 1,185,062
------------
28,819,037
------------
INVESTMENT MANAGEMENT--2.7%
Salomon, Inc. .............................. 306,400 8,349,400
------------
METALS--1.2%
Phelps Dodge................................ 60,000 3,742,500
------------
NATURAL GAS--3.7%
National Fuel Gas Co. ...................... 115,000 4,140,000
Sonat, Inc. ................................ 60,000 2,700,000
Tenneco, Inc. .............................. 90,000 4,601,250
------------
11,441,250
------------
OIL & GAS--15.6%
Amoco Corp. ................................ 155,000 11,218,125
Atlantic Richfield Corp. ................... 55,000 6,517,500
British Petroleum Co. PLC, ADR.............. 70,000 7,481,250
Mobil Corp. ................................ 105,000 11,773,125
Texaco, Inc. ............................... 125,000 10,484,375
------------
47,474,375
------------
PHARMACEUTICALS--1.0%
Warner Lambert Co. ......................... 56,000 3,080,000
------------
</TABLE>
See Notes to Financial Statements.
FS-11
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS--3.9%
Amli Residential Properties Trust....... 140,000 $ 2,905,000
Equity Residential...................... 100,000 3,287,500
National Health Investors, Inc. ........ 174,000 5,698,500
------------
11,891,000
------------
RETAIL STORES--2.2%
May Department Stores Co. .............. 156,938 6,866,038
------------
TELECOMMUNICATIONS--5.7%
GTE Corp. .............................. 210,000 9,397,500
Sprint Corp. ........................... 156,938 6,591,396
U.S. West, Inc. ........................ 50,000 1,593,750
------------
17,582,646
------------
UTILITIES--7.4%
Cinergy Corp. .......................... 130,000 4,160,000
DTE Energy.............................. 196,173 6,056,841
Texas Utilities Co. .................... 156,938 6,709,099
United Illuminating Co. ................ 156,938 5,865,558
------------
22,791,498
------------
TOTAL COMMON STOCKS
(COST $215,550,627).................... 255,061,489
------------
CONVERTIBLE PREFERRED STOCKS--1.9%
AUTOMOBILES--1.9%
Ford Motor Company, Series A, $4.20..... 55,000 5,830,000
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $4,567,292)...................... 5,830,000
------------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
CONVERTIBLE BONDS--5.0%
Bank of New York, Inc. Subordinate
Convertible Debenture................. 7.50% 8/15/01 $3,139 8,255,570
Price Companies Convertible Debenture... 6.75% 3/1/01 5,400 5,784,750
RLI Corp. Convertible Debenture......... 6.00% 7/15/03 1,100 1,152,250
------------
TOTAL CONVERTIBLE BONDS
(COST $11,619,162)..................... 15,192,570
------------
</TABLE>
See Notes to Financial Statements.
FS-12
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Rate Date (000) (Note 2(a))
---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--9.7%
TIME DEPOSIT--9.7%
JJ Lummis, Money Market
(cost $29,931,000).................. 5.56% 7/1/96 $29,931,000 $ 29,931,000
------------
TOTAL INVESTMENTS
(COST $261,668,081)(A)--99.7%........ 306,015,059
Other assets in excess of liabilities--
0.3%................................. 829,661
------------
NET ASSETS--100.0%..................... $306,844,720
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $306,844,720.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $44,584,743
Unrealized depreciation........................................ (237,765)
-----------
Net unrealized appreciation.................................... $44,346,978
===========
</TABLE>
(b) Represents non-income producing securities.
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-13
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--96.3%
ADVERTISING & MARKETING SERVICES--1.6%
Interpublic Group of Cos., Inc. ............ 65,000 $ 3,046,875
Omnicon Group............................... 40,000 1,860,000
------------
4,906,875
------------
BANKING--3.8%
Norwest Corp. .............................. 177,000 6,172,875
State Street Boston Corp. .................. 110,000 5,610,000
------------
11,782,875
------------
BEVERAGES, FOOD & TOBACCO--10.9%
ConAgra, Inc. .............................. 100,000 4,537,500
General Mills, Inc. ........................ 80,000 4,360,000
PepsiCo, Inc. .............................. 200,000 7,075,000
Philip Morris Cos. Inc. .................... 120,000 12,480,000
Sara Lee Corp. ............................. 20,000 647,500
UST, Inc. .................................. 130,000 4,452,500
------------
33,552,500
------------
CAPITAL EQUIPMENT--INFORMATION--2.6%
York International Corp. ................... 155,000 8,021,250
------------
CHEMICALS--2.2%
Praxair, Inc. .............................. 160,000 6,760,000
------------
COMPUTER SOFTWARE, PERIPHERALS & SERVICES--12.6%
Automatic Data Processing, Inc. ............ 175,000 6,759,375
Computer Associates International, Inc. .... 90,000 6,412,500
Electronic Data Systems..................... 36,000 1,935,000
Hewlett Packard............................. 50,000 4,981,250
Microsoft Corp. ............................ 75,000 9,009,375
Newell Co. ................................. 170,000 5,206,250
Silicon Graphics, Inc. ..................... 195,000 4,680,000
------------
38,983,750
------------
CONSUMER GOODS & SERVICES--11.7%
American Home Products...................... 60,000 3,607,500
Clorox Co. ................................. 50,000 4,431,250
Gaylord Entertainment Co. .................. 49,350 1,394,138
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
CONSUMER GOODS & SERVICES (CONTINUED)
Kimberly-Clark Corp......................... 120,000 $ 9,270,000
Proctor & Gamble Co. ....................... 100,000 9,062,500
Service Corp. International................. 145,000 8,337,500
------------
36,102,888
------------
ELECTRONICS--5.0%
AMP, Inc. .................................. 170,000 6,821,250
Emerson Electric............................ 95,000 8,585,625
------------
15,406,875
------------
ENGINEERING & CONSTRUCTION--2.1%
Fluor Corp. ................................ 100,000 6,537,500
------------
HEALTH INDUSTRIES--4.1%
Columbia HCA Healthcare Corp................ 140,000 7,472,500
United Healthcare Corp...................... 100,000 5,050,000
------------
12,522,500
------------
INSURANCE--5.6%
American International Group, Inc. ......... 55,000 5,424,375
Chubb Corp. ................................ 100,000 4,987,500
UNUM Corp. ................................. 110,000 6,847,500
------------
17,259,375
------------
LEISURE & HOME ENTERTAINMENT--1.6%
Carnival Cruise Lines, Inc.................. 170,000 4,908,750
------------
NATURAL GAS--2.1%
Enron Corp.................................. 160,000 6,540,000
------------
OIL & GAS EQUIPMENT & SERVICES--1.9%
Western Atlas, Inc.......................... 100,000 5,825,000
------------
PHARMACEUTICALS--10.3%
Elan Corp. PLC, ADR......................... 100,000 5,712,500
Ivax Corp................................... 110,000 1,746,250
Johnson & Johnson Co. ...................... 160,000 7,920,000
Mylan Labs.................................. 250,000 4,312,500
</TABLE>
See Notes to Financial Statements.
FS-15
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
PHARMACEUTICALS (CONTINUED)
Pfizer, Inc................................ 100,000 $ 7,137,500
SmithKline Beecham, ADR.................... 90,000 4,893,750
------------
31,722,500
------------
POLLUTION CONTROL--3.7%
Browning-Ferris............................ 200,000 5,800,000
WMX Technologies, Inc...................... 175,000 5,731,250
------------
11,531,250
------------
RETAIL STORES--6.5%
Albertsons, Inc............................ 108,500 4,489,188
Eckerd Corp.(b)............................ 219,000 4,954,875
Home Depot, Inc............................ 135,000 7,290,000
Walgreen Co.(b)............................ 100,000 3,350,000
------------
20,084,063
------------
SEMICONDUCTORS--1.8%
Intel Corp................................. 75,000 5,507,812
------------
SUPRANATIONALS--1.0%
Lucent Technologies........................ 82,800 3,136,050
------------
TELECOMMUNICATIONS--4.5%
Airtouch Communications.................... 230,000 6,497,500
MCI Communications Corp.................... 300,000 7,687,500
------------
14,185,000
------------
UTILITIES--0.7%
AES Corp.(b)............................... 80,000 2,260,000
------------
TOTAL COMMON STOCKS
(COST $253,511,543)....................... 297,536,813
------------
</TABLE>
See Notes to Financial Statements.
FS-16
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--3.6%
TIME DEPOSIT--3.6%
JJ Lummis (cost $11,108,000)............ 5.56% 7/1/96 $11,108 $ 11,108,000
------------
TOTAL INVESTMENTS--99.9%
(COST $264,619,543)(A)................. 308,644,813
Other assets in excess of liabilities--
0.1%................................... 446,233
------------
NET ASSETS--100.0%....................... $309,091,046
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $309,091,046.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$312,970. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $47,855,328
Unrealized depreciation........................................ (4,143,028)
-----------
Net unrealized appreciation.................................... $43,712,300
===========
</TABLE>
(b) Represents non-income producing securities.
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-17
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--95.6%
APPAREL--1.2%
Tommy Hilfiger Corp. ....................... 24,100 $ 1,292,363
------------
AUTOMOTIVE PARTS & EQUIPMENT--3.4%
Borg Warner................................. 60,000 2,370,000
Superior Industries Int'l, Inc. ............ 45,000 1,192,500
------------
3,562,500
------------
BANKS--2.3%
Old Kent Financial.......................... 63,000 2,464,875
------------
BUSINESS EQUIPMENT & SERVICES--0.3%
Cort Business Services Corp. ............... 18,400 358,800
------------
CHEMICALS--1.1%
Airgas, Inc. ............................... 60,000 1,140,000
------------
COMPUTER SERVICES--2.1%
Dendrite International, Inc. ............... 63,500 2,190,750
------------
COMPUTER SOFTWARE & PERIPHERALS--2.2%
FileNet Corp. .............................. 35,000 1,277,500
Microchip Technology........................ 45,000 1,113,750
------------
2,391,250
------------
CONSTRUCTION EQUIPMENT--1.2%
Southern Pacific Funding Corp. ............. 70,000 1,225,000
------------
CONSUMER NON-DURABLES--2.1%
Alberto-Culver Co., Class A................. 55,000 2,200,000
------------
ELECTRONICS--7.7%
Belden, Inc. ............................... 80,000 2,400,000
Methode Electronics, Inc., Class A.......... 95,000 1,615,000
Oak Industry, Inc. ......................... 60,000 1,777,500
Perceptron, Inc. ........................... 65,000 2,372,500
------------
8,165,000
------------
HEALTH CARE PRODUCTS & SERVICES--14.6%
American Medical Response, Inc. ............ 55,000 1,938,750
AmeriSource Health Corp, Class A............ 60,000 1,995,000
Community Health Systems, Inc. ............. 50,000 2,587,500
</TABLE>
See Notes to Financial Statements.
FS-18
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
HEALTH CARE PRODUCTS & SERVICES (CONTINUED)
Genesis Health Ventures, Inc. ............ 75,000 $ 2,353,125
Health Care & Retirement Corp. ........... 82,500 1,959,375
Meridian Diagnostics Inc. ................ 110,000 1,684,375
Multicare COs., Inc. ..................... 75,000 1,425,000
OEA, Inc. ................................ 42,000 1,575,000
------------
15,518,125
------------
INDUSTRIAL GOODS & EQUIPMENT--7.3%
ABC Rail Products Corp. .................. 85,000 1,838,125
Greenfield Industries..................... 60,000 1,980,000
LittleFuse, Inc. ......................... 50,000 1,875,000
Wolverine Tube, Inc. ..................... 60,000 2,100,000
------------
7,793,125
------------
INSURANCE--14.7%
Capital Re Corp. ......................... 60,000 2,205,000
CapMac Holdings, Inc. .................... 85,000 2,422,500
CMAC Investment Corp. .................... 45,000 2,587,500
Executive Risks........................... 50,000 1,912,500
Integon, Corp. ........................... 100,000 2,012,500
National Re Corp. ........................ 60,000 2,265,000
Western National Corp. ................... 120,000 2,205,000
------------
15,610,000
------------
MACHINERY & EQUIPMENT--1.7%
DT Industries, Inc. ...................... 100,000 1,825,000
------------
MANUFACTURING--5.6%
AptarGroup, Inc. ......................... 44,200 1,337,050
Charter Power Systems..................... 40,000 1,390,000
Holophane................................. 45,000 708,750
InterVoice, Inc. ......................... 40,000 795,000
W. H. Brady Co. .......................... 75,000 1,668,750
------------
5,899,550
------------
</TABLE>
See Notes to Financial Statements.
FS-19
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
MEDICAL CARE & PRODUCTS--3.3%
Rural/Metro................................. 80,000 $ 2,740,000
Sofamor Danek Group......................... 28,900 801,975
------------
3,541,975
------------
NATURAL GAS--2.3%
Swift Energy Co. ........................... 135,000 2,430,000
------------
OIL & GAS--3.6%
Noble Affiliates............................ 50,000 1,887,500
Smith International, Inc. .................. 65,000 1,958,125
------------
3,845,625
------------
PHARMACEUTICALS--4.3%
ALPHARMA, Inc. ............................. 85,000 1,689,375
Elan Corp. PLC ADR.......................... 50,000 2,856,250
------------
4,545,625
------------
REAL ESTATE DEVELOPMENT--2.0%
Stewart Enterprises, Inc., Class A.......... 67,500 2,109,375
------------
RESTAURANTS--2.0%
IHOP Corp. ................................. 80,000 2,160,000
------------
RETAIL STORES--6.5%
Eckerd Corp. ............................... 110,000 2,488,750
99(cents) Only Stores....................... 150,000 2,100,000
Proffitt's, Inc. ........................... 65,000 2,307,500
------------
6,896,250
------------
SEMICONDUCTORS--1.1%
Zilog, Inc. ................................ 50,000 1,200,000
------------
UTILITIES--3.0%
AES Corp. .................................. 27,900 788,175
Public Services Co. of New Mexico........... 55,000 1,127,500
SIGCORP, Inc. .............................. 36,800 1,274,200
------------
3,189,875
------------
TOTAL COMMON STOCKS
(COST $85,454,357)......................... 101,555,063
------------
</TABLE>
See Notes to Financial Statements.
FS-20
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--3.1%
TIME DEPOSIT--3.1%
JJ Lummis (cost $3,329,000)............. 5.56% 7/1/96 3,329 $ 3,329,000
------------
TOTAL INVESTMENTS--98.7%
(COST $88,783,357)(A).................. 104,884,063
Other assets in excess of liabilities--
1.3%................................... 1,432,401
------------
NET ASSETS--100.0%....................... $106,316,464
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $106,316,464.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $18,523,319
Unrealized depreciation........................................ (2,422,613)
-----------
Net unrealized appreciation.................................... $16,100,706
===========
</TABLE>
(b) Represents non-income producing securities.
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-21
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--79.8%
AUSTRALIA--2.3%
Aberfoyle Limited............................ 2,400 $ 6,800
Adelaide Brighton Limited.................... 3,800 3,888
Amcor Limited................................ 15,300 104,162
Ashton Mining Limited........................ 7,000 9,916
Australian National Industries Limited....... 18,800 15,239
Boral Limited................................ 27,500 71,423
Brambles Industries Limited.................. 5,500 76,532
Broken Hill Proprietary Co................... 47,000 649,939
Burns Philip & Co............................ 12,200 23,045
Caltex Limited(b)............................ 4,300 17,260
Coca-Coca Amatil............................. 9,600 106,762
Coles Myer Limited........................... 26,612 96,764
CRA Limited.................................. 16,017 246,577
Crusader(b).................................. 2,400 3,211
CSR Limited.................................. 22,700 80,217
Dominion Mining Limited(b)................... 2,160 1,258
Email Limited................................ 6,900 17,921
Emperor Mines Limited(b)..................... 1,600 3,778
FAI Insurances(b)............................ 7,600 4,007
Fosters Brewing Group........................ 48,900 84,284
General Property Trust....................... 15,200 26,079
Gold Mines of Kalgoorlie..................... 23,800 26,037
Goodman Fielder Limited...................... 29,900 30,354
Hardie (James) Industries.................... 9,600 19,418
ICI Australia................................ 7,400 64,881
Lend Lease Corp.............................. 6,000 92,085
MIM Holdings Limited......................... 39,700 51,241
National Australia Bank...................... 34,900 322,748
Newcrest Mining Limited...................... 5,800 23,281
News Corporation Limited..................... 49,700 282,028
North Limited................................ 17,100 49,123
OPSM Protector Limited....................... 3,500 6,198
Pacific Dunlop Limited....................... 28,800 64,826
Pioneer International Holdings............... 22,100 64,355
QCT Resources................................ 15,100 19,965
RGC Limited.................................. 5,000 24,201
</TABLE>
See Notes to Financial Statements.
FS-22
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
AUSTRALIA (CONTINUED)
Rothman's Holdings Limited.................. 2,500 $ 13,970
Santos Limited.............................. 21,000 72,723
Schroders Property Fund..................... 9,100 15,828
Smith Howard Limited........................ 4,200 26,114
Sons of Gwalia Limited...................... 1,800 12,750
SouthCorp Holdings.......................... 23,400 58,013
Stockland Trust Group....................... 7,400 16,890
TNT Limited(b).............................. 14,400 16,206
Westfield Trust............................. 23,700 42,715
Westpac Banking Corp........................ 45,500 201,615
WMC Limited................................. 27,600 197,674
------------
3,464,301
------------
FINLAND--1.0%
Amer-Yhtymae................................ 1,400 23,505
Cultor OY 1................................. 1,000 48,860
Cultor OY 2................................. 500 25,614
Kesko....................................... 4,000 58,977
Kone Corp................................... 400 44,512
Merita Ltd.................................. 41,000 85,600
Metra OY, Class A........................... 700 31,641
Nokia....................................... 6,400 233,772
Outokumpu................................... 6,500 109,128
Pohojola Insurance.......................... 1,400 23,655
Sampo Insurance Co.......................... 800 46,320
Stockman.................................... 600 32,932
UPM-Kymmene................................. 20,400 421,972
10KIA....................................... 8,400 309,175
------------
1,495,663
------------
FRANCE--4.6%
Accor....................................... 550 76,922
Air Liquide................................. 1,300 229,541
Alcatel Alsthom............................. 2,900 252,929
AXA......................................... 3,650 199,655
Banque Nationale de Paris................... 4,500 157,952
BIC......................................... 550 78,097
</TABLE>
See Notes to Financial Statements.
FS-23
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
FRANCE (CONTINUED)
Bouygues.................................... 450 $ 50,174
Canal Plus.................................. 450 110,051
Carrefour(b)................................ 500 280,104
Casino Guichard............................. 1,200 49,533
Casino Guichard RTX......................... 1,250 1,943
Chargeurs International SA.................. 50 2,235
Cie De St Gobain............................ 2,300 307,823
Cie De Suez................................. 2,400 87,784
Cie Financiere.............................. 2,350 138,770
Cie Geophysique(b).......................... 50 2,972
Club Mediterranee(b)........................ 50 4,477
Compagnie Bancaire.......................... 1,210 136,322
Compagnie UAP............................... 6,000 121,792
Comptoirs Modern............................ 50 22,552
CSF (Thomson)............................... 2,300 64,647
Docks de France............................. 250 52,932
Dollfus-Meig & Cie PV....................... 50 2,224
Eaux-Cie Generale........................... 2,700 301,568
Ecco........................................ 200 50,310
ELF-Aquitane................................ 5,250 386,094
Eridania Beghin-Say......................... 500 78,281
Essilor International....................... 50 14,161
Europe 1(b)................................. 25 5,415
Groupe Danone............................... 1,400 211,846
GTM Entrepose............................... 50 3,244
Havas....................................... 1,250 102,222
Imetal...................................... 300 42,540
Lafarge-Coppee.............................. 1,780 107,704
Lagardere Groupe............................ 1,650 42,531
Legrand..................................... 500 89,354
L'Oreal..................................... 1,200 398,361
LVMH Moet Hennessy.......................... 1,600 379,481
Lyonnais Des Eaux-Dumez..................... 1,150 109,815
Michelin, Class B........................... 2,300 112,407
Moulinex(b)................................. 150 2,867
Nord Est.................................... 50 1,378
Pathe....................................... 50 11,733
</TABLE>
See Notes to Financial Statements.
FS-24
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
FRANCE (CONTINUED)
Pernod-Ricard............................... 1,100 $ 70,512
Peugeot SA.................................. 1,300 173,987
Pinault-Printemps........................... 450 157,427
Primagaz.................................... 400 44,366
Promodes.................................... 350 100,892
Rhone Poulenc, Series A..................... 6,250 164,259
Sagem SA.................................... 50 30,011
Sanofi SA................................... 3,300 247,303
Schneider SA................................ 2,600 136,361
Sefimeg..................................... 50 3,380
Seita....................................... 1,000 45,842
Sidel....................................... 150 38,140
Simco....................................... 50 4,613
Societe Generale............................ 2,500 274,859
Societe Technip............................. 50 4,604
Sodexho(b).................................. 50 22,183
St. Louis................................... 50 13,277
Total, Class B.............................. 4,800 355,984
Union Immobiliere de France................. 50 4,089
Usinor Sacilor.............................. 4,700 67,787
Valeo....................................... 1,350 72,245
------------
6,914,864
------------
GERMANY--2.5%
Allianz Holdings AG......................... 200 347,669
AMB Aachener & Muench....................... 50 36,133
BASF AG..................................... 600 170,878
Bayer AG.................................... 6,000 211,084
Bayerische Vereinsbank...................... 3,000 83,961
Beiersdorf AG, Series ABC................... 50 49,207
Bilfinger & Berger.......................... 50 21,056
Brau Und Brunnen............................ 50 5,190
Bremer Vulkan AG............................ 150 468
CKAG Cononia................................ 50 39,911
Commerzbank AG.............................. 500 103,407
Continental AG.............................. 1,000 16,227
Daimler Benz AG............................. 350 187,746
</TABLE>
See Notes to Financial Statements.
FS-25
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
GERMANY (CONTINUED)
Daimler Benz AG-RTS.......................... 350 $ 48
Degussa AG................................... 100 33,932
Deutsche Bank AG............................. 8,000 378,940
Deutsche Lufthansa AG........................ 400 56,631
Didier-Werke AG(b)........................... 50 3,876
FAG Kugelfischer Georg(b).................... 50 7,489
Heidelberger Zement.......................... 55 37,723
Hochtief AG.................................. 100 44,674
Kaufhof Holding AG........................... 300 113,426
Kloeckner.................................... 500 1,790
Linde AG..................................... 100 64,810
Linotype Hell AG(b).......................... 50 2,480
MAN AG....................................... 100 25,063
Mannesmann AG................................ 450 154,914
Muenchener Ruckvers.......................... 100 204,318
Preussag AG.................................. 800 201,558
P.W.A. Papier Waldhof(b)..................... 50 6,225
RWE AG....................................... 3,000 116,678
SAP AG....................................... 500 73,646
Schering AG.................................. 1,000 72,497
Siemens AG(b)................................ 6,500 348,371
Thyssen AG(b)................................ 350 64,038
Veba AG...................................... 7,000 372,042
Volkswagen AG................................ 200 74,435
------------
3,732,541
------------
HONG KONG--1.2%
Bank of East Asia............................ 7,200 26,323
Cathay Pacific Airway........................ 23,000 42,194
Cheung Kong Holdings......................... 18,000 129,641
China Light and Power Co., Limited........... 25,000 113,362
Chinese Estates Holdings..................... 12,000 10,697
Dickson Concepts International Limited....... 5,000 6,395
Giordano International Holdings.............. 4,000 3,876
Hang Lung Development Co..................... 10,000 18,797
Hang Seng Bank Limited....................... 21,800 219,674
Hong Kong Aircraft........................... 1,200 3,604
</TABLE>
See Notes to Financial Statements.
FS-26
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
HONG KONG (CONTINUED)
Hong Kong Telecom........................... 106,400 $ 191,062
Hopewell Holdings........................... 35,000 18,991
Hutchison Whampoa........................... 46,000 289,409
Hysan Development Co. Limited............... 8,000 24,494
Hysan Development Co. Warrants.............. 400 212
Johnson Electric Holdings................... 3,000 6,744
Kumagai Gumi................................ 3,000 2,693
Kumagai Gumi Warrants....................... 600 91
Lai Sun Garment International............... 2,000 2,403
Melco International Development............. 600 167
Miramar Hotel & Investment.................. 4,000 8,836
New World Development Co.................... 13,000 60,293
Oriental Press Group........................ 12,000 6,433
Peregrine Investment Holdings............... 4,000 5,762
Peregrine Investment Holdings Warrants...... 400 50
Playmates Toys Holdings..................... 4,000 971
Regal Hotel Holdings........................ 22,000 5,896
Shangri-La Asia............................. 8,000 11,214
Shun Tak Holdings Limited................... 12,000 7,363
South China Morning Post.................... 12,000 8,216
Sun Hung Kai Properties..................... 25,000 252,728
Swire Pacific Limited....................... 20,000 171,176
Television Broadcasts Limited............... 3,000 11,259
Wharf Holdings Limited...................... 39,000 139,562
Wing Lung Bank.............................. 1,440 8,334
Winsor Industrial Corp. Limited............. 2,000 1,705
------------
1,810,627
------------
JAPAN--45.5%
Advantest Corp. ............................ 2,200 87,252
Ajinomoto Co., Inc. ........................ 20,000 238,872
Alps Electric Co.(b)........................ 6,000 72,756
Amada Co.................................... 28,000 301,235
Aoki Corp(b)................................ 2,000 7,421
Aoyama Trading(b)........................... 1,000 26,167
Asahi Bank Limited.......................... 72,000 833,681
Asahi Breweries............................. 13,000 151,711
</TABLE>
See Notes to Financial Statements.
FS-27
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Asahi Chemical Industries.................... 45,000 $ 320,836
Asahi Glass Co. ............................. 33,000 394,139
Ashikaga Bank................................ 18,000 113,728
Bank of Tokyo, Mitsubishi.................... 60,800 1,408,000
Bank of Yokohama............................. 35,000 317,509
Banyu Pharmaceutical......................... 7,000 98,923
Bridgestone Corp............................. 22,000 419,212
Brother Industries Limited................... 4,000 24,471
Canon, Inc................................... 24,000 498,898
Casio Computer Co. .......................... 8,000 76,585
Chiba Bank................................... 20,000 176,146
Chichibu Onada Cement........................ 17,000 97,490
Chugai Pharmaceutical Co..................... 8,000 78,044
Citizen Watch Co. Limited.................... 19,000 158,158
Cosmo Oil Co................................. 18,000 111,267
Credit Saison................................ 4,000 96,643
Dai Nippon Co. Limited.(b)................... 26,000 502,544
Dai-Ichi Kangyo Bank......................... 97,000 1,804,132
Daicel Chemical Industries................... 13,000 80,003
Daido Steel Co. Limited...................... 2,000 9,883
Daiei, Inc................................... 18,000 216,626
Daiichi Pharmaceuticals Co. Limited.......... 8,000 123,266
Daikin Industries Limited.................... 27,000 295,399
Daikyo(b).................................... 3,000 22,292
Daimaru(b)................................... 8,000 55,943
Dai Nippon Ink & Chemical.................... 22,000 112,726
Dai Nippon Screen............................ 4,000 35,594
Daishowa Paper(b)............................ 1,000 7,704
Daito Trust.................................. 1,000 14,952
Daiwa Bank................................... 20,000 138,218
Daiwa House Industries....................... 14,000 216,992
Daiwa Kosho Lease Co. Limited................ 3,000 32,002
Daiwa Securities............................. 42,000 539,927
Denki Kagaku Kogyo........................... 15,000 54,156
Ebara Corp................................... 9,000 143,597
Eisai Co. Limited............................ 7,000 132,110
Ezaki Glico Co............................... 2,000 22,246
</TABLE>
See Notes to Financial Statements.
FS-28
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Fanuc Co................................... 7,000 $ 278,260
Fuji Bank.................................. 90,000 1,936,512
Fuji Photo Film Limited.................... 14,000 441,641
Fujikura Limited........................... 10,000 82,785
Fujita Corp................................ 15,000 69,747
Fujita Kanko............................... 3,000 60,174
Fujitsu Limited............................ 57,000 519,686
Furukawa Electric.......................... 18,000 107,492
Gakken Co.(b).............................. 2,000 14,806
Gunma Bank................................. 14,000 155,723
Gunze Limited(b)........................... 4,000 25,054
Hankyu Corp.(b)............................ 24,000 140,479
Hanyu Department Stores.................... 6,000 78,773
Haseko Corp.(b)............................ 2,000 8,661
Hazama Corp.(b)............................ 2,000 8,734
Higo Bank.................................. 3,000 23,933
Hirose Electric............................ 1,000 61,724
Hitachi Limited............................ 104,000 967,158
Hokkaido Bank.............................. 5,000 16,502
Hokuriku Bank.............................. 19,000 114,158
Honda Motor Co. ........................... 30,000 776,793
Honshu Paper Co............................ 2,000 14,168
House Foods Corp.(b)....................... 2,000 37,928
Hoya Corp.................................. 3,000 96,826
Inax Corp.................................. 26,000 258,383
Industrial Bank of Japan................... 73,000 1,810,327
Isetan Co.................................. 7,000 105,943
Ishihara Sangyo Kaisha(b).................. 2,000 7,950
Ito Yokado Co. ............................ 13,000 783,450
Itochu Corp................................ 43,000 300,303
Itoham Foods............................... 7,000 53,290
Iwantani International Corp.(b)............ 3,000 17,368
Jaccs...................................... 2,000 18,216
Japan Air Lines Co.(b)..................... 53,000 428,611
Japan Energy Corp.......................... 31,000 115,032
Jeol....................................... 1,000 7,704
JGC Corp.(b)............................... 1,000 13,129
</TABLE>
See Notes to Financial Statements.
FS-29
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Joyo Bank................................... 21,000 $ 159,104
Jusco Co.(b)................................ 8,000 261,849
Kajima Corp................................. 25,000 257,562
Kaken Pharmaceutical........................ 1,000 8,178
Kamigumi Co., Limited....................... 8,000 72,938
Kandenko Limited............................ 6,000 76,038
Kanebo Corp.(b)............................. 9,000 26,832
Kaneka Corp................................. 11,000 73,913
Kansai Electric Power....................... 29,100 665,936
Kansai Paint Co. Limited.................... 2,000 10,503
KAO Corp.................................... 19,000 256,378
Katokichi................................... 1,000 24,161
Kawasaki Kisen Kaisha(b).................... 18,000 60,721
Kawasaki Steel Corp......................... 84,000 302,509
Keihin Electric............................. 16,000 94,674
Keio Teito Electric Railway................. 16,000 94,819
Kikkoman Corp............................... 3,000 24,480
Kinden Corp................................. 7,000 111,049
Kinki Nippon Railway........................ 50,000 359,675
Kirin Brewery Co............................ 33,000 403,164
Kissei Pharmaceutical....................... 1,000 27,990
Kobe Steel(b)............................... 73,000 209,649
Kokuyo...................................... 4,000 110,502
Komatsu Limited............................. 30,000 295,398
Konica Corp................................. 10,000 75,308
Koyo Seiko.................................. 6,000 58,533
Kubota Corp................................. 42,000 276,856
Kumagai Gumi Co............................. 20,000 80,232
Kurabo Industries........................... 5,000 19,967
Kuraray Co. Limited......................... 8,000 89,714
Kureha Chemical Industries Co.(b)........... 2,000 11,269
Kurita Water................................ 4,400 107,110
Kyocera Corp................................ 6,000 423,955
Kyowa Hakko Kogyo........................... 13,000 124,450
Lion Corp................................... 9,000 53,992
Maeda Road Construction..................... 6,000 103,390
Makita Corp................................. 5,000 81,144
</TABLE>
See Notes to Financial Statements.
FS-30
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Marubeni Corp............................... 45,000 $ 246,163
Marudai Food Co.(b)......................... 2,000 14,423
Maruha Corp.(b)............................. 4,000 14,514
Marui Co.(b)................................ 9,000 199,395
Matsushita Electric Industries.............. 65,000 1,208,954
Meija Milk Products......................... 9,000 57,685
Meiji Seika Kaisha.......................... 12,000 74,287
Minebea Co.................................. 11,000 92,367
Misawa Homes................................ 1,000 9,756
Mitsubishi Chemical Corp.................... 68,000 313,704
Mitsubishi Corp............................. 49,000 643,316
Mitsubishi Electric Corp.................... 64,000 445,798
Mitsubishi Estate........................... 39,000 536,917
Mitsubishi Gas(b)........................... 15,000 66,054
Mitsubishi Heavy Industries Limited......... 101,000 877,559
Mitsubishi Materials........................ 35,000 190,186
Mitsubishi Oil Co........................... 13,000 110,820
Mitsubishi Paper............................ 34,000 212,340
Mitsubishi Steel Manufacturing(b)........... 1,000 5,853
Mitsubishi Trust and Banking Limited........ 39,000 657,813
Mitsubishi Warehouse........................ 5,000 89,349
Mitsui & Co., Limited....................... 48,000 434,563
Mitsui Engine & Shipbuilding(b)............. 1,000 3,045
Mitsui Fire & Marine Insurance.............. 23,000 182,645
Mitsui Fudosan Co. ......................... 24,000 323,846
Mitsui Mining and Smelting(b)............... 16,000 65,352
Mitsui O.S.K. Lines(b)...................... 31,000 106,835
Mitsui Toatsu Chemical...................... 22,000 86,849
Mitsui Trust and Banking Co................. 36,000 420,124
Mitsukoshi Limited(b)....................... 14,000 149,341
Mochida Pharmaceuticals..................... 5,000 65,189
Murata Manufacturing Co..................... 7,000 264,858
Nagase & Co.(b)............................. 1,000 9,482
Nagoya Railroad Co.......................... 24,000 122,316
Nankai Electric Railway..................... 15,000 95,047
NEC Corp.................................... 48,000 520,776
</TABLE>
See Notes to Financial Statements.
FS-31
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
New Oji Paper............................... 19,000 $ 163,873
NGK Insulators.............................. 44,000 493,425
NGK Spark................................... 6,000 66,739
Nichido Fire and Marine Insurance........... 12,000 92,668
Nichii Co. Limited.......................... 22,000 365,057
Nichirei Corp............................... 10,000 71,570
Nihon Cement Co............................. 4,000 29,430
Nintendo Co................................. 2,600 193,433
Nippon Beet Sugar(b)........................ 2,000 10,922
Nippon Communications Systems Corp.(b)...... 1,000 13,494
Nippon Denso................................ 24,000 520,778
Nippon Express Co........................... 33,000 321,931
Nippon Fire and Marine Insurance............ 16,000 104,301
Nippon Light Metal.......................... 15,000 85,064
Nippon Meat Packers......................... 16,000 227,568
Nippon Oil Co............................... 34,000 230,319
Nippon Paper Industries..................... 24,000 149,887
Nippon Seiko Kab Kai........................ 16,000 120,931
Nippon Shinpan Co........................... 9,000 64,004
Nippon Shokubai Kagaku Kogyo................ 6,000 57,986
Nippon Steel Corp........................... 178,000 610,202
Nippon Suisan(b)............................ 4,000 17,031
Nippon Yusen Kab Kai........................ 35,000 202,310
Nishimatsu(b)............................... 8,000 87,526
Nissan Motor Co............................. 78,000 691,946
Nisshinbo Industries, Inc................... 7,000 68,926
Nissin Food Products Co., Limited(b)........ 4,000 102,478
NKK Corp.(b)................................ 91,000 275,448
NOF Corp. .................................. 2,000 12,454
Nomura Securities........................... 61,000 1,190,171
NTN Corp. .................................. 13,000 91,857
Obayashi Corp............................... 19,000 171,669
Odakyu Electric Railway..................... 20,000 134,570
Okamoto Industries.......................... 3,000 18,873
Okumura(b).................................. 7,000 58,460
Olympus Optical Co., Limited................ 7,000 70,203
</TABLE>
See Notes to Financial Statements.
FS-32
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Omron Corp.................................. 8,000 $ 169,946
Onward Kashiyama(b)......................... 5,000 81,600
Orient Corp................................. 11,000 72,208
Orix Corp................................... 3,000 111,049
Osaka Gas Co................................ 117,000 427,752
Penta-Ocean(b).............................. 11,000 74,114
Pioneer Electronic.......................... 8,000 190,369
Q.P. Corp.(b)............................... 2,000 19,329
Renown, Inc.(b)............................. 5,000 20,012
Ricoh Co.................................... 20,000 211,520
Rohn Company Limited........................ 4,000 264,037
Sagami...................................... 4,000 18,453
Sakura Bank................................. 108,000 1,201,295
Sankyo Aluminum............................. 2,000 11,707
Sankyo Co................................... 19,000 491,969
Sanrio Corp.(b)............................. 1,000 11,579
Sanwo Shutter Corp.......................... 7,000 65,736
Sanyo Electric Corp......................... 58,000 353,765
Sapporo Corporation......................... 10,000 93,908
Secom Co.................................... 7,000 462,065
Sega Enterprises............................ 3,000 140,042
Seino Transportation........................ 10,000 157,729
Seiyu(b).................................... 7,000 88,711
Sekisui Chemical............................ 14,000 171,039
Sekisui House............................... 54,000 615,416
Settsu Corp.(b)............................. 1,000 3,483
Seven-Eleven Japan NPV...................... 13,000 828,489
Sharp Corp.................................. 33,000 577,672
Shimachu.................................... 2,000 59,262
Shimano..................................... 4,000 71,480
Shimizu Corp................................ 20,000 220,638
Shin-Etsu Chemical Co....................... 10,400 199,122
Shinmaywa Industries........................ 16,000 163,381
Shiongoi & Co............................... 10,000 85,885
Shiseido Co................................. 10,000 127,642
Shizuoka Bank............................... 25,000 321,385
Shochiku Co.(b)............................. 1,000 11,488
</TABLE>
See Notes to Financial Statements.
FS-33
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Shokusan(b).................................. 1,000 $ 4,185
Showa Denko KK(b)............................ 29,000 89,366
Skylark Co................................... 2,000 42,122
Snow Brand Milk(b)........................... 10,000 67,923
Sony Corp.................................... 11,200 736,240
Sumitomo Bank................................ 98,000 1,894,203
Sumitomo Chemical............................ 43,000 205,037
Sumitomo Corp................................ 33,000 293,047
Sumitomo Electric Industries................. 22,000 314,910
Sumitomo Forestry............................ 5,000 74,306
Sumitomo Marine and Fire Insurance........... 21,000 182,847
Sumitomo Metal Industries(b)................. 81,000 248,135
Sumitomo Metal Mining........................ 17,000 147,089
Sumitomo Osaka Cement........................ 14,000 68,160
Taisei Corp.................................. 26,000 184,423
Taisho Pharmaceutical Co..................... 9,000 194,472
Taiyo Yuden.................................. 2,000 25,164
Takara(b).................................... 2,000 22,976
Takara Shuzo(b).............................. 7,000 71,479
Takashimaya Co.(b)........................... 7,000 108,496
Takeda Chemical Industries................... 32,000 566,000
Tanabe....................................... 8,000 62,435
TDK Corp..................................... 8,000 477,017
Teijin Limited............................... 25,000 135,617
TOA Corp.(b)................................. 1,000 6,865
Tobu Railway Co.............................. 24,000 157,327
Toho Co...................................... 1,000 176,876
Tohoku Electric Power........................ 16,080 359,185
Tokai Bank................................... 63,000 815,629
Tokio Marine and Fire Insurance.............. 48,000 638,938
Tokyo Broadcasting........................... 5,000 88,438
Tokyo Dome Corp.............................. 5,000 100,746
Tokyo Electric Power......................... 40,200 1,018,913
Tokyo Electronics............................ 5,000 145,421
Tokyo Gas Co................................. 72,000 262,577
Tokyo Steel Manufacturing Co. Limited........ 20,000 392,044
</TABLE>
See Notes to Financial Statements.
FS-34
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Tokyo Style Co.(b).......................... 2,000 $ 34,828
Tokyo Tatemono(b)........................... 4,000 25,856
Tokyoto Keiba Co............................ 5,000 22,383
Tokyu Corp.................................. 34,000 258,839
Tonen Corp.................................. 20,000 293,576
Toppan Printing Co.......................... 21,000 306,340
Toray Industries, Inc....................... 90,000 620,334
Toshiba Corp................................ 88,000 625,812
Tosoh Corp.(b).............................. 18,000 79,922
Tostem Corp................................. 6,000 176,693
Toto Limited................................ 9,000 135,392
Toyo Engineering............................ 1,000 6,729
Toyo Kanetsu KK............................. 3,000 15,262
Toyo Seikan Kaisha.......................... 2,000 69,656
Toyobo Co.(b)............................... 22,000 82,438
Toyoda Automatic Loom Works Limited......... 8,000 159,735
Toyota Motor Corp........................... 117,000 2,922,824
UBE Industries(b)........................... 2,000 7,604
Uni-Charm................................... 2,000 51,422
Uniden Corp................................. 1,000 20,514
Unitika Limited(b).......................... 3,000 9,053
Yamaguchi Bank.............................. 6,000 101,749
Yamaha Corp................................. 5,000 82,512
Yamaichi Securities Co...................... 36,000 246,823
Yamanouchi Pharmaceutical................... 10,000 216,991
Yamato Transport............................ 10,000 117,613
Yamazaki Baking Co.......................... 6,000 111,049
Yasuda Trust and Bank....................... 33,000 208,501
Yokogawa Bridge Works Corp.................. 7,000 95,731
Yokogawa Electric........................... 7,000 70,203
77 Bank..................................... 11,000 109,316
------------
68,085,431
------------
NORWAY--1.0%
Bergensen................................... 700 14,116
Bergensen, Class A.......................... 3,000 62,343
Dyno Industrier............................. 2,300 50,983
</TABLE>
See Notes to Financial Statements.
FS-35
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
NORWAY (CONTINUED)
Hafslund, Class A.......................... 3,660 $ 26,479
Hafslund, Class B.......................... 2,571 16,226
Kvaerner, Class A.......................... 2,150 90,847
Kvaerner, Class B.......................... 1,200 46,365
Leif Hoegh & Co............................ 1,400 24,352
Norsk Hydro................................ 13,000 636,359
Norsk Skog................................. 1,800 54,307
Nycomed, Class A........................... 3,700 53,253
Nycomed, Class B........................... 2,550 35,327
Orkla, Class A............................. 2,350 123,716
Orkla, Class B............................. 700 34,050
Transocean................................. 4,461 115,708
Uni-Storebrand............................. 15,450 69,445
Unitor Ship................................ 1,200 19,395
------------
1,473,271
------------
SINGAPORE--5.3%
Amcol Holdings............................. 29,000 64,105
City Developments.......................... 75,000 584,505
Cycle and Carriage......................... 22,000 235,360
Development Bank Singapore................. 65,000 810,517
Fraser and Neave Limited................... 26,800 277,219
Haw Par Brothers International............. 1,800 695
Jurong Shipyard............................ 11,000 55,723
Keppel Corp................................ 50,000 418,010
Overseas Chinese Banking Corp.............. 87,000 1,017,039
Overseas Union Enterprises................. 8,700 69,652
Sia Limited Foreign........................ 123,000 1,298,449
Singapore Techology........................ 60,000 158,982
Singapore Press Holdings................... 32,800 643,710
Singapore Telecommunications............... 480,000 1,278,672
Straits Trading Co......................... 29,000 76,021
United Overseas Bank....................... 87,600 837,859
------------
7,826,518
------------
UNITED KINGDOM--16.4%
Abbey National PLC(b)...................... 32,800 275,717
Anglian Water PLC.......................... 6,500 59,891
</TABLE>
See Notes to Financial Statements.
FS-36
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Argos PLC.................................. 6,906 $ 80,050
Argyll Group............................... 27,800 149,886
Arjo Wiggins............................... 26,000 71,100
Associated British FDS..................... 24,500 147,323
Barclays PLC(b)............................ 39,300 472,024
Barratt Development........................ 7,800 30,783
Bass PLC(b)................................ 27,900 350,709
BAT Industries............................. 80,400 625,874
BBA Group.................................. 12,100 57,907
BICC PLC................................... 10,500 50,575
Blue Circle Industries..................... 21,300 119,144
BOC Group.................................. 13,100 188,078
Boots Co. PLC.............................. 23,400 210,518
Bowthorpe PLC.............................. 5,600 39,156
BPB Industries............................. 13,800 68,401
British Aerospace.......................... 12,400 188,239
British Airways............................ 26,400 227,251
British Gas................................ 121,000 338,413
British Land Co.(b)........................ 12,100 79,527
British Petroleum.......................... 172,900 1,516,541
British Sky Boardcasting................... 46,800 319,958
British Steel.............................. 55,100 140,836
British Telecom............................ 170,000 913,937
BTR PLC.................................... 112,510 443,115
Cable & Wireless........................... 60,100 397,808
Cadbury Schweppes PLC...................... 26,900 212,747
Carlton Communication...................... 13,950 112,278
Chubb Security(b).......................... 6,800 34,127
Coats Viyella.............................. 27,700 74,028
Commercial Union........................... 17,200 155,006
Courtaulds PLC............................. 11,000 72,640
De La Rue PLC.............................. 5,400 49,924
East Midland Electric...................... 9,500 76,904
Electrocomponent PLC....................... 12,800 75,974
English China Clays........................ 8,300 33,402
General Accident PLC....................... 11,700 118,712
General Electric........................... 82,600 445,346
</TABLE>
See Notes to Financial Statements.
FS-37
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
GKN PLC.................................... 11,800 $ 181,148
Glaxo Holdings PLC......................... 88,700 1,194,221
Granada Group.............................. 16,000 214,299
Grand Metropolitan......................... 58,900 390,784
Great Universe Stores PLC.................. 24,700 250,996
Guardian Royal Exchange PLC................ 21,700 83,619
Guinness................................... 51,700 375,947
Hammerson PLC.............................. 8,100 45,686
Hanson..................................... 143,200 401,619
Harrison & Crossfield PLC.................. 19,400 40,994
Hepworth Ceramic........................... 6,800 30,535
HSBC Holdings.............................. 65,100 1,019,616
IMI PLC.................................... 9,400 51,630
Imperial Chemical Industries............... 19,700 241,205
Kingfisher PLC............................. 16,400 164,869
Ladbroke Group PLC(b)...................... 31,800 88,938
Land Securities PLC........................ 15,400 149,074
Legal & General............................ 12,900 134,094
Lloyds TSB Group........................... 180,086 881,413
London Electricity PLC..................... 4,728 45,988
Lonrho PLC(b).............................. 21,200 60,939
Lucas Industries PLC....................... 28,300 99,596
Marks & Spencer PLC........................ 71,800 524,901
Metal Box-Caradon(b)....................... 16,400 55,042
MEPC....................................... 11,800 74,439
Mercury Asset Management................... 3,800 56,978
National Grid Group(b)..................... 47,242 125,154
National Power............................. 31,500 254,511
Next PLC................................... 9,200 80,480
P & O Steam Nav(b)......................... 19,900 150,273
Pearson PLC................................ 15,200 156,821
Pilkington Ord PLC......................... 27,300 76,776
Provident Financial........................ 8,000 57,179
Prudential Corp............................ 52,600 331,822
Rank Organisation PLC...................... 23,900 184,936
Redland PLC................................ 16,600 103,430
</TABLE>
See Notes to Financial Statements.
FS-38
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Reed International.......................... 15,400 $ 257,710
Rentokil Group.............................. 21,780 138,412
Reuters Holdings PLC(b)..................... 46,700 565,261
Rexam PLC................................... 15,900 83,750
RMC Group................................... 7,200 113,327
Rolls Royce................................. 42,700 148,617
Royal Bank of Scotland PLC.................. 20,000 153,204
Royal Insurance PLC......................... 24,200 149,655
RTZ Corp.................................... 29,100 430,904
Rugby....................................... 17,800 30,422
Sainsbury (J) PLC........................... 44,400 261,467
Schroders PLC(b)............................ 5,700 120,007
Scottish & New Castle PLC(b)................ 15,500 158,712
Scottish Power PLC(b)....................... 23,100 109,113
Sears PLC................................... 88,800 136,592
Sedgwick Group.............................. 24,700 52,962
Slough Estate PLC........................... 11,400 38,969
Smith Industries............................ 10,800 118,138
Smithkline Beecham.......................... 85,745 917,291
Southern Electric PLC(b).................... 7,186 79,722
Southern Water PLC.......................... 3,700 57,605
T & N PLC................................... 15,700 34,152
Tarmac PLC.................................. 25,500 43,980
Tate & Lyle PLC............................. 10,800 76,857
Taylor Woodrow PLC.......................... 16,600 40,237
Tesco....................................... 77,700 354,941
Thames Water PLC............................ 22,800 200,868
Thorn EMI PLC(b)............................ 11,700 326,139
TI Group PLC(b)............................. 12,800 107,000
Unigate Limited............................. 6,400 39,578
Unilever PLC................................ 22,100 439,538
United Biscuts PLC.......................... 14,400 47,881
United Utilities PLC........................ 11,600 97,689
Vodafone Group.............................. 83,100 309,240
Williams Holdings........................... 15,900 83,750
Wimpey George PLC........................... 15,600 36,116
</TABLE>
See Notes to Financial Statements.
FS-39
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Wolseley............................ 15,200 $ 107,459
Zeneca Group........................ 23,700 524,019
------------
24,395,085
------------
TOTAL COMMON STOCKS
(COST $111,710,756)................ 119,198,301
------------
PREFERRED STOCKS--0.2%
AUSTRALIA--0.1%
News Corp., Limited Voting Preferred
Shares............................ 24,100 117,601
------------
FRANCE--0.0%
Casino Guich-Perr, Preferred Shares. 50 1,384
------------
GERMANY--0.1%
Lufthansa AG, Preferred Shares
Nonvoting......................... 50 7,046
MAN AG, NV.......................... 50 9,723
RWE AG, Preferred Shares Non-voting. 1,500 46,070
SAP AG, Preferred Shares Non-voting. 500 74,303
Volkswagon AG, Preferred Shares
Non-voting........................ 50 13,698
------------
150,840
------------
TOTAL PREFERRED STOCKS
(COST $229,246).................... 269,825
------------
<CAPTION>
Principal
Maturity Amount
Description Rate Date (000)
----------- ---- -------- ---------
<S> <C> <C> <C> <C>
FOREIGN CORPORATE OBLIGATIONS--9.1%
GERMANY--9.1%
Bundeslaender Versicher
(cost $14,454,720)................ 4.79% 12/22/97 $20,000 13,699,140
------------
</TABLE>
See Notes to Financial Statements.
FS-40
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS--9.7%
U.S. TREASURY BILLS--9.7%
U.S. Treasury Bill...................... 4.99% 7/5/96 $ 1,000 $ 999,446
U.S. Treasury Bill...................... 5.36% 7/25/96 1,500 1,494,645
U.S. Treasury Bill...................... 5.41% 8/22/96 1,150 1,141,170
U.S. Treasury Bill...................... 5.31% 9/19/96 1,000 988,666
U.S. Treasury Bill...................... 4.83% 10/17/96 3,000 2,953,827
U.S. Treasury Bill...................... 5.14% 11/14/96 2,000 1,960,784
U.S. Treasury Bill...................... 4.58% 1/9/97 2,000 1,944,638
U.S. Treasury Bill...................... 5.18% 3/6/97 1,130 1,089,130
U.S. Treasury Bill...................... 6.13% 5/31/97 2,000 2,006,250
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $14,585,002)..................... 14,578,556
------------
TOTAL INVESTMENTS--98.8%
(COST $140,979,724)(A)................. 147,745,822
Other assets in excess of liabilities--
1.2%................................... 1,847,015
------------
NET ASSETS--100.0%....................... $149,592,837
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $149,021,086.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $10,045,959
Unrealized depreciation........................................ (3,279,861)
-----------
Net unrealized appreciation.................................... $ 6,766,098
===========
</TABLE>
(b) Represents non-income producing securities.
<TABLE>
<CAPTION>
Contract Contract Unrealized
Price Value Depreciation
-------- -------- ------------
<S> <C> <C> <C>
FOREIGN CURRENCY INVESTMENTS
CURRENCY PURCHASED:
German Deutsche Mark........................... $0.654206 $ 1 $ --
Japanese Yen................................... $0.911730 2,634 (5)
Japanese Yen................................... $1.068114 569,116 (98,885)
-------- --------
TOTAL FOREIGN CURRENCY INVESTMENTS
(COST $670,640)............................... $571,751 $(98,890)
======== ========
</TABLE>
<TABLE>
<CAPTION>
Market Value Unrealized
Number of Covered Appreciation
Contracts by Contracts Expiration at 6/30/96
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
FINANCIAL FUTURES
FINANCIAL FUTURES PURCHASED
LONG:
Japanese Yen--TOPIX(1).... 108 $16,844,850 September 1996 $321,616
</TABLE>
- -----------
(1) Exchange traded local currency denominated futures contracts.
See Notes to Financial Statements.
FS-41<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--38.4%
AEROSPACE & DEFENSE--2.3%
Lockheed Martin, Corp. ................. 7.75% 5/1/26 $ 4,800 $ 4,771,560
------------
ASSET-BACKED SECURITIES--5.9%
Advanta Mortgage Loan Trust,
Series 1994-3, Class A2............... 7.60% 7/25/10 3,915 3,965,617
Green Tree Home Improvement Loan Trust,
Series 1994-B1, Class A-1............. 7.15% 7/15/14 876 884,348
MBNA Master Credit Card Trust,
Series 1994-C, Class A................ 5.75% 3/15/04 1,655 1,663,952
Olympic Automobiles Receivables Trust,
Series 1995-D......................... 6.15% 7/15/01 2,300 2,274,307
People's Bank Credit Card Master Trust,
Series 1993-1, Class A................ 4.80% 12/15/99 1,240 1,238,374
Security Pacific Acceptance Corp.
Series 1995-1......................... 7.25% 5/10/20 2,000 1,984,618
------------
12,011,216
------------
BANKING--10.0%
AAB, Global Bond, Guaranteed by ABN Amro
Bank.................................. 7.25% 5/31/05 4,800 4,793,515
Chase Manhattan Corp., Subordinate Note. 9.75% 11/1/01 3,000 3,371,150
Chevy Chase Auto Receivables Trust
Class A............................... 5.80% 6/15/02 2,465 2,455,858
Mellon Financial Co., Senior Notes...... 7.63% 11/15/99 2,310 2,375,472
Midland Bank............................ 6.95% 3/15/11 3,000 2,816,250
NationsBank............................. 7.75% 8/15/15 3,000 3,006,468
Norwest Corp., Medium Term Note......... 7.75% 3/1/02 1,500 1,560,239
------------
20,378,952
------------
BROKERAGE SERVICES--3.3%
Goldman Sachs........................... 6.10% 4/15/98 3,000 2,976,267
Salomon, Inc. Senior Notes.............. 6.70% 12/1/98 3,700 3,698,124
------------
6,674,391
------------
</TABLE>
See Notes to Financial Statements.
FS-42
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
FINANCE--2.8%
Chemical Master Credit Card Trust,
Class A, Source Mortgage.............. 6.23% 4/15/05 $ 2,500 $ 2,429,073
9.00% 6/1/12 3,225 3,357,586
------------
5,786,659
------------
FOREIGN--5.5%
European Investment Bank................ 8.88% 3/1/01 1,000 1,086,398
Rep Italy............................... 6.88% 9/27/23 5,000 4,518,750
SNCB Belgium............................ 8.88% 12/1/24 5,000 5,610,110
------------
11,215,258
------------
HEALTH CARE & HOSPITAL MANAGEMENT--2.0%
Columbia HCA/Health, Medium Term Note... 6.87% 9/15/03 4,250 4,159,841
------------
HOTELS & GAMING--1.2%
Marriott International, Inc., Senior
Note.................................. 7.88% 4/15/05 2,500 2,551,250
------------
RETAIL STORES--1.2%
Dayton Hudson Corp...................... 6.10% 2/25/02 2,500 2,491,823
------------
SCIENTIFIC & MEDICAL INSTRUMENTS--1.5%
Beckman Instruments..................... 7.05% 6/1/26 3,000 2,989,181
------------
TELECOMMUNICATIONS--2.2%
Bell Telephone.......................... 8.35% 12/15/30 4,000 4,571,392
------------
UTILITIES--0.5%
West Texas Utilities.................... 6.38% 10/1/05 1,000 940,266
------------
TOTAL CORPORATE OBLIGATIONS
(COST $79,450,382)..................... 78,541,789
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--5.4%
Federal Home Loan Bank.................. 5.94% 1/30/01 3,000 2,897,748
Federal Home Loan Mortgage Corp......... 7.35% 3/22/05 8,000 8,151,673
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $11,120,080)..................... 11,049,421
------------
</TABLE>
See Notes to Financial Statements.
FS-43
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--53.2%
U.S. TREASURY BONDS--10.5%
U.S Treasury Bond....................... 7.25% 8/15/04 $ 1,000 $ 1,035,625
U.S Treasury Bond....................... 12.75% 11/15/10 1,600 2,248,000
U.S Treasury Bond....................... 10.38% 11/15/12 5,000 6,350,000
U.S Treasury Bond....................... 8.75% 5/15/17 4,025 4,777,172
U.S Treasury Bond....................... 8.13% 8/15/19 1,000 1,121,875
U.S Treasury Bond....................... 7.88% 2/15/21 5,500 6,027,648
------------
21,560,320
------------
U.S. TREASURY NOTES--42.7%
U.S. Treasury Note...................... 5.75% 9/30/97 8,000 7,985,000
U.S. Treasury Note...................... 7.38% 11/15/97 9,100 9,262,088
U.S. Treasury Note...................... 5.38% 5/31/98 375 370,077
U.S. Treasury Note...................... 5.13% 6/30/98 400 392,874
U.S. Treasury Note...................... 4.75% 10/31/98 19,000 18,412,159
U.S. Treasury Note...................... 5.00% 1/31/99 550 534,188
U.S. Treasury Note...................... 6.88% 8/31/99 1,785 1,811,215
U.S. Treasury Note...................... 7.13% 9/30/99 165 168,661
U.S. Treasury Note...................... 7.88% 11/15/99 990 1,034,550
U.S. Treasury Note...................... 7.75% 11/30/99 2,440 2,541,409
U.S. Treasury Note...................... 7.75% 1/31/00 12,100 12,618,013
U.S. Treasury Note...................... 8.50% 2/15/00 830 885,764
U.S. Treasury Note...................... 6.88% 3/31/00 800 812,249
U.S. Treasury Note...................... 6.13% 7/31/00 5,000 4,945,305
U.S. Treasury Note...................... 8.75% 8/15/00 1,870 2,025,444
U.S. Treasury Note...................... 6.25% 8/31/00 3,000 2,980,308
U.S. Treasury Note...................... 7.50% 11/15/01 18,050 18,845,301
U.S. Treasury Note...................... 7.50% 5/15/02 150 156,938
U.S. Treasury Note...................... 7.25% 5/15/04 1,500 1,553,438
------------
87,334,981
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $109,319,933).................... 108,895,301
------------
</TABLE>
See Notes to Financial Statements.
FS-44
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--2.0%
TIME DEPOSIT--2.0%
JJ Lummis (cost $4,179,000)............. 5.56% 7/1/96 4,179 $ 4,179,000
------------
TOTAL INVESTMENTS--99.0%
(COST $204,069,395)(A)................. 202,665,511
Other assets in excess of liabilities--
1.0%................................... 2,091,394
------------
NET ASSETS--100.0%....................... $204,756,905
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $204,756,905.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$12,813. Cost for federal income tax purposes differs from value by net
unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................... $ 1,524,512
Unrealized depreciation....................................... (2,941,209)
-----------
Net unrealized depreciation................................... $(1,416,697)
===========
</TABLE>
See Notes to Financial Statements.
FS-45
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ------- -------- --------- ------------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--33.5%
ASSET-BACKED SECURITIES--6.6%
Advanta Mortgage Loan Trust,
Series 1994-3, Class A2............. 7.60% 7/25/10 $ 1,625 $ 1,646,010
First U.S.A. Credit Card Master Trust,
Series 1992-1, Class A.............. 5.20% 6/15/98 333 332,720
Green Tree Financial Corp.,
Manufactured Housing Senior
Subordinate Passthrough,
Series 1995-4, Class A6............. 7.30% 7/15/25 3,000 2,886,657
Security Pacific Acceptance Corp.
Manufactured Housing Contract Senior
Subordinate, Series 1995-1, Class
A3.................................. 7.25% 4/10/20 2,000 1,984,618
Standard Credit Card Master Trust I,
Participation Certificates,
Series 1994-2, Class A.............. 7.25% 4/7/06 1,800 1,806,946
------------
8,656,951
------------
BANKING--13.0%
ABN-ARMO Bank N.V., Chicago
Subordinate Note.................... 7.25% 5/31/05 2,000 1,997,298
Chase Manhattan Corp.,
Subordinate Note.................... 9.75% 11/1/01 2,000 2,247,434
Chemical Master Credit Card Trust I,
Series 1995-3, Asset-Backed, Class
A................................... 6.23% 4/15/05 1,000 971,629
Chevy Chase Auto Receivables Trust
Series 1995-2, Class A.............. 5.80% 6/15/02 1,643 1,637,238
International Bank for Reconstruction
and Development..................... 9.64% 4/30/99 1,500 1,621,831
International Bank for Reconstruction
and Development..................... 8.25% 9/1/16 2,000 2,180,098
Midland Bank.......................... 6.95% 3/15/11 2,000 1,877,500
NationsBank Corp...................... 7.75% 8/15/15 2,000 2,004,312
Salomon, Inc., Senior Notes........... 6.70% 12/1/98 2,500 2,498,732
------------
17,036,072
------------
</TABLE>
See Notes to Financial Statements.
FS-46
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ------- -------- --------- ------------
<S> <C> <C> <C> <C>
CABLE TV SYSTEMS--1.9%
Cablevision Industries................ 9.25% 4/1/08 $ 2,500 $ 2,531,250
------------
CHEMICALS--1.2%
Monsanto Co., Debenture............... 8.20% 4/15/25 1,500 1,538,021
------------
FINANCE--2.4%
Sears Credit Account Master Trust,
Series 1995-3, Class A.............. 7.00% 10/15/04 1,600 1,625,870
Source One Mortgage................... 9.00% 6/1/12 1,500 1,561,668
------------
3,187,538
------------
FOREIGN GOVERNMENT--1.8%
Province of Quebec.................... 6.50% 1/17/06 2,500 2,356,548
------------
HEALTH CARE & HOSPITAL MANAGEMENT--1.8%
Columbia/HCA.......................... 7.58% 9/15/25 2,500 2,417,095
------------
HOTELS AND GAMING--1.6%
Marriott International, Inc., Senior
Note, Series B...................... 7.88% 4/15/05 2,000 2,041,000
------------
RETAIL STORES--2.5%
Dayton Hudson Credit Card Master
Trust, Series 95-1, Class A......... 6.10% 2/25/02 1,500 1,495,093
Dayton Hudson Corp., Debentures....... 7.88% 6/15/23 1,800 1,763,055
------------
3,258,148
------------
UTILITIES--0.7%
West Texas Utilities.................. 6.38% 10/1/05 1,000 940,265
------------
TOTAL CORPORATE OBLIGATIONS
(COST $44,699,037)................... 43,962,888
------------
U.S. GOVERNMENT OBLIGATIONS--60.6%
U.S. TREASURY BONDS--20.0%
U.S. Treasury Bond.................... 10.75% 5/15/03 1,000 1,225,311
U.S. Treasury Bond.................... 11.13% 8/15/03 3,500 4,380,463
U.S. Treasury Bond.................... 10.38% 11/15/12 3,000 3,810,000
U.S. Treasury Bond.................... 9.88% 11/15/15 1,000 1,302,500
U.S. Treasury Bond.................... 8.75% 5/15/17 8,445 10,023,159
U.S. Treasury Bond.................... 7.88% 2/15/21 4,000 4,383,744
U.S. Treasury Bond.................... 7.63% 2/15/25 1,000 1,078,436
------------
26,203,613
------------
</TABLE>
See Notes to Financial Statements.
FS-47
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ------- -------- --------- ------------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES--40.6%
U.S. Treasury Note.................... 4.75% 2/15/97 $10,500 $ 10,440,937
U.S. Treasury Note.................... 7.88% 1/15/98 700 718,813
U.S. Treasury Note.................... 5.00% 1/31/99 6,450 6,264,562
U.S. Treasury Note.................... 7.75% 11/30/99 4,000 4,166,244
U.S. Treasury Note.................... 6.75% 4/30/00 6,200 6,267,803
U.S. Treasury Note.................... 7.75% 2/15/01 2,000 2,101,250
U.S. Treasury Note.................... 7.50% 11/15/01 6,800 7,099,615
U.S. Treasury Note.................... 7.25% 5/15/04 7,000 7,249,375
U.S. Treasury Note.................... 6.50% 8/15/05 9,000 8,867,799
------------
53,176,398
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $80,061,634)................... 79,380,011
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--
1.7%
Federal National Mortgage Association. 5.66% 8/25/08 1,169 1,058,963
Federal National Mortgage Association. 6.00% 12/25/21 1,250 1,151,049
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $2,236,072)........ 2,210,012
------------
SHORT-TERM INVESTMENTS--3.1%
TIME DEPOSIT--3.1%
JJ Lummis (cost $4,058,002)........... 5.56% 7/1/96 4,058 4,058,002
------------
TOTAL INVESTMENTS--98.9%
(COST $131,054,745)(A)............... 129,610,913
Other assets in excess of liabilities--
1.1%................................. 1,410,035
------------
NET ASSETS--100.0%..................... $131,020,948
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $131,020,948.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................... $ 1,124,945
Unrealized depreciation....................................... (2,568,777)
-----------
Net unrealized depreciation................................... $(1,443,832)
===========
</TABLE>
See Notes to Financial Statements.
FS-48
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ------- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--4.2%
BRITISH POUNDS STERLING--1.1%
Barclays Bank.......................... 10.25% 12/10/97 $ 120 $ 195,429
-----------
FRENCH FRANCS--1.5%
Unilever NV............................ 9.88% 9/4/97 1,300 267,987
-----------
JAPANESE YEN--1.6%
Export-Import Bank of Japan............ 4.38% 10/1/03 300 296,760
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $837,604)....................... 760,176
-----------
FOREIGN GOVERNMENT OBLIGATIONS--67.7%
AUSTRALIAN DOLLAR--2.2%
Australia Government................... 9.00% 9/15/04 500 397,627
-----------
BELGIUM FRANC--2.8%
Belgium Government, Series 19.......... 6.50% 3/31/05 16,000 506,256
-----------
BRITISH POUNDS STERLING--6.6%
United Kingdom Exchequer............... 12.25% 3/26/99 250 440,162
United Kingdom Gilt.................... 8.00% 9/27/13 500 762,576
-----------
1,202,738
-----------
CANADIAN DOLLAR--3.0%
Canadian Government.................... 9.75% 10/1/97 200 153,981
Canadian Government.................... 10.75% 3/15/98 500 394,949
-----------
548,930
-----------
DANISH KRONE--2.0%
Kingdom of Denmark..................... 9.00% 11/15/98 2,000 369,904
-----------
FINNISH MARKKA--1.8%
Republic of Finland.................... 6.00% 1/29/02 300 319,320
-----------
FRENCH FRANC--7.3%
France O.A.T........................... 8.50% 6/25/97 2,800 565,320
France O.A.T........................... 5.50% 4/25/04 1,100 202,239
France O.A.T........................... 6.50% 4/25/11 3,000 564,558
-----------
1,332,117
-----------
</TABLE>
See Notes to Financial Statements.
FS-49
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ------- -------- --------- -----------
<S> <C> <C> <C> <C>
GERMAN DEUTSCHEMARK--10.5%
Austria Republic....................... 6.00% 4/1/98 $ 600 $ 405,613
Bundesrepublic......................... 9.00% 10/20/00 600 446,450
Bundesrepublic......................... 6.00% 1/5/06 1,000 630,888
Deutsche Bundespost.................... 7.50% 8/2/04 600 417,163
-----------
1,900,114
-----------
ITALIAN LIRA--9.1%
Italy Government....................... 8.50% 1/1/99 15,000 984,000
Italy Government....................... 9.50% 2/1/06 10,000 662,000
-----------
1,646,000
-----------
JAPANESE YEN--13.3%
Japan Development Bank................. 6.50% 9/20/01 350 381,500
Japan Government Bank, Series 175...... 4.50% 12/20/04 400 401,760
Government of Japan.................... 3.20% 3/20/06 1,800 1,642,428
-----------
2,425,688
-----------
NETHERLANDS GUILDER--3.8%
Netherlands Government................. 5.75% 1/15/04 1,200 686,125
-----------
SPANISH PESETA--2.9%
Spanish Government..................... 8.00% 5/30/04 700 519,750
-----------
SWEDEN KRONA--2.4%
Sweden Government...................... 8.00% 8/15/07 3,000 431,949
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(COST $12,090,131).................... 12,286,518
-----------
</TABLE>
See Notes to Financial Statements.
FS-50
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ------- -------- --------- -----------
<S> <C> <C> <C> <C>
SUPRANATIONAL OBLIGATIONS--10.1%
GERMAN DEUTSCHEMARKS--2.3%
European Investment Bank............. 7.50% 11/4/02 $ 600 $ 420,040
-----------
JAPANESE YEN--7.8%
Asian Development Bank............... 5.00% 2/5/03 400 409,360
Council of Europe.................... 6.88% 3/5/01 300 326,160
International Bank Reconstruction &
Development........................ 5.25% 3/20/02 300 311,640
Interamerican Development Bank....... 7.25% 5/15/00 350 378,910
-----------
1,426,070
-----------
TOTAL SUPRANATIONAL OBLIGATIONS
(COST $2,035,096)................... 1,846,110
-----------
SHORT-TERM INVESTMENTS--24.0%
U.S. TREASURY BILLS--24.0%
U.S. Treasury Bill................... 5.03%* 8/22/96 1,900 1,886,469
U.S. Treasury Bill................... 5.07%* 9/5/96 2,500 2,476,990
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $4,362,995)................... 4,363,459
-----------
TOTAL INVESTMENTS--106.0%
(COST $19,325,826)(A)............... 19,256,263
Liabilities in excess of other
assets--(6.0)%...................... (1,100,308)
-----------
TOTAL NET ASSETS--100.0%.............. $18,155,955
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $18,155,955.
* Yield at purchase.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................... $ 423,220
Unrealized depreciation....................................... (492,783)
---------
Net unrealized depreciation................................... $ (69,563)
=========
</TABLE>
See Notes to Financial Statements.
FS-51
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS--99.5%
ALABAMA--0.3%
Columbia Industrial Bonds,
Development Pollution
Control, Series C......... VMIG1/A-1 3.75% 10/1/22 $ 1,100 $ 1,100,000
------------
ALASKA--0.6%
Alaska Student Loan Corp.,
Student Loan Revenue,
State Assisted, Series A
(A.M.T.).................. A/A 5.50% 7/1/04 1,000 977,870
North Slope Boro Refunding,
Series G (FSA Insured).... Aaa/AAA 8.35% 6/30/98 1,500 1,615,995
------------
2,593,865
------------
ARIZONA--1.3%
Maricopa County University
School District No. 41,
Series C, Collateralized
by U.S. Government
Securities (Pre-refunded
at 100 on 7/1/04) (FGIC
Insured).................. Aaa/AAA 6.10% 7/1/14 2,000 2,143,040
Pima County Refunding,
Series A.................. Aa/A+ 5.00% 7/1/02 3,000 3,036,450
------------
5,179,490
------------
CALIFORNIA--9.3%
California Health Facilities
Financing Authority
Revenue Refunding,
Catholic Health Facilities
Insured, Series B (AMBAC
Insured).................. Aaa/AAA 4.50% 7/1/02 2,500 2,460,600
Central Valley Financing
Authority,
Califcogeneration Project
Revenue, Carson Ice
Generation Project........ NR/BBB- 5.40% 7/1/00 2,550 2,549,975
</TABLE>
See Notes to Financial Statements.
FS-52
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Fresno Health Facilities
Revenue, Holy Cross Health
Systems Corp. (MBIA
Insured).................. A1/AA- 5.00% 12/1/02 $ 1,500 $ 1,517,190
Fresno Health Facilities
Revenue, Holy Cross Health
Systems Corp. (MBIA
Insured).................. A1/AA- 5.10% 12/1/03 1,570 1,588,306
Fresno Health Facilities
Revenue, Holy Cross Health
Systems Corp. (MBIA
Insured).................. A1/AA- 5.10% 12/1/03 635 642,404
Los Angeles Wastewater
Systems Revenue, Series A
(MBIA Insured)............ Aaa/AAA 8.50% 6/1/00 1,360 1,548,945
MSR Public Power Agency
California, San Juan
Project Revenue Refunding,
Series F (AMBAC Insured).. Aaa/AAA 5.55% 7/1/02 1,615 1,687,417
Northern California Power
Agency, Public Power
Refunding, Series B-1,
Collateralized by U.S.
Government Securities,
(Pre-refunded at 100 on
7/1/98)................... NR/AAA 8.00% 7/1/24 3,000 3,223,650
Orange County Recovery
Certificate Participation,
Series A.................. Aaa/AAA 5.70% 7/1/10 4,000 3,969,520
Sacramento Cogeneration
Authority Revenue, Procter
& Gamble Project.......... NR/BBB- 5.80% 7/1/01 1,300 1,306,148
Sacramento Cogeneration
Authority Revenue, Procter
& Gamble Project.......... NR/BBB- 5.60% 7/1/99 3,300 3,341,810
</TABLE>
See Notes to Financial Statements.
FS-53
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Sacramento Cogeneration
Authority Revenue, Procter
& Gamble Project.......... NR/BBB- 5.90% 7/1/02 $ 1,000 $ 1,002,500
South Coast Air Quality
Management District
Building Corp., California
Revenue Institutional
Sale, Series B............ Aaa/AAA 7.12% 8/1/14 3,650 4,003,211
University of California
Revenue Refunding,
Multiple Purpose Projects
(MBIA Insured)............ Aaa/AAA 6.20% 9/1/01 6,675 7,166,146
------------
36,007,822
------------
COLORADO--7.0%
Adams County Single Family
Mortgage Revenue, Series
A, Collateralized by U.S.
Government Securities..... Aaa/AAA 8.88% 8/1/03 1,230 1,517,759
Denver City and County
Airport, Series A......... Aaa/AAA 8.50% 11/15/07 2,000 2,281,860
Denver City and County
Airport, Series A......... Baa/BBB 8.00% 11/15/25 1,360 1,528,817
Denver City and County
Airport, Series B
(A.M.T.).................. Baa/BBB 7.25% 11/15/05 2,000 2,170,920
Denver City and County
Airport, Series C......... Baa/BBB 6.55% 11/15/03 1,145 1,199,365
Denver City and County
Airport, Series D......... Baa/BBB 7.30% 11/15/00 2,900 3,133,856
Denver City & County Water
Refunding................. Aa/AA 7.00% 10/1/99 8,665 9,312,535
Denver Metropolitan Major
League Baseball Stadium,
Colorado Revenue
Refunding, Sales Tax,
Baseball Stadium Project
(FGIC Insured)............ Aaa/AAA 4.60% 10/1/05 2,000 1,910,440
</TABLE>
See Notes to Financial Statements.
FS-54
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
COLORADO (CONTINUED)
Poudre Valley Hospital
District Revenue,
Collateralized by U.S.
Government Securities,
(Pre-refunded at 101 on
12/1/01) (AMBAC Insured).. Aaa/AAA 6.63% 12/1/01 $ 3,750 $ 4,110,750
------------
27,166,302
------------
DISTRICT OF COLUMBIA--3.5%
District of Columbia, Series
A, Collateralized by U.S.
Government Securities,
(Pre-refunded at 102 on
6/1/00)................... Aaa/AAA 7.25% 6/1/05 1,125 1,245,645
District of Columbia
Hospital Revenue,
Washington Hospital Center
Corp. Issue, Series A,
Collateralized by U.S.
Government Securities,
(Pre-refunded at 102 on
1/1/01)................... NR/BBB 8.75% 1/1/01 2,750 3,222,120
District of Columbia
Refunding, Series A-1
(MBIA Insured)............ Aaa/AAA 4.65% 6/1/02 1,500 1,469,850
District of Columbia
Refunding, Series A-1
(MBIA Insured)............ Aaa/AAA 4.75% 6/1/03 2,960 2,854,920
District of Columbia
Refunding, Series B-1
(AMBAC Insured)........... Aaa/AAA 5.10% 6/1/03 3,000 2,976,090
District of Columbia
Refunding, Series B-3
(MBIA Insured)............ Aaa/AAA 5.20% 6/1/04 2,000 1,983,020
------------
13,751,645
------------
</TABLE>
See Notes to Financial Statements.
FS-55
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
FLORIDA--5.3%
Dade County Water & Sewer
Systems, Water Utility
Improvements.............. Aaa/AAA 5.50% 10/1/25 $10,500 $ 10,008,180
Florida State Board of
Education Capital Outlay
Refunding, Series A,
Collateralized by U.S.
Government Securities,
(Pre-refunded at 102 on
6/1/00)................... Aaa/AAA 7.25% 6/1/23 4,620 5,127,738
Lakeland Water & Electric
Revenue, Series A......... Aaa/AAA 6.00% 10/1/10 5,170 5,462,002
------------
20,597,920
------------
GEORGIA--5.8%
Georgia State, G.O. ........ Aaa/AA+ 7.25% 9/1/04 9,440 10,892,533
Georgia State, G.O. ........ Aaa/AA+ 7.25% 9/1/05 10,130 11,769,642
------------
22,662,175
------------
HAWAII--3.2%
Hawaii State Department of
Budget & Finance Special
Purpose Mortgage Revenue,
Kapiolani Healthcare
System.................... A/A 5.60% 7/1/02 2,065 2,089,099
Hawaii State Refunding,
Series C.................. Aa/AA 4.25% 7/1/99 7,500 7,446,750
Hawaii State, School
Improvements Series BZ.... Aa/AA 5.90% 10/1/06 2,600 2,741,986
------------
12,277,835
------------
ILLINOIS--11.5%
Chicago Metropolitan Water
Reclamation District...... Aa/AA 5.00% 12/1/02 4,500 4,555,305
</TABLE>
See Notes to Financial Statements.
FS-56
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Chicago Public Community
Building Revenue, Series A
(MBIA Insured)............ Aaa/AAA 4.90% 12/1/01 $ 3,000 $ 3,014,790
Chicago, O'Hare
International Airport,
American Airlines
Improvements.............. P1/NR 3.70% 12/1/17 6,700 6,700,000
Chicago Wastewater
Transmission, Sewer
Improvements, Refunding
Bonds..................... Aaa/AAA 5.00% 1/1/15 11,645 10,468,040
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center.... A/A- 5.10% 10/1/02 1,180 1,163,645
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center.... A/A- 5.00% 10/1/01 1,120 1,108,710
Metropolitan Pier &
Exposition Authority,
Illinois Dedicated State
Tax Revenue............... A/A+ 6.40% 6/1/03 10,495 11,206,456
Metropolitan Pier &
Exposition Authority,
Illinois Dedicated State
Tax Revenue............... A/A+ 6.50% 6/1/05 2,960 3,183,687
Regional Transportation
Authority, Series A (AMBAC
Insured).................. Aaa/AAA 8.00% 6/1/03 2,785 3,252,852
------------
44,653,485
------------
INDIANA--2.3%
Indiana State Office
Community Building Capital
Complex Revenue Refunding,
State Office Building II
Facilities, Series D...... A1/A+ 6.50% 7/1/99 3,000 3,137,010
</TABLE>
See Notes to Financial Statements.
FS-57
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
INDIANA (CONTINUED)
Indianapolis Economic
Development Water
Facilities Revenue
Refunding, Indianapolis
Water Co. Project........ A1/A+ 5.20% 5/1/01 $ 5,810 $ 5,861,535
------------
8,998,545
------------
IOWA--0.8%
Iowa Student Loan Liquidity
Corp. Student Loan
Revenue, Series A........ Aa1/NR 6.00% 3/1/98 3,000 3,078,420
------------
MARYLAND--2.7%
Montgomery County,
Construction Public
Improvements, Series A... Aaa/AAA 5.13% 4/1/08 5,500 5,427,950
Montgomery County,
Construction Public
Improvements, Series A... Aaa/AAA 5.25% 4/1/09 5,000 4,942,400
------------
10,370,350
------------
MASSACHUSETTS--5.2%
Massachusetts Bay
Transportation Authority,
General Transportation
Systems, Series A,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
3/1/01).................. Aaa/A+ 7.00% 3/1/22 3,500 3,895,850
Massachusetts State, G.O.,
Public Improvements,
Series D................. Aaa/AAA 5.13% 11/1/08 9,205 8,975,151
</TABLE>
See Notes to Financial Statements.
FS-58
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- ---------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
MASSACHUSETTS (CONTINUED)
Massachusetts State G.O.,
Series B.................. A/A+ 9.25% 7/1/00 $ 2,000 $ 2,327,920
Massachusetts State
Refunding, Series A....... A1/A+ 6.25% 7/1/02 4,500 4,821,345
------------
20,020,266
------------
MINNESOTA--3.9%
Minnesota State, G.O.,
School Improvements &
Public Improvements....... Aaa/AA+ 5.50% 5/1/04 2,000 2,073,920
Minnesota State Housing
Financial Agency, Series
L......................... Aa/AA+ 6.25% 7/1/27 12,910 12,919,683
------------
14,993,603
------------
NEVADA--3.3%
Clark County G.O............ A1/A+ 7.00% 9/1/00 6,705 7,289,475
Las Vegas Refunding G.O. ... A1/A 6.40% 10/1/03 2,250 2,440,170
Nevada State Municipal Bond
Bank Project No. R-5,
Series A.................. Aa/AA 6.00% 5/1/02 1,000 1,058,060
Nevada State Municipal Bond
Bank Project No. R-5,
Series A.................. Aa/AA 4.50% 11/1/02 1,020 998,203
Nevada State Refunding,
Series C, G.O. ........... Aa/AA 5.90% 4/1/01 1,000 1,049,030
------------
12,834,938
------------
NEW YORK--6.0%
New York City, G.O., Public
Improvements, Series B.... VMIG1/A-1+ 3.75% 10/1/20 300 300,000
New York City, G.O.,
Series F.................. Aaa/AAA 3.00% 11/15/00 3,000 2,815,380
</TABLE>
See Notes to Financial Statements.
FS-59
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- ---------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York City Municipal
Water Financing Authority
Water & Sewer Systems
Revenue, Series C,
Collateralized by U.S.
Government Securities,
(Pre-refunded at 101.5 on
6/15/01) (FGIC Insured)... Aaa/AAA 7.00% 6/15/16 $ 3,805 $ 4,232,796
New York City Municipal
Water Financial Authority,
Water & Sewer System
Refunding Bonds, Series C. VMIG1/A-1+ 3.75% 6/15/25 500 500,000
New York City Municipal
Water Financial Authority,
Water & Sewer System,
Series C.................. VMIG1/A-1+ 3.60% 6/15/23 500 500,000
New York State Energy
Residential Housing &
Development Authority
Pollution Control, Mohawk
Power, Series A........... NR/A-1+ 3.70% 7/1/15 100 100,000
New York State Energy
Residential Housing &
Development Authority
Pollution Control,
Refunding Bonds........... VMIG1/A-1+ 3.50% 10/1/29 500 500,000
New York State Local
Assistance Corp., Series
C, Collateralized by U.S.
Government Securities,
(Pre-refunded at 102 on
4/1/2001)................. AAA/AAA 7.50% 4/1/20 4,255 4,838,233
</TABLE>
See Notes to Financial Statements.
FS-60
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York State Throughway
Authority, Highway &
Bridge Traffic Fund,
General Purpose, Series Y. Aa/A+ 5.90% 1/1/08 $ 9,000 $ 9,407,880
------------
23,194,289
------------
NORTH CAROLINA--0.7%
North Carolina Municipal
Power Agency No. 1,
Catawba Electric Revenue,
(MBIA Insured)............ Aaa/AAA 7.25% 1/1/07 2,500 2,862,875
------------
PENNSYLVANIA--10.5%
Geisinger Authority Health
Systems, Series A......... Aa/AA 5.50% 7/1/03 2,895 2,967,636
Pennsylvania
Intergovernmental
Cooperative Authority,
Special Tax Revenue, City
of Philadelphia Funding
Program, Collateralized by
U.S. Government Securities
(Pre-refunded at 100 on
6/15/02).................. Aaa/AAA 6.80% 6/15/02 9,375 10,334,719
Pennsylvania
Intergovernmental
Cooperative Authority,
Special Tax Revenue, City
of Philadelphia Funding
Program (FGIC Insured).... Aaa/AAA 6.00% 6/15/00 7,000 7,334,460
Philadelphia Gas Works
Revenue, Fourteenth
Series.................... Aaa/AAA 7.00% 7/1/02 12,090 13,367,792
Philadelphia Gas Works
Revenue, Fifteenth Series
(FSA Insured)............. Aaa/AAA 4.90% 8/1/02 1,350 1,347,124
</TABLE>
See Notes to Financial Statements.
FS-61
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Pittsburgh Water & Sewer
Authority, Water & Sewer
System Revenue, Series A.. Aaa/AAA 6.50% 9/1/14 $ 5,000 $ 5,481,350
------------
40,833,081
------------
SOUTH CAROLINA--1.3%
South Carolina State Public
SVC Authority Revenue,
Series A.................. A1/A+ 5.00% 7/1/01 5,000 5,035,200
------------
TENNESSEE--2.6%
Chattanooga-Hamilton County,
Hospital Authority
Hospital Revenue, Enlanger
Medical Center............ Aaa/AAA 5.63% 10/1/09 5,000 5,050,750
Tennessee State, Refunding
Bonds, Series B........... Aaa/AA+ 5.50% 5/1/04 5,000 5,211,200
------------
10,261,950
------------
TEXAS--2.4%
Dallas Independent School
District, Collateralized
by U.S. Government
Securities................ Aa/AAA 8.70% 8/1/00 1,000 1,147,450
Humble Independent School
District Refunding (PSFG
Insured).................. Aaa/AAA 6.00% 2/15/04 2,035 2,149,102
Texas State Public Financing
Authority, Series A....... Aa/AA 8.00% 10/1/99 1,000 1,104,390
Texas State Public Financing
Authority, Series B....... Aa/AA 5.63% 10/1/11 5,000 5,030,500
------------
9,431,442
------------
VIRGINIA--1.7%
Fairfax County Refunding,
Series A.................. Aaa/AAA 4.80% 6/1/02 5,250 5,275,358
</TABLE>
See Notes to Financial Statements.
FS-62
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
VIRGINIA (CONTINUED)
Virginia Beach Public
Improvement, Series A..... Aa/AA 6.85% 5/1/99 $ 1,100 $ 1,165,846
------------
6,441,204
------------
WASHINGTON--1.1%
King County G.O., Series A.. Aa1/AA+ 9.00% 12/1/99 1,200 1,366,092
Snohomish County Public
Utilities District No.
001, Electric Revenue
Generation System,
Series B (A.M.T.)......... A1/A+ 5.15% 1/1/03 1,280 1,265,946
Washington State Public
Power Supply Systems,
Nuclear Project No. 1
Revenue, Series A,
Collateralized by U.S.
Government Securities Pre-
refunded at 102 on 7/1/99)
(MBIA Insured)............ Aaa/AAA 7.50% 7/1/15 1,420 1,563,661
------------
4,195,699
------------
WEST VIRGINIA--1.6%
Pleasants County Pollution
Control Revenue Refunding,
Monogahela Power Co.,
Series B.................. A1/NR 6.88% 4/1/98 6,105 6,385,891
------------
WISCONSIN--5.6%
Wisconsin State Clean Water
Refunding Bonds, Series 2. Aa/AA 6.00% 6/1/07 2,500 2,648,926
Wisconsin State G.O.,
Series B.................. Aa/AA 7.00% 5/1/01 3,950 4,334,533
Wisconsin State G.O.,
Series B.................. Aa/AA 7.00% 5/1/02 4,155 4,612,175
</TABLE>
See Notes to Financial Statements.
FS-63
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Market
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- --------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
WISCONSIN (CONTINUED)
Wisconsin State G.O.,
Series B.................. Aa/AA 7.00% 5/1/03 $ 4,625 $ 5,181,988
Wisconsin State Refunding,
Series 3.................. Aa/AA 4.25% 11/1/99 4,895 4,862,397
------------
21,640,019
------------
TOTAL INVESTMENTS--99.5%
(COST $380,216,692)(A)..... 386,568,311
Other assets in excess of
liabilities--0.5%.......... 2,049,893
------------
NET ASSETS--100.0%........... $388,618,204
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $388,618,204.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from the value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation........................ $ 7,381,065
Unrealized depreciation........................ (1,029,446)
-----------
Net unrealized appreciation.................... $ 6,351,619
===========
</TABLE>
AMBAC--AMBAC Indemnity Corporation.
A.M.T.--Subject to Alternative Minimum Tax.
FGIC--Financial Guaranty Insurance Company.
FSA--Financial Security Assurance.
G.O.--General Obligation.
MBIA--Municipal Bond Insurance Association.
NR--No rating available.
PSFG--Permanent School Fund Guaranty.
See Notes to Financial Statements.
FS-64
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS--99.6%
ALASKA--0.3%
Alaska Student Loan Corp.,
Student Loan Revenue
State Assisted, Series A
(AMBAC Insured), (A.M.T.)... Aaa/AAA 6.13% 7/1/05 $ 800 $ 823,640
------------
ARIZONA--1.1%
Maricopa County School
District No. 028, Kyrene
Elementary, Series B (FGIC
Insured).................... Aaa/AAA 6.00% 7/1/14 2,500 2,542,050
------------
CALIFORNIA--12.8%
Cupertino Certificates of
Participation, Open Space
Acquisition Project,
Collateralized by U.S.
Government Securities (Pre-
refunded at 102 on 4/1/01).. NR/NR 7.13% 4/1/16 2,675 2,989,527
Fresno Health Facilities
Revenue, Holy Cross Health
System Corp. (MBIA Insured). A1/AA 5.25% 12/1/05 1,850 1,866,354
Los Angeles Wastewater Systems
Revenue, Series D,
Collateralized by U.S.
Government Securities (Pre-
refunded at 102 on 12/1/00)
(MBIA Insured).............. Aaa/AAA 6.70% 12/1/00 10,000 11,014,300
Northern California Power
Agency, Public Power Revenue
Refunding, Geothermal
Project No. 3, Series A..... Aaa/AAA 5.60% 7/1/06 3,500 3,618,370
Northern California Power
Agency, Public Power Revenue
Refunding, Geothermal
Project No. 3, Series A..... Aaa/AAA 5.65% 7/1/07 4,800 4,965,888
</TABLE>
See Notes to Financial Statements.
FS-65
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Orange County California
Recovery Certificate
Participation, Series A..... Aaa/AAA 5.80% 7/1/16 $ 2,500 $ 2,463,650
Sacramento Cogeneration
Authority Revenue, Procter &
Gamble Project.............. NR/BBB- 7.00% 7/1/05 1,500 1,618,365
Sacramento Cogeneration
Authority Revenue, Procter &
Gamble Project.............. NR/BBB- 6.20% 7/1/06 2,500 2,496,300
------------
31,032,754
------------
COLORADO--8.5%
Denver City and County Airport
Revenue, Series A (A.M.T.).. NR/NR 8.50% 11/15/23 2,500 2,857,600
Denver City and County Airport
Revenue, Series A (A.M.T.).. Baa/BB 8.00% 11/15/25 2,295 2,567,371
Denver City and County Airport
Revenue, Series B (A.M.T.).. NR/NR 7.25% 11/15/05 3,000 3,256,380
Denver City and County Airport
Revenue, Series C (A.M.T.).. Baa/BB 6.50% 11/15/06 2,000 2,059,640
Denver City and County Airport
Revenue, Series D (A.M.T.).. Baa/BB 7.75% 11/15/13 6,925 8,158,896
Denver Metropolitan Major
League Baseball Stadium
District Revenue Refunding,
Sales Tax, Baseball Stadium
Project (FGIC Insured)...... Aaa/AAA 4.50% 10/1/04 1,600 1,534,272
------------
20,434,159
------------
FLORIDA--5.2%
Broward County Educational
Facilities Authority
Revenue, Nova Southeastern
University Project (Connie
Lee Insured)................ NR/AAA 5.70% 4/1/05 1,440 1,473,739
Florida State Board, Education
Capacity Outlay, General
Obligation, Series E........ Aa/AA 4.75% 6/1/22 8,000 6,734,400
</TABLE>
See Notes to Financial Statements.
FS-66
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
FLORIDA (CONTINUED)
Lakeland Florida Electric &
Water Revenue, Series B..... Aaa/AAA 6.00% 10/1/11 $ 4,000 $ 4,219,160
------------
12,427,299
------------
GEORGIA--12.4%
Fulton County School District,
General Obligation.......... Aa/AA 6.38% 5/1/10 5,000 5,467,950
Georgia State General
Obligation.................. Aaa/AA+ 7.10% 9/1/09 8,500 9,894,425
Georgia State General
Obligation.................. Aaa/AA+ 6.75% 9/1/11 10,000 11,346,200
Georgia State General
Obligation, Series F........ Aaa/AA+ 6.50% 12/1/05 3,060 3,405,137
------------
30,113,712
------------
ILLINOIS--9.2%
Chicago Airport Revenue
Refunding, 2nd Lien, O'Hare
International Airport,
Series C (MBIA Insured)..... Aaa/AAA 5.75% 1/1/09 2,490 2,517,664
City of Chicago, General
Obligation, Series B........ Aaa/AAA 6.00% 1/1/02 3,310 3,477,387
Cook County Community College,
District No. 508 Lease,
Series C (MBIA Insured)..... Aaa/NR 7.70% 12/1/04 5,000 5,890,450
Illinois Health Facilities
Authority Revenue Refunding
(SPA--Bankers Trust Co.)
(FGIC Insured).............. Aaa/AAA 6.00% 8/15/05 1,000 1,053,040
Illinois State Sales Tax
Revenue Refunding, Series Q. A1/AAA 5.75% 6/15/06 5,000 5,197,850
</TABLE>
See Notes to Financial Statements.
FS-67
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Winnebago & Boone Counties
School District No. 205
(CGIC Insured).............. Aaa/AAA 7.35% 2/1/04 $ 3,600 $ 4,122,648
------------
22,259,039
------------
INDIANA--0.9%
Indiana University Revenue,
Series K.................... Aa/AA- 6.50% 8/1/05 1,935 2,124,843
------------
MASSACHUSETTS--14.9%
Massachusetts State Refunding,
Series A.................... A1/A+ 6.25% 7/1/02 12,000 12,856,920
Massachusetts State Water
Resource, Authority,
Series B.................... Aaa/AAA 5.00% 12/1/16 6,980 6,312,503
Massachusetts State Water
Resource, Authority,
Series B.................... Aaa/AAA 5.00% 12/1/25 10,000 8,806,500
New England Educational Loan
Marketing Corp.,
Massachusetts Student Loan
Revenue Refunding, Series G. A1/A- 5.20% 8/1/02 8,000 7,857,280
------------
35,833,203
------------
MISSOURI--3.5%
Missouri State Health &
Education Christian Health,
Series A.................... Aaa/AAA 6.80% 2/15/06 2,150 2,369,021
Missouri State Health &
Education Christian Health,
Series A.................... Aaa/AAA 6.88% 2/15/21 2,000 2,209,920
Sikeston Electric Revenue
Refunding (MBIA Insured).... Aaa/AAA 6.00% 6/1/05 3,710 3,956,418
------------
8,535,359
------------
</TABLE>
See Notes to Financial Statements.
FS-68
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
NEVADA--1.9%
Clark County Industrial
Development Revenue
Refunding, Nevada Power Co.
Project, Series C (AMBAC
Insured).................... Aaa/AAA 7.20% 10/1/22 $ 4,115 $ 4,561,272
------------
NEW YORK--7.6%
Municipal Assistance Corp.
City of New York, Revenue
Bond........................ Aa/A+ 6.00% 7/1/06 5,000 5,311,050
New York City General
Obligation, Series B........ Aaa/AAA 3.75% 10/1/20 800 800,000
New York City General
Obligation, Sub Series B-4.. Aaa/AAA 3.60% 8/15/23 2,600 2,600,000
New York City Municipal Water
Financing Authority, Water &
Sewer Revenue............... Aaa/AAA 3.60% 6/15/23 500 500,000
New York State Energy Research
& Development Authority
Pollution Control Revenue... NR/AA 3.70% 7/1/15 600 600,000
New York State Revenue Bonds,
Series E (LC Assistance
Corp.)...................... A/A 5.00% 4/1/21 9,500 8,466,970
------------
18,278,020
------------
NORTH CAROLINA--3.9%
North Carolina Housing
Financing Agency, Series BB. Aa/AA 6.50% 9/1/26 4,335 4,397,771
North Carolina Housing
Financing Agency, Series FF. Aa/AA 6.25% 3/1/28 5,000 4,972,100
------------
9,369,871
------------
OHIO--0.2%
Columbus School District,
144A*....................... NR/NR 9.39% 5/1/97 456 464,835
------------
</TABLE>
See Notes to Financial Statements.
FS-69
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
OKLAHOMA--1.5%
Oklahoma State Industrial
Authority Revenue Refunding,
Health Facilities, Sisters
of Mercy, Series A.......... Aa/AA 5.20% 6/1/05 $ 3,600 $ 3,549,384
------------
RHODE ISLAND--2.1%
Rhode Island Depositors
Economic Protection Corp.,
Series A (FSA and
MBIA insured)............... Aaa/AAA 6.30% 8/1/05 4,640 5,014,494
------------
TENNESSEE--5.0%
Knox County Health,
Educational & Housing
Facilities Board, Hospital
Facilities Revenue
Refunding, Fort Sanders
Alliance (MBIA insured)..... Aaa/AAA 7.25% 1/1/08 8,900 10,345,805
Knox County Health,
Educational & Housing
Facilities Board, Hospital
Facilities Revenue
Refunding, Fort Sanders
Alliance (MBIA insured)..... Aaa/AAA 7.25% 1/1/09 1,360 1,580,986
------------
11,926,791
------------
TEXAS--6.3%
Gulf Coast Waste Disposal
Authority................... Aaa/AAA 3.55% 6/1/20 1,500 1,500,000
Texas State College Student
Loan (A.M.T.)............... Aa/AA 6.50% 8/1/07 4,000 4,228,760
Texas State Public Finance
Authority, Series A......... Aa/AA 8.00% 10/1/99 3,930 4,340,253
Texas State Public Finance
Authority, Series B......... Aa/AA 5.63% 10/1/12 5,000 5,011,100
------------
15,080,113
------------
</TABLE>
See Notes to Financial Statements.
FS-70
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal
Moody's/ Maturity Amount Value
Description S&P Rate Date (000) (Note 2(a))
----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
WASHINGTON--1.9%
Washington State Public Power
Supply System Nuclear
Project No. 2 Revenue,
Series C................... NR/AAA 7.63% 7/1/10 $ 4,000 $ 4,523,920
------------
WYOMING--0.4%
Wyoming Community Development
Authority, Single Family,
Series D (FHA/VA Mortgage
Insured)................... Aa/AA 7.60% 6/1/17 800 844,303
------------
TOTAL INVESTMENTS--99.6%
(COST $235,849,139)(A)...... 239,739,061
Other assets in excess of
liabilities--0.4%........... 932,214
------------
NET ASSETS--100.0%............ $240,671,275
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $240,671,275.
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(a) Represents cost for federal income tax purposes and differs from the value
by net unrealized appreciation of the securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................... $4,325,972
Unrealized depreciation........................... (436,050)
----------
Net unrealized appreciation....................... $3,889,922
==========
</TABLE>
AMBAC--AMBAC Indemnity Corporation.
A.M.T.--Subject to Alternative Minimum Tax.
CGIC--Capital Guaranty Insurance Corporation.
FGIC--Financial Guaranty Insurance Company.
FHA/VA--Federal Housing Association/Veterans Administration.
FSA--Financial Security Assurance.
LC--Letter of Credit.
MBIA--Municipal Bond Insurance Association
NR--No rating available.
SPA--Standby Purchase Agreement.
See Notes to Financial Statements.
FS-71
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Maturity Amount Cost
Description Rate Date (000) (Note 2(a))
----------- ----- -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--94.0%
Federal Home Loan Bank................... 5.33% 2/3/97 $ 3,000 $ 2,903,616
-----------
Federal Home Loan Bank Discount Note..... 5.25% 9/16/96 5,000 4,942,892
4.75% 2/24/97 10,000 9,936,104
-----------
14,878,996
-----------
Federal Home Loan Mortgage Corp.......... 0.00% 7/23/96 27,970 27,879,943
5.24% 7/29/96 4,125 4,108,188
6.06% 7/31/96 5,000 4,977,958
5.27% 8/19/96 5,000 4,964,135
-----------
41,930,224
-----------
Federal National Mortgage Assoc.......... 0.00% 7/18/96 10,000 9,975,114
5.25% 9/13/96 5,000 4,945,528
5.17% 12/6/96 5,000 4,881,280
5.14% 12/31/96 6,540 6,360,477
-----------
26,162,399
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(AMORTIZED COST $85,875,235)............ 85,875,235
-----------
REPURCHASE AGREEMENTS--6.3%
Repurchase agreement with Daiwa
Securities, dated 6/28/96, with a
maturity value of $5,002,292 (see
Footnote )............................ 5.50% 7/1/96 5,000 5,000,000
Repurchase agreement with Lehman
Brothers, dated 6/28/96, with a
maturity value of $746,336 (see
Footnote B)........................... 5.40% 7/1/96 746 746,000
-----------
TOTAL REPURCHASE AGREEMENTS--6.3%
(AMORTIZED COST $5,746,000)............. 5,746,000
-----------
TOTAL INVESTMENTS--100.3%
(AMORTIZED COST $91,621,235)(A)......... 91,621,235
Liabilities in excess of other assets--
(0.3%).................................. (231,046)
-----------
NET ASSETS--100.0%........................ $91,390,189
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $91,390,189.
(a) Cost for federal income tax and financial reporting purposes are the same.
Footnote A: Collateralized by $4,970,000 U.S. Treasury Notes, 6.38%, due
1/15/00 with a value of $5,114,398.
Footnote B: Collateralized by $730,000 U.S. Treasury Notes, 7.25%, due 2/15/98
with a value of $762,030.
See Notes to Financial Statements.
FS-72
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Amortized
Moody's/ Maturity Amount Cost
Description S&P Rate Date (000) (Note 2(a))
- ----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
BANK NOTES--0.3%
KeyBank, N.A (cost
$1,008,895)................. A1/NR 7.13% 4/15/97 $ 1,000 $ 1,008,895
------------
COMMERCIAL PAPER--71.0%
DOMESTIC--56.1%
Abbey National NA............. P-1/A-1+ 5.40% 12/4/96 5,000 4,883,000
Barton Capital Corp........... P-1/A-1+ 5.45% 7/22/96 14,921 14,873,564
Bayer Corp.................... P-1/A-1 5.28% 8/26/96 6,000 5,950,720
BBV Finance Delaware, Inc..... P-1/A-1+ 5.29% 8/7/96 10,000 9,945,630
Enterprise Capital Fund....... P-1/A-1+ 5.34% 7/8/96 7,000 6,992,732
General Electric.............. P-1/A-1+ 5.41% 9/4/96 10,000 9,902,319
Hewlett Packard............... P-1/A-1+ 5.16% 7/12/96 7,500 7,488,175
Household Bank................ P-1/A-1 5.40% 7/30/96 10,000 10,000,000
Huntington National Bank...... P-1/A-1 5.37% 8/6/96 10,000 10,000,000
Pearson, Inc.................. P-1/A-1 5.37% 7/8/96 10,990 10,978,525
Pooled Accounts Receivable
Capital Corp................ P-1/A-1+ 5.45% 7/19/96 15,000 14,959,125
Progress Capital Holdings..... P-1/A-1 5.35% 7/3/96 10,000 9,997,028
Southern California Gas....... P-1/A-1+ 5.30% 8/8/96 7,407 7,365,562
South Carolina Electric & Gas. P-1/A-1 5.40% 7/12/96 6,000 5,990,100
Travelers Insurance........... P-1/A-1 5.34% 7/15/96 10,000 9,979,233
Twin Towers, Inc.............. P-1/A-1+ 5.29% 8/16/96 9,755 9,689,062
UBS Finance (DE), Inc......... P-1/A-1+ 5.58% 7/1/96 15,000 15,000,000
U.S. Borax, Inc............... NR/A-1+ 5.28% 7/25/96 7,000 6,975,360
U.S. Life..................... P-1/A-1 5.42% 7/1/96 13,427 13,427,000
Wood Street Funding Corp...... P-1/A-1 5.50% 7/3/96 7,467 7,464,718
Wood Street Funding Corp...... P-1/A-1 5.35% 7/23/96 10,000 9,967,306
------------
201,829,159
------------
FOREIGN--14.9%
Banco Nacional de Mexico...... NR/NR 5.70% 7/1/96 10,000 10,000,000
Bayerische Vereinsbank........ P-1/A-1+ 5.55% 7/1/96 10,000 10,000,000
Commonwealth of Australia..... NR/NR 5.30% 7/17/96 7,000 6,983,511
Dresdner Bank................. P-1/A-1+ 5.40% 7/5/96 15,000 14,991,000
Kingdom of Sweden............. P-1/A-1+ 5.38% 2/14/97 7,000 6,761,487
Royal Bank of Canada.......... NR/A-1 5.32% 1/17/97 5,000 4,852,222
------------
53,588,220
------------
TOTAL COMMERCIAL PAPER
(COST $255,417,379).......... 255,417,379
------------
</TABLE>
See Notes to Financial Statements.
FS-73
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Amortized
Moody's/ Maturity Amount Cost
Description S&P Rate Date (000) (Note 2(a))
- ----------- -------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
CORPORATE NOTE--0.3%
Associates Corp. of North
America (cost $1,029,474).. AA3/AA- 9.70% 5/1/97 $ 1,000 $ 1,029,474
------------
TOTAL INVESTMENT IN SECURITIES
(COST $257,455,748)......... 257,455,748
------------
REPURCHASE AGREEMENTS--29.1%
Repurchase agreement with
Daiwa Securities, dated
6/28/96, with a maturity
value of $100,045,833
(see Footnote A)........... NR/NR 5.50% 7/1/96 100,000 100,000,000
Repurchase agreement with
Lehman Brothers, dated
6/28/96, with a maturity
value of $4,713,120
(see Footnote B)........... NR/NR 5.40% 7/1/96 4,711 4,711,000
------------
TOTAL REPURCHASE AGREEMENTS
(COST $104,711,000)......... 104,711,000
------------
TOTAL INVESTMENTS--100.7%
(COST $362,166,748)(A)...... 362,166,748
Liabilities in excess of other
assets--(0.7%).............. (2,451,391)
------------
NET ASSETS--100.0%............ $359,715,357
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $359,715,357.
(a) Cost for federal income tax and financial reporting purposes are the same.
NR--No rating available.
Footnote A: Collateralized by $98,900,000 U.S. Treasury Notes, 6.25%, due
8/31/96; with a value of $101,054,703.
Footnote B: Collateralized by $4,470,000 U.S. Treasury Notes, 7.75%, due
1/31/00; with a value of $4,807,368.
See Notes to Financial Statements.
FS-74
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Amortized
Moody's/ Maturity Amount Cost
Description S&P Rate Date (000) (Note 2(a))
----------- ---------- ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL SECURITIES--100%
ALABAMA--2.3%
Phoenix City............... P-1/NR 3.55% 8/13/96 $ 6,000 $ 6,000,000
------------
ALASKA--2.7%
Valdez, Marine Terminal
Revenue.................. VMIG1/NR 3.65% 10/9/96 7,000 7,000,000
------------
ARIZONA--0.9%
Cochise County, Solid Waste
Arizona Electric Power
Corp, Inc. Project....... NR/A-1+ 3.30%* 9/3/96 2,400 2,399,794
------------
COLORADO--1.9%
Colorado Student Obligation
Bond Authority, VRDN,
Student Loan Revenue,
Series 1990A, (A.M.T.)
(LC Student Loan
Marketing Association)... VMIG1/NR 3.40%* 9/4/96 5,000 5,000,000
------------
DISTRICT OF COLUMBIA--2.9%
American University,
Revenue Bonds,
Series A, (A.M.T.)....... VMIG1/NR 3.15%* 7/15/96 7,665 7,665,000
------------
FLORIDA--14.8%
Dade County, Solid Waste
Industrial Development,
Series A, (A.M.T.)....... NR/A-1+ 3.80%* 7/1/96 9,000 9,000,000
Florida Municipal Power.... P-1/A-1 3.50% 9/10/96 7,500 7,500,000
Florida State Board of
Education................ NR/NR 7.75%* 8/27/96 4,250 4,487,816
Orange County, Housing
Financial Authority,
Series B................. NR/A-1+ 3.65%* 8/26/96 5,000 5,000,000
St. Lucie County........... VMIG1/A-1+ 3.45% 7/17/96 5,000 5,000,000
Sunshine State Government
Financing Commission..... NR/A-1+ 3.40% 7/16/96 8,000 8,000,000
------------
38,987,816
------------
</TABLE>
See Notes to Financial Statements.
FS-75
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Amortized
Moody's/ Maturity Amount Cost
Description S&P Rate Date (000) (Note 2(a))
----------- ---------- ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
GEORGIA--3.8%
Burke County............... P-1/A-1+ 3.55% 10/23/96 $ 5,000 $ 5,000,000
Georgia Municipal Gas...... NR/A-1+ 3.60% 10/17/96 5,000 5,000,000
------------
10,000,000
------------
INDIANA--3.4%
Town of Burns Harbor, (J&E
Steel Corp.)............. NR/NR 3.55% 7/1/96 9,000 9,000,000
------------
KENTUCKY--3.4%
Henderson County, Solid
Waste Disposal Revenue,
VRDN, Hudson Foods, Inc.
Project, (A.M.T.)........ VMIG1/NR 3.55% 7/2/96 9,000 9,000,000
------------
LOUISIANA--8.3%
Environmental Revenue
Bonds, (Citgo Corp.),
Series 94A............... VMIG1/NR 3.80% 7/1/96 2,100 2,100,000
Lake Charles Harbor........ NR/A-1+ 3.45% 7/5/96 5,500 5,500,000
Louisiana State............ VMIG1/A-1+ 3.25% 7/8/96 7,500 7,500,000
Parish of Plaquemines,
Environmental Revenue
Bonds (BP Exploration &
Oil), Series 1994........ P-1/A-1+ 3.80% 7/1/96 2,600 2,600,000
Parish of St. Charles
(Shell Oil Norco
Project), Series 91...... VMIG1/A-1+ 3.80% 7/1/96 4,200 4,200,000
------------
21,900,000
------------
MASSACHUSETTS--3.1%
Massachusetts Health &
Education................ VMIG1/A-1+ 3.50% 9/9/96 8,200 8,200,000
------------
MISSOURI--1.1%
Missouri Higher Education
Loan Authority, Series A,
(A.M.T.) (LC National
Westminster PLC)......... VMIG1/NR 3.40% 7/29/96 3,000 3,000,000
------------
</TABLE>
See Notes to Financial Statements.
FS-76
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Amortized
Moody's/ Maturity Amount Cost
Description S&P Rate Date (000) (Note 2(a))
----------- ---------- ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
NEVADA--3.0%
Clark County Industrial
Development Revenue,
Nevada Power Co. Project,
Series A, (A.M.T.) (LC
Barclays Bank PLC)....... NR/A-1+ 3.30% 7/29/96 $ 8,000 $ 8,000,000
------------
NEW HAMPSHIRE--3.8%
New Hampshire Business
Finance Authority,
Pollution Control Revenue
Refunding, Public Service
Co. of New Hampshire
Project, VRDN, Series
1992D, (A.M.T.) (LC
Barclays Bank PLC)....... VMIG1/A-1+ 3.60% 7/29/96 10,000 10,000,000
------------
NEW JERSEY--1.8%
New Jersey State G.O. ..... NR/NR 7.30% 8/27/96 4,515 4,614,492
------------
NEW MEXICO--1.9%
City of Albuquerque,
Airport Subordinate
Liens, Series 1996A...... VMIG1/NR 3.30% 7/29/96 5,000 5,000,000
------------
NEW YORK--5.1%
City of Rochester.......... NR/A-1+ 3.40% 7/16/96 3,300 3,300,000
Niagara County............. VMIG1/A-1 3.80% 7/22/96 10,000 10,000,000
------------
13,300,000
------------
NORTH DAKOTA--1.5%
Grand Forks Health Care
Facilities............... VMIG1/NR 3.70% 7/29/96 4,000 4,000,000
------------
OHIO--4.6%
Ohio State Turnpike
Commission Series A...... NR/NR 4.25% 8/27/96 3,545 3,557,820
Ohio State Water
Development Authority.... P-1/A-1+ 3.80% 8/27/96 8,500 8,500,000
------------
12,057,820
------------
</TABLE>
See Notes to Financial Statements.
FS-77
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Amortized
Moody's/ Maturity Amount Cost
Description S&P Rate Date (000) (Note 2(a))
----------- ---------- ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
PENNSYLVANIA--2.7%
Carbon County.............. NR/A-1+ 3.30% 8/8/96 $ 7,000 $ 7,000,000
------------
SOUTH CAROLINA--1.5%
York County, Electric
Project.................. NR/A-1+ 3.25% 8/27/96 4,000 4,000,000
------------
TENNESSEE--3.3%
Memphis Shelby County...... P-1/A-1+ 3.70% 9/10/96 6,405 6,405,000
Metropolitan Government,
Davidson County,
Nashville................ NR/A-1+ 7.20% 8/27/96 2,100 2,163,000
------------
8,568,000
------------
TEXAS--15.7%
Austin, Commission
Utilities................ P-1/A-1+ 3.60% 10/22/96 5,000 5,000,000
Brazos Higher Education
Authority, Student Loan
Revenue, VRDN, Series
B-1, (A.M.T.) (LC Student
Loan Marketing
Authority)............... VMIG1/NR 3.40% 8/26/96 6,000 6,000,000
Brazos River Authority,
Pollution Control
Revenue, (A.M.T.)........ VMIG1/A-1+ 3.85% 7/29/96 5,400 5,400,000
Brazos River Texas......... VMIG1/A-1+ 3.50% 7/5/96 3,000 3,000,000
Gulf Coast Industrial
Development Authority,
Marine Terminal (LC Amoco
Credit Corp.)............ VMIG1/A-1+ 3.80% 7/1/96 1,000 1,000,000
Gulf Coast Industrial
Development Authority,
Texas Solid Waste
Disposal Revenue......... P-1/A-1+ 3.80% 7/1/96 2,000 2,000,000
Nueces River Authority,
(Reynolds Metals Co.
Project) (LC Bank of Nova
Scotia).................. P-1/NR 3.80% 8/27/96 7,000 7,000,000
</TABLE>
See Notes to Financial Statements.
FS-78
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Principal Amortized
Moody's/ Maturity Amount Cost
Description S&P Rate Date (000) (Note 2(a))
----------- ---------- ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
TEXAS (CONTINUED)
Panhandle Plains, Higher
Education Authorized
Student Loan Revenue,
(A.M.T.)................ VMIG1/A 3.40% 8/27/96 $ 6,000 $ 6,000,000
Port Arthur, Navigation
District (American
Petrofina, Inc.)........ NR/NR 3.80% 7/29/96 2,800 2,800,000
Tyler Health.............. VMIG1/A-1+ 4.00% 10/10/96 3,000 3,000,000
------------
41,200,000
------------
UTAH--4.1%
Intermountain Power....... VMIG1/A-1+ 3.35% 8/22/96 4,650 4,650,000
Tooele County............. NR/NR 3.70% 10/23/96 6,000 6,000,000
------------
10,650,000
------------
WEST VIRGINIA--2.4%
West Virginia Public
Energy.................. VMIG1/NR 3.70% 10/18/96 6,000 6,000,000
------------
TOTAL INVESTMENTS--100.0%
(COST $262,542,922)(A)... 262,542,922
Liabilities in excess of
other assets--0.0%....... (52,872)
------------
NET ASSETS--100.0%......... $262,490,050
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $262,490,050.
(a) Cost for federal income tax and financial reporting purposes are the same.
A.M.T.--Subject to Alternative Minimum Tax.
LC--Letter of Credit.
VRDN--Variable Rate Demand Note.
* Variable Rate Security. Interest rate stated is as of June 30, 1996.
Maturity date reflects next rate change date.
See Notes to Financial Statements.
FS-79
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
FS-80
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund Assets Fund Income Fund
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $52,881,746, $8,356,220,
$261,668,081, $264,619,543,
$88,783,357, $140,979,724 and
$204,069,395 respectively)........... $61,536,173 $9,606,405 $306,015,059
Cash................................... 2,058,968 218,768 151,814
Cash denominated in foreign currencies. -- -- --
Receivable for investment securities
sold................................. -- -- 32,278,556
Receivable for Fund shares sold........ 35,373 24,626 337,817
Receivable from Adviser................ -- 5,832 --
Dividends receivable................... 107,998 11,306 1,037,529
Interest receivable.................... 386,085 32,129 258,283
Foreign tax reclaim receivable......... -- -- --
Deferred organization expenses......... 67,996 53,123 55,598
Prepaid expenses and other assets...... 6,794 1,804 22,233
----------- ---------- ------------
Total Assets.......................... 64,199,387 9,953,993 340,156,889
----------- ---------- ------------
LIABILITIES:
Advisory fees payable.................. 19,978 -- 101,472
Administration fees payable............ 7,470 -- 37,597
Shareholder Services fees payable
(Class A Shares)..................... 32,649 5,156 2,567
Shareholder Services fees payable
(Class B Shares)..................... 2,545 732 736
12b-1 fees payable (Class B Shares).... 8,324 2,152 2,196
Custodian fees and expenses............ 6,223 15,719 15,105
Bank overdrafts........................ -- -- --
Dividends payable...................... -- -- --
Payable for Fund shares redeemed....... 35,609 4,519 120,149
Payable for investment securities
purchased............................ 1,996,094 -- 32,952,311
Payable for variation margin........... -- -- --
Other accrued expenses................. 17,069 5,369 80,036
----------- ---------- ------------
Total Liabilities..................... 2,125,961 33,647 33,312,169
----------- ---------- ------------
NET ASSETS.............................. $62,073,426 $9,920,346 $306,844,720
=========== ========== ============
</TABLE>
See Notes to Financial Statements.
FS-81
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Growth Opportunities Equity Intermediate
Fund Fund Fund Bond Fund
------ ------------- ------------- ------------
<S> <C> <C> <C>
$308,644,813 $104,884,063 $147,745,822 $202,665,511
858 853 -- 508
-- -- 571,751 --
12,878,958 4,671,799 2,236,522 4,103,942
687,552 119,404 486,326 298,697
-- -- -- 192,506
466,192 14,000 546,656 --
6,715 2,015 528,621 2,750,168
-- -- 122,179 --
54,888 53,599 54,256 36,448
8,250 4,174 8,228 24,130
- ------------ ------------ ------------ ------------
322,748,226 109,749,907 152,300,361 210,071,910
- ------------ ------------ ------------ ------------
133,764 44,787 81,215 42,487
38,373 13,132 18,054 24,865
3,280 671 2,433 4,143
445 24 503 279
1,326 69 1,497 880
19,933 15,600 51,551 13,638
-- -- 749,643 --
-- -- -- 1,010,819
298,671 10,342 47,683 12,581
13,070,469 3,329,000 1,567,136 4,179,000
-- -- 79,542 --
90,919 19,818 108,267 26,313
- ------------ ------------ ------------ ------------
13,657,180 3,433,443 2,707,524 5,315,005
- ------------ ------------ ------------ ------------
$309,091,046 $106,316,464 $149,592,837 $204,756,905
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
FS-82
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund Assets Fund Income Fund
------------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
CLASS A SHARES:
Net Assets........................... $56,763,865 $8,279,052 $ 5,097,730
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 3,819,804 678,968 398,282
----------- ---------- ------------
Net Asset Value per Share............ 14.86 12.19 12.80
Maximum Sales Charge................. 0.70* 0.58* 0.60*
----------- ---------- ------------
Maximum Offering Price............... $ 15.56 $ 12.77 $ 13.40
=========== ========== ============
CLASS B SHARES:
Net Assets........................... $ 4,072,351 $1,205,482 $ 1,361,680
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 273,666 99,387 106,454
----------- ---------- ------------
Net Asset Value per Share............ $ 14.88 $ 12.13 $ 12.79
=========== ========== ============
CLASS I SHARES:
Net Assets........................... $ 1,237,210 $ 435,812 $300,385,310
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 83,045 35,845 23,487,452
----------- ---------- ------------
Net Asset Value per Share............ $ 14.90 $ 12.16 $ 12.79
=========== ========== ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at
par................................ $ 4,176 $ 814 $ 23,992
Additional paid-in-capital........... 52,729,198 8,616,391 246,129,186
Accumulated net realized gains
(losses) from investment
transactions....................... 514,763 (30) 15,425,210
Undistributed net investment income.. 170,862 52,986 919,354
Net unrealized appreciation
(depreciation) on investments...... 8,654,427 1,250,185 44,346,978
Net unrealized appreciation of assets
and liabilities denominated in
foreign currencies and financial
futures............................ -- -- --
----------- ---------- ------------
NET ASSETS, JUNE 30, 1996.............. $62,073,426 $9,920,346 $306,844,720
=========== ========== ============
</TABLE>
- -----------
* Sales charge is 4.50% of Maximum Offering Price.
** Sales charge is 3.00% of Maximum Offering Price.
See Notes to Financial Statements.
FS-83
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Growth Opportunities Equity Intermediate
Fund Fund Fund Bond Fund
------ ------------- ------------- ------------
<S> <C> <C> <C>
$ 5,741,437 $ 1,421,675 $ 4,221,668 $ 6,745,881
442,055 108,325 367,088 863,562
- ------------ ------------ ------------ ------------
12.99 13.12 11.50 7.81
0.61* 0.62* 0.54* 0.24**
- ------------ ------------ ------------ ------------
$ 13.60 $ 13.74 $ 12.04 $ 8.05
============ ============ ============ ============
$ 825,708 $ 57,128 $ 893,398 $ 431,547
63,849 4,395 77,830 55,157
- ------------ ------------ ------------ ------------
$ 12.93 $ 13.00 $ 11.48 $ 7.82
============ ============ ============ ============
$302,523,901 $104,837,661 $144,477,771 $197,579,477
23,278,785 7,982,332 12,520,836 25,250,755
- ------------ ------------ ------------ ------------
$ 13.00 $ 13.13 $ 11.54 $ 7.82
============ ============ ============ ============
$ 23,785 $ 8,095 $ 12,966 $ 26,169
232,712,772 83,558,061 137,027,945 203,768,099
31,689,674 6,632,040 4,930,238 2,366,521
639,545 17,562 637,006 --
44,025,270 16,100,706 6,766,098 (1,403,884)
-- -- 218,584 --
- ------------ ------------ ------------ ------------
$309,091,046 $106,316,464 $149,592,837 $204,756,905
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
FS-84
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate
Bond International Municipal
Fund Bond Fund Bond Fund
---- ------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $131,054,745, $19,325,826,
$380,216,692, $235,849,139,
$85,875,235, $257,455,748 and
$262,542,922, respectively)......... $129,610,913 $19,256,263 $386,568,311
Repurchase agreements (amortized cost
$0, $0, $0, $0, $5,746,000,
$104,711,000 and $0, respectively).. -- -- --
Cash.................................. 736 3,557,660 --
Receivable for investment securities
sold................................ 3,814,000 -- 15,772,141
Receivable for Fund shares sold....... 498,417 112,319 427,008
Receivable from Adviser............... -- -- 141,550
Interest receivable................... 1,934,415 461,495 6,100,512
Deferred organization expenses........ 51,349 49,741 43,079
Prepaid expenses and other assets..... 3,735 14,097 29,746
------------ ----------- ------------
Total Assets......................... 135,913,565 23,451,575 409,082,347
------------ ----------- ------------
LIABILITIES:
Advisory fees payable................. 34,464 -- 101,817
Administration fees payable........... 15,933 981 47,482
Shareholder Services fees payable
(Class A Shares).................... 1,379 358 59,460
Shareholder Services fees payable
(Class B Shares).................... 38 4 287
12b-1 fees payable (Class B Shares)... 110 8 949
Custodian fees and expenses........... 25,935 -- 74,309
Bank overdrafts....................... -- -- 2,957
Dividends payable..................... 637,734 76,808 1,495,378
Payable for Fund shares redeemed...... 88,350 3,403 126,562
Payable for investment securities
purchased........................... 4,058,000 5,200,523 18,486,500
Other accrued expenses................ 30,674 13,535 68,442
------------ ----------- ------------
Total Liabilities.................... 4,892,617 5,295,620 20,464,143
------------ ----------- ------------
NET ASSETS............................. $131,020,948 $18,155,955 $388,618,204
============ =========== ============
</TABLE>
See Notes to Financial Statements.
FS-85
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Money Market Money Market Money Market
Bond Fund Fund Fund Fund
--------- --------------- ------------ ------------
<S> <C> <C> <C>
$239,739,061 $85,875,235 $257,455,748 $262,542,922
-- 5,746,000 104,711,000 --
3,087 -- -- 454,408
11,642,869 3,648,000 151,218,829 6,000,000
20,152 2,347,496 6,379,731 1,998,005
-- -- -- --
4,145,335 170,595 274,601 1,614,127
5,909 54,702 56,367 76,090
85,623 404 81,101 20,205
- ------------ ----------- ------------ ------------
255,642,036 97,842,432 520,177,377 272,705,757
- ------------ ----------- ------------ ------------
57,287 3,416 28,122 63,456
29,168 9,980 39,871 32,259
21,893 84,696 251,474 216,753
269 -- 75 --
903 -- -- --
16,083 9,593 27,681 10,051
-- 24,659 67,323 --
963,719 305,904 1,185,953 602,607
121,830 253,081 4,151,966 903,273
13,744,926 5,746,000 154,678,900 8,319,945
14,683 14,914 30,655 67,363
- ------------ ----------- ------------ ------------
14,970,761 6,452,243 160,462,020 10,215,707
- ------------ ----------- ------------ ------------
$240,671,275 $91,390,189 $359,715,357 $262,490,050
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
FS-86
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate
Bond International Municipal
Fund Bond Fund Bond Fund
---- ------------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
CLASS A SHARES:
Net Assets........................ $ 2,616,251 $ 643,186 $ 17,339,106
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 255,409 61,294 1,448,754
------------ ----------- ------------
Net Asset Value per Share......... 10.24 10.49 11.97
Maximum Sales Charge.............. 0.48* 0.49* 0.37**
------------ ----------- ------------
Maximum Offering Price............ $ 10.72 $ 10.98 $ 12.34
============ =========== ============
CLASS B SHARES:
Net Assets........................ $ 56,872 $ 4,441 $ 512,518
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 5,551 421 42,814
------------ ----------- ------------
Net Asset Value per Share......... $ 10.25 $ 10.55 $ 11.97
============ =========== ============
CLASS I SHARES:
Net Assets........................ $128,347,825 $17,508,328 $370,766,580
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 12,521,294 1,659,333 30,966,106
------------ ----------- ------------
Net Asset Value per Share......... $ 10.25 $ 10.55 $ 11.97
============ =========== ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at
par............................. $ 12,782 $ 1,721 $ 32,458
Additional paid-in-capital........ 128,907,545 18,018,905 380,979,280
Accumulated net realized gains
(losses) on investment
transactions.................... 3,544,453 176,515 1,254,847
Undistributed net investment loss. -- (14,103) --
Net unrealized appreciation
(depreciation) on investments... (1,443,832) (69,563) 6,351,619
Net unrealized appreciation of
assets and liabilities
denominated in foreign
currencies...................... -- 42,480 --
------------ ----------- ------------
NET ASSETS, JUNE 30, 1996........... $131,020,948 $18,155,955 $388,618,204
============ =========== ============
</TABLE>
- -----------
* Sales charge is 4.50% of Maximum Offering Price.
** Sales charge is 3.00% of Maximum Offering Price.
(1) The Municipal Bond Fund has authorized 2.5 billion shares for Class A and
Class B and has authorized 5.0 billion shares for Class I.
See Notes to Financial Statements.
FS-87
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Money Market Money Market Money Market
Bond Fund Fund Fund Fund
--------- --------------- ------------ ------------
<S> <C> <C> <C>
$ 7,149,023 $91,390,189 $359,619,155 $262,490,050
584,901 91,406,174 359,587,873 262,543,701
- ------------ ----------- ------------ ------------
12.22 1.00 1.00 1.00
0.58* -- -- --
- ------------ ----------- ------------ ------------
$ 12.80 $ 1.00 $ 1.00 $ 1.00
============ =========== ============ ============
$ 449,647 $ 96,202
36,763 96,194
- ------------ ------------
$ 12.23 $ 1.00
============ ============
$233,072,605
19,075,312
- ------------
$ 12.22
============
$ 19,697 $ 91,406 $ 359,684 $ 262,544
234,725,308 91,314,768 359,324,382 262,267,580
2,036,348 (15,985) 31,291 (40,074)
-- -- -- --
3,889,922 -- -- --
-- -- -- --
- ------------ ----------- ------------ ------------
$240,671,275 $91,390,189 $359,715,357 $262,490,050
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
FS-88
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund Assets Fund Income Fund
------------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $138,766 for
International Equity Fund)........... $ 484,803 $ 66,280 $ 5,446,602
Interest income........................ 950,797 102,898 877,739
---------- -------- -----------
1,435,600 169,178 6,324,341
---------- -------- -----------
EXPENSES:
Advisory fees.......................... 186,260 32,204 748,435
Administration fees.................... 42,983 7,432 224,531
Shareholder Services fees (Class A
Shares and Class B Shares)........... 70,041 11,860 5,572
12b-1 fees (Class B Shares)............ 12,104 3,903 3,545
Custodian fees and expenses............ 35,230 35,984 68,543
Registration fees...................... 6,746 6,396 39,602
Legal and audit fees................... 12,690 4,488 23,876
Amortization of organization expenses.. 8,907 8,230 7,428
Transfer agent fees and expenses....... 38,256 6,336 7,182
Reports to shareholders................ 3,972 3,076 12,954
Trustees' fees......................... 3,058 2,230 4,396
Miscellaneous expenses................. 1,168 168 6,732
---------- -------- -----------
Total Expenses......................... 421,415 122,307 1,152,796
Less: Expense reimbursements........... (49,405) (55,370) (166,802)
Expenses paid by third party.......... (3,816) (938) (1,131)
---------- -------- -----------
Net Expenses.......................... 368,194 65,999 984,863
---------- -------- -----------
NET INVESTMENT INCOME................. 1,067,406 103,179 5,339,478
---------- -------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gains (losses) on
investment transactions.............. 694,477 (35) 10,159,860
Net realized losses on foreign currency
transactions......................... -- -- --
Net realized gains on futures
transactions......................... -- -- --
Net change in unrealized appreciation
(depreciation) on investments........ 386,420 526,122 2,749,219
Net unrealized depreciation of assets
and liabilities denominated in
foreign currencies and financial
futures.............................. -- -- --
---------- -------- -----------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS............... 1,080,897 526,087 12,909,079
---------- -------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $2,148,303 $629,266 $18,248,557
========== ======== ===========
</TABLE>
See Notes to Financial Statements.
FS-89
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Growth Opportunities Equity Intermediate
Fund Fund Fund Bond Fund
------ ------------- ------------- ------------
<S> <C> <C> <C>
$ 2,417,830 $ 342,593 $ 919,738 $ --
345,981 180,715 812,573 6,464,285
- ----------- ---------- ---------- -----------
2,763,811 523,308 1,732,311 6,464,285
- ----------- ---------- ---------- -----------
1,001,299 347,121 510,026 397,522
231,069 74,383 95,630 149,070
6,857 1,296 5,144 8,230
2,153 98 2,128 1,413
76,713 45,388 143,783 52,441
32,692 6,392 18,787 18,436
28,964 14,582 13,902 20,008
7,344 7,350 7,304 3,957
7,744 7,128 7,021 5,960
12,834 4,380 7,972 15,042
5,336 4,906 5,254 3,142
10,298 2,148 3,018 2,688
- ----------- ---------- ---------- -----------
1,423,303 515,172 819,969 677,909
(178,139) (91,042) (121,611) (117,649)
(579) (546) (18,899) (965)
- ----------- ---------- ---------- -----------
1,244,585 423,584 679,459 559,295
- ----------- ---------- ---------- -----------
1,519,226 99,724 1,052,852 5,904,990
- ----------- ---------- ---------- -----------
26,440,370 6,745,106 54,335 (243,227)
-- -- (21,145) --
-- -- 3,394,282 --
(1,707,596) 640,604 890,843 (8,621,282)
-- -- (680,616) --
- ----------- ---------- ---------- -----------
24,732,774 7,385,710 3,637,699 (8,864,509)
- ----------- ---------- ---------- -----------
$26,252,000 $7,485,434 $4,690,551 $(2,959,519)
=========== ========== ========== ===========
</TABLE>
See Notes to Financial Statements.
FS-90
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate
Bond International Municipal
Fund Bond Fund Bond Fund
----------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income (net of foreign
withholding taxes of $245 for
International Bond Fund)........... $ 4,132,313 $ 491,723 $ 9,997,821
----------- --------- ------------
4,132,313 491,723 9,997,821
----------- --------- ------------
EXPENSES:
Advisory fees........................ 350,506 57,597 778,758
Administration fees.................. 96,541 12,343 292,034
Shareholder Services fees (Class A
Shares and
Class B Shares).................... 2,615 664 22,194
12b-1 fees (Class B Shares).......... 211 16 1,519
Custodian fees and expenses.......... 61,373 10,654 102,370
Registration fees.................... 15,643 6,906 28,032
Legal and audit fees................. 12,311 8,636 30,768
Amortization of organization
expenses........................... 6,984 6,893 5,467
Transfer agent fees and expenses..... 7,003 6,976 6,952
Reports to shareholders.............. 3,396 2,316 20,330
Trustees' fees....................... 4,493 4,002 4,732
Miscellaneous expenses............... 3,330 316 9,870
----------- --------- ------------
Total Expenses....................... 564,406 117,319 1,303,026
Less: Expense reimbursements......... (119,917) (46,124) (197,946)
Expenses paid by third parties....... (1,433) (618) (5,602)
----------- --------- ------------
Net Expenses........................ 443,056 70,577 1,099,478
----------- --------- ------------
NET INVESTMENT INCOME............... 3,689,257 421,146 8,898,343
----------- --------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gains (losses) on
investment transactions............ 1,073,445 232,363 1,326,766
Net realized losses on foreign
currency transactions.............. -- (18,467) --
Net change in unrealized depreciation
on investments..................... (7,715,626) (497,279) (10,453,612)
Translation of assets and liabilities
denominated in foreign currencies.. -- (101,700) --
----------- --------- ------------
NET REALIZED AND UNREALIZED LOSSES
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS............. (6,642,181) (385,083) (9,126,846)
----------- --------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS........... $(2,952,924) $ 36,063 $ (228,503)
=========== ========= ============
</TABLE>
See Notes to Financial Statements.
FS-91
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Money Market Money Market Money Market
Bond Fund Fund Fund Fund
- ----------- --------------- ------------ ------------
<S> <C> <C> <C>
$ 6,348,550 $1,748,921 $6,839,129 $ 4,373,019
- ----------- ---------- ---------- -----------
6,348,550 1,748,921 6,839,129 4,373,019
- ----------- ---------- ---------- -----------
477,525 132,814 504,256 505,016
179,072 49,805 189,096 189,381
9,428 83,009 315,160 315,635
1,382 -- 457 --
69,653 45,632 80,358 71,688
18,485 5,158 19,280 16,816
26,946 7,996 33,158 30,700
585 6,783 6,846 9,255
7,162 30,644 159,950 60,506
16,668 4,454 13,825 14,562
3,714 3,004 5,404 8,224
8,352 1,808 6,294 7,516
- ----------- ---------- ---------- -----------
818,972 371,107 1,334,084 1,229,299
(150,790) (101,615) (316,471) (336,659)
(7,134) (4,086) (9,900) (9,001)
- ----------- ---------- ---------- -----------
661,048 265,406 1,007,713 883,639
- ----------- ---------- ---------- -----------
5,687,502 1,483,515 5,831,416 3,489,380
- ----------- ---------- ---------- -----------
1,828,477 -- (564) --
-- -- -- --
(9,784,351) -- -- --
-- -- -- --
- ----------- ---------- ---------- -----------
(7,955,874) -- (564) --
- ----------- ---------- ---------- -----------
$(2,268,372) $1,483,515 $5,830,852 $ 3,489,380
=========== ========== ========== ===========
</TABLE>
See Notes to Financial Statements.
FS-92
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Assets
Income Fund Managed Assets Fund
-------------------------- -------------------------
For the Six For the For the Six For the
Months Ended Year Ended Months Ended Period Ended
June 30, December 31, June 30, December 31,
1996 1995 1996 1995(1)
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income..... $ 1,067,406 $ 2,375,663 $ 103,179 $ 93,370
Net realized gains
(losses) on investment
transactions............ 694,477 (324,052) (35) 5
Net change in unrealized
appreciation
(depreciation) on
investments............. 386,420 9,391,499 526,122 724,063
----------- ----------- ---------- ----------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. 2,148,303 11,443,110 629,266 817,438
----------- ----------- ---------- ----------
DIVIDENDS TO SHAREHOLDERS
FROM:
Net investment income:
Class A Shares........... (833,893) (2,441,590) (44,483) (77,991)
Class B Shares........... (40,101) (31,089) (3,095) (7,493)
Class I Shares........... (22,770) (36,073) (2,688) (7,813)
----------- ----------- ---------- ----------
TOTAL DIVIDENDS TO
SHAREHOLDERS........... (896,764) (2,508,752) (50,266) (93,297)
----------- ----------- ---------- ----------
Net realized gains on
investments:
Class A Shares........... -- (108,059) -- --
Class B Shares........... -- (4,560) -- --
Class I Shares........... -- (2,720) -- --
----------- ----------- ---------- ----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........... -- (115,339) -- --
----------- ----------- ---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares
sold.................... 8,937,941 9,561,625 1,323,074 9,391,817
Dividends reinvested...... 820,415 2,415,006 47,580 85,512
Cost of shares redeemed... (4,401,796) (9,697,497) (1,628,309) (602,469)
----------- ----------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM FUND
SHARE TRANSACTIONS..... 5,356,560 2,279,134 (257,655) 8,874,860
----------- ----------- ---------- ----------
TOTAL INCREASE IN NET
ASSETS................ 6,608,099 11,098,153 321,345 9,599,001
NET ASSETS:
Beginning of period....... 55,465,327 44,367,174 9,599,001 --
----------- ----------- ---------- ----------
End of period (4)......... $62,073,426 $55,465,327 $9,920,346 $9,599,001
=========== =========== ========== ==========
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) Includes distributions in excess of net investment income of $8,587.
(4) Includes undistributed net investment income (distributions in excess of
net investment income) of $170,862, $220, $52,986, $73, $919,354,
($8,587), $639,545 and $3,678, respectively.
See Notes to Financial Statements.
FS-93
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Income Fund Growth Fund
--------------------------------- -----------------------------------------
For the Six For the For the Six For the
Months Ended Period Ended Months Ended Period Ended
June 30, December 31, June 30, December 31,
1996 1995(2) 1996 1995(2)
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
$ 5,339,478 $ 9,024,081 $ 1,519,226 $ 3,827,071
10,159,860 12,993,377 26,440,370 26,140,162
2,749,219 41,597,759 (1,707,596) 45,732,866
------------ ------------ ------------ ------------
18,248,557 63,615,217 26,252,000 75,700,099
------------ ------------ ------------ ------------
(44,312) (36,341) (8,415) (20,056)
(9,668) (4,665) -- (128)
(4,357,557) (8,991,662)(3) (874,944) (3,803,209)
------------ ------------ ------------ ------------
(4,411,537) (9,032,668) (883,359) (3,823,393)
------------ ------------ ------------ ------------
-- (76,484) -- (297,846)
-- (15,958) -- (18,522)
-- (7,635,585) -- (20,574,490)
------------ ------------ ------------ ------------
-- (7,728,027) -- (20,890,858)
------------ ------------ ------------ ------------
19,975,695 258,157,716 15,401,213 300,831,887
136,609 6,638,209 27,290 15,027,099
(14,498,131) (24,256,920) (30,247,444) (68,303,488)
------------ ------------ ------------ ------------
5,614,173 240,539,005 (14,818,941) 247,555,498
------------ ------------ ------------ ------------
19,451,193 287,393,527 10,549,700 298,541,346
287,393,527 -- 298,541,346 --
------------ ------------ ------------ ------------
$306,844,720 $287,393,527 $309,091,046 $298,541,346
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
FS-94
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special Opportunities Fund International Equity Fund
---------------------------- --------------------------
For the Six For the For the Six For the
Months Ended Period Ended Months Ended Period Ended
June 30, December 31, June 30, December 31,
1996 1995(1) 1996 1995(2)
------------- ------------- ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 99,724 $ 412,673 $ 1,052,852 $ 1,052,004
Net realized gains on
investment
transactions......... 6,745,106 1,749,697 54,335 505,347
Net realized gains
(losses) on foreign
currency transactions -- -- (21,145) (236,752)
Net realized gains on
futures transactions. -- -- 3,394,282 3,503,125
Net change in
unrealized
appreciation
(depreciation) on
investments.......... 640,604 15,460,102 890,843 5,875,255
Net unrealized
appreciation
(depreciation) of
assets and
liabilities
denominated in
foreign currencies
and financial
futures.............. -- -- (680,616) 899,200
------------- ------------ ------------ ------------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS..... 7,485,434 17,622,472 4,690,551 11,598,179
------------- ------------ ------------ ------------
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income:
Class A Shares........ (10) (807) (12,751) (12,465)
Class B Shares........ -- -- (965) (174)
Class I Shares........ (86,090) (407,928) (536,221) (905,274)
------------- ------------ ------------ ------------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (86,100) (408,735) (549,937) (917,913)
------------- ------------ ------------ ------------
Net realized gains on
investments:
Class A Shares........ -- (13,273) -- (60,752)
Class B Shares........ -- (308) -- (4,283)
Class I Shares........ -- (1,849,182) -- (2,203,921)
------------- ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........ -- (1,862,763) -- (2,268,956)
------------- ------------ ------------ ------------
CAPITAL STOCK
TRANSACTIONS:
Net proceeds from
shares sold.......... 11,643,865 89,942,654 45,863,061 100,265,824
Dividends reinvested... 1,409 1,194,408 26,086 1,535,547
Cost of shares
redeemed............. (6,341,087) (12,875,093) (4,826,301) (5,823,304)
------------- ------------ ------------ ------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS.. 5,304,187 78,261,969 41,062,846 95,978,067
------------- ------------ ------------ ------------
TOTAL INCREASE IN NET
ASSETS............. 12,703,521 93,612,943 45,203,460 104,389,377
NET ASSETS:
Beginning of period.... 93,612,943 -- 104,389,377 --
------------- ------------ ------------ ------------
End of period(4)....... $ 106,316,464 $ 93,612,943 $149,592,837 $104,389,377
============= ============ ============ ============
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(3) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(4) Includes undistributed net investment income (distributions in excess of
net investment income) of $17,562, $3,938, $637,006, $134,091, $0, $0,
($14,103) and ($13,857), respectively.
See Notes to Financial Statements.
FS-95
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bond Fund International Bond Fund
---------------------------------- --------------------------------------------
For the Six For the For the Six For the
Months Ended Period Ended Months Ended Period Ended
June 30, December 31, June 30, December 31,
1996 1995(3) 1996 1995(1)
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
$ 3,689,257 $ 6,703,140 $ 421,146 $ 611,812
1,073,445 6,908,795 232,363 1,020,021
-- -- (18,467) 30,644
-- -- -- --
(7,715,626) 6,271,794 (497,279) 427,716
-- -- (101,700) 144,180
------------ ------------ ----------- -----------
(2,952,924) 19,883,729 36,063 2,234,373
------------ ------------ ----------- -----------
(55,896) (50,085) (12,161) (13,458)
(1,334) (755) (85) (173)
(3,632,027) (6,652,300) (409,146) (612,038)
------------ ------------ ----------- -----------
(3,689,257) (6,703,140) (421,392) (625,669)
------------ ------------ ----------- -----------
-- (63,549) -- (33,914)
-- (2,117) -- (311)
-- (4,372,121) -- (1,053,821)
------------ ------------ ----------- -----------
-- (4,437,787) -- (1,088,046)
------------ ------------ ----------- -----------
17,151,796 129,396,150 4,483,775 15,584,504
52,643 2,974,473 22,078 380,496
(6,849,979) (13,804,756) (959,857) (1,490,370)
------------ ------------ ----------- -----------
10,354,460 118,565,867 3,545,996 14,474,630
------------ ------------ ----------- -----------
3,712,279 127,308,669 3,160,667 14,995,288
127,308,669 -- 14,995,288 --
------------ ------------ ----------- -----------
$131,020,948 $127,308,669 $18,155,955 $14,995,288
============ ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
FS-96
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Six Months Period Ended Year Ended
Ended June 30, December 31, January 31,
1996 1995(1) 1995
-------------- ------------ -----------
(Unaudited)
<S> <C> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
Net investment income............... $ 5,904,990 $ 9,688,284 $ 346,925
Net realized gains (losses) on
investment transactions........... (243,227) 7,844,775 (63,605)
Net change in unrealized
appreciation (depreciation) on
investments....................... (8,621,282) 7,312,968 (304,664)
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................... (2,959,519) 24,846,027 (21,344)
------------ ------------ -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares..................... (173,857) (137,077) (4,217)
Class B Shares..................... (9,027) (3,518) (99)
Class I Shares..................... (5,722,106) (9,547,689) (342,609)
------------ ------------ -----------
TOTAL DIVIDENDS TO SHAREHOLDERS. (5,904,990) (9,688,284) (346,925)
------------ ------------ -----------
Net realized gains on investments:
Class A Shares..................... -- (157,731) (16)
Class B Shares..................... -- (6,773) (1)
Class I Shares..................... -- (5,006,911) (1,196)
------------ ------------ -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS.................. -- (5,171,415) (1,213)
------------ ------------ -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....... 33,850,087 200,868,057 7,682,912
Dividends reinvested................ 295,658 4,026,532 9,789
Cost of shares redeemed............. (18,808,002) (23,767,145) (5,345,718)
------------ ------------ -----------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS....... 15,337,743 181,127,444 2,346,983
------------ ------------ -----------
TOTAL INCREASE IN NET ASSETS.. 6,473,234 191,113,772 1,977,501
NET ASSETS:
Beginning of period................. 198,283,671 7,169,899 5,192,398
------------ ------------ -----------
End of period....................... $204,756,905 $198,283,671 $ 7,169,899
============ ============ ===========
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995.
See Notes to Financial Statements.
FS-97
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Six Months Period Ended Year Ended
Ended June 30, December 31, February 28,
1996 1995(1) 1995
-------------- ------------ ------------
(Unaudited)
<S> <C> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
Net investment income............... $ 8,898,343 $ 14,827,033 $ 1,985,164
Net realized gains (losses) on
investment transactions........... 1,326,766 3,839,621 (757,908)
Net change in unrealized
appreciation (depreciation) on
investments....................... (10,453,612) 13,694,976 2,898,764
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS. (228,503) 32,361,630 4,126,020
------------ ------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares..................... (371,298) (619,417) (1,214,913)
Class B Shares..................... (6,928) (3,609) (17)
Class I Shares..................... (8,520,117) (14,204,008) (770,234)
------------ ------------ ------------
TOTAL DIVIDENDS TO SHAREHOLDERS.... (8,898,343) (14,827,034) (1,985,164)
------------ ------------ ------------
Net realized gains on investments:
Class A Shares..................... -- (143,000) (62,814)
Class B Shares..................... -- (2,501) (284)
Class I Shares..................... -- (3,007,029) --
------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS..................... -- (3,152,530) (63,098)
------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....... 34,339,457 48,746,625 367,446,983
Dividends reinvested................ 336,595 2,914,315 851,803
Cost of shares redeemed............. (28,801,719) (57,221,370) (16,165,822)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM FUND SHARE
TRANSACTIONS..................... 5,874,333 (5,560,430) 352,132,964
------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... (3,252,513) 8,821,636 354,210,722
NET ASSETS:
Beginning of period................. 391,870,717 383,049,081 28,838,359
------------ ------------ ------------
End of period....................... $388,618,204 $391,870,717 $383,049,081
============ ============ ============
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995.
See Notes to Financial Statements.
FS-98
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Six Months Period Ended Year Ended
Ended June 30, December 31, February 28,
1996 1995(1) 1995
-------------- ------------ ------------
(Unaudited)
<S> <C> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
Net investment income............... $ 5,687,502 $ 10,231,899 $ 930,044
Net realized gains (losses) on
investment transactions........... 1,828,477 5,020,578 (260,986)
Net change in unrealized
appreciation (depreciation) on
investments....................... (9,784,351) 11,041,965 2,624,847
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS. (2,268,372) 26,294,442 3,293,905
------------ ------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares..................... (158,240) (268,916) (409,080)
Class B Shares..................... (6,673) (2,833) (67)
Class I Shares..................... (5,522,589) (9,960,150) (520,897)
------------ ------------ ------------
TOTAL DIVIDENDS TO SHAREHOLDERS.... (5,687,502) (10,231,899) (930,044)
------------ ------------ ------------
Net realized gains on investments:
Class A Shares..................... -- (135,418) --
Class B Shares..................... -- (4,334) --
Class I Shares..................... -- (4,405,351) --
------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS..................... -- (4,545,103) --
------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....... 17,848,361 34,482,785 222,400,536
Dividends reinvested................ 139,406 3,928,330 323,826
Cost of shares redeemed............. (17,183,768) (29,087,608) (7,342,155)
------------ ------------ ------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS.......... 803,999 9,323,507 215,382,207
------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.......................... (7,151,875) 20,840,947 217,746,068
NET ASSETS:
Beginning of period................. 247,823,150 226,982,203 9,236,135
------------ ------------ ------------
End of period....................... $240,671,275 $247,823,150 $226,982,203
============ ============ ============
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995.
See Notes to Financial Statements.
FS-99
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government
Money Market Fund
---------------------------
For the Six For the
Months Ended Year Ended
June 30, December 31,
1996 1995
------------ -------------
(Unaudited)
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income.............................. $ 1,483,515 $ 3,391,932
Net realized gains (losses) on investments......... -- 32,485
----------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 1,483,515 3,424,417
----------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares.................................... (1,483,515) (3,391,932)
Class B Shares.................................... -- --
----------- -------------
TOTAL DIVIDENDS TO SHAREHOLDERS................... (1,483,515) (3,391,932)
----------- -------------
Net realized gains on investments:
Class A Shares.................................... -- --
Class B Shares.................................... -- --
----------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... -- --
----------- -------------
TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. (1,483,515) (3,391,932)
----------- -------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold...................... 103,720,750 250,085,862
Dividends reinvested............................... 1,045,460 2,488,380
Cost of shares redeemed............................ (70,640,081) (311,695,323)
----------- -------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS.............................. 34,126,129 (59,121,081)
----------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 34,126,129 (59,088,596)
NET ASSETS:
Beginning of period................................ 57,264,060 116,352,656
----------- -------------
End of period...................................... $91,390,189 $ 57,264,060
=========== =============
</TABLE>
See Notes to Financial Statements.
FS-100
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund Municipal Money Market Fund
---------------------------------- ----------------------------------------------
For the Six For the For the Six For the
Months Ended Year Ended Months Ended Year Ended
June 30, December 31, June 30, December 31,
1996 1995 1996 1995
------------ ------------ ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
$ 5,831,416 $ 7,780,385 $ 3,489,380 $ 6,529,805
(564) 179,219 -- (44)
------------ ------------ ------------- -------------
5,830,852 7,959,604 3,489,380 6,529,761
------------ ------------ ------------- -------------
(5,829,046) (7,779,495) (3,489,380) (6,529,805)
(2,370) (890) -- --
------------ ------------ ------------- -------------
(5,831,416) (7,780,385) (3,489,380) (6,529,805)
------------ ------------ ------------- -------------
-- (123,505) -- --
-- (35) -- --
------------ ------------ ------------- -------------
-- (123,540) -- --
------------ ------------ ------------- -------------
(5,831,416) (7,903,925) (3,489,380) (6,529,805)
------------ ------------ ------------- -------------
647,714,346 803,027,143 303,063,695 534,326,783
4,315,245 6,873,012 1,569,202 3,305,612
(496,372,888) (725,296,634) (270,654,125) (482,251,105)
------------ ------------ ------------- -------------
155,656,703 84,603,521 33,978,772 55,381,290
------------ ------------ ------------- -------------
155,656,139 84,659,200 33,978,772 55,381,246
204,059,218 119,400,018 228,511,278 173,130,032
------------ ------------ ------------- -------------
$359,715,357 $204,059,218 $ 262,490,050 $ 228,511,278
============ ============ ============= =============
</TABLE>
See Notes to Financial Statements.
FS-101
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1--GENERAL
Prairie Funds (the "Trust") is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"). At
June 30, 1996, the Trust consisted of twelve separate investment portfolios.
The accompanying financial statements include the results of operations for the
following portfolios of the Trust: Managed Assets Income Fund, Managed Assets
Fund, Equity Income Fund, Growth Fund, Special Opportunities Fund,
International Equity Fund, Bond Fund, International Bond Fund, Intermediate
Municipal Bond Fund, U.S. Government Money Market Fund, Money Market Fund and
Municipal Money Market Fund. Additionally, the accompanying financial
statements include the results of operations for the Prairie Municipal Bond
Fund, Inc. and the Prairie Intermediate Bond Fund, two open-end management
investment companies registered under the Act (together with the Trust's
portfolios, the "Funds").
The investment objective of the Managed Assets Income Fund is to maximize
current income by following an asset allocation strategy of investing in equity
securities, fixed-income securities and short-term instruments of domestic and
foreign issuers. The investment objective of the Managed Assets Fund seeks to
maximize total return through capital appreciation and current income without
assuming undue risk. The Fund follows an asset allocation strategy similar to
the Managed Assets Income Fund. The investment objective of the Equity Income
Fund is to provide income, capital appreciation and growth of earnings. The
Fund invests primarily in income-producing equity securities of domestic
issuers. The investment objective of the Growth Fund is to seek long-term
capital appreciation through investing primarily in equity securities of
domestic issuers. The investment objective of the Special Opportunities Fund is
to seek long-term capital appreciation. This objective is achieved through
investing primarily in equity securities of small- to medium-sized emerging
growth domestic issuers. The investment objective of the International Equity
Fund is to seek long-term capital appreciation. The Fund invests primarily in
equity securities of foreign issuers. The investment objective of the
Intermediate Bond Fund is to provide as high a level of current income as is
consistent with the preservation of capital. The Fund seeks to achieve its
objective by investing in a portfolio of U.S. dollar denominated investment
grade fixed-income securities of domestic and foreign issuers which, under
normal market conditions, will have a dollar-weighted average maturity expected
to range between three and ten years. The investment objective of the Bond Fund
is to provide as high a level of current income as is consistent with the
preservation of capital. The Fund invests primarily in a portfolio of U.S.
dollar denominated investment grade fixed-income securities of domestic and
foreign issuers, without regard to maturity. The investment objective of the
International Bond Fund is to provide both long-term capital appreciation and
current income through investing primarily in investment grade debt securities
of foreign securities. The investment objective of the Intermediate Municipal
Bond Fund is to provide as high a level of current income exempt from Federal
income tax as is consistent with the preservation of capital.
FS-102
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
The Fund invests primarily in a portfolio of investment grade Municipal
Obligations which, under normal conditions, will have a dollar-weighted average
maturity expected to range between three and ten years. The investment
objective of the Municipal Bond Fund is to provide a high level of current
income exempt from Federal income tax and is consistent with the preservation
of capital. This objective is achieved through primarily investing in a
portfolio of investment grade Municipal Obligations without regard to maturity.
The investment objective of the U.S. Government Money Market Fund is to provide
as high a level of current income as is consistent with the preservation of
capital and the maintenance of liquidity. The Fund will only invest short-term
securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies and instrumentalities, and repurchase agreements in
respect of such securities. The investment objective of the Money Market Fund
is to provide as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity. The objective is
achieved by investing in short-term money market instruments. The investment
objective of the Municipal Money Market Fund is to provide a high level of
current income exempt from Federal income tax as is consistent with the
preservation of capital and the maintenance of liquidity through invests in
short-term Municipal Obligations.
First Chicago Investment Management Company ("FCIMCO"), a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), serves as each
Fund's investment adviser and administrator. Additionally, FCIMCO has engaged
Concord Holding Corporation ("Concord"), a wholly-owned subsidiary of The BISYS
Group, Inc., to assist it in providing certain administrative services for the
Funds. Concord Financial Group, Inc. (the "Distributor"), a wholly-owned
subsidiary of Concord, serves as the principal underwriter and distributor of
each Fund's shares.
The Funds (except for the U.S. Government Money Market Fund and Municipal
Money Market Fund, which offer Class A shares only, and the Money Market Fund,
which offers class A Shares and Class B shares) each offer Class A shares,
Class B shares and Class I shares. Class A shares, Class B shares and Class I
shares are substantially the same except that Class A shares are subject to a
sales charge imposed at the time of purchase and are subject to fees charged
pursuant to a Shareholder Services Plan. Class B shares are subject to a
contingent deferred sales charge imposed at the time of redemption and are
subject to fees charged pursuant to a Distribution Plan adopted pursuant to
Rule 12b-1 under the Act and fees charged pursuant to the Shareholder Services
Plan. Class I shares are not subject to any sales charge, shareholder services
fees or distribution fees.
During the period January 27, 1995 through March 3, 1995, various common
trust funds and collective trust funds managed by FNBC transferred cash and
securities to certain Funds in exchange for Class I shares of the corresponding
Fund. The following table sets forth the date on which such transfers occurred,
the transferring entity, the corresponding Fund, the market value of the
securities and cash transferred and the amount of Class I shares issued in
connection with such transfer:
FS-103
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class I
Shares
Date of Transfer Transferring Entity Fund Market Value Issued
---------------- ------------------- ---- ------------ -------
<S> <C> <C> <C> <C>
January 27, 1995........ First Chicago Personal Equity Income $198,087,162 19,808,716
Trust Equity Fund Fund
January 27, 1995........ First Chicago Personal Growth Fund 245,392,975 24,539,297
Trust Endowment Equity
Fund and First Chicago
Personal Trust Growth
Equity Fund
January 27, 1995........ First Chicago Personal Special 51,316,357 5,131,636
Trust Special Equity Opportunities
Fund Fund
January 27, 1995........ First Chicago Personal International 8,955,517 895,552
Trust International Bond Bond Fund
Fund
February 10, 1995....... First Chicago Personal Bond Fund 98,997,057 9,899,706
Trust Taxable Bond Fund
And First Chicago
Personal Trust
Endowment Bond Fund
February 10, 1995....... First Chicago Personal Intermediate 129,394,694 16,848,267
Trust Intermediate Bond Fund
Taxable Bond Fund and
Lake Shore Common
Trust Taxable Fixed
Income Fund
February 10, 1995....... First Chicago Personal Municipal Bond 213,488,376 17,910,099
Trust Tax-Exempt Bond Fund
Fund
February 10, 1995....... First Chicago Personal Intermediate 349,656,211 29,885,146
Trust Intermediate Tax- Municipal Bond
Exempt Bond Fund and Fund
Lake Shore Common
Trust Municipal Bond
Fund
March 3, 1995........... First Chicago Personal International 48,338,875 4,833,888
Trust International Equity Equity Fund
Fund
</TABLE>
At meetings of the shareholders of the First Prairie Diversified Assets Fund,
First Prairie Municipal Bond Fund--Intermediate Series, First Prairie Money
Market Fund--Money Market Series and Government Series, and First Prairie
Municipal Money Market Fund (collectively, the "First Prairie Funds") held on
January 17, 1995, shareholders of each such Fund approved an Agreement and Plan
of Exchange (the "Plan") which called for the transfer of the assets, subject
to the liabilities, of each First Prairie Fund to the Prairie Managed Assets
Income Fund,
FS-104
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
Prairie Intermediate Municipal Bond Fund, Prairie Money Market Fund, Prairie
U.S. Government Money Market Fund, and Prairie Municipal Money Market Fund,
respectively. The Plan also called for the issuance of shares by the respective
Prairie Funds to the shareholders of the corresponding First Prairie Fund, such
shares being equal in value to the net assets so transferred.
The following table sets forth the date on which this transfer took place
along with the net assets transferred and the number of shares issued:
<TABLE>
<CAPTION>
Net Assets
Fund Date of Transfer Transferred Shares Issued
---- ---------------- ----------- -------------
<S> <C> <C> <C>
Managed Assets Income Fund....... March 3, 1995 $43,698,653 3,518,593
Intermediate Municipal Bond Fund. January 27, 1995 22,331,512 1,930,122
Money Market Fund................ May 20, 1995 127,335,807 127,197,352
U.S. Government Money Market
Fund............................ May 20, 1995 52,257,087 52,273,072
Municipal Money Market Fund...... May 20, 1995 178,386,094 178,439,745
</TABLE>
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
(A) Portfolio Valuation: Bonds, debentures, notes, mortgage-related
securities, asset-backed securities, municipal obligations and convertible debt
obligations ("Fixed Income Securities") are valued daily using available market
quotations or at fair value as determined by one or more independent pricing
services (the "Service") approved by the Board of Trustees (the "Board of
Trustees" or the "Board"). Fixed Income Securities for which quoted bid prices
are readily available and are representative of the bid side of the market, in
the judgement of the Service, are valued at the mean between the quoted bid
prices (as obtained by the Service from dealers in such securities) and asked
prices (as calculated by the Service based upon its evaluation of the market
for such securities). Other Fixed Income Securities are carried at fair value
as determined by the Service, based upon methods which include consideration of
yields or prices of securities of comparable quality, coupon rate, maturity and
type, indication as to values from dealers, and general market conditions.
Fixed income securities with maturities less than 60 days are carried at
amortized cost, which approximates market value.
Common stocks, preferred stocks and convertible securities, as well as
warrants to purchase such securities ("Equity Securities"), and call options
written by a Fund are valued at the last sale price on the securities exchange
or national securities market on which such securities primarily are traded.
Equity Securities not
FS-105
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
listed on an exchange or national securities market, or securities for which
there were no transactions, are valued at the most recent bid prices. Any
securities or other assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by the Board.
Restricted securities, illiquid securities and securities for which market
quotations are not readily available, if any, are valued at fair value using
methods approved by the Board.
Investments of the U.S. Government Money Market Fund, Money Market Fund and
Municipal Money Market Fund (the "money market funds") are valued at amortized
cost, which approximates market value. Under the amortized cost method,
discount or premium is amortized on a constant basis to the maturity of the
security. In addition, the money market funds may not (a) purchase any
instruments with a remaining maturity greater that thirteen months unless such
instrument is subject to a demand feature, or (b) maintain a dollar-weighted
average maturity which exceeds 90 days.
(B) Foreign currency translations: The books and records of the International
Bond Fund and the International Equity Fund are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars on
the following basis: (i) investment securities, other assets and liabilities
initially expressed in foreign currencies are converted each business day into
U.S. dollars at the midpoint of the New York interbank market spot exchange
rate as quoted on the day of such translation by the Federal Reserve Bank of
New York or at such other quoted market exchange rate as may be determined to
be appropriate by the investment adviser; and (ii) purchases and sales of
foreign securities, income and expenses are converted into U.S. dollars based
upon currency exchange rates prevailing on the respective dates of such
transactions. The Funds generally do not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized and unrealized gains and losses on foreign currency
represent: (i) foreign exchange gains and losses from the sale and holding of
foreign currencies forward contracts and foreign currency denominated debt
obligations; (ii) gains and losses between trade date and settlement date on
investment securities transactions and forward exchange contracts; and (iii)
gains and losses from the difference between amounts of dividends and interest
recorded and the amounts actually received.
(C) Futures contracts: The International Equity Fund may engage in futures
contracts for the purpose of hedging against changes in the value of its
portfolio securities and in the value of securities it intends to purchase.
Upon entering into a futures contract, the Fund is required to deposit with the
broker an amount of cash or cash equivalents equal to a certain percentage of
the contract amount. This is known as the "initial margin". Subsequent payments
("variation margin") are made
FS-106
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the value of the contract are
recorded as unrealized gains or losses. The Fund recognizes, when the contract
is closed, a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the time it was closed. Futures
contracts open at June 30, 1996 and their related unrealized market
appreciation (depreciation) are set forth in the notes to the Portfolio of
Investments of the International Equity Fund.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments or indices, which may not
correlate with the change in value of the hedged investments. In addition,
there is the risk that the Fund may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) Forward foreign currency contracts: The International Bond Fund may enter
into forward foreign currency contracts in order to hedge its exposure to
changes in foreign currency exchange rates on its foreign portfolio holdings.
When executing forward foreign currency contracts, the Fund is obligated to buy
or sell a foreign currency at a specified rate on a certain date in the future.
With respect to sales of forward foreign currency contracts, the Fund would
incur a loss if the value of the contract increases between the date the
forward contract is opened and the date the forward contract is closed. The
Fund realizes a gain if the value of the contract decreases between those
dates. With respect to purchases of forward foreign currency contracts, the
fund would incur a loss if the value of the contract decreases between the date
the forward contract is opened and the date the forward contract is closed. The
Fund realizes a gain if the value of the contract increases between those
dates. The Fund is also exposed to credit risk associated with counter party
nonperformance on these forward foreign currency contracts which is typically
limited to the unrealized gains on such contracts that are recognized in the
Statement of Assets and Liabilities.
(E) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, adjusted for
amortization of premiums and, when appropriate, discounts on investments, is
earned from settlement date and recognized on the accrual basis. Securities
purchased or sold on a when-issued or delayed-delivery basis may be settled a
month or more after the trade date.
Each Fund may enter into repurchase agreements with financial institutions
deemed to be creditworthy by FCIMCO, subject to the sellers agreement to
repurchase and the Funds agreement to resell such securities at a mutually
agreed upon price. Securities purchased subject to repurchase agreements are
deposited with the Fund's custodian and, pursuant to the terms of the
repurchase agreement, must have an aggregate market value greater than or equal
to the repurchase price
FS-107
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
plus accrued interest at all times. If the value of the underlying securities
fall below the value of the repurchase price plus accrued interest, the Fund
will require the seller to deposit additional collateral by the next business
day. If the request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller.
(F) Expenses: Expenses directly attributable to a Fund are charged to that
Funds operations; expenses which are applicable to all Funds are allocated
among them on the basis of relative net assets. Fund expenses directly
attributable to a class of shares are charged to that class; expenses which are
applicable to all classes are allocated among them.
(G) Dividends to shareholders: It is the policy of Managed Assets Income Fund
and Equity Income Fund to declare and pay dividends from net investment income
monthly while the Managed Assets Fund, Growth Fund, Special Opportunities Fund
and International Equity Fund declare and pay dividends quarterly. The Bond
Fund, Intermediate Bond Fund, International Bond Fund, Municipal Bond Fund,
Intermediate Municipal Bond Fund, U.S. Government Money Market Fund, Money
Market Fund and Municipal Money Market Fund declare dividends daily from net
investment income payable monthly. Distributions from net realized capital
gains, if any, are normally declared and paid annually, but each Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code (the "Code"). However, to the extent
that net realized capital gains of a Fund can be reduced by capital loss
carryovers, if any, such gains will not be distributed.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles. To
the extent these differences are permanent in nature, such amounts are
reclassified within the composition of net assets based on their federal tax-
basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as distributions in excess of net investment income or
net realized capital gains. To the extent they exceed net investment income and
net realized capital gains for tax purposes, they are reported as distributions
of capital.
(H) Federal income taxes: It is the policy of each Fund to qualify or to
continue to qualify as a regulated investment company by complying with the
provisions available to certain investment companies, as defined in applicable
sections of the Code, and to make distributions of income and net realized
capital gains sufficient to relieve it from all, or substantially all, Federal
income and excise taxes.
Capital losses incurred after October 31 ("Post-October losses") within the
taxable year are deemed to arise on the first business day of the Funds next
taxable year. For the fiscal year ended December 31, 1995, the Municipal Money
FS-108
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
Market Fund and the Special Opportunities Fund incurred and may elect to defer
net capital losses of approximately $50 and $113,000, respectively.
At December 31, 1995, the Managed Assets Income Fund had unused capital loss
carryovers of approximately $317,000, which are available for Federal income
tax purposes to be applied against future net capital gains, if any, realized
subsequent to December 31, 1995. If not applied, the carryover expires in 2003.
At December 31, 1995, the U.S. Government Money Market Fund had unused
capital loss carryovers of approximately $16,000, which are available for
Federal income tax purposes to be applied against future net capital gains, if
any, realized subsequent to December 31, 1995. If not applied, the carryover
expires in 2002.
At December 31, 1995, the Municipal Money Market Fund had unused capital loss
carryovers of approximately $40,000, which are available for Federal income tax
purposes to be applied against future net capital gains, if any, realized
subsequent to December 31, 1995. If not applied, $1,000 of the carryover
expires in 1999, $2,000 expires in 2001, $1,000 expires in 2002 and $36,000
expires in 2003.
At December 31, 1995, with the exception of the Growth Fund, the cost of the
Funds investments for Federal income tax purposes was substantially the same as
the cost for financial reporting purposes (see Portfolios of Investments).
(I) Other: Organization expenses incurred by the Funds are being amortized to
operations over the period during which it is expected that a benefit will be
realized, not to exceed five years.
Each Fund maintains a cash balance with its custodian and receives a
reduction of its custody fees and expenses for the amount of interest earned on
such uninvested cash balances. For financial reporting purposes for the six
months ended June 30, 1996, custodian fees and expenses and expenses paid by
third parties were increased by the following amounts:
<TABLE>
<S> <C>
Managed Assets Income Fund.......................................... $ 3,816
Managed Assets Fund................................................. 938
Equity Income Fund.................................................. 1,131
Growth Fund......................................................... 579
Special Opportunities Fund.......................................... 546
International Equity Fund........................................... 18,899
Intermediate Bond Fund.............................................. 965
Bond Fund........................................................... 1,433
International Bond Fund............................................. 618
Intermediate Municipal Bond Fund.................................... 5,602
Municipal Bond Fund................................................. 7,134
U.S. Government Money Market Fund................................... 4,086
Money Market Fund................................................... 9,900
Municipal Money Market Fund......................................... 9,001
</TABLE>
There was no effect on net investment income. The Funds could have invested
such cash amounts in an income-producing asset if they had not agreed to a
FS-109
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
reduction of fees or expenses under the expense offset agreements with their
custodian.
(J) Concentration of risk: Investing in securities of foreign issuers and
foreign currency transactions may involve certain considerations and risks not
typically associated with investments in the United States. These risks include
revaluation of currencies, adverse fluctuations in foreign currency values and
possible adverse political, social and economic developments, including those
particular to a specific industry, country or region, which could cause the
securities and their markets to be less liquid and prices more volatile than
those of comparable U.S. securities. These risks are greater with respect to
securities of issuers located in emerging market countries in which certain
Funds are authorized to invest. The ability of the issuers of debt securities
held by the Funds to meet their obligations may be affected by economic and
political developments particular to a specific industry, country or region.
NOTE 3--INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH
AFFILIATES
(A) The Trust has an Investment Advisory Agreement with FCIMCO pursuant to
which FCIMCO has agreed to provide day-to-day management of each Fund's
investments at the following annual rates:
<TABLE>
<S> <C>
Managed Assets Income Fund............................................. 0.65%
Managed Assets Fund.................................................... 0.65%
Equity Income Fund..................................................... 0.50%
Growth Fund............................................................ 0.65%
Special Opportunities Fund............................................. 0.70%
International Equity Fund.............................................. 0.80%
Intermediate Bond Fund................................................. 0.40%
Bond Fund.............................................................. 0.55%
International Bond Fund................................................ 0.70%
Intermediate Municipal Bond Fund....................................... 0.40%
Municipal Bond Fund.................................................... 0.40%
U.S. Government Money Market Fund...................................... 0.40%
Money Market Fund...................................................... 0.40%
Municipal Money Market Fund............................................ 0.40%
</TABLE>
The Trust has an Administration Agreement with FCIMCO pursuant to which
FCIMCO has agreed to assist in all aspects of the Funds' operations at an
annual rate of 0.15% of each Fund's average daily net assets. FCIMCO has
engaged Concord to provide certain administrative services to the Funds
pursuant to a Master Sub-Administration Agreement between FCIMCO and Concord.
FCIMCO has agreed to pay Concord a fee for the services stipulated in the
Master Sub-Administration Agreement.
FS-110
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
For the six months ended June 30, 1996, FCIMCO voluntarily agreed to
reimburse a portion of the operating expenses of the Funds to the extent that
the Funds' expenses exceeded the following amounts, excluding shareholder
servicing fees and 12b-1 fees (as a percentage of each Fund's average net
assets):
<TABLE>
<CAPTION>
Class A Class B Class I
------- ------- -------
<S> <C> <C> <C>
Managed Assets Income Fund.............................. 1.25% 2.00% 1.00%
Managed Assets Fund..................................... 1.25% 2.00% 1.00%
Equity Income Fund...................................... 0.90% 1.65% 0.65%
Growth Fund............................................. 1.05% 1.80% 0.80%
Special Opportunities Fund.............................. 1.10% 1.85% 0.85%
International Equity Fund............................... 1.30% 2.05% 1.05%
Intermediate Bond Fund.................................. 0.80% 1.55% 0.55%
Bond Fund............................................... 0.95% 1.70% 0.70%
International Bond Fund................................. 1.20% 1.95% 0.95%
Intermediate Municipal Bond Fund........................ 0.80% 1.55% 0.55%
Municipal Bond Fund..................................... 0.80% 1.55% 0.55%
U.S. Government Money Market............................ 0.80% NA NA
Money Market Fund....................................... 0.80% 1.55% NA
Municipal Money Market Fund............................. 0.70% NA NA
</TABLE>
As such, FCIMCO reimbursed expenses during the six months ended June 30, 1996
in the following amounts:
<TABLE>
<CAPTION>
Expense
Reimbursement
-------------
<S> <C>
Managed Assets Income Fund..................................... $ 49,405
Managed Assets Fund............................................ 55,370
Equity Income Fund............................................. 166,802
Growth Fund.................................................... 178,139
Special Opportunities Fund..................................... 91,042
International Equity Fund...................................... 121,611
Intermediate Bond Fund......................................... 117,649
Bond Fund...................................................... 119,917
International Bond Fund........................................ 46,124
Intermediate Municipal Bond Fund............................... 197,946
Municipal Bond Fund............................................ 150,790
U.S. Government Money Market Fund.............................. 101,615
Money Market Fund.............................................. 316,471
Municipal Money Market Fund.................................... 336,659
</TABLE>
The Distributor is not entitled to any fees pursuant to the Distribution
Agreement; however the Distributor may receive payments of sales charges or
contingent deferred sales charges.
FS-111
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
For the six months ended June 30, 1996 the Distributor and FCIMCO and its
affiliates advised the Funds that they retained the following amounts from
commissions earned on the sale of each Fund's shares:
<TABLE>
<CAPTION>
FCIMCO
Distributor and its affiliates
----------- ------------------
<S> <C> <C>
Managed Assets Income Fund.................... $10,846 $930
Managed Assets Fund........................... 1,123 220
Equity Income Fund............................ 2,621 40
Growth Fund................................... 1,028 --
Special Opportunities Fund.................... 333 600
International Equity Fund..................... 2,250 800
Intermediate Bond Fund........................ 23 --
Bond Fund..................................... 480 --
International Bond Fund....................... 52 --
Intermediate Municipal Bond Fund.............. 190 814
Municipal Bond Fund........................... 941 256
</TABLE>
(B) The Funds' Class A shares and Class B shares have a Shareholder Services
Plan (the "Plan") pursuant to which the Funds pay the Distributor a fee, at an
annual rate of 0.25% of the average daily net assets of the outstanding Class A
shares and Class B shares. Pursuant to the terms of the Plan, the Distributor
has agreed to provide certain shareholder services to the holders of these
shares. Additionally, under the terms of the Plan, the Distributor may make
payments to other shareholder service agents who may include FCIMCO and its
affiliates.
For the six months ended June 30, 1996, the Funds paid the following amounts
under the Plan:
<TABLE>
<CAPTION>
Amounts paid to Amounts paid to Amounts
FCIMCO, FNBC other service retained by
and its affiliates organizations Distributor
------------------ --------------- -----------
<S> <C> <C> <C>
Managed Assets Income Fund... $ 6,490 $63,070 $481
Managed Assets Fund.......... 8,165 3,684 11
Equity Income Fund........... 846 4,713 13
Growth Fund.................. 1,594 5,250 13
Special Opportunities Fund... 484 799 13
International Equity Fund.... 1,676 3,456 12
Intermediate Bond Fund....... 4,754 3,476 --
Bond Fund.................... 1,318 1,285 12
International Bond Fund...... 300 352 12
Intermediate Municipal Bond
Fund........................ 11,719 9,929 546
Municipal Bond Fund.......... 4,316 4,973 139
U.S. Government Money Market
Fund........................ 82,679 -- 330
Money Market Fund............ 313,747 1,404 9
Municipal Money Market Fund.. 315,617 -- 18
</TABLE>
FS-112
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
(C) The Funds' Class B shares have a Distribution Plan adopted pursuant to
Rule 12b-1 under the Act (the "12b-1 Plan") pursuant to which the Funds have
agreed to pay the Distributor for advertising, marketing and distributing
shares of the Funds at an annual rate of 0.75% of the average daily net assets
of the Funds' outstanding Class B shares. Under the terms of the 12b-1 Plan,
the Distributor may make payments to FCIMCO and its affiliates in respect of
these services. For the six months ended June 30, 1996, the Funds made the
following payments under the 12b-1 Plan, all of which was retained by the
Distributor:
<TABLE>
<S> <C>
Managed Assets Income Fund.......................................... $12,104
Managed Assets Fund................................................. 3,903
Equity Income Fund.................................................. 3,545
Growth Fund......................................................... 2,153
Special Opportunities Fund.......................................... 98
International Equity Fund........................................... 2,128
Intermediate Bond Fund.............................................. 1,413
Bond Fund........................................................... 211
International Bond Fund............................................. 16
Intermediate Municipal Bond Fund.................................... 1,519
Municipal Bond Fund................................................. 1,382
Money Market Fund................................................... 457
</TABLE>
NOTE 4--SECURITIES TRANSACTIONS
The following summarizes the securities transactions entered into by the
Funds, excluding short-term investments, for the six months ended June 30,
1996:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Managed Assets Income Fund........................ $ 13,486,476 $ 3,497,882
Managed Assets Fund............................... 154,125 --
Equity Income Fund................................ 85,251,269 89,486,586
Growth Fund....................................... 147,689,098 160,090,665
Special Opportunities Fund........................ 53,563,689 47,257,760
International Equity Fund......................... 59,387,476 2,099,835
Intermediate Bond Fund............................ 105,874,298 75,881,773
Bond Fund......................................... 68,668,713 47,058,672
International Bond Fund........................... 5,083,581 --
Intermediate Municipal Bond Fund.................. 110,172,853 115,585,130
Municipal Bond Fund............................... 95,361,378 96,216,828
</TABLE>
FS-113
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
At June 30, 1996, accumulated net unrealized appreciation (depreciation) on
investments was as follows:
<TABLE>
<CAPTION>
Net Unrealized
Unrealized Unrealized Appreciation/
Appreciation Depreciation (Depreciation)
------------ ------------ --------------
<S> <C> <C> <C>
Managed Assets Income Fund.......... $ 9,312,584 $ (658,157) $ 8,654,427
Managed Assets Fund................. 1,290,209 (40,024) 1,250,185
Equity Income Fund.................. 44,584,743 (237,765) 44,346,978
Growth Fund......................... 48,168,298 (4,143,028) 44,025,270
Special Opportunities Fund.......... 18,523,319 (2,422,613) 16,100,706
International Equity Fund........... 10,045,959 (3,279,861) 6,766,098
Intermediate Bond Fund.............. 1,524,512 (2,928,396) (1,403,884)
Bond Fund........................... 1,124,945 (2,568,777) (1,443,832)
International Bond Fund............. 423,220 (492,783) (69,563)
Intermediate Municipal Bond Fund.... 7,381,065 (1,029,446) 6,351,619
Municipal Bond Fund................. 4,325,972 (436,050) 3,889,922
</TABLE>
NOTE 5--CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds are summarized below:
<TABLE>
<CAPTION>
Managed Assets
Income Fund
-------------------------------------------
For the For the
Six Months Year Ended
Ended December 31,
June 30, 1996 1995
-------------------- ---------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
-----------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued...................... $6,941,025 470,005 $ 6,191,735 463,615
Dividends reinvested............... 779,471 52,795 2,369,623 177,490
Shares redeemed.................... (4,110,893) (279,513) (9,494,631) (723,267)
---------- -------- ----------- --------
Net increase (decrease)............ $3,609,603 243,287 $ (933,273) (82,162)
========== ======== =========== ========
Class B Shares:
Shares issued...................... $1,885,926 127,911 $ 2,007,221 146,972
Dividends reinvested............... 37,701 2,550 33,593 2,392
Shares redeemed.................... (91,603) (6,159) -- --
---------- -------- ----------- --------
Net increase....................... $1,832,024 124,302 $ 2,040,814 149,364
========== ======== =========== ========
Class I Shares:
Shares issued...................... $ 110,990 7,569 $ 1,362,669 103,183
Dividends reinvested............... 3,243 220 11,790 865
Shares redeemed.................... (199,300) (13,529) (202,866) (15,263)
---------- -------- ----------- --------
Net increase (decrease)............ $ (85,067) (5,740) $ 1,171,593 88,785
========== ======== =========== ========
Net increase in Fund............... $5,356,560 361,849 $ 2,279,134 155,987
========== ======== =========== ========
</TABLE>
FS-114
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Assets
Fund
----------------------------------------------
For the For the Period
Six Months April 3, 1995
Ended through
June 30, 1996 December 31, 1995(a)
--------------------- -----------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued..................... $ 981,624 83,041 $ 8,265,007 774,054
Dividends reinvested.............. 44,470 3,721 77,996 6,993
Shares redeemed................... (1,598,920) (134,226) (582,928) (54,615)
----------- -------- ----------- --------
Net increase (decrease)........... $ (572,826) (47,464) $ 7,760,075 726,432
=========== ======== =========== ========
Class B Shares:
Shares issued..................... $ 341,450 28,891 $ 763,106 73,866
Dividends reinvested.............. 3,082 259 7,435 679
Shares redeemed................... (29,389) (2,479) (19,541) (1,829)
----------- -------- ----------- --------
Net increase...................... $ 315,143 26,671 $ 751,000 72,716
=========== ======== =========== ========
Class I Shares:
Shares issued..................... $ -- -- $ 363,704 35,836
Dividends reinvested.............. 28 2 81 7
Shares redeemed................... -- -- -- --
----------- -------- ----------- --------
Net increase...................... $ 28 2 $ 363,785 35,843
=========== ======== =========== ========
Net increase (decrease) in Fund... $ (257,655) (20,791) $ 8,874,860 834,991
=========== ======== =========== ========
</TABLE>
FS-115
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Income
Fund
--------------------------------------------------
For the For the Period
Six Months January 27, 1995,
Ended through
June 30, 1996 December 31, 1995(a)
------------------------ ------------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued............... $ 2,593,736 204,517 $ 3,147,813 274,126
Dividends reinvested........ 37,354 2,949 96,740 8,056
Shares redeemed............. (562,898) (44,345) (548,876) (47,021)
------------ ---------- ------------ ----------
Net increase................ $ 2,068,192 163,121 $ 2,695,677 235,161
============ ========== ============ ==========
Class B Shares:
Shares issued............... $ 755,253 59,886 $ 549,799 47,321
Dividends reinvested........ 9,121 719 20,644 1,708
Shares redeemed............. (34,688) (2,701) (5,669) (479)
------------ ---------- ------------ ----------
Net increase................ $ 729,686 57,904 $ 564,774 48,550
============ ========== ============ ==========
Class I Shares:
Shares issued............... $ 16,626,706 1,326,494 $254,460,104 24,853,530
Dividends reinvested........ 90,134 7,127 6,520,825 538,073
Shares redeemed............. (13,900,545) (1,105,542) (23,702,375) (2,132,230)
------------ ---------- ------------ ----------
Net increase................ $ 2,816,295 228,079 $237,278,554 23,259,373
============ ========== ============ ==========
Net increase in Fund........ $ 5,614,173 449,104 $240,539,005 23,543,084
============ ========== ============ ==========
</TABLE>
FS-116
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth
Fund
--------------------------------------------------
For the For the Period
Six Months January 27, 1995,
Ended through
June 30, 1996 December 31, 1995(a)
------------------------ ------------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued.............. $ 2,059,759 163,338 $ 4,175,044 365,857
Dividends reinvested....... 7,979 630 284,304 24,056
Shares redeemed............ (1,052,207) (83,582) (339,951) (28,244)
------------ ---------- ------------ ----------
Net increase............... $ 1,015,531 80,386 $ 4,119,397 361,669
============ ========== ============ ==========
Class B Shares:
Shares issued.............. $ 539,479 43,223 $ 246,223 21,032
Dividends reinvested....... -- -- 18,650 1,584
Shares redeemed............ (22,971) (1,812) (2,126) (178)
------------ ---------- ------------ ----------
Net increase............... $ 516,508 41,411 $ 262,747 22,438
============ ========== ============ ==========
Class I Shares:
Shares issued.............. $ 12,801,975 1,028,443 $296,410,620 29,238,077
Dividends reinvested....... 19,311 1,519 14,724,145 1,243,736
Shares redeemed............ (29,172,266) (2,310,630) (67,961,411) (5,922,360)
------------ ---------- ------------ ----------
Net increase (decrease).... $(16,350,980) (1,280,668) $243,173,354 24,559,453
============ ========== ============ ==========
Net increase (decrease) in
Fund...................... $(14,818,941) (1,158,871) $247,555,498 24,943,560
============ ========== ============ ==========
</TABLE>
FS-117
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special Opportunities
Fund
-----------------------------------------------
For the For the Period
Six Months January 27, 1995,
Ended through
June 30, 1996 December 31, 1995(a)
--------------------- ------------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued.................. $ 1,724,658 136,292 $ 621,648 57,254
Dividends reinvested........... 23 2 13,920 1,177
Shares redeemed................ (1,048,065) (83,039) (38,190) (3,361)
----------- -------- ------------ ----------
Net increase................... $ 676,616 53,255 $ 597,378 55,070
=========== ======== ============ ==========
Class B Shares:
Shares issued.................. $ 40,710 3,126 $ 13,756 1,248
Dividends reinvested........... -- -- 308 26
Shares redeemed................ -- -- (52) (5)
----------- -------- ------------ ----------
Net increase................... $ 40,710 3,126 $ 14,012 1,269
=========== ======== ============ ==========
Class I Shares:
Shares issued.................. $ 9,878,497 781,144 $ 89,307,250 8,700,086
Dividends reinvested........... 1,386 109 1,180,180 99,691
Shares redeemed................ (5,293,022) (421,957) (12,836,851) (1,176,741)
----------- -------- ------------ ----------
Net increase................... $ 4,586,861 359,296 $ 77,650,579 7,623,036
=========== ======== ============ ==========
Net increase in Fund........... $ 5,304,187 415,677 $ 78,261,969 7,679,375
=========== ======== ============ ==========
</TABLE>
FS-118
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Equity
Fund
----------------------------------------------
For the For the Period
Six Months March 3, 1995,
Ended through
June 30, 1996 December 31, 1995(a)
---------------------- ----------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued................... $ 2,462,024 218,946 $ 2,704,994 256,160
Dividends reinvested............ 13,331 1,178 72,968 6,664
Shares redeemed................. (1,111,304) (99,483) (171,519) (16,377)
----------- --------- ----------- ---------
Net increase.................... $ 1,364,051 120,641 $ 2,606,443 246,447
=========== ========= =========== =========
Class B Shares:
Shares issued................... $ 699,364 62,076 $ 177,315 16,903
Dividends reinvested............ 954 90 4,093 407
Shares redeemed................. (18,390) (1,628) (193) (18)
----------- --------- ----------- ---------
Net increase.................... $ 681,928 60,538 $ 181,215 17,292
=========== ========= =========== =========
Class I Shares:
Shares issued................... $42,701,673 3,766,633 $97,383,515 9,484,283
Dividends reinvested............ 11,801 1,035 1,458,486 131,833
Shares redeemed................. (3,696,607) (326,722) (5,651,592) (536,226)
----------- --------- ----------- ---------
Net increase.................... $39,016,867 3,440,946 $93,190,409 9,079,890
=========== ========= =========== =========
Net increase in Fund............ $41,062,846 3,622,125 $95,978,067 9,343,629
=========== ========= =========== =========
</TABLE>
FS-119
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Bond
Fund
----------------------------------------------------
For the Six Months For the Period
Ended February 1, 1995, through
June 30, 1996 December 31, 1995(b)
----------------------- ---------------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued............. $ 2,067,940 263,052 $ 7,282,071 895,627
Dividends reinvested...... 136,779 17,251 288,362 35,401
Shares redeemed........... (9,115,466) (161,738) (1,588,172) (194,954)
----------- ---------- ------------- -----------
Net increase (decrease)... $(6,910,747) 118,565 $ 5,982,261 736,074
=========== ========== ============= ===========
Class B Shares:
Shares issued............. $ 229,943 28,665 $ 303,451 37,048
Dividends reinvested...... 5,267 665 7,835 961
Shares redeemed........... (46,313) (5,874) (50,817) (6,308)
----------- ---------- ------------- -----------
Net increase.............. $ 188,897 23,456 $ 260,469 31,701
=========== ========== ============= ===========
Class I Shares:
Shares issued............. $31,552,204 3,980,497 $ 193,282,535 24,813,641
Dividends reinvested...... 153,612 19,379 3,730,335 459,341
Shares redeemed........... (9,646,223) (2,204,462) (22,128,156) (2,742,147)
----------- ---------- ------------- -----------
Net increase.............. $22,059,593 1,795,414 $ 174,884,714 22,530,835
=========== ========== ============= ===========
Net increase in Fund...... $15,337,743 1,937,435 $ 181,127,444 23,298,610
=========== ========== ============= ===========
</TABLE>
FS-120
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Bond Bond
Fund Fund
--------------------- ----------------------
For the Year For the Six Months
Ended Ended
January 31, 1995 June 30, 1996
--------------------- ----------------------
(Unaudited)
Amount Shares Amount Shares
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued.................... $ 19,449 2,527 $ 1,047,511 101,525
Dividends reinvested............. 4,153 533 44,094 4,234
Shares redeemed.................. (15,285) (1,997) (221,279) (21,225)
---------- --------- ----------- ---------
Net increase..................... $ 8,317 1,063 $ 870,326 84,534
========== ========= =========== =========
Class B Shares:
Shares issued.................... $ 2,000 245 $ 8,496 804
Dividends reinvested............. 99 13 1,008 97
Shares redeemed.................. (2,099) (258) (11,001) (1,019)
---------- --------- ----------- ---------
Net decrease..................... $ -- -- $ (1,497) (118)
========== ========= =========== =========
Class I Shares:
Shares issued.................... $7,661,463 1,001,211 $16,095,789 1,559,023
Dividends reinvested............. 5,537 710 7,541 722
Shares redeemed.................. (5,328,334) (698,958) (6,617,699) (636,515)
---------- --------- ----------- ---------
Net increase..................... $2,338,666 302,963 $ 9,485,631 923,230
========== ========= =========== =========
Net increase in Fund............. $2,346,983 304,026 $10,354,460 1,007,646
========== ========= =========== =========
</TABLE>
FS-121
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bond International Bond
Fund Fund
------------------------ -------------------
For the Period For the
February 10, 1995, Six Months
through Ended
December 31, 1995(a) June 30, 1996
------------------------ -------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued.................... $ 1,854,556 174,316 $ 182,495 17,334
Dividends reinvested............. 110,618 10,293 9,834 930
Shares redeemed.................. (148,560) (13,734) (23,845) (2,259)
------------ ---------- ---------- -------
Net increase..................... $ 1,816,614 170,875 $ 168,484 16,005
============ ========== ========== =======
Class B Shares:
Shares issued.................... $ 58,404 5,401 $ -- --
Dividends reinvested............. 2,873 268 70 7
Shares redeemed.................. -- -- -- --
------------ ---------- ---------- -------
Net increase..................... $ 61,277 5,669 $ 70 7
============ ========== ========== =======
Class I Shares:
Shares issued.................... $127,483,190 12,620,870 $4,301,280 404,240
Dividends reinvested............. 2,860,982 267,174 12,174 1,146
Shares redeemed.................. (13,656,196) (1,289,980) (936,012) (88,085)
------------ ---------- ---------- -------
Net increase..................... $116,687,976 11,598,064 $3,377,442 317,301
============ ========== ========== =======
Net increase in Fund............. $118,565,867 11,774,608 $3,545,996 333,313
============ ========== ========== =======
</TABLE>
FS-122
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Bond Intermediate Municipal
Fund Bond Fund
---------------------- ------------------------
For the Period For the
January 27, 1995, Six Months
through Ended
December 31, 1995(a) June 30, 1996
---------------------- ------------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued................. $ 480,966 42,767 $ 887,830 73,737
Dividends reinvested.......... 47,097 4,274 235,837 19,489
Shares redeemed............... (19,999) (1,752) (1,160,385) (96,213)
----------- --------- ------------ ----------
Net increase (decrease)....... $ 508,064 45,289 $ (36,718) (2,987)
=========== ========= ============ ==========
Class B Shares:
Shares issued................. $ 3,704 370 $ 176,150 14,675
Dividends reinvested.......... 484 44 3,856 319
Shares redeemed............... -- -- (167) (14)
----------- --------- ------------ ----------
Net increase.................. $ 4,188 414 $ 179,839 14,980
=========== ========= ============ ==========
Class I Shares:
Shares issued................. $15,099,834 1,442,838 $ 33,275,477 2,745,439
Dividends reinvested.......... 332,915 29,708 96,902 8,005
Shares redeemed............... (1,470,371) (130,514) (27,641,167) (2,296,798)
----------- --------- ------------ ----------
Net increase.................. $13,962,378 1,342,032 $ 5,731,212 456,646
=========== ========= ============ ==========
Net increase in Fund.......... $14,474,630 1,387,735 $ 5,874,333 468,639
=========== ========= ============ ==========
</TABLE>
FS-123
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Municipal
Bond Fund
-------------------------------------------------
For the Period For the
March 1, 1995, Year Ended
through February 28,
December 31, 1995(c) 1995
----------------------- ------------------------
Amount Shares Amount Shares
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued............... $ 2,036,319 167,138 $ 920,191 78,527
Dividends reinvested........ 579,220 47,958 829,334 70,747
Shares redeemed............. (2,724,405) (225,316) (12,219,977) (1,053,197)
----------- ---------- ------------ ----------
Net decrease................ $ (108,866) (10,220) $(10,470,452) (903,923)
=========== ========== ============ ==========
Class B Shares:
Shares issued............... $ 348,000 28,626 $ 115,550 9,750
Dividends reinvested........ 4,876 399 1,971 169
Shares redeemed............. (20,212) (1,672) (123,958) (10,419)
----------- ---------- ------------ ----------
Net increase (decrease)..... $ 332,664 27,353 $ (6,437) (500)
=========== ========== ============ ==========
Class I Shares:
Shares issued............... $46,362,306 3,850,432 $366,411,242 31,318,358
Dividends reinvested........ 2,330,219 191,337 20,498 1,737
Shares redeemed............. (54,476,753) (4,527,302) (3,821,887) (325,102)
----------- ---------- ------------ ----------
Net increase (decrease)..... $(5,784,228) (485,533) $362,609,853 30,994,993
=========== ========== ============ ==========
Net increase (decrease) in
Fund....................... $(5,560,430) (468,400) $ 52,132,964 30,090,570
=========== ========== ============ ==========
</TABLE>
FS-124
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Bond
Fund
--------------------------------------------------
For the For the Period
Six Months Ended March 1, 1995, through
June 30, 1996 December 31, 1995(c)
------------------------ ------------------------
Amount Shares Amount Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued.............. $ 470,562 38,219 $ 1,295,558 103,426
Dividends reinvested....... 110,515 8,916 346,338 27,700
Shares redeemed............ (618,647) (49,853) (1,377,127) (110,562)
------------ ---------- ------------ ----------
Net increase (decrease).... $ (37,570) (2,718) $ 264,769 20,564
============ ========== ============ ==========
Class B Shares:
Shares issued.............. $ 217,604 17,585 $ 228,602 18,257
Dividends reinvested....... 4,721 381 6,838 543
Shares redeemed............ -- -- (39) (3)
------------ ---------- ------------ ----------
Net increase............... $ 222,325 17,966 $ 235,401 18,797
============ ========== ============ ==========
Class I Shares:
Shares issued.............. $ 17,160,195 1,403,309 $ 32,958,625 2,685,708
Dividends reinvested....... 24,170 1,952 3,575,154 285,358
Shares redeemed............ (16,565,121) (1,341,032) (27,710,442) (2,219,888)
------------ ---------- ------------ ----------
Net increase............... $ 619,244 64,229 $ 8,823,337 751,178
============ ========== ============ ==========
Net increase in Fund....... $ 803,999 79,477 $ 9,323,507 790,539
============ ========== ============ ==========
</TABLE>
FS-125
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government
Municipal Bond Money Market
Fund Fund
------------------------ --------------------------
For the For the For the
Year Ended Six Months Year Ended
February 28, Ended December 31,
1995 June 30, 1996 1995
------------------------ ------------- ------------
Amount Shares Shares Shares
------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... $ 301,216 25,507 103,720,750 250,085,862
Dividends reinvested.... 319,837 27,236 1,045,460 2,488,380
Shares redeemed......... (2,895,171) (246,815) (70,640,081) (311,695,323)
------------ ---------- ----------- ------------
Net increase (decrease). $ (2,274,118) (194,072) 34,126,129 (59,121,081)
============ ========== =========== ============
Class B Shares:
Shares issued........... $ -- -- -- --
Dividends reinvested.... 66 6 -- --
Shares redeemed......... (2,071) (168) -- --
------------ ---------- ----------- ------------
Net decrease............ $ (2,005) (162) -- --
============ ========== =========== ============
Class I Shares:
Shares issued........... $222,099,320 18,631,505 --
Dividends reinvested.... 3,923 325 --
Shares redeemed......... (4,444,913) (371,925) --
------------ ---------- ----------- ------------
Net increase............ $217,658,330 18,259,905 --
============ ========== =========== ============
Net increase in Fund.... $215,382,207 18,065,671 34,126,129 (59,121,081)
============ ========== =========== ============
</TABLE>
FS-126
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal
Money Market Money Market
Fund Fund
--------------------------- ---------------------------
For the For the For the For the
Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31,
June 30, 1996 1995 June 30, 1996 1995
------------- ------------ ------------- ------------
Shares Shares Shares Shares
------ ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... 647,108,056 802,777,063 303,063,695 534,326,783
Dividends reinvested.... 4,313,881 6,872,109 1,569,202 3,305,612
Shares redeemed......... (495,796,561) (725,110,518) (270,654,125) (482,251,105)
------------ ------------ ------------ ------------
Net increase............ 155,625,376 84,538,654 33,978,772 55,381,290
============ ============ ============ ============
Class B Shares:
Shares issued........... 606,290 250,080 -- --
Dividends reinvested.... 1,364 903 -- --
Shares redeemed......... (576,327) (186,116) -- --
------------ ------------ ------------ ------------
Net increase............ 31,327 64,867 -- --
============ ============ ============ ============
Net increase in Fund.... 155,656,703 84,603,521 33,978,772 55,381,290
============ ============ ============ ============
</TABLE>
- -----------
(a) Period from commencement of operations.
(b) Effective February 1, 1995, the Fund changed its fiscal year end from
January 31 to December 31.
(c) Effective March 1, 1995, the Fund changed its fiscal year end from
February 28 to December 31.
NOTE 6--SUBSEQUENT EVENT
On August 23, 1996, the Prairie Growth Fund, Prairie International Equity
Fund, Prairie Bond Fund and Prairie Managed Assets Fund merged into The
Woodward Capital Growth Fund, The Woodward International Equity Fund, The
Woodward Bond Fund and The Woodward Balanced Fund, respectively.
On or about September 13, 1996, the Prairie Municipal Bond Fund, Inc.,
Prairie Money Market Fund, Prairie U.S. Government Money Market Fund and
Prairie Municipal Money Market Fund will merge into The Woodward Municipal
Bond Fund, The Woodward Money Market Fund, The Woodward Treasury Money Market
Fund and The Woodward Tax-Exempt Money Market Fund, respectively.
On or about September 21, 1996, the Prairie Equity Income Fund, Prairie
Special Opportunities Fund, Prairie Intermediate Bond Fund, Prairie
International Bond Fund, Prairie Intermediate Municipal Bond Fund and Prairie
Managed Assets Income Fund will reorganize into the Pegasus Equity Income
Fund, Pegasus Small Cap Opportunity Fund, Pegasus Income Fund, Pegasus
International Bond Fund, Pegasus Intermediate Municipal Bond Fund and Pegasus
Managed Assets Conservative Fund, respectively.
FS-127
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Year Ended December 31,
Months Ended -----------------------------------
June 30,
1996 1995 1994 1993 1992
------------ ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning
of Period................ $ 14.54 $ 12.13 $ 13.11 $ 12.68 $ 12.56
------- ------- ------- ------- -------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income..... 0.27 0.64 0.73 0.72 0.79
Net realized and
unrealized gains (loss-
es) on investments...... 0.28 2.48 (0.98) 0.61 0.26
------- ------- ------- ------- -------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS.. 0.55 3.12 (0.25) 1.33 1.05
------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRI-
BUTIONS:
From net investment in-
come.................... (0.23) (0.68) (0.72) (0.72) (0.77)
From net realized gains on
investments............. -- (0.03) (0.01) (0.18) (0.16)
------- ------- ------- ------- -------
TOTAL DIVIDENDS AND
DISTRIBUTIONS.......... (0.23) (0.71) (0.73) (0.90) (0.93)
------- ------- ------- ------- -------
Net change in net asset
value.................... 0.32 2.41 (0.98) 0.43 0.12
------- ------- ------- ------- -------
Net Asset Value, End of Pe-
riod..................... $ 14.86 $ 14.54 $ 12.13 $ 13.11 $ 12.68
======= ======= ======= ======= =======
TOTAL RETURN (EXCLUDES SALES
CHARGE) 3.82%++ 26.40% (1.92)% 10.70% 8.68%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets....... 1.25%+ 1.17% 0.63% 0.39% 0.02%
Ratio of net investment
income to average net
assets................... 3.76%+ 4.88% 5.77% 5.54% 6.24%
Ratio of expenses to
average net assets*...... 1.43%+** 1.54% 1.67% 1.65% 1.88%
Ratio of net investment
income to average net
assets*.................. 3.59%+ 4.51% 4.73% 4.28% 4.38%
Portfolio turnover......... 7.44%++ 8.23% 28.69% 16.40% 22.14%
Net assets, end of period
(000's omitted).......... $56,764 $51,997 $44,367 $51,586 $34,262
Average commission rate
paid(1).................. $0.0700 -- -- -- --
</TABLE>
- -----------
(1) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-128
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the For the
Months Ended Period Ended Period Ended
June 30, December 31, December 2,
1996 1995(2) 1994(1)
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period. $ 14.56 $12.42 $13.05
------- ------ ------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income............... 0.21 0.45 0.51
Net realized and unrealized gains
(losses) on investments........... 0.29 2.17 (0.91)
------- ------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS....................... 0.50 2.62 (0.40)
------- ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income.......... (0.18) (0.45) (0.54)
From net realized gains on invest-
ments............................. -- (0.03) (0.01)
------- ------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS.. (0.18) (0.48) (0.55)
------- ------ ------
Net change in net asset value........ 0.32 2.14 (0.95)
------- ------ ------
Conversion to Class A Shares(3)...... NA NA 12.10
------- ------ ------
Net Asset Value, End of Period....... $ 14.88 $14.56 --
======= ====== ======
TOTAL RETURN (EXCLUDES REDEMPTION
CHARGE) 3.42%++ 21.42%++ (3.13)%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets............................. 1.99%+ 1.92%+ 1.21% +
Ratio of net investment income to
average net assets................. 3.01%+ 3.89%+ 4.10% +
Ratio of expenses to average net
assets*............................ 2.17%+** 2.12%+ 2.17% +
Ratio of net investment income to
average net assets*................ 2.84%+ 3.70%+ 3.14% +
Portfolio turnover................... 7.44%++ 8.23%++ 28.69% ++
Net assets, end of period (000's
omitted)........................... $ 4,072 $2,175 --
Average commission rate paid(4)...... $0.0700 -- --
</TABLE>
- -----------
(1) For the period February 8, 1994 (initial offering date of Class B Shares)
through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of Class B Shares under the then-current sales load schedule and
such shares converted to Class A Shares.
(2) For the period March 3, 1995 (re-offering date of Class B Shares) through
December 31, 1995.
(3) On December 2, 1994, the Fund terminated its offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
(4) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-129
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............... $ 14.57 $12.42
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.31 0.57
Net realized and unrealized gains on investments.. 0.28 2.18
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS.......... 0.59 2.75
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.26) (0.57)
From net realized gains on investments............ -- (0.03)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.26) (0.60)
------- ------
Net change in net asset value...................... 0.33 2.15
------- ------
Net Asset Value, End of Period..................... $ 14.90 $14.57
======= ======
TOTAL RETURN 4.09%++ 22.55%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 0.86%+ 0.77%+
Ratio of net investment income to average net
assets........................................... 4.15%+ 5.12%+
Ratio of expenses to average net assets*........... 1.26%+** 1.22%+
Ratio of net investment income to average net
assets*.......................................... 3.76%+ 4.66%+
Portfolio turnover................................. 7.44%++ 8.23%++
Net assets, end of period (000's omitted).......... $ 1,237 $1,294
Average commission rate paid(2).................... $0.0700 --
</TABLE>
- -----------
(1) For the period March 3, 1995 (initial offering date of Class I Shares)
through December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-130
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period............... $11.50 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.13 0.14
Net realized and unrealized gains on investments.. 0.62 1.50
------ ------
TOTAL INCOME FROM INVESTMENT OPERATIONS.......... 0.75 1.64
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.06) (0.14)
------ ------
Net change in net asset value...................... 0.69 1.50
------ ------
Net Asset Value, End of Period..................... $12.19 $11.50
====== ======
TOTAL RETURN (EXCLUDES SALES CHARGE) 6.54%++ 16.48%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 1.27%+ 1.26%+
Ratio of net investment income to average net
assets........................................... 2.14%+ 2.45%+
Ratio of expenses to average net assets*........... 2.37%+** 3.15%+
Ratio of net investment income to average net
assets*.......................................... 1.06%+ 0.56%+
Portfolio turnover................................. 0.00%++ 2.25%++
Net assets, end of period (000's omitted).......... $8,279 $8,356
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-131
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period.............. $11.45 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.07 0.13
Net realized and unrealized gains on investments. 0.64 1.45
------ ------
TOTAL INCOME FROM INVESTMENT OPERATIONS......... 0.71 1.58
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....................... (0.03) (0.13)
------ ------
Net change in net asset value..................... 0.68 1.45
------ ------
Net Asset Value, End of Period.................... $12.13 $11.45
====== ======
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 6.24%++ 15.83% ++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... 2.02%+ 2.00% +
Ratio of net investment income to average net
assets.......................................... 1.41%+ 1.69% +
Ratio of expenses to average net assets*.......... 3.25%+** 6.84% +
Ratio of net investment income (loss) to average
net assets*..................................... 0.20%+ (3.15)%+
Portfolio turnover................................ 0.00%++ 2.25% ++
Net assets, end of period (000's omitted)......... $1,205 $ 833
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-132
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period.............. $11.46 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.15 0.22
Net realized and unrealized gains on investments. 0.63 1.46
------ ------
TOTAL INCOME FROM INVESTMENT OPERATIONS......... 0.78 1.68
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....................... (0.08) (0.22)
------ ------
Net change in net asset value..................... 0.70 1.46
------ ------
Net Asset Value, End of Period.................... $12.16 $11.46
====== ======
TOTAL RETURN 6.78%++ 16.90% ++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... 0.87%+ 0.80% +
Ratio of net investment income to average net
assets.......................................... 2.55%+ 3.06% +
Ratio of expenses to average net assets*.......... 2.51%+** 4.12% +
Ratio of net investment income (loss) to average
net assets*..................................... 0.93%+ (0.26)%+
Portfolio turnover................................ 0.00%++ 2.25% ++
Net assets, end of period (000's omitted)......... $ 436 $ 411
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-133
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period............... $ 12.22 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.20 0.36
Net realized and unrealized gains on investments.. 0.54 2.57
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS.......... 0.74 2.93
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.16) (0.36)
In excess of net investment income................ -- (0.01)
From net realized gains on investments............ -- (0.34)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.16) (0.71)
------- ------
Net change in net asset value...................... 0.58 2.22
------- ------
Net Asset Value, End of Period..................... $ 12.80 $12.22
======= ======
TOTAL RETURN (EXCLUDES SALES CHARGE) 6.06%++ 29.78%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 1.03%+ 1.11%+
Ratio of net investment income to average net
assets........................................... 3.24%+ 3.33%+
Ratio of expenses to average net assets*........... 1.08%+** 1.44%+
Ratio of net investment income to average net
assets*.......................................... 3.19%+ 2.99%+
Portfolio turnover................................. 31.13%++ 44.07%++
Net assets, end of period (000's omitted).......... $ 5,098 $2,873
Average commission rate paid(2).................... $0.0484 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-134
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............... $ 12.22 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.14 0.29
Net realized and unrealized gains on investments.. 0.57 2.56
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS.......... 0.71 2.85
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.14) (0.29)
From net realized gains on investments............ -- (0.34)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.14) (0.63)
------- ------
Net change in net asset value...................... 0.57 2.22
------- ------
Net Asset Value, End of Period..................... $ 12.79 $12.22
======= ======
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 5.64%++ 28.97%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 1.77%+ 1.90%+
Ratio of net investment income to average net
assets........................................... 2.51%+ 2.65%+
Ratio of expenses to average net assets*........... 2.12%+** 2.65%+
Ratio of net investment income to average net
assets*.......................................... 2.17%+ 1.90%+
Portfolio turnover................................. 31.13%++ 44.07%++
Net assets, end of period (000's omitted).......... $ 1,362 $ 593
Average commission rate paid(2).................... $0.0484 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-135
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............. $ 12.21 $ 10.00
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................... 0.23 0.42
Net realized and unrealized gains on invest-
ments......................................... 0.54 2.55
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS........ 0.77 2.97
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................... (0.19) (0.42)
From net realized gains on investments.......... -- (0.34)
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............. (0.19) (0.76)
-------- --------
Net change in net asset value.................... 0.58 2.21
-------- --------
Net Asset Value, End of Period................... $ 12.79 $ 12.21
======== ========
TOTAL RETURN 6.29%++ 30.27%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 0.65%+ 0.65%+
Ratio of net investment income to average net
assets......................................... 3.57%+ 4.08%+
Ratio of expenses to average net assets*......... 0.76%+** 0.77%+
Ratio of net investment income to average net
assets*........................................ 3.46%+ 3.96%+
Portfolio turnover............................... 31.13%++ 44.07%++
Net assets, end of period (000's omitted)........ $300,385 $283,927
Average commission rate paid(2).................. $ 0.0484 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-136
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period............... $ 11.97 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.04 0.11
Net realized and unrealized gains on investments.. 1.00 2.86
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS.......... 1.04 2.97
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.02) (0.11)
From net realized gains on investments............ -- (0.89)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.02) (1.00)
------- ------
Net change in net asset value...................... 1.02 1.97
------- ------
Net Asset Value, End of Period..................... $ 12.99 $11.97
======= ======
TOTAL RETURN (EXCLUDES SALES CHARGE) 8.71%++ 29.98%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 1.17%+ 1.21%+
Ratio of net investment income to average net
assets........................................... 0.63%+ 0.86%+
Ratio of expenses to average net assets*........... 1.23%+** 1.39%+
Ratio of net investment income to average net
assets*.......................................... 0.57%+ 0.68%+
Portfolio turnover................................. 49.67%++ 106.02%++
Net assets, end of period (000's omitted).......... $ 5,741 $4,329
Average commission rate(2)......................... $0.0525 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-137
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............. $ 11.95 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................... -- 0.06
Net realized and unrealized gains on invest-
ments......................................... 0.98 2.84
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS........ 0.98 2.90
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................... -- (0.06)
From net realized gains on investments.......... -- (0.89)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............. -- (0.95)
------- ------
Net change in net asset value.................... 0.98 1.95
------- ------
Net Asset Value, End of Period................... $ 12.93 $11.95
======= ======
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 8.20% ++ 29.15% ++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 1.92% + 2.04% +
Ratio of net investment income (loss) to average
net assets..................................... (0.12)%+ 0.02% +
Ratio of expenses to average net assets*......... 2.13% +** 2.60% +
Ratio of net investment loss to average net
assets*........................................ (0.33)%+ (0.54)%+
Portfolio turnover............................... 49.67% ++ 106.02% ++
Net assets, end of period (000's omitted)........ $ 826 $ 268
Average commission rate(2)....................... $0.0525 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-138
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............. $ 11.97 $ 10.00
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................... 0.07 0.15
Net realized and unrealized gains on invest-
ments......................................... 1.00 2.86
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS........ 1.07 3.01
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................... (0.04) (0.15)
From net realized gains on investments.......... -- (0.89)
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............. (0.04) (1.04)
-------- --------
Net change in net asset value.................... 1.03 1.97
-------- --------
Net Asset Value, End of Period................... $ 13.00 $ 11.97
======== ========
TOTAL RETURN 8.91%++ 30.38%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 0.80%+ 0.80%+
Ratio of net investment income to average net
assets......................................... 0.99%+ 1.46%+
Ratio of expenses to average net assets*......... 0.92%+** 0.92%+
Ratio of net investment income to average net
assets*........................................ 0.87%+ 1.34%+
Portfolio turnover............................... 49.67%++ 106.02%++
Net assets, end of period (000's omitted)........ $302,524 $293,944
Average commission rate(2)....................... $ 0.0525 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-139
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period............. $ 12.20 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).................... (0.01) 0.02
Net realized and unrealized gains on invest-
ments......................................... 0.93 2.45
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS........ 0.92 2.47
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................... -- (0.02)
From net realized gains on investments.......... -- (0.25)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............. -- (0.27)
------- ------
Net change in net asset value.................... 0.92 2.20
------- ------
Net Asset Value, End of Period................... $ 13.12 $12.20
======= ======
TOTAL RETURN (EXCLUDES SALES CHARGE) 7.54% ++ 24.80% ++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 1.23% + 1.25% +
Ratio of net investment income (loss) to average
net assets..................................... (0.23)%+ 0.19% +
Ratio of expenses to average net assets*......... 1.60% +** 2.56% +
Ratio of net investment loss to average net
assets*........................................ (0.60)%+ (1.12)%+
Portfolio turnover............................... 50.65% ++ 38.89% ++
Net assets, end of period (000's omitted)........ $ 1,422 $ 672
Average commission rate paid(2).................. $0.0358 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-140
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............. $ 12.12 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss............................. (0.01) (0.03)
Net realized and unrealized gains on invest-
ments......................................... 0.89 2.40
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS........ 0.88 2.37
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net realized gains on investments.......... -- (0.25)
------- ------
Net change in net asset value.................... 0.88 2.12
------- ------
Net Asset Value, End of Period................... $ 13.00 $12.12
======= ======
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 7.26% ++ 23.76% ++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 1.94% + 2.00% +
Ratio of net investment loss to average net
assets......................................... (1.03)%+ (0.51)%+
Ratio of expenses to average net assets*......... 6.06% +** 9.52% +
Ratio of net investment loss to average net
assets*........................................ (5.15)%+ (8.04)%+
Portfolio turnover............................... 50.65% ++ 38.89% ++
Net assets, end of period (000's omitted)........ $ 57 $ 15
Average commission rate paid(2).................. $0.0358 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-141
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............. $ 12.19 $ 10.00
-------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................... 0.01 0.06
Net realized and unrealized gains on invest-
ments......................................... 0.94 2.44
-------- -------
TOTAL INCOME FROM INVESTMENT OPERATIONS........ 0.95 2.50
-------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................... (0.01) (0.06)
From net realized gains on investments.......... -- (0.25)
-------- -------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............. (0.01) (0.31)
-------- -------
Net change in net asset value.................... 0.94 2.19
-------- -------
Net Asset Value, End of Period................... $ 13.13 $ 12.19
======== =======
TOTAL RETURN 7.80%++ 25.08%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 0.85%+ 0.85%+
Ratio of net investment income to average net as-
sets........................................... 0.21%+ 0.59%+
Ratio of expenses to average net assets*......... 1.03%+** 1.09%+
Ratio of net investment income to average net as-
sets*.......................................... 0.03%+ 0.36%+
Portfolio turnover............................... 50.65%++ 38.89%++
Net assets, end of period (000's omitted)........ $104,838 $92,926
Average commission rate paid(2).................. $ 0.0358 --
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-142
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period............... $ 11.16 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.04 0.10
Net realized and unrealized gains on investments.. 0.34 1.40
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS.......... 0.38 1.50
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.04) (0.09)
From net realized gains on investments and foreign
currency transactions........................... -- (0.25)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.04) (0.34)
------- ------
Net change in net asset value...................... 0.34 1.16
------- ------
Net Asset Value, End of Period..................... $ 11.50 $11.16
======= ======
TOTAL RETURN (EXCLUDES SALES CHARGE) 3.40%++ 15.16%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 1.44%+ 1.50%+
Ratio of net investment income to average net as-
sets............................................. 1.33%+ 1.19%+
Ratio of expenses to average net assets*........... 1.59%+** 1.96%+
Ratio of net investment income to average net as-
sets*............................................ 1.21%+ 0.72%+
Portfolio turnover................................. 2.09%++ 5.65%++
Net assets, end of period (000's omitted).......... $ 4,222 $2,749
Average commission rate paid(2).................... $0.0216 --
</TABLE>
- -----------
(1) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-143
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period.............. $ 11.14 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.03 0.05
Net realized and unrealized gains on investments. 0.33 1.39
------- ------
TOTAL INCOME FROM INVESTMENT OPERATIONS......... 0.36 1.44
------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....................... (0.02) (0.05)
From net realized gains on investments and for-
eign currency transactions..................... -- (0.25)
------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS............... (0.02) (0.30)
------- ------
Net change in net asset value..................... 0.34 1.14
------- ------
Net Asset Value, End of Period.................... $ 11.48 $11.14
======= ======
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 3.22%++ 14.52% ++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... 2.15%+ 2.28% +
Ratio of net investment income to average net as-
sets............................................ 0.67%+ 0.40% +
Ratio of expenses to average net assets*.......... 2.51%+** 3.83% +
Ratio of net investment income (loss) to average
net assets*..................................... 0.34%+ (1.15)%+
Portfolio turnover................................ 2.09%++ 5.65% ++
Net assets, end of period (000's omitted)......... $ 893 $ 193
Average commission rate paid(2)................... $0.0216 --
</TABLE>
- -----------
(1) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-144
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............. $ 11.17 $ 10.00
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................... 0.09 0.14
Net realized and unrealized gains on invest-
ments......................................... 0.33 1.40
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS........ 0.42 1.54
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................... (0.05) (0.12)
From net realized gains on investments and for-
eign currency transactions.................... -- (0.25)
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............. (0.05) (0.37)
-------- --------
Net change in net asset value.................... 0.37 1.17
-------- --------
Net Asset Value, End of Period................... $ 11.54 $ 11.17
======== ========
TOTAL RETURN 3.76%++ 15.62%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 1.05%+ 1.05%+
Ratio of net investment income to average net as-
sets........................................... 1.66%+ 1.70%+
Ratio of expenses to average net assets*......... 1.27%+** 1.38%+
Ratio of net investment income to average net as-
sets*.......................................... 1.47%+ 1.36%+
Portfolio turnover............................... 2.09%++ 5.65%++
Net assets, end of period (000's omitted)........ $144,478 $101,448
Average commission rate paid(2).................. $ 0.0216 --
</TABLE>
- -----------
(1) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-145
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the For the For the
Months Ended Period Ended Year Ended Period Ended
June 30, December 31, January 31, January 31,
1996 1995(1) 1995 1994(2)
------------ ------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value,
Beginning of Period..... $ 8.18 $ 7.68 $ 8.25 $ 8.36
------ ------- ------ ------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income.... 0.22 0.44 0.52 0.47
Net realized and
unrealized gains on
investments............. (0.37) 0.72 (0.57) (0.09)
------ ------- ------ ------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS............ (0.15) 1.16 (0.05) 0.38
------ ------- ------ ------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income.................. (0.22) (0.44) (0.52) (0.47)
From net realized gains
on investments.......... -- (0.22) -- (0.02)
------ ------- ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS......... (0.22) (0.66) (0.52) (0.49)
------ ------- ------ ------
Net change in net asset
value................... (0.37) 0.50 (0.57) (0.11)
------ ------- ------ ------
Net Asset Value, End of
Period.................. $ 7.81 $ 8.18 $ 7.68 $ 8.25
====== ======= ====== ======
TOTAL RETURN (EXCLUDES
SALES CHARGE) (1.79)%++ 15.55%++ (0.45)% 5.16%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets...... 0.89% + 0.94%+ 0.04%+ -- +
Ratio of net investment
income to average net
assets.................. 5.61% + 5.72%+ 6.70%+ 5.96%+
Ratio of expenses to
average net assets*..... 0.96% +** 1.15%+ 2.78%+ 3.67%+
Ratio of net investment
income to average net
assets*................. 5.54% + 5.51%+ 3.96%+ 2.29%+
Portfolio turnover....... 40.84% ++ 173.26%++ 71.65% 26.54%++
Net assets, end of period
(000's omitted)......... $6,746 $ 6,095 $ 69 $ 65
</TABLE>
- -----------
(1) For the period February 1, 1995 (commencement of operations) through
December 31, 1995. Effective February 1, 1995, the Fund changed its fiscal
year end from January 31 to December 31.
(2) For the period March 5, 1993 (commencement of operations) through December
31, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-146
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the For the
Months Ended Period Ended Period Ended
June 30, December 31, January 31,
1996 1995(1) 1994(2)
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of
Period............................. $ 8.18 $ 8.13 $ 8.16
------ ------- ------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income............... 0.19 0.24 0.40
Net realized and unrealized gains
(losses) on investments............ (0.36) 0.27 (0.55)
------ ------- ------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS............ (0.17) 0.51 (0.15)
------ ------- ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income.......... (0.19) (0.24) (0.40)
From net realized gains on
investments........................ -- (0.22) --
------ ------- ------
TOTAL DIVIDENDS AND DISTRIBUTIONS. (0.19) (0.46) (0.40)
------ ------- ------
Net change in net asset value....... (0.36) 0.05 (0.55)
------ ------- ------
Conversion to Class A Shares(3)..... NA NA 7.61
------ ------- ------
Net Asset Value, End of Period...... $ 7.82 $ 8.18 --
====== ======= ======
TOTAL RETURN (EXCLUDES REDEMPTION
CHARGE) (2.09)%++ 6.41%++ (1.82)%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets............................. 1.69% + 1.60%+ --
Ratio of net investment income to
average net assets................. 4.83% + 5.00%+ 6.48% +
Ratio of expenses to average net
assets*............................ 1.80% +** 1.78%+ 2.58% +
Ratio of net investment income to
average net assets*................ 4.72% + 4.83%+ 3.90% +
Portfolio turnover.................. 40.84% ++ 173.26%++ 71.65% ++
Net assets, end of period (000's
omitted)........................... $ 432 $ 259 --
</TABLE>
- -----------
(1) For the period May 31, 1995 (re-offering date of Class B Shares) through
December 31, 1995. Effective February 1, 1995, the Fund changed its fiscal
year end from January 31 to December 31.
(2) For the period February 8, 1994 (initial offering date of Class B Shares)
through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of Class B Shares and such shares converted to Class A Shares.
(3) On December 2, 1994, the Fund terminated the offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-147
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the For the For the
Months Ended Period Ended Year Ended Period Ended
June 30, December 31, January 31, January 31,
1996 1995(1) 1995 1994(2)
------------ ------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
CLASS I SHARES:
Net Asset Value,
Beginning of Period... $ 8.18 $ 7.68 $ 8.25 $ 8.36
-------- -------- ------ ------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income.. 0.26 0.47 0.52 0.47
Net realized and
unrealized gains on
investments........... (0.38) 0.72 (0.57) (0.09)
-------- -------- ------ ------
TOTAL (LOSS) INCOME
FROM INVESTMENT
OPERATIONS.......... (0.12) 1.19 (0.05) 0.38
-------- -------- ------ ------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income................ (0.24) (0.47) (0.52) (0.47)
From net realized
gains on investments.. -- (0.22) -- (0.02)
-------- -------- ------ ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS....... (0.24) (0.69) (0.52) (0.49)
-------- -------- ------ ------
Net change in net asset
value................. (0.36) 0.50 (0.57) (0.11)
-------- -------- ------ ------
Net Asset Value, End of
Period................ $ 7.82 $ 8.18 $ 7.68 $ 8.25
======== ======== ====== ======
TOTAL RETURN (1.53)%++ 15.90%++ (0.48)% 5.16%++
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net assets.... 0.55% + 0.55%+ 0.04%+ --
Ratio of net investment
income to average net
assets................ 5.96% + 6.34%+ 6.70%+ 6.21%+
Ratio of expenses to
average net assets*... 0.67% +** 0.67%+ 2.78%+ 2.64%+
Ratio of net investment
income to average net
assets*............... 5.84% + 6.22%+ 3.96%+ 3.57%+
Portfolio turnover..... 40.84% ++ 173.26%++ 71.65% 26.54%++
Net assets, end of
period (000's
omitted).............. $197,579 $191,930 $7,101 $5,128
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995. Effective
February 1, 1995, the Fund changed its fiscal year end from January 31 to
December 31.
(2) For the period March 5, 1993 (commencement of operations) through January
31, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-148
<PAGE>
PRAIRIE FUNDS
BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period.............. $10.81 $ 10.00
------ -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.29 0.57
Net realized and unrealized gains (losses) on
investments...................................... (0.57) 1.20
------ -------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS.. (0.28) 1.77
------ -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.29) (0.57)
From net realized gains on investments............ -- (0.39)
------ -------
TOTAL DIVIDENDS AND DISTRIBUTIONS............... (0.29) (0.96)
------ -------
Net change in net asset value..................... (0.57) 0.81
------ -------
Net Asset Value, End of Period.................... $10.24 $ 10.81
====== =======
TOTAL RETURN (EXCLUDES SALES CHARGE) (2.64)%++ 18.22%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... 1.07% + 1.02%+
Ratio of net investment income to average net
assets........................................... 5.51% + 5.94%+
Ratio of expenses to average net assets*.......... 1.29% +** 1.57%+
Ratio of net investment income to average net
assets*.......................................... 5.29% + 5.39%+
Portfolio turnover................................ 41.99% ++ 156.11%++
Net assets, end of period (000's omitted)......... $2,616 $ 1,847
</TABLE>
- -----------
(1) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-149
<PAGE>
PRAIRIE FUNDS
BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period.............. $10.81 $ 10.00
------ -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.25 0.50
Net realized and unrealized gains (losses) on
investments...................................... (0.56) 1.20
------ -------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS.. (0.31) 1.70
------ -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.25) (0.50)
From net realized gains on investments............ -- (0.39)
------ -------
TOTAL DIVIDENDS AND DISTRIBUTIONS............... (0.25) (0.89)
------ -------
Net change in net asset value..................... (0.56) 0.81
------ -------
Net Asset Value, End of Period.................... $10.25 $ 10.81
====== =======
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) (2.92)%++ 17.41%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... 1.85% + 1.87%+
Ratio of net investment income to average net
assets........................................... 4.75% + 5.22%+
Ratio of expenses to average net assets*.......... 3.29% +** 3.91%+
Ratio of net investment income to average net
assets*.......................................... 3.31% + 3.19%+
Portfolio turnover................................ 41.99% ++ 156.11%++
Net assets, end of period (000's omitted)......... $ 57 $ 61
</TABLE>
- -----------
(1) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-150
<PAGE>
PRAIRIE FUNDS
BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............ $ 10.81 $ 10.00
-------- --------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income........................... 0.31 0.61
Net realized and unrealized gains (losses) on
investments.................................... (0.56) 1.20
-------- --------
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS................................... (0.25) 1.81
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................... (0.31) (0.61)
From net realized gains on investments.......... -- (0.39)
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS............. (0.31) (1.00)
-------- --------
Net change in net asset value................... (0.56) 0.81
-------- --------
Net Asset Value, End of Period.................. $ 10.25 $ 10.81
======== ========
TOTAL RETURN (2.36)%++ 18.57%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... 0.70% + 0.70%+
Ratio of net investment income to average net
assets......................................... 5.89% + 6.48%+
Ratio of expenses to average net assets*........ 0.89% +** 0.87%+
Ratio of net investment income to average net
assets*........................................ 5.70% + 6.31%+
Portfolio turnover.............................. 41.99% ++ 156.11%++
Net assets, end of period (000's omitted)....... $128,348 $125,401
</TABLE>
- -----------
(1) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-151
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period.............. $10.75 $10.00
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.24 0.98
Net realized and unrealized gains (losses) on
investments...................................... (0.26) 1.10
------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS.. (0.02) 2.08
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.24) (0.98)
In excess of net investment income................ -- (0.01)
From net realized gains on investments and
foreign currency transactions.................... -- (0.34)
------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS............... (0.24) (1.33)
------ ------
Net change in net asset value..................... (0.26) 0.75
------ ------
Net Asset Value, End of Period.................... $10.49 $10.75
====== ======
TOTAL RETURN (EXCLUDES SALES CHARGE) (0.15)%++ 21.10%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets........... 1.34% + 1.33%+
Ratio of net investment income to average net
assets........................................... 4.63% + 4.91%+
Ratio of expenses to average net assets*.......... 2.78% +** 3.65%+
Ratio of net investment income to average net
assets*.......................................... 3.20% + 2.59%+
Portfolio turnover................................ 0.00% ++ 48.03%++
Net assets, end of period (000's omitted)......... $ 643 $ 487
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-152
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............. $10.81 $10.00
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.20 0.91
Net realized and unrealized gains (losses) on
investments..................................... (0.26) 1.16
------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS. (0.06) 2.07
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....................... (0.20) (0.91)
In excess of net investment income............... -- (0.01)
From net realized gains on investments and
foreign currency transactions................... -- (0.34)
------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............. (0.20) (1.26)
------ ------
Net change in net asset value.................... (0.26) 0.81
------ ------
Net Asset Value, End of Period................... $10.55 $10.81
====== ======
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) (0.51)%++ 20.90% ++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets.......... 2.13% + 2.03% +
Ratio of net investment income to average net
assets.......................................... 3.85% + 4.39% +
Ratio of expenses to average net assets*......... 12.06% +** 8.69% +
Ratio of net investment loss to average net
assets*......................................... (6.07)%+ (2.28)%+
Portfolio turnover............................... 0.00% ++ 48.03% ++
Net assets, end of period (000's omitted)........ $ 4 $ 4
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-153
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............... $ 10.81 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............................. 0.27 1.02
Net realized and unrealized gains (losses) on
investments....................................... (0.26) 1.16
------- -------
TOTAL INCOME FROM INVESTMENT OPERATIONS.......... 0.01 2.18
------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income......................... (0.27) (1.02)
In excess of net investment income................. -- (0.01)
From net realized gains on investments and foreign
currency transactions............................. -- (0.34)
------- -------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.27) (1.37)
------- -------
Net change in net asset value...................... (0.26) 0.81
------- -------
Net Asset Value, End of Period..................... $ 10.55 $ 10.81
======= =======
TOTAL RETURN 0.12%++ 22.13%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets............ 0.84%+ 0.95%+
Ratio of net investment income to average net
assets............................................ 5.14%+ 5.71%+
Ratio of expenses to average net assets*........... 1.38%+** 1.93%+
Ratio of net investment income to average net
assets*........................................... 4.60%+ 4.73%+
Portfolio turnover................................. 0.00%++ 48.03%++
Net assets, end of period (000's omitted).......... $17,508 $14,504
</TABLE>
- -----------
(1) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-154
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Year Ended
Six Months For the ---------------------------------------------------
Ended Period Ended
June 30, December 31, February 28, February 28, February 28, February 29,
1996 1995(1) 1995 1994 1993 1992
----------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Begin-
ning of Period....... $ 12.25 $ 11.79 $ 12.18 $ 12.79 $ 12.25 $ 11.95
------- ------- ------- ------- ------- -------
INCOME (LOSS) FROM
INVESTMENT
OPERATIONS:
Net investment income.. 0.26 0.44 0.55 0.61 0.64 0.76
Net realized and
unrealized gains
(losses) on
investments.......... (0.28) 0.56 (0.36) 0.01 0.68 0.37
------- ------- ------- ------- ------- -------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS......... (0.02) 1.00 0.19 0.62 1.32 1.13
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment in-
come................. (0.26) (0.44) (0.55) (0.61) (0.64) (0.76)
From net realized gains
on investments....... -- (0.10) (0.03) (0.62) (0.14) (0.07)
------- ------- ------- ------- ------- -------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.26) (0.54) (0.58) (1.23) (0.78) (0.83)
------- ------- ------- ------- ------- -------
Net change in net asset
value................ (0.28) 0.46 (0.39) (0.61) 0.54 0.30
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period............... $ 11.97 $ 12.25 $ 11.79 $ 12.18 $ 12.79 $ 12.25
======= ======= ======= ======= ======= =======
TOTAL RETURN (EXCLUDES
SALES CHARGE) (0.19)%++ 8.58%++ 1.64% 4.94% 11.26% 9.78%
RATIOS/SUPPLEMENTAL DA-
TA:
Ratio of expenses to
average net assets... 0.85%+ 0.83%+ 0.29% 0.06% -- --
Ratio of net investment
income to average net
assets............... 4.28%+ 4.30%+ 4.73% 4.78% 5.16% 6.15%
Ratio of expenses to
average net assets*.. 0.93%+** 0.97%+ 1.38% 1.27% 1.31% 1.72%
Ratio of net investment
income to average net
assets*.............. 4.21%+ 4.16%+ 3.64% 3.57% 3.85% 4.43%
Portfolio turnover..... 29.65%++ 44.75%++ 128.02% 167.95% 63.67% 86.91%
Net assets, end of pe-
riod (000's omitted). $17,339 $17,777 $17,243 $28,826 $27,885 $18,310
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-155
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Period Ended
Six Months ------------------------------------------------------
Ended
June 30, December 31, February 28, December 2, February 28,
1996 1995(1) 1995(2) 1994(3) 1994(4)
----------- ------------ ------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Begin-
ning of Period....... $ 12.25 $ 11.80 $ 11.57 $ 12.18 $ 12.32
-------- ------- ------- ------- -------
INCOME (LOSS) FROM
INVESTMENT
OPERATIONS:
Net investment income. 0.21 0.37 0.04 0.37 0.03
Net realized and
unrealized gains
(losses) on invest-
ments............... (0.28) 0.55 0.23 (0.72) (0.14)
-------- ------- ------- ------- -------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS......... (0.07) 0.92 0.27 (0.35) (0.11)
-------- ------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income.............. (0.21) (0.37) (0.04) (0.37) (0.03)
From net realized
gains on
investments......... -- (0.10) -- (0.03) --
-------- ------- ------- ------- -------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.21) (0.47) (0.04) (0.40) (0.03)
-------- ------- ------- ------- -------
Net change in net asset
value................ (0.28) 0.45 0.23 (0.75) (0.14)
-------- ------- ------- ------- -------
Conversion to Class A
shares(5)............ NA NA NA 11.43 NA
-------- ------- ------- ------- -------
Net Asset Value, End of
Period............... $ 11.97 $ 12.25 $ 11.80 -- $ 12.18
======== ======= ======= ======= =======
TOTAL RETURN (EXCLUDES
REDEMPTION CHARGE) (0.61)%++ 7.75%++ 2.30%++ (2.98)%++ (0.93)%++
RATIOS/SUPPLEMENTAL DA-
TA:
Ratio of expenses to
average net assets... 1.67% + 1.71%+ 1.36%+ 0.76% + 0.75% +
Ratio of net investment
income to average net
assets............... 3.47% + 3.36%+ 3.72%+ 4.03% + 1.68% +
Ratio of expenses to
average net assets*.. 1.86% +** 2.01%+ 1.64%+ 2.00% + 3.00% +
Ratio of net investment
income (loss) to av-
erage net assets*.... 3.28% + 3.06%+ 3.44%+ 2.79% + (0.57)%+
Portfolio turnover..... 29.65% ++ 44.75%++ 128.02%++ 128.02% ++ 167.95% ++
Net assets, end of
period (000's
omitted)............. $ 513 $ 341 $ 6 -- $ 12
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period January 30, 1995 (re-offering date of Class B Shares)
through February 28, 1995.
(3) For the period March 1, 1994 through December 2, 1994. On December 2,
1994, the Fund terminated its offering of Class B Shares and such shares
converted to Class A Shares.
(4) For the period February 8, 1994 (initial offering date of Class B Shares)
through February 28, 1994.
(5) On December 2, 1994, the Fund terminated the offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-156
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the For the
Months Ended Period Ended Period Ended
June 30, December 31, February 28,
1996 1995(1) 1995(2)
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Pe-
riod............................ $ 12.25 $ 11.80 $ 11.57
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............ 0.28 0.47 0.04
Net realized and unrealized gains
(losses) on investments........ (0.28) 0.55 0.23
-------- -------- --------
TOTAL INCOME FROM INVESTMENT
OPERATIONS.................... -- 1.02 0.27
-------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....... (0.28) (0.47) (0.04)
From net realized gains on in-
vestments...................... -- (0.10) --
-------- -------- --------
TOTAL DIVIDENDS AND DISTRIBU-
TIONS......................... (0.28) (0.57) (0.04)
-------- -------- --------
Net change in net asset value..... (0.28) 0.45 0.23
-------- -------- --------
Net Asset Value, End of Period.... $ 11.97 $ 12.25 $ 11.80
======== ======== ========
TOTAL RETURN (0.04)%++ 8.76%++ 2.37%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets.......................... 0.55% + 0.55%+ 0.50%+
Ratio of net investment income to
average net assets.............. 4.59% + 4.78%+ 4.79%+
Ratio of expenses to average net
assets*......................... 0.66% +** 0.68%+ 0.60%+
Ratio of net investment income to
average net assets*............. 4.49% + 4.65%+ 4.69%+
Portfolio turnover................ 29.65% ++ 44.75%++ 128.02%++
Net assets, end of period (000's
omitted)........................ $370,767 $373,753 $365,801
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period February 1, 1995 (initial offering date of Class I Shares)
through February 28, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-157
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Year Ended
Six Months For the ---------------------------------------------------
Ended Period Ended
June 30, December 31, February 28, February 28, February 28, February 29,
1996 1995(1) 1995 1994 1993 1992
----------- ------------ ------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Begin-
ning of Period....... $12.64 $12.06 $12.13 $ 13.25 $ 12.49 $12.10
------ ------ ------ ------- ------- ------
INCOME (LOSS) FROM IN-
VESTMENT OPERATIONS:
Net investment income. 0.27 0.48 0.60 0.63 0.70 0.76
Net realized and
unrealized gains
(losses) on
investments......... (0.42) 0.82 (0.07) (0.15) 1.01 0.47
------ ------ ------ ------- ------- ------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS......... (0.15) 1.30 0.53 0.48 1.71 1.23
------ ------ ------ ------- ------- ------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income.............. (0.27) (0.48) (0.60) (0.63) (0.70) (0.76)
From net realized
gains on invest-
ments............... -- (0.24) -- (0.96) (0.25) (0.08)
In excess of net real-
ized gains on
investments......... -- -- -- (0.01) -- --
------ ------ ------ ------- ------- ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.27) (0.72) (0.60) (1.60) (0.95) (0.84)
------ ------ ------ ------- ------- ------
Net change in net asset
value................ (0.42) 0.58 (0.07) (1.12) 0.76 0.39
------ ------ ------ ------- ------- ------
Net Asset Value, End of
Period............... $12.22 $12.64 $12.06 $ 12.13 $ 13.25 $12.49
====== ====== ====== ======= ======= ======
TOTAL RETURN (EXCLUDES
SALES CHARGE)RATIOS/ (1.18)%++ 10.95%++ 4.45% 3.70% 14.37% 10.50%
SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets... 0.90% + 0.89%+ 1.98% -- -- --
Ratio of net investment
income to average net
assets............... 4.42% + 4.57%+ 5.09% 4.85% 5.49% 5.99%
Ratio of expenses to
average net assets*.. 0.97% +** 1.04%+ 3.89% 1.44% 1.59% 2.75%
Ratio of net investment
income to average net
assets*.............. 4.36% + 4.43%+ 3.18% 3.41% 3.90% 3.24%
Portfolio turnover..... 43.29% ++ 69.31%++ 60.78% 175.06% 88.53% 66.28%
Net assets, end of pe-
riod (000's omitted). $7,149 $7,426 $6,840 $ 9,234 $11,290 $6,591
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-158
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Period Ended
Months Ended ----------------------------------------
June 30, December 31, December 2, February 28,
1996 1995(1) 1994(2) 1994(3)
------------ ------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Begin-
ning of Period....... $ 12.65 $ 12.17 $ 12.14 $ 12.37
------- ------- ------- -------
INCOME (LOSS) FROM
INVESTMENT
OPERATIONS:
Net investment income. 0.22 0.34 0.41 0.03
Net realized and
unrealized gains
(losses) on invest-
ments............... (0.42) 0.72 (0.70) (0.23)
------- ------- ------- -------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS......... (0.20) 1.06 (0.29) (0.20)
------- ------- ------- -------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income.............. (0.22) (0.34) (0.41) (0.03)
From net realized
gains on
investments......... -- (0.24) -- --
------- ------- ------- -------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.22) (0.58) (0.41) (0.03)
------- ------- ------- -------
Net change in net asset
value................ (0.42) 0.48 (0.70) (0.23)
------- ------- ------- -------
Conversion to Class A
Shares (4)........... NA NA 11.44 NA
------- ------- ------- -------
Net Asset Value, End of
Period............... $ 12.23 $ 12.65 $ NA $ 12.14
======= ======= ======= =======
TOTAL RETURN (EXCLUDES
REDEMPTION CHARGE) (1.57)%++ 8.81%++ (4.30)%+ (1.64)%++
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net assets... 1.67% + 1.66%+ 3.18% + 0.50% +
Ratio of net investment
income to average net
assets............... 3.69% + 3.61%+ 4.51% + 4.10% +
Ratio of expenses to
average net assets*.. 1.84% +** 2.04%+ 5.85% + 2.91% +
Ratio of net investment
income to average net
assets*.............. 3.52% + 3.23%+ 1.84% + 1.69% +
Portfolio turnover..... 43.29% ++ 69.31%++ 60.78% ++ 175.06% ++
Net assets, end of
period (000's
omitted)............. $ 450 $ 238 $ -- $ 2
</TABLE>
- -----------
(1) For the period April 4, 1995 (re-offering date of Class B Shares) through
December 31, 1995. Effective March 1, 1995, the Fund changed its fiscal
year end from February 28 to December 31.
(2) For the period March 1, 1994 through December 2, 1994. On December 2,
1994, the Fund terminated its offering of Class B Shares and such shares
converted to Class A Shares.
(3) For the period February 8, 1994 (initial offering date of Class B Shares)
through February 28, 1994.
(4) On December 2, 1994, the Fund terminated its offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-159
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Period Ended
Months Ended --------------------------
June 30, December 31, February 28,
1996 1995(1) 1995(2)
------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Pe-
riod............................ $ 12.63 $ 12.06 $ 12.06
-------- -------- --------
INCOME (LOSS) FROM INVESTMENT OP-
ERATIONS:
Net investment income............ 0.29 0.52 0.05
Net realized and unrealized gains
(losses) on investments........ (0.41) 0.81 --
-------- -------- --------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS......... (0.12) 1.33 0.05
-------- -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....... (0.29) (0.52) (0.05)
From net realized gains on in-
vestments...................... -- (0.24) --
-------- -------- --------
TOTAL DIVIDENDS AND
DISTRIBUTIONS................. (0.29) (0.76) (0.05)
-------- -------- --------
Net change in net asset value..... (0.41) 0.57 --
-------- -------- --------
Net Asset Value, End of Period.... $ 12.22 $ 12.63 $ 12.06
======== ======== ========
TOTAL RETURN (0.92)%++ 11.20%++ 0.39%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets.......................... 0.54% + 0.54%+ 0.65%+
Ratio of net investment income to
average net assets.............. 4.78% + 4.95%+ 5.45%+
Ratio of expenses to average net
assets*......................... 0.68% +** 0.67%+ 0.79%+
Ratio of net investment income to
average net assets*............. 4.65% + 4.81%+ 5.31%+
Portfolio turnover................ 43.29% ++ 69.31%++ 60.78%
Net assets, end of period (000's
omitted)........................ $233,073 $240,160 $220,143
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period February 1, 1995 (initial offering date of Class I Shares)
to February 28, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-160
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Year Ended December 31,
Months Ended ---------------------------------------
June 30,
1996 1995 1994 1993 1992
------------ -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value,
Beginning of Period. $ 0.9997 $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment in-
come............... 0.0222 0.0498 0.0379 0.0249 0.0283
Net realized and
unrealized gains
(losses) on
investments........ 0.0001 0.0001 (0.0083) (0.0001) --
-------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS........ 0.0223 0.0499 0.0296 0.0248 0.0283
-------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income............. (0.0222) (0.0498) (0.0379) (0.0249) (0.0283)
-------- -------- -------- -------- --------
Increase due to
voluntary capital
contribution from an
affiliate of the
Investment Adviser.. -- -- 0.0080 -- --
-------- -------- -------- -------- --------
Net change in net as-
set value........... 0.0001 0.0001 (0.0003) (0.0001) --
-------- -------- -------- -------- --------
Net Asset Value, End
of Period........... $ 0.9998 $ 0.9997 $ 0.9996 $ 0.9999 $ 1.0000
======== ======== ======== ======== ========
TOTAL RETURN 2.24%++ 5.09% 3.86%* 2.52% 2.87%
RATIOS/SUPPLEMENTAL DA-
TA:
Ratio of expenses to
average net assets.. 0.80%+ 0.78% 0.86% 0.74% 0.91%
Ratio of net
investment income to
average net assets.. 4.47%+ 4.97% 3.73% 2.48% 2.87%
Ratio of expenses to
average net
assets**............ 1.11%+*** 1.07% 0.88% 0.88% 0.91%
Ratio of net
investment income to
average net
assets**............ 4.16%+ 4.67% 3.71% 2.34% 2.87%
Net assets, end of
period
(000's omitted)..... $91,390 $57,264 $116,353 $154,613 $548,733
</TABLE>
- -----------
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
2.83%.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
*** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-161
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Year Ended December 31,
Months Ended ---------------------------------------
June 30,
1996 1995 1994 1993 1992
------------ -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value,
Beginning of Period... $ 1.0002 $ 0.9998 $ 1.0001 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.0230 0.0514 0.0355 0.0274 0.0313
Net realized and
unrealized gains
(losses) on
investments.......... (0.0002) 0.0010 (0.0109) 0.0001 --
-------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS.......... 0.0228 0.0524 0.0246 0.0275 0.0313
-------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income............... (0.0230) (0.0514) (0.0355) (0.0274) (0.0313)
From net realized gains
on investments....... -- (0.0006) (0.0002) -- --
-------- -------- -------- -------- --------
TOTAL DIVIDENDS AND
DISTRIBUTIONS....... (0.0230) (0.0520) (0.0357) (0.0274) (0.0313)
-------- -------- -------- -------- --------
Increase due to
voluntary capital
contribution from an
affiliate of the
Investment Adviser.... -- -- 0.0108 -- --
-------- -------- -------- -------- --------
Net change in net asset
value................. (0.0002) 0.0004 (0.0003) 0.0001 --
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................ $ 1.0000 $ 1.0002 $ 0.9998 $ 1.0001 $ 1.0000
======== ======== ======== ======== ========
TOTAL RETURN 2.33%++ 5.33% 3.63%* 2.77% 3.18%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets.... 0.80%+ 0.79% 1.02% 0.94% 0.98%
Ratio of net investment
income to average net
assets................ 4.63%+ 5.12% 3.51% 2.76% 3.17%
Ratio of expenses to
average net assets**.. 1.05%+*** 1.07% 1.02% 0.99% 0.98%
Ratio of net investment
income to average net
assets**.............. 4.39%+ 4.83% 3.51% 2.71% 3.17%
Net assets, end of peri-
od (000's omitted).... $359,619 $203,994 $119,400 $162,623 $260,865
</TABLE>
- -----------
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
2.61%.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
*** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-162
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS-- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Period Ended
June 30, December 31,
1996 1995(1)
------------ ------------
(Unaudited)
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............ $ 1.0002 $ 1.0000
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.......................... 0.0193 0.0162
Net realized and unrealized gains (losses) on
investments.................................. (0.0001) 0.0008
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS....... 0.0192 0.0170
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income..................... (0.0193) (0.0162)
From net realized gains on investments......... -- (0.0006)
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS............. (0.0193) (0.0168)
-------- --------
Net change in net asset value................... (0.0001) 0.0002
-------- --------
Net Asset Value, End of Period.................. $ 1.0001 $ 1.0002
======== ========
TOTAL RETURN 1.95% ++ 1.69%++
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets......... 1.55% + 1.51%+
Ratio of net investment income to average net
assets........................................ 3.89% + 4.33%+
Ratio of expenses to average net assets*........ 14.38% +** 2.02%+
Ratio of net investment income (loss) to average
net assets*................................... (8.93)%+ 3.82%+
Net assets, end of period (000's omitted)....... $ 96 $ 65
</TABLE>
- -----------
(1) For the period May 20, 1995 (initial offering of Class B Shares) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-163
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Year Ended December 31,
Months Ended --------------------------------------
June 30,
1996 1995 1994 1993 1992
------------ -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Be-
ginning of Period... $ 0.9998 $ 0.9997 $ 0.9999 $ 0.9999 $ 0.9999
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment in-
come............... 0.0138 0.0322 0.0234 0.0174 0.0236
Net realized and
unrealized gains
(losses) on
investments........ -- 0.0001 (0.0002) -- --
-------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS........ 0.0138 0.0323 0.0232 0.0174 0.0236
-------- -------- -------- -------- --------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income............. (0.0138) (0.0322) (0.0234) (0.0174) (0.0236)
-------- -------- -------- -------- --------
Net change in net
asset value......... -- 0.0001 (0.0002) -- --
-------- -------- -------- -------- --------
Net Asset Value, End
of Period........... $ 0.9998 $ 0.9998 $ 0.9997 $ 0.9999 $ 0.9999
======== ======== ======== ======== ========
TOTAL RETURN 1.39%++ 3.26% 2.36% 1.75% 2.38%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net assets.. 0.70%+ 0.70% 0.68% 0.79% 0.95%
Ratio of net
investment income to
average net assets.. 2.76%+ 3.21% 2.33% 1.74% 2.38%
Ratio of expenses to
average net assets*. 0.97%+** 0.94% 0.93% 0.95% 0.96%
Ratio of net invest-
ment income to aver-
age net assets*..... 2.50%+ 2.97% 2.08% 1.58% 2.37%
Net assets, end of
period (000's
omitted)............ $262,490 $228,511 $173,130 $177,698 $210,000
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Fund received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-164
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
RESULTS OF SPECIAL SHAREHOLDER MEETING (UNAUDITED)
- --------------------------------------------------------------------------------
On July 10, 1996, a special meeting of the shareholders of Prairie Funds,
Prairie Intermediate Bond Fund and Prairie Municipal Bond Fund, Inc. was held
to approve an Agreement and Plan of Reorganization by and between Woodward
Funds and Prairie Funds.
The shareholders approved the Reorganization Agreement with respect to each
Fund as follows:
<TABLE>
<CAPTION>
Portfolio In Favor Opposed Abstain
- --------- ----------- --------- ----------
<S> <C> <C> <C>
Managed Assets Fund............................ 495,381 979 5,193
Equity Income Fund............................. 17,086,027 557,152 778,275
Growth Fund.................................... 16,985,662 336,073 431,857
Special Opportunities Fund..................... 6,108,968 36,495 159,336
Intermediate Bond Fund......................... 17,288,591 102,858 426,036
Bond Fund...................................... 6,766,424 278,628 438,535
International Bond Fund........................ 1,243,173 2,257 6,297
Intermediate Municipal Bond Fund............... 21,540,002 449,258 384,673
Municipal Bond Fund, Inc. ..................... 13,143,654 353,174 949,035
U.S. Government Money Market Fund.............. 38,340,979 1,424,680 4,431,933
Money Market Fund.............................. 136,028,608 5,041,454 14,543,694
Municipal Money Market Fund.................... 138,203,505 5,069,235 12,044,818
On July 23, 1996, a special meeting of the shareholders of the Prairie Managed
Assets Income Fund of Prairie Funds was held to approve an Agreement and Plan of
Reorganization by and between Woodward Funds and Prairie Funds.
The shareholders approved the Reorganization Agreement with respect to the
Managed Assets Income Fund as follows:
<CAPTION>
Portfolio In Favor Opposed Abstain
- --------- ----------- --------- ----------
<S> <C> <C> <C>
Managed Assets Income Fund..................... 2,106,210 63,874 131,178
On July 31, 1996, a special meeting of the shareholders of the Prairie
International Equity Fund of Prairie Funds was held to approve an Agreement and
Plan of Reorganization by and between Woodward Funds and Prairie International
Equity Fund.
The shareholders approved the Reorganization Agreement with respect to the
International Equity Fund as follows:
<CAPTION>
Portfolio In Favor Opposed Abstain
- --------- ----------- --------- ----------
<S> <C> <C> <C>
International Equity Fund...................... 8,671,709 118,384 156,745
</TABLE>
FS-165
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
GROWTH/VALUE OPPORTUNITY
FUND FUND
------------ -----------
<S> <C> <C>
ASSETS:
Investment in securities:
At cost ................................................... $ 580,482,038 $ 563,241,479
============= =============
At value (Note 2) ......................................... $ 728,723,075 $ 702,287,236
Cash ........................................................... 21,693,251 5,107,637
Receivable for shares purchased ................................ 9,500 --
Receivable for securities sold ................................. 17,336,908 857,678
Income receivable .............................................. 1,168,760 669,256
Deferred organization costs, net (Note 2) ...................... -- --
Prepaids and other assets ...................................... 1,439 1,329
------------- -------------
TOTAL ASSETS ......................................... 768,932,933 708,923,136
------------- -------------
LIABILITIES:
Payable for securities purchased ............................... -- 1,172,608
Accrued investment advisory fee ................................ 472,901 437,285
Accrued distribution fees ...................................... 6,847 7,992
Accrued custodial fee .......................................... 9,542 8,332
Other payables and accrued expenses ............................ 76,635 235,907
------------- -------------
TOTAL LIABILITIES .................................... 565,925 1,862,124
------------- -------------
NET ASSETS ........................................... $ 768,367,008 $ 707,061,012
============= =============
Net assets consist of:
Capital shares (unlimited number of shares authorized, par value
$.10 per share) .............................................. $ 5,405,639 $ 4,219,774
Additional paid-in capital ..................................... 559,042,435 534,422,593
Accumulated undistributed net investment income ................ 261,863 (16,512)
Accumulated undistributed net realized gains ................... 55,416,034 29,389,400
Net unrealized appreciation on investments ..................... 148,241,037 139,045,757
------------- -------------
TOTAL NET ASSETS ..................................... $ 768,367,008 $ 707,061,012
============= =============
Shares of capital stock outstanding ............................ 54,056,392 42,197,740
============= =============
Net asset value and redemption price per share ................. $ 14.21 $ 16.76
============= =============
Maximum offering price per share ............................... $ 14.96 $ 17.64
============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
F5-166
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
June 30, 1996
(Unaudited)
INTRINSIC VALUE CAPITAL GROWTH BALANCED
FUND FUND FUND
--------------- -------------- --------
<S> <C> <C> <C>
ASSETS:
Investment in securities:
At cost ................................................... $256,529,181 $188,104,228 $ 100,692,794
============ ============ =============
At value (Note 2) ......................................... $296,910,797 $233,044,215 $ 109,350,305
Cash ........................................................... 1,256,182 2,361,073 974,120
Receivable for shares purchased ................................ -- -- --
Receivable for securities sold ................................. 848,661 382,228 77,915
Income receivable .............................................. 906,790 225,519 581,962
Deferred organization costs, net (Note 2) ...................... -- 24,332 23,598
Prepaids and other assets ...................................... 519 2,507 60,159
------------ ------------ -------------
TOTAL ASSETS ......................................... 299,922,949 236,039,874 111,068,059
------------ ------------ -------------
LIABILITIES:
Payable for securities purchased ............................... 3,801,772 2,270,074 1,132,382
Accrued investment advisory fee ................................ 180,122 144,499 67,316
Accrued distribution fees ...................................... 2,512 1,336 1,223
Accrued custodial fee .......................................... 4,346 3,521 10,313
Dividends payable .............................................. 343,488 62,966 124,943
Other payables and accrued expenses ............................ 116,908 2,874 3,135
------------ ------------ -------------
TOTAL LIABILITIES .................................... 4,105,660 2,422,304 1,214,369
------------ ------------ -------------
NET ASSETS ........................................... $295,817,289 $233,617,570 $ 109,853,690
============ ============ =============
Net assets consist of:
Capital shares (unlimited number of shares authorized, par value
$.10 per share) .............................................. $ 2,276,377 $ 1,639,006 $ 956,443
Additional paid-in capital ..................................... 240,350,418 183,946,388 97,018,013
Accumulated undistributed net investment income ................ 81,074 7,307 (490,797)
Accumulated undistributed net realized gains ................... 12,727,804 3,084,882 3,712,520
Net unrealized appreciation on investments ..................... 40,381,616 44,939,987 8,657,511
------------ ------------ -------------
TOTAL NET ASSETS ..................................... $295,817,289 $233,617,570 $ 109,853,690
============ ============ =============
Shares of capital stock outstanding ............................ 22,763,773 16,390,057 9,564,434
============ ============ =============
Net asset value and redemption price per share ................. $ 13.00 $ 14.25 $ 11.48
============ ============ =============
Maximum offering price per share ............................... $ 13.68 $ 15.00 $ 12.09
============ ============ =============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-167
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
GROWTH/VALUE OPPORTUNITY
FUND FUND
------------- -----------
<S> <C> <C>
INVESTMENT INCOME (Note 2)
Interest ........................................... $ 410,422 $ 596,624
Dividends .......................................... 7,311,431 3,021,692
----------- -----------
TOTAL INVESTMENT INCOME ........................ 7,721,853 3,618,316
----------- -----------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee ............................ 2,822,334 2,540,002
Distribution fees .................................. 41,309 47,710
Professional fees .................................. 12,518 15,256
Custodial fee ...................................... 53,137 52,181
Transfer and dividend disbursing agent fees ........ 33,974 59,733
Amortization of deferred organization costs ........ 7,429 3,243
Marketing expenses ................................. 18,485 21,248
Registration, filing fees and other expenses ....... 44,364 51,561
Less:
Expense reimbursement .......................... -- --
----------- -----------
NET EXPENSES .................................. 3,033,550 2,790,934
----------- -----------
NET INVESTMENT INCOME .................................. 4,688,303 827,382
----------- -----------
REALIZED AND UNREALIZED GAINS ON
INVESTMENTS:
Net realized gains ................................. 49,090,116 27,655,671
Net change in unrealized appreciation (depreciation)
on investments ................................... 8,281,141 40,200,406
----------- -----------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS ............................. 57,371,257 67,856,077
----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ................................... $62,059,560 $68,683,459
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-168
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF OPERATIONS (Continued)
For the Six Months Ended June 30, 1996
(Unaudited)
INTRINSIC VALUE CAPITAL GROWTH BALANCED
FUND FUND FUND
--------------- -------------- --------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 2)
Interest ........................................... $ 1,159,402 $ 155,673 $ 1,673,345
Dividends .......................................... 3,321,841 1,240,114 496,026
----------- ----------- -----------
TOTAL INVESTMENT INCOME ........................ 4,481,243 1,395,787 2,169,371
----------- ----------- -----------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee ............................ 1,008,003 817,701 390,877
Distribution fees .................................. 14,661 7,692 7,342
Professional fees .................................. 15,256 15,256 15,256
Custodial fee ...................................... 24,278 18,622 49,502
Transfer and dividend disbursing agent fees ........ 15,007 7,833 8,246
Amortization of deferred organization costs ........ 2,323 4,055 4,717
Marketing expenses ................................. 15,780 14,279 13,918
Registration, filing fees and other expenses ....... 55,038 67,785 18,496
Less:
Expense reimbursement .......................... -- -- (18,406)
----------- ----------- -----------
NET EXPENSES .................................. 1,150,346 953,223 489,948
----------- ----------- -----------
NET INVESTMENT INCOME .................................. 3,330,897 442,564 1,679,423
----------- ----------- -----------
REALIZED AND UNREALIZED GAINS ON
INVESTMENTS:
Net realized gains ................................. 10,320,264 2,532,203 3,447,803
Net change in unrealized appreciation (depreciation)
on investments ................................... 13,578,178 12,491,742 (818,005)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS ............................. 23,898,442 15,023,945 2,629,798
----------- ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ................................... $27,229,339 $15,466,509 $ 4,309,221
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-169
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
GROWTH/VALUE OPPORTUNITY
FUND FUND
------------------------------- --------------------------------
Six Months Six Months
Ended Ended
June 30, 1996 Year Ended June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995 (Unaudited) Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............... $ 4,688,303 $ 11,355,754 $ 827,382 $ 2,185,244
Net realized gains .................. 49,090,116 21,032,338 27,655,671 33,998,949
Net change in unrealized appreciation
(depreciation) on investments ...... 8,281,141 130,722,828 40,200,406 70,828,164
------------- ------------- ------------- -------------
Net increase in net assets
from operations ................... 62,059,560 163,110,920 68,683,459 107,012,357
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income .......... (4,467,118) (11,928,616) (844,871) (2,383,890)
From realized gains ................. -- (14,216,458) -- (31,302,346)
------------- ------------- ------------- -------------
Total distributions ................. (4,467,118) (26,145,074) (844,871) (33,686,236)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ........... 60,710,921 129,170,938 65,351,320 138,422,625
Net asset value of shares
issued in reinvestment of
distributions to shareholders ..... 3,241,492 22,736,385 660,200 32,652,833
------------- ------------- ------------- -------------
63,952,413 151,907,323 66,011,520 171,075,458
Less: payments for shares redeemed .. (90,344,914) (123,076,813) (77,741,364) (118,448,431)
------------- ------------- ------------- -------------
Net increase (decrease) in
net assets from capital share
transactions ...................... (26,392,501) 28,830,510 (11,729,844) 52,627,027
------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS ............ 31,199,941 165,796,356 56,108,744 125,953,148
NET ASSETS:
Beginning of period ................. 737,167,067 571,370,711 650,952,268 524,999,120
------------- ------------- ------------- -------------
End of period ....................... $ 768,367,008 $ 737,167,067 $ 707,061,012 $ 650,952,268
============= ============= ============= =============
CAPITAL SHARE TRANSACTIONS:
Shares sold ........................... 4,425,684 10,922,667 4,077,492 9,374,983
Shares issued in reinvestment
of distributions to shareholders .... 231,584 1,788,703 40,008 2,199,921
------------- ------------- ------------- -------------
4,657,268 12,711,370 4,117,500 11,574,904
Less: shares redeemed ................. (6,597,525) (10,251,504) (4,879,943) (7,969,587)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING ......................... (1,940,257) 2,459,866 (762,443) 3,605,317
CAPITAL SHARES:
Beginning of period ................. 55,996,649 53,536,783 42,960,183 39,354,866
------------- ------------- ------------- -------------
End of period ....................... 54,056,392 55,996,649 42,197,740 42,960,183
============= ============= ============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-170
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
INTRINSIC VALUE CAPITAL GROWTH BALANCED
FUND FUND FUND
----------------------------- ----------------------------- -----------------------------
Six Months Six Months Six Months
Ended Ended Ended
June 30, 1996 Year Ended June 30, 1996 Year Ended June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995 (Unaudited) Dec. 31, 1995 (Unaudited) Dec. 31, 1995
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ......... $ 3,330,897 $ 6,011,616 $ 442,564 $ 906,758 $ 1,679,423 $ 2,515,594
Net realized gains ............ 10,320,264 18,391,186 2,532,203 2,343,100 3,447,803 1,548,275
Net change in unrealized
appreciation (depreciation)
on investments .............. 13,578,178 28,180,120 12,491,742 30,092,839 (818,005) 11,071,176
------------- ------------- ------------- ------------- ------------- ------------
Net increase in net assets
from operations ............. 27,229,339 52,582,922 15,466,509 33,342,697 4,309,221 15,135,045
------------- ------------- ------------- ------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
(Note 2):
From net investment income .... (3,360,072) (6,247,197) (446,558) (933,730) (2,199,157) (2,524,322)
From realized gains ........... -- (16,471,970) -- (1,616,085) -- (987,934)
------------- ------------- ------------- ------------- ------------- ------------
Total distributions ........... (3,360,072) (22,719,167) (446,558) (2,549,815) (2,199,157) (3,512,256)
------------- ------------- ------------- ------------- ------------- ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ..... 39,949,138 39,975,498 42,509,951 116,265,186 27,750,960 47,232,261
Net asset value of shares
issued in reinvestment of
distributions to shareholders 2,607,303 21,049,306 320,297 2,306,069 2,022,269 3,343,276
------------- ------------- ------------- ------------- ------------- ------------
42,556,441 61,024,804 42,830,248 118,571,255 29,773,229 50,575,537
Less: payments for shares
redeemed .................... (26,493,278) (55,031,796) (20,093,807) (34,772,563) (15,653,404) (22,741,717)
------------- ------------- ------------- ------------- ------------- ------------
Net increase (decrease)
in net assets from
capital share transactions .. 16,063,163 5,993,008 22,736,441 83,798,692 14,119,825 27,833,820
------------- ------------- ------------- ------------- ------------- ------------
NET INCREASE IN NET ASSETS ...... 39,932,430 35,856,763 37,756,392 114,591,574 16,229,889 39,456,609
NET ASSETS:
Beginning of period ........... 255,884,859 220,028,096 195,861,178 81,269,604 93,623,801 54,167,192
------------- ------------- ------------- ------------- ------------- ------------
End of period ................. $ 295,817,289 $ 255,884,859 $ 233,617,570 $ 195,861,178 $ 109,853,690 $ 93,623,801
============= ============= ============= ============= ============= ============
CAPITAL SHARE TRANSACTIONS:
Shares sold ..................... 3,166,068 3,432,079 3,038,138 9,733,178 2,431,133 4,495,916
Shares issued in reinvestment
of distributions to
shareholders .................. 205,504 1,777,948 22,601 177,953 176,485 306,837
------------- ------------- ------------- ------------- ------------- ------------
3,371,572 5,210,027 3,060,739 9,911,131 2,607,618 4,802,753
Less: shares redeemed ........... (2,133,166) (4,687,782) (1,436,519) (2,927,524) (1,371,866) (2,160,736)
------------- ------------- ------------- ------------- ------------- ------------
NET INCREASE (DECREASE)
IN SHARES OUTSTANDING ......... 1,238,406 522,245 1,624,220 6,983,607 1,235,752 2,642,017
CAPITAL SHARES:
Beginning of period ........... 21,525,367 21,003,122 14,765,837 7,782,230 8,328,682 5,686,665
------------- ------------- ------------- ------------- ------------- ------------
End of period ................. 22,763,773 21,525,367 16,390,057 14,765,837 9,564,434 8,328,682
============= ============= ============= ============= ============= ============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-171
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
GROWTH/VALUE FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Description Shares Market Value
----------- ------ ------------
<S> <C> <C>
COMMON STOCKS - 100.00%
Aerospace - 2.58%
Boeing Co. ................................................................ 216,000 $18,819,000
-----------
Apparel - 2.06%
Russell Corp. ............................................................. 543,000 15,000,375
Banks - 6.41%
Barnett Banks, Inc. ....................................................... 246,000 15,006,000
Fleet Financial Group, Inc. ............................................... 474,000 20,619,000
Norwest Corp. ............................................................. 317,000 11,055,375
-----------
46,680,375
-----------
Business Machines - 1.31%
Autodesk, Inc. ............................................................ 240,900 7,196,888
Compaq Computer Corp.* .................................................... 137,000 6,747,250
-----------
13,944,138
-----------
Business Services - 10.45%
Deluxe Corp. .............................................................. 440,000 15,620,000
Dun & Bradstreet Corp. .................................................... 276,000 17,250,000
Electronic Data Systems Corp. ............................................. 393,000 21,123,750
Interpublic Group of Companies, Inc. ...................................... 152,000 7,125,000
WMX Technologies, Inc. .................................................... 458,000 14,999,500
-----------
76,118,250
-----------
Chemicals - 5.41%
Dow Chemical Co. .......................................................... 120,000 9,120,000
Great Lakes Chemical Corp. ................................................ 192,000 11,952,000
Sigma-Aldrich Corp. ....................................................... 343,000 18,350,500
-----------
39,422,500
-----------
Construction - 5.23%
Masco Corp. ............................................................... 474,000 14,338,500
York International Corp. .................................................. 459,000 23,753,250
-----------
38,091,750
-----------
Consumer Durables - 2.31%
Rubbermaid, Inc. .......................................................... 619,000 16,867,750
-----------
</TABLE>
FS-172
<PAGE>
<TABLE>
<S> <C> <C>
Containers - 2.23%
Crown Cork & Seal Co., Inc. * ............................................. 361,000 16,245,000
-----------
Drugs and Medicine - 7.66%
Abbott Laboratories Corp. ................................................. 326,000 14,181,000
Bristol-Myers Squibb Co. .................................................. 203,000 18,270,000
Schering-Plough Corp. ..................................................... 372,000 23,343,000
-----------
55,794,000
-----------
Electronics - 3.15%
Hewlett Packard Co. ....................................................... 57,000 5,678,625
Intel Corp. ............................................................... 95,000 6,976,562
Lucent Technology, Inc. ................................................... 103,000 3,901,125
Motorola, Inc. ............................................................ 102,000 6,413,250
-----------
22,969,562
-----------
Energy and Utilities - 7.14%
Enron Corp. ............................................................... 388,000 15,859,500
MCN Corp. ................................................................. 804,000 19,597,500
Pinnacle West Capital Corp. ............................................... 545,000 16,554,375
-----------
52,011,375
-----------
Energy Raw Materials - 3.09%
Schlumberger Ltd. ......................................................... 267,000 22,494,750
-----------
Food and Agriculture - 6.13%
ConAgra, Inc. ............................................................. 257,000 11,661,375
CPC International, Inc. ................................................... 194,000 13,968,000
Sysco Corp. ............................................................... 555,000 19,008,750
-----------
44,638,125
-----------
Insurance - 4.49%
American International Group, Inc. ........................................ 106,000 10,454,250
Chubb Corp. ............................................................... 446,000 22,244,250
-----------
32,698,500
-----------
International Oil - 1.62%
Royal Dutch Petroleum Co., N.Y. Registry .................................. 77,000 11,838,750
-----------
Liquor - 2.54%
Anheuser-Busch Companies, Inc. ............................................ 247,000 18,525,000
-----------
</TABLE>
FS-173
<PAGE>
<TABLE>
<S> <C> <C>
Media - 5.18%
Gannett Co., Inc. ......................................................... 254,000 17,970,500
Washington Post Co. Class B ............................................... 61,000 19,764,000
------------
37,734,500
------------
Miscellaneous & Conglomerates - 2.46%
Duracell International, Inc. .............................................. 415,000 17,896,875
------------
Motor Vehicles - 1.80%
General Motors Corp. ...................................................... 250,000 13,093,750
------------
Non-Durables and Entertainment - 1.57%
Cracker Barrel Old Country Store, Inc. .................................... 473,000 11,470,250
------------
Producer Goods - 3.58%
General Electric Co. ...................................................... 146,000 12,629,000
Stewart & Stevenson Services, Inc. ........................................ 593,000 13,490,750
------------
26,119,750
------------
Retail - 1.37%
Toys R Us * ............................................................... 351,000 10,003,500
------------
Telephone - 8.11%
A T & T Corp. ............................................................. 362,000 22,444,000
Century Telephone Enterprises, Inc. ....................................... 471,000 15,013,125
MCI Communications Corp. .................................................. 846,000 21,678,750
------------
59,135,875
------------
Trucking and Freight - 1.52%
Ryder System, Inc. ........................................................ 395,000 11,109,375
------------
TOTAL COMMON STOCKS ................................................................ 728,723,075
(Cost $580,482,038) ------------
TOTAL INVESTMENTS .................................................................. $728,723,075
(Cost $580,482,038) ============
<FN>
* Non-income producing security.
</TABLE>
FS-174
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 2.27%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96
(secured by various U.S. Treasury Strips with maturities ranging
from 2/15/99 through 8/15/00, all held at Chemical Bank) .................. $15,945,982 $15,945,982
(Cost $15,945,982) -----------
Shares
------
COMMON STOCKS - 97.73
Air Transport - 1.16%
Air Express International Corp. ........................................... 287,600 8,124,700
-----------
Apparel - 1.55%
Nine West Group, Inc. * ................................................... 212,850 10,881,956
-----------
Banks - 5.81%
Charter One Financial, Inc. ............................................... 480,000 16,740,000
First Tennessee National .................................................. 365,000 11,178,125
TCF Financial Corp. ....................................................... 387,800 12,894,350
-----------
40,812,475
-----------
Business Machines - 4.19%
Autodesk, Inc. ............................................................ 147,099 4,394,583
Diebold, Inc. ............................................................. 273,375 13,190,344
InterVoice, Inc. * ........................................................ 129,200 2,567,850
Xilinx, Inc. * ............................................................ 292,600 9,290,050
-----------
29,442,827
-----------
Business Services - 9.67%
American Management Systems, Inc. * ....................................... 395,050 11,555,212
CDI Corp. * ............................................................... 291,200 9,828,000
DST Systems, Inc. * ....................................................... 120,100 3,843,200
G & K Services Inc. Class A ............................................... 262,200 7,472,700
Omnicom Group, Inc. ....................................................... 239,220 11,123,730
SunGard Data Systems, Inc. * .............................................. 404,800 16,242,600
Zilog, Inc. * ............................................................. 327,300 7,855,200
-----------
67,920,642
-----------
Chemicals - 0.87%
RPM, Inc. ................................................................. 390,272 6,098,000
-----------
</TABLE>
FS-175
<PAGE>
<TABLE>
<S> <C> <C>
Construction - 2.67%
Crane Co. ................................................................. 458,146 18,783,986
------------
Consumer Durables - 2.83%
Durakon Industries, Inc. * ................................................ 314,892 4,605,296
Invacare Corp. ............................................................ 122,600 2,881,100
Leggett & Platt, Inc. ..................................................... 445,910 12,374,003
------------
19,860,399
------------
Containers - 1.35%
Aptargroup, Inc. .......................................................... 314,400 9,510,600
------------
Drugs and Medicine - 5.76%
Community Health System, Inc. * ........................................... 139,200 7,203,600
Health Care & Retirement Corp. * .......................................... 284,334 6,752,932
Scherer (R.P.) Corp. * .................................................... 88,064 3,995,904
Sybron International Corp.*................................................ 470,900 11,772,500
Vivra, Inc. * ............................................................. 326,400 10,730,400
------------
40,455,336
------------
Electronics - 6.98%
Belden, Inc. .............................................................. 585,000 17,550,000
Dynatech Corp. * .......................................................... 416,000 13,520,000
Microchip Technology, Inc. * .............................................. 431,200 10,672,200
Molex, Inc. Class A Non-Voting ............................................ 246,607 7,244,081
------------
48,986,281
------------
Energy Raw Materials - 5.65%
Apache Corp. .............................................................. 502,374 16,515,545
Noble Affiliates, Inc. .................................................... 368,100 13,895,775
Southwestern Energy Co. ................................................... 658,074 9,295,295
------------
39,706,615
------------
Food and Agriculture - 0.63%
Universal Foods Corp. ..................................................... 119,700 4,413,937
------------
Insurance - 3.50%
Capital Re Corp. .......................................................... 310,000 11,392,500
Transatlantic Holdings, Inc. .............................................. 188,246 13,200,751
------------
24,593,251
------------
</TABLE>
FS-176
<PAGE>
<TABLE>
<S> <C> <C>
Media - 1.68%
Banta Corp. ............................................................... 466,415 11,776,979
------------
Miscellaneous and Conglomerates - 10.05%
ABC Rail Products Corp. * ................................................. 240,800 5,207,300
Culligan Water Technologies, Inc. * ....................................... 213,000 8,094,000
DENTSPLY International, Inc. .............................................. 274,200 11,653,500
Greenfield Industries, Inc. ............................................... 476,300 15,717,900
Health Management Associates, Inc. Class A * .............................. 335,363 6,791,091
Littlefuse, Inc. * ........................................................ 279,600 10,485,000
Wolverine Tube, Inc. * .................................................... 360,000 12,600,000
------------
70,548,791
------------
Miscellaneous Finance - 14.74%
CMAC Investment Corp. ..................................................... 224,000 12,880,000
Edwards (A.G.), Inc. ...................................................... 476,580 12,927,232
Everest Reinsurance Holdings, Inc. ........................................ 543,800 14,070,825
Executive Risk, Inc. ...................................................... 355,600 13,601,700
FINOVA Group, Inc. ........................................................ 391,665 19,093,669
Idex Corp. ................................................................ 339,329 12,894,483
PMI Group, Inc. ........................................................... 262,300 11,147,750
Scotsman Industries, Inc. ................................................. 342,000 6,882,750
------------
103,498,409
------------
Motor Vehicles - 4.06%
Borg Warner Automotive .................................................... 137,800 5,443,100
Excel Industries, Inc. .................................................... 220,800 2,760,000
Harley-Davidson, Inc. ..................................................... 241,774 9,942,956
Myers Industries, Inc. .................................................... 358,120 6,669,985
Superior Industries International ......................................... 138,844 3,679,366
------------
28,495,407
------------
Non-Durables and Entertainment - 1.17%
Lancaster Colony Corp. .................................................... 220,096 8,226,088
------------
Non-Ferrous Metals - 1.06%
DT Industries, Inc. ....................................................... 408,500 7,455,125
------------
Producer Goods - 6.26%
Hubbell, Inc. Class B ..................................................... 182,663 12,101,424
</TABLE>
FS-177
<PAGE>
<TABLE>
<S> <C> <C>
Juno Lighting, Inc. ....................................................... 669,711 11,385,087
Teleflex, Inc. ............................................................ 214,360 10,235,690
Trimas Corp. .............................................................. 439,465 10,272,494
------------
43,994,695
------------
Retail - 4.38%
Cato Corp. Class A ........................................................ 1,019,082 6,114,492
Kohls Corp. * ............................................................. 136,236 4,989,643
Proffitts, Inc. * ......................................................... 350,000 12,425,000
Talbots, Inc. ............................................................. 223,701 7,242,320
------------
30,771,455
------------
Travel and Recreation - 1.71%
Callaway Golf Co. ......................................................... 360,400 11,983,300
------------
TOTAL COMMON STOCKS ................................................................ 686,341,254
(Cost $547,295,497) ------------
TOTAL INVESTMENTS .................................................................. $702,287,236
(Cost $563,241,479) ============
<FN>
* Non-income producing security
</TABLE>
FS-178
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTRINSIC VALUE FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 5.58%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96, (secured
by various U.S. Treasury Strips with maturities ranging from 2/15/99
through 8/15/00, all held at Chemical Bank)
(Cost $ 16,573,465) ........................................................... $16,573,465 $16,573,465
-----------
CONVERTIBLE BONDS - 9.25%
Chubb Capital Corp., 6.00%, 5/15/98 ........................................... 5,650,000 6,582,250
Consolidated Natural Gas Co., 7.25%, 12/15/15 ................................. 4,549,700 4,885,240
Leucadia National Corp., 2/1/03 ............................................... 7,017,500 7,333,288
Price Co., 6.75%, 3/1/01 ...................................................... 8,100,000 8,677,125
-----------
(Cost $26,029,337) ............................................................. 27,477,903
-----------
Shares
------
COMMON STOCKS - 85.17%
Aerospace-2.42%
Lockheed Martin Corp. ..................................................... 85,500 7,182,000
-----------
Apparel - 7.17%
Reebok International LTD .................................................. 98,530 3,313,071
Payless Shoesource, Inc. * ................................................ 255,505 8,112,284
Unifi Inc. ................................................................ 245,200 6,896,250
V. F. Corp. ............................................................... 49,600 2,957,400
-----------
21,279,005
-----------
Banks - 4.29%
Bancorp Hawaii, Inc. ...................................................... 188,900 6,800,400
First Union Corp. ......................................................... 64,650 3,935,569
Mercantile Bankshares Corp. ............................................... 78,800 2,009,400
-----------
12,745,369
-----------
Business Services - 4.36%
Angelica Corp. ............................................................ 120,200 2,839,725
Harland (John H.) Co. ..................................................... 108,500 2,671,813
National Service Industries, Inc. ......................................... 190,200 7,441,575
-----------
12,953,113
-----------
</TABLE>
FS-179
<PAGE>
<TABLE>
<S> <C> <C>
Chemicals - 3.24%
NCH Corp. ................................................................. 149,900 9,631,075
------------
Consumer Durables - 2.80%
Hillenbrand Industries, Inc. .............................................. 60,600 2,257,350
National Presto Industries, Inc. .......................................... 102,700 3,902,600
Thiokol Corp. ............................................................. 54,700 2,160,650
------------
8,320,600
------------
Domestic Oil - 4.12%
Atlantic Richfield Co. .................................................... 28,300 3,353,550
MAPCO, Inc. ............................................................... 157,300 8,867,787
------------
12,221,337
------------
Drugs and Medicine - 2.11%
Block Drug Inc., Class A .................................................. 77,685 3,262,770
Bristol-Myers Squibb Co. .................................................. 33,500 3,015,000
------------
6,277,770
------------
Energy and Utilities - 4.39%
American Water Works Co., Inc. ............................................ 49,860 2,006,865
Equitable Resources, Inc. ................................................. 128,200 3,621,650
Sierra Pacific Resources .................................................. 291,900 7,406,963
------------
13,035,478
------------
Energy Raw Materials - 1.33%
Ashland Coal, Inc. ........................................................ 151,500 3,939,000
------------
Food and Agriculture - 0.33%
Farmer Brothers Co. ....................................................... 7,200 993,600
------------
Insurance - 15.58%
Allmerica Property & Casualty Co. ......................................... 129,500 3,496,500
AMBAC, Inc. ............................................................... 94,600 4,931,025
Citizens Corp. ............................................................ 225,700 4,231,875
Financial Security Assurance Holdings ..................................... 184,500 5,050,687
Home Beneficial Corp. Class B ............................................. 246,900 6,481,125
Mid Ocean Ltd. ............................................................ 162,300 6,654,300
Old Republic International Corp. .......................................... 430,800 9,262,200
Safeco Corp. .............................................................. 174,200 6,162,325
------------
46,270,037
------------
</TABLE>
FS-180
<PAGE>
<TABLE>
<S> <C> <C>
International Oil - 2.25%
Amoco Corp. ............................................................... 46,100 3,336,488
Texaco, Inc. .............................................................. 39,900 3,346,613
------------
6,683,101
------------
Media - 1.27%
Gannett Co., Inc. ......................................................... 53,100 3,756,825
------------
Miscellaneous and Conglomerates - 0.50%
Guiness Plc Adr ........................................................... 40,700 1,479,807
------------
Miscellaneous Finance - 8.14%
Federal National Mortgage Association ..................................... 312,700 10,475,450
Fund American Enterprises Holdings, Inc. .................................. 128,865 10,438,065
Salomon, Inc. ............................................................. 74,300 3,269,200
------------
24,182,715
------------
Motor Vehicles - 0.98%
Ford Motor Co. ............................................................ 89,798 2,907,210
------------
Non-Durables and Entertainment - 4.69%
Hasbro, Inc. .............................................................. 152,700 5,459,025
Lubys Cafeterias, Inc. .................................................... 149,400 3,510,900
Sbarro, Inc. .............................................................. 196,700 4,942,088
------------
13,912,013
------------
Railroads and Shipping - 3.00%
Alexander & Baldwin, Inc. ................................................. 287,500 6,935,937
Illinois Central Corp. Series A ........................................... 69,150 1,962,131
------------
8,898,068
------------
Retail - 2.31%
May Department Stores Co. ................................................. 58,615 2,564,406
Stanhome, Inc. Voting ..................................................... 162,200 4,298,300
------------
6,862,706
------------
Soaps and Cosmetics - 2.20%
Unilever N.V .............................................................. 44,900 6,516,112
------------
Tires and Rubber Goods - 2.46%
Bandag, Inc. Class A ...................................................... 155,700 7,298,438
------------
</TABLE>
FS-181
<PAGE>
<TABLE>
<S> <C> <C>
Tobacco - 5.23%
Loews Corp. ............................................................... 127,600 10,064,450
Philip Morris Companies, Inc. ............................................. 52,400 5,449,600
------------
15,514,050
------------
TOTAL COMMON STOCKS ................................................................ 252,859,429
(Cost $ 213,926,379) ------------
TOTAL INVESTMENTS .................................................................. $296,910,797
(Cost $ 256,529,181) ============
<FN>
* Non-income producing security
</TABLE>
FS-182
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 0.04%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96,
(secured by various U.S. Treasury Strips with maturities ranging
from 2/15/99 through 8/15/00, all held at Chemical Bank) .................... $ 102,477 $ 102,477
(Cost $102,477) ---------- ----------
Shares
COMMON STOCKS - 99.96% ------
Banks - 3.38% .................................................................
Banc One Corp. ............................................................ 88,000 2,992,000
Norwest Corp. ............................................................. 140,000 4,882,500
----------
7,874,500
----------
Business Machines - 4.28%
Microsoft Corp. * ......................................................... 55,000 6,606,875
Silicon Graphics * ........................................................ 140,000 3,360,000
----------
9,966,875
----------
Business Services - 9.37%
Automatic Data Processing, Inc. ........................................... 116,000 4,480,500
Computer Assoc. International, Inc. ....................................... 50,000 3,562,500
Electronic Data Systems Corp. ............................................. 95,000 5,106,250
Interpublic Group of Companies, Inc. ...................................... 105,000 4,921,875
WMX Technologies, Inc. .................................................... 115,000 3,766,250
----------
21,837,375
----------
Chemicals - 3.32%
Great Lakes Chemical Corp. ................................................ 58,000 3,610,500
Praxair, Inc. ............................................................. 60,000 2,535,000
Sigma-Aldrich Corp. ....................................................... 29,900 1,599,650
----------
7,745,150
----------
Construction - 4.53%
Fluor Corp. ............................................................... 73,000 4,772,375
York International Corp. .................................................. 112,000 5,796,000
----------
10,568,375
----------
Consumer Durables - 1.84%
Newell Co. ................................................................ 140,000 4,287,500
----------
</TABLE>
FS-183
<PAGE>
<TABLE>
<S> <C> <C>
Containers - 1.93%
Crown Cork & Seal Co., Inc. * ............................................. 100,000 4,500,000
----------
Drugs and Medicine - 15.46%
Columbia/HCA Healthcare Corp. ............................................. 106,000 5,657,750
Johnson & Johnson ......................................................... 140,000 6,930,000
Medtronic, Inc. ........................................................... 67,000 3,752,000
Mylan Laboratories, Inc. .................................................. 180,000 3,105,000
Pall Corp. ................................................................ 225,000 5,428,125
Smithkline Beecham Plc Adr ................................................ 65,000 3,534,375
Stryker Corp. ............................................................. 166,000 3,776,500
United Healthcare Corp. ................................................... 76,000 3,838,000
----------
36,021,750
----------
Electronics - 8.70%
Amp, Inc. ................................................................. 170,000 6,821,250
Hewlett Packard Co. ....................................................... 50,000 4,981,250
Intel Corp. ............................................................... 85,000 6,242,188
Lucent Technology, Inc. ................................................... 58,800 2,227,050
----------
20,271,738
----------
Energy And Utilities - 2.37%
Enron Corp. ............................................................... 135,000 5,518,125
----------
Energy Raw Materials - 4.13%
Schlumberger, Ltd. ....................................................... 52,000 4,381,000
Western Atlas, Inc. * ..................................................... 90,000 5,242,500
----------
9,623,500
----------
Food and Agriculture - 1.06%
Pepsico, Inc. ............................................................ 70,000 2,476,250
----------
Insurance - 7.97%
AFLAC, Inc. ............................................................... 150,000 4,481,250
American International Group, Inc. ........................................ 56,000 5,523,000
Chubb Corp. ............................................................... 72,000 3,591,000
Unum Corp. ................................................................ 80,000 4,980,000
----------
18,575,250
----------
Non-Durables and Entertainment - 6.04%
Cracker Barrel Old Country Store, Inc. .................................... 200,000 4,850,000
</TABLE>
FS-184
<PAGE>
<TABLE>
<S> <C> <C>
CUC International, Inc. * ................................................. 73,650 2,614,575
Service Corp. International ............................................... 115,000 6,612,500
------------
14,077,075
------------
Producer Goods - 3.76%
Illinois Tool Works, Inc. ................................................. 76,000 5,139,500
Ivax Corp. ................................................................ 85,000 1,349,375
Stewart & Stevenson Services, Inc. ........................................ 100,000 2,275,000
------------
8,763,875
------------
Retail - 7.37%
Albertsons, Inc. .......................................................... 132,000 5,461,500
Home Depot, Inc. .......................................................... 135,000 7,290,000
Walgreen Co. .............................................................. 132,000 4,422,000
------------
17,173,500
------------
Telephone - 3.99%
AirTouch Communications, Inc. * ........................................... 170,000 4,802,500
MCI Communications Corp. .................................................. 175,000 4,484,375
------------
9,286,875
------------
Tobacco - 3.85%
Philip Morris Companies, Inc. ............................................. 50,000 5,200,000
UST, Inc. ................................................................. 110,000 3,767,500
------------
8,967,500
------------
Travel and Recreation - 6.61%
Carnival Corp. Class A .................................................... 180,000 5,197,500
Disney (Walt) Co. ......................................................... 85,000 5,344,375
Gaylord Entertainment Co. Class A ......................................... 172,200 4,864,650
------------
15,406,525
------------
TOTAL COMMON STOCKS ................................................................ 232,941,738
(Cost $188,001,751) ------------
TOTAL INVESTMENTS .................................................................. $233,044,215
(Cost $188,104,228) ============
<FN>
* Non-income producing security
</TABLE>
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<CAPTION>
THE WOODWARD FUNDS
BALANCED FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 7.23%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96
(secured by various U.S. Treasury Strips with maturities ranging
from 2/15/99 through 8/15/00, all held at Chemical Bank) .................. $7,908,176 $7,908,176
(Cost $7,908,176) ----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 37.22%
U.S. Treasury Securities - 19.85%
Principal Strips from U.S. Treasury Securities due:
5/15/17 ................................................................ 915,000 208,199
8/15/17 ................................................................ 3,455,000 771,467
Strips from U.S. Treasury Securities due:
5/15/98 ................................................................ 200,000 178,702
8/15/98 ................................................................ 500,000 439,330
2/15/99 ................................................................ 100,000 85,014
8/15/99 ................................................................ 500,000 410,933
2/15/11 ................................................................ 600,000 216,606
5/15/11 ................................................................ 1,083,000 383,707
2/15/12 ................................................................ 280,000 93,783
8/15/12 ................................................................ 750,000 241,995
5/15/13 ................................................................ 760,000 231,732
2/15/14 ................................................................ 2,935,000 847,364
11/15/18 ............................................................... 600,000 122,616
U.S. Treasury Bonds:
12.750%, 11/15/10 ...................................................... 1,145,000 1,607,832
10.375%, 11/15/12 ...................................................... 685,000 869,628
12.500%, 8/15/14 ....................................................... 120,000 176,738
8.750%, 5/15/17 ........................................................ 200,000 237,375
U.S. Treasury Notes:
7.250%, 11/15/96 ....................................................... 200,000 201,281
8.625%, 8/15/97 ........................................................ 850,000 874,837
8.750%, 10/15/97 ....................................................... 200,000 206,874
8.875%, 11/15/97 ....................................................... 800,000 829,872
7.875%, 1/15/98 ........................................................ 3,030,000 3,111,416
7.875%, 4/15/98 ........................................................ 3,870,000 3,984,281
6.875%, 7/31/99 ........................................................ 200,000 202,844
</TABLE>
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<S> <C> <C>
7.75%, 11/30/99 ........................................................ 2,005,000 2,087,706
6.25%, 2/15/03 ......................................................... 400,000 392,875
7.25%, 5/15/04 ......................................................... 2,600,000 2,692,625
----------
(Cost $21,544,665) 21,707,632
----------
Agency Obligations - 17.37%
Federal Home Loan Mortgage Corp. Participation Ctf
#555238, 12.000%, 7/01/19 .............................................. 161,307 180,605
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 22 Class C, 9.500%, 4/15/20 ..................................... 138,110 150,738
Series 11 Class D, 9.500%,7/15/19 ...................................... 200,000 217,246
Series 84 Class F, 9.200%, 10/15/20 .................................... 300,000 318,795
Series 99 Class Z, 9.500%, 1/15/21 ..................................... 95,781 102,064
Series 109 Class I, 9.100%, 1/15/21 .................................... 500,000 534,675
Series 1051 Class D, 7.000%, 11/15/19 .................................. 148,835 149,463
Series 1065 Class J, 9.000%, 4/15/21 ................................... 100,000 105,903
Series 1084 Class F, AR, 5/15/21 ....................................... 250,000 254,822
Series 1084 Class S, IF, 5/15/21 ....................................... 175,000 201,250
Series 1144 Class KB, 8.500%, 9/15/21 .................................. 250,000 258,912
Series 1295 Class JB, 4.500%, 3/15/07 .................................. 300,000 256,458
Series 1297 Class H, 7.500%, 1/15/20 ................................... 135,703 131,982
Series 1360 Class PK, 10.000%, 12/15/20 ................................ 150,000 168,105
Series 1370 Class F, 6.750%, 3/15/19 ................................... 260,000 255,094
Series 1378 Class H, 10.000%, 1/15/21 .................................. 100,000 111,723
Series 1378 Class JZ, 7.500%, 11/15/21 ................................. 657,702 605,917
Series 1465 Class SA, IF, 2/15/08 ...................................... 1,372,170 65,178
Series 1483 Class E, 6.500%, 2/15/20 ................................... 367,500 352,344
Series 1489 Class L, 5.500%, 4/15/08 ................................... 194,563 184,642
Series 1491 Class F, 5.000%, 8/15/19 ................................... 400,000 364,396
Series 1508 Class KB, IO, IF, 5/15/23 .................................. 646,884 40,831
Series 1531 Class K, 6.000%, 4/15/08 ................................... 346,816 324,293
Series 1554 Class KA, PO, 8/15/08 ...................................... 79,189 51,473
Series 1575 Class FB, 7.000%, 8/15/08 .................................. 298,345 296,108
Series 1575 Class SB, 3.000%, 8/15/08 .................................. 99,448 57,680
Series 1583 Class NS, IF, 9/15/23 ...................................... 115,888 71,271
Series 1585 Class NB, IF, 9/15/23 ...................................... 144,996 99,141
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<S> <C> <C>
Series 1586 Class A, 6.000%, 9/15/08 ................................... 167,614 155,341
Series 1595 Class S, IO, IF, 10/15/13 .................................. 1,457,418 68,309
Series 1602 Class O, 6.000%, 10/15/23 .................................. 250,000 220,470
Series 1604 Class SE, IF, 11/15/08 ..................................... 187,033 135,131
Series 1606 Class LD, IF, 5/15/08 ...................................... 393,649 221,671
Series 1681 Class K, 7.000%, 8/15/23 ................................... 435,915 412,332
Series 1686 Class A, 5.000%, 2/15/24 ................................... 92,449 74,414
Series 1686 Class SL, IF, 2/15/24 ...................................... 231,122 168,142
Series 1689 Class SD, IF, 10/15/23 ..................................... 100,000 75,750
Series 1706 Class LA, 7.000%, 3/15/24 .................................. 398,680 385,052
Series 1757-A, Class A, 9.500%, 5/15/23 ............................... 160,957 169,809
Series 1796-A, Class S, IF, 2/15/09 .................................... 100,000 66,000
Series 1825 Class C, 5.799%, 12/15/23 .................................. 400,000 341,124
Series 1854 Class C, 4/15/08 ........................................... 400,000 224,372
Federal Housing Administration Merrill Lynch Project
Pool 170 Pass thru Ctf., 7.430%, 8/1/20 ................................ 225,566 226,242
Federal Housing Administration
Project #07335307, 7.430%, 1/1/22 ...................................... 226,813 227,040
Federal Housing Administration
Greystone 1996-2 Pool, 7.430%, 11/1/22 ................................. 249,559 249,808
Federal National Mortgage Assn. Pass Thru Securities
Pool #116612, AR, 3/1/19 ............................................... 110,908 114,268
Federal National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
1989 Class 34-D, 9.850%, 7/25/13 ....................................... 46,222 46,574
1989 Class 69-G, 7.600%, 10/25/19 ...................................... 800,000 777,247
1989 Class 78-H, 9.400%, 11/25/19 ...................................... 250,000 271,317
1990 Class 1-D, 8.800%, 1/25/20 ........................................ 150,000 156,265
1990 Class 120-H, 9.000%, 10/25/20 ..................................... 500,000 534,105
1990 Class 140-K, HB, 652.1454%, 12/25/20 .............................. 1,463 41,266
1990 Class 143-J, 8.750%, 12/25/20 ..................................... 125,000 130,019
1991 Class 144-PZ, 8.500%, 6/25/21 ..................................... 222,717 230,270
1991 Class 161-H, 7.500%, 2/25/21 ...................................... 154,674 156,394
1992-G Class 15-Z, 7.000%, 1/25/22 ..................................... 202,976 176,897
1992-G Class 42-Z, 7.000%, 7/25/22 ..................................... 657,193 592,385
1992-G Class 59-C, 6.000%, 12/25/21 .................................... 600,000 552,504
1992 Class 204-B, 6.000%, 10/25/20 ..................................... 250,000 226,275
</TABLE>
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<S> <C> <C>
1993 Class 13-G, 6.000%, 6/25/20 ....................................... 200,000 186,668
1993 Class 15-K, 7.000%, 02/25/08 ...................................... 190,146 181,448
1993 Class 19-G, 5.000%, 5/25/19 ....................................... 250,000 227,735
1993-G Class 19-K, 6.500%, 6/25/19 ..................................... 254,799 238,683
1993 Class 32-K, 6.000%, 3/25/23 ....................................... 340,598 290,274
1993 Class 38-S, 5.255%, 11/25/22 ...................................... 969,702 29,091
1993 Class 44-S, IO, IF, 4/25/23 ....................................... 429,613 29,936
1993 Class 58-J, 5.500%, 4/25/23 ....................................... 150,260 134,342
1993 Class 94-K, 6.750%, 5/25/23 ....................................... 123,415 115,459
1993 Class 139-SG, IF, 8/25/23 ......................................... 242,431 126,670
1993 Class 155-LA, 6.500%, 5/25/23 ..................................... 347,178 336,099
1993 Class 155-SB, IO, IF, 9/25/23 ..................................... 820,046 52,147
1993 Class 190-SE, IF, 10/25/08 ........................................ 49,847 34,503
1993 Class 207-SC, IF, 11/25/23 ........................................ 286,295 165,871
1993 Class 209-KB, 5.659%, 8/25/08 ..................................... 373,990 338,868
1993 Class 214-L, 6.000%, 12/25/08 ..................................... 157,499 148,396
1993 Class 220-SD, IF, 11/25/13 ........................................ 49,707 28,954
1993 Class 223-FB, AR, 12/25/23 ........................................ 165,265 114,446
1993 Class 223-SB, IF, 12/25/23 ........................................ 371,360 358,363
1994-G Class 13-ZB, 7.000%, 11/17/24 ................................... 111,685 96,304
1994 Class 19-C, 5.000%, 1/25/24 ....................................... 341,483 297,896
1994 Class 30-LA, 6.500%, 2/25/09 ...................................... 82,749 79,531
1994 Class 36-SE, IF, 11/25/23 ......................................... 136,624 89,489
1994 Class 39-F, IF, 3/25/24 ........................................... 225,925 220,981
1994 Class 39-S, IF, 3/25/24 ........................................... 86,894 68,076
1994 Class 53-CA, PO, 11/25/23 ......................................... 460,000 316,250
1994 Class 82-SA, IF, 5/25/23 .......................................... 1,777,652 53,330
1995 Class 13-B, 6.500%, 3/25/09 ....................................... 563,918 532,073
1996 Class 20-L, 2/25/08 ............................................... 165,000 88,016
Government National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
1994 Class 4-SA, IO, IF, 10/16/22 ...................................... 600,000 34,770
Government National Mortgage Assn. Pass Thru:
Pool #297628, 8.000%, 9/15/22 .......................................... 178,228 180,876
Pool #313110, 7.500%, 11/15/22 ......................................... 468,988 466,033
----------
(Cost $18,085,135) 18,999,470
----------
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<TABLE>
<S> <C> <C>
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS ....................................... 40,707,103
(Cost $39,629,800) ----------
CORPORATE BONDS AND NOTES - 3.90%
Finance - 3.26%
Associates Corp. of North America:
9.125%, 4/1/00 ......................................................... 85,000 91,600
8.150%, 8/1/09 ......................................................... 200,000 209,804
Case Equipment Loan Trust Asset Backed Ctf ................................
Series 1996-A, Class A2, 5.500%, 2/15/03 ............................... 430,000 426,108
Ford Credit Grantor Trust Asset Backed Ctf ................................
Series 1994-A, Class A, 6.350%, 5/15/99 ................................ 192,431 193,391
Green Tree Financial Corp. Asset Backed Ctf ...............................
Series 1996-A, Class A, 5.700%, 2/15/26 ................................ 120,249 119,996
Merrill Lynch Home Equity Loan Asset Backed Ctf ...........................
Series 1992-1, Class A, VR, 7/15/22 .................................... 167,849 168,213
Merrill Lynch Trust 43 E CMO, Series 43-E,
6.500%, 8/27/15 ........................................................ 200,000 189,892
Merrill Lynch MBS Project Pass Thru Ctf ...................................
Series 144-S, 7.43 %, 7/25/24 .......................................... 365,410 350,794
Nationsbank Auto Grantor Trust Asset Backed Ctf ...........................
Series 1995-A, Class A, 5.850%, 6/15/02 ................................ 74,746 74,640
Navistar Financial Corp. Owner Trust Asset Backed Ctf .....................
Series 1995-A, Class A2, 6.550%, 11/20/01 .............................. 280,034 284,420
Onyx Acceptance Grantor Trust Auto Loan Pass Thru Ctf .....................
Series 1996-1, Class A, 5.400%, 5/15/01 ................................ 253,094 250,320
Superior Wholesale Inventory Trust Asset Backed Ctf .......................
Series 1996-A, Class A, VR, 3/15/01 .................................... 200,000 200,000
World Omni Automobile Trust Asset Backed Ctf ..............................
Series 1995-A, Class A, 6.050%, 11/25/01 ............................... 1,000,000 1,001,629
----------
(Cost $4,280,428) 3,560,805
----------
Industrial - 0.32%
Boeing Co., 7.950%, 8/15/24 ............................................... 110,000 116,529
Proctor & Gamble Co., 8.000%, 10/26/96 .................................... 220,000 233,974
----------
(Cost $360,167) 350,503
----------
Public Utility - 0.32%
New England Telephone & Telegraph Co., 7.875%, 11/15/29 ................... 250,000 264,600
</TABLE>
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<S> <C> <C>
Nippon Telegraph & Telephone Corp., 9.500%, 7/27/98 ....................... 80,000 84,500
----------
(Cost $349,736) 349,100
----------
TOTAL CORPORATE BONDS AND NOTES .................................................... 4,260,408
(Cost $4,990,331) ----------
CONVERTIBLE BONDS - 0.78%
Chubb Capital Corp., 6.000%, 5/15/98 .......................................... 176,000 205,040
Consolidated Natural Gas Co., 7.250%, 12/15/15 ................................ 141,800 152,258
Leucadia National Corp., 5.250%, 2/1/03 ....................................... 215,900 225,616
Price Co., 6.750%, 3/1/01 ..................................................... 251,000 268,884
----------
(Cost $820,678) 851,797
----------
Shares
------
COMMON STOCKS - 50.87%
Aerospace - 0.94%
Boeing Co. ................................................................ 9,500 827,688
Lockheed Martin Corp. ..................................................... 2,420 203,280
----------
1,030,968
----------
Air Transport - 0.10%
Air Express International Corp. ........................................... 3,725 105,231
----------
Apparel - 1.34%
Nine West Group, Inc. * ................................................... 2,850 145,706
Payless Shoesource, Inc. * ................................................ 8,055 255,746
Reebok International Ltd. ................................................. 3,110 104,574
Russell Corp. ............................................................. 23,900 660,238
Unifi Inc. ................................................................ 7,610 214,031
V.F. Corp. ............................................................... 1,470 87,649
----------
1,467,943
----------
Banks - 2.96%
Banc One Corp. ............................................................ 3,410 115,940
Bancorp Hawaii, Inc. ...................................................... 5,750 207,000
Barnett Banks, Inc. ....................................................... 10,800 658,800
Charter One Financial Inc. ................................................ 6,200 216,225
First Tennessee National Corp. ............................................ 4,800 147,000
First Union Corp. ......................................................... 2,120 129,055
</TABLE>
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<TABLE>
<S> <C> <C>
Fleet Financial Group, Inc. ............................................... 20,800 904,800
Mercantile Bankshares Co. ................................................. 2,400 61,200
Norwest Corp. ............................................................. 17,900 624,263
TCF Financial Corp. ....................................................... 5,200 172,900
----------
3,237,183
----------
Business Machines - 2.17%
Autodesk, Inc. ............................................................ 11,900 355,513
Compaq Computer Corp. * ................................................... 5,900 290,575
Diebold, Inc. ............................................................. 3,569 172,204
Electronic Data System Corp. .............................................. 19,800 1,064,250
InterVoice, Inc. * ........................................................ 1,600 31,800
Microsoft Corp. * ......................................................... 1,600 192,200
Silicon Graphics * ........................................................ 6,000 144,000
Xilinx, Inc. * ............................................................ 3,750 119,063
----------
2,369,604
----------
Business Services - 3.84%
American Management System, Inc. * ........................................ 5,150 150,638
Angelica Corp. ............................................................ 3,520 83,160
Automatic Data Processing, Inc. ........................................... 3,600 139,050
CDI Corp. * ............................................................... 3,800 128,250
Computer Association International, Inc. .................................. 1,500 106,875
Deluxe Corp. .............................................................. 19,300 685,150
DST Systems Inc. * ........................................................ 1,500 48,000
Dun & Bradstreet Corp. .................................................... 12,100 756,250
G & K Services, Inc. Class A .............................................. 3,300 94,050
Harland (John H.) Co. ..................................................... 3,000 73,875
Interpublic Group of Companies, Inc. ...................................... 10,800 506,250
National Service Industries, Inc. ......................................... 5,280 206,580
Omnicom Group, Inc. ....................................................... 3,080 143,220
SunGard Data Systems, Inc. * .............................................. 5,200 208,650
WMX Technologies, Inc. .................................................... 23,400 766,350
Zilog, Inc. * ............................................................. 4,200 100,800
----------
4,197,148
----------
Chemicals - 2.12%
Dow Chemical Co. .......................................................... 5,300 402,800
</TABLE>
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<S> <C> <C>
Great Lakes Chemical Corp. ................................................ 10,400 647,400
NCH Corp. ................................................................. 4,700 301,975
RPM, Inc. ................................................................. 4,965 77,578
Sigma-Aldrich Corp. ....................................................... 16,500 882,750
----------
2,312,503
----------
Construction - 2.08%
Crane Co. ................................................................. 5,904 242,064
Fluor Corp. ............................................................... 3,100 202,663
Masco Corp. ............................................................... 20,800 629,200
York International Corp. .................................................. 23,200 1,200,600
----------
2,274,527
----------
Consumer Durables - 1.29%
Durakon Industries, Inc. * ................................................ 4,008 58,617
Hillenbrand Industries, Inc. .............................................. 1,860 69,285
Invacare Corp. ............................................................ 1,500 35,250
Leggett & Platt, Inc. ..................................................... 5,640 156,510
National Presto Industries, Inc. .......................................... 3,220 122,360
Newell Co. ................................................................ 5,300 162,313
Rubbermaid, Inc. .......................................................... 27,200 741,200
Thiokol Corp. ............................................................. 1,720 67,940
----------
1,413,475
----------
Containers - 0.85%
AptarGroup, Inc. .......................................................... 3,900 117,975
Crown Cork & Seal Co., Inc. * ............................................. 18,100 814,500
----------
932,475
----------
Domestic Oil - 0.34%
Atlantic Richfield Co. .................................................... 850 100,725
MAPCO, Inc. ............................................................... 4,860 273,983
----------
374,708
----------
Drugs and Medicine - 4.09%
Abbott Laboratories Corp. ................................................. 14,300 622,050
Block Drug Inc. Class A ................................................... 2,405 101,010
Bristol-Myers Squibb Co. .................................................. 9,920 892,800
Columbia/HCA Healthcare Corp. ............................................. 3,500 186,813
Health Care & Retirement Corp. * .......................................... 3,691 87,661
</TABLE>
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<TABLE>
<S> <C> <C>
Johnson & Johnson ......................................................... 3,400 168,300
Medtronic, Inc. ........................................................... 2,400 134,400
Mid Ocean Ltd. ............................................................ 5,020 205,820
Mylan Laboratories, Inc. .................................................. 7,000 120,750
Pall Corp. ................................................................ 5,800 139,925
Scherer (R.P.) Corp. * .................................................... 1,086 49,277
Schering-Plough Corp. ..................................................... 16,400 1,029,100
Smithkline Beecham ........................................................ 3,000 163,125
Stryker Corp. ............................................................. 4,000 91,000
Sybron International Corp. * .............................................. 6,500 162,500
United HealthCare Corp. ................................................... 3,400 171,700
Vivra, Inc. * ............................................................. 4,300 141,363
----------
4,467,594
----------
Electronics - 2.01%
AMP, Inc. ................................................................. 2,500 100,313
Belden, Inc. .............................................................. 7,800 234,000
Dynatech Corp. * .......................................................... 5,200 169,000
Hewlett Packard Co. ....................................................... 4,900 488,163
Intel Corp. ............................................................... 6,500 477,344
Lucent Technology, Inc. ................................................... 6,000 227,250
Microchip Technology, Inc. ................................................ 5,500 136,125
Molex, Inc. Class A Non-Voting ............................................ 3,150 92,531
Motorola, Inc. ............................................................ 4,400 276,650
----------
2,201,375
----------
Energy and Utilities - 2.51%
American Water Works Co., Inc. ............................................ 1,510 60,778
Enron Corp. ............................................................... 18,500 756,188
Equitable Resources, Inc. ................................................. 3,910 110,458
MCN Corp. ................................................................. 35,300 860,438
Pinnacle West Capital Co. ................................................. 23,900 725,963
Sierra Pacific Resources .................................................. 9,260 234,973
----------
2,748,795
----------
Energy Raw Materials - 1.76%
Apache Corp. .............................................................. 6,476 212,899
Ashland Coal, Inc. ........................................................ 4,920 127,920
</TABLE>
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<S> <C> <C>
Noble Affiliates, Inc. .................................................... 4,900 184,975
Schlumberger Ltd. ......................................................... 13,500 1,137,375
Southwestern Energy Co. ................................................... 8,476 119,724
Western Atlas, Inc. * ..................................................... 2,500 145,625
----------
1,928,517
----------
Food and Agriculture - 2.03%
ConAgra, Inc. ............................................................. 11,300 512,738
CPC International, Inc. ................................................... 8,400 604,800
Farmer Brothers Co. ....................................................... 310 42,780
Pepsi, Inc. ............................................................... 5,000 176,875
Sysco Corp. ............................................................... 24,400 835,700
Universal Foods Corp. ..................................................... 1,400 51,625
----------
2,224,518
----------
Insurance - 3.27%
AFLAC, Inc. ............................................................... 5,000 149,375
Allmerica Property & Casualty Co. ......................................... 4,130 111,510
AMBAC, Inc. ............................................................... 3,050 158,982
American International Group, Inc. ........................................ 6,100 601,613
Capital Re Corp. .......................................................... 4,000 147,000
Chubb Corp. ............................................................... 22,600 1,127,175
Citizens Corp. ............................................................ 6,340 118,875
Financial Security Assurance Holdings ..................................... 5,740 157,133
Home Beneficial Corp. Class B ............................................. 7,560 198,450
Old Republic International Corp. .......................................... 13,345 286,918
Safeco Corp. .............................................................. 5,580 197,393
Transatlantic Holdings, Inc. .............................................. 2,354 165,074
Unum Corp. ................................................................ 2,500 155,625
----------
3,575,121
----------
International Oil - 0.66%
Amoco Corp. ............................................................... 1,370 99,154
Royal Dutch Petroleum Co., N.Y. Registry .................................. 3,400 522,750
Texaco, Inc. .............................................................. 1,210 101,489
----------
723,393
----------
Liquor - 0.74%
Anheuser Busch Companies, Inc. ............................................ 10,800 810,000
----------
</TABLE>
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<TABLE>
<S> <C> <C>
Media - 1.75%
Banta Corp. ............................................................... 6,035 152,384
Gannett Co., Inc. ......................................................... 12,480 882,960
Washington Post Co. Class B ............................................... 2,700 874,800
----------
1,910,144
----------
Miscellaneous and Conglomerates - 1.60%
ABC Rail Products Corp. * ................................................. 3,200 69,200
Culligan Water Technologies, Inc. * ....................................... 2,700 102,600
DENTSPLY International, Inc. .............................................. 3,500 148,750
Duracell International, Inc. .............................................. 18,300 789,188
Greenfield Industries, Inc. ............................................... 6,200 204,600
Guinness PLC ADR .......................................................... 1,100 39,995
Health Management Associates, Inc. Class A * .............................. 4,493 90,984
Littlefuse, Inc. * ........................................................ 3,600 135,000
Wolverine Tube, Inc.* ..................................................... 4,850 169,750
----------
1,750,066
----------
Miscellaneous Finance - 1.90%
CMAC Investment Corp. ..................................................... 2,900 166,750
Edwards (A.G.) Inc. ....................................................... 6,255 169,667
Everest Reinsurance Holdings, Inc. ........................................ 7,200 186,300
Executive Risk, Inc. ...................................................... 4,700 179,775
Federal National Mortgage Association ..................................... 9,580 320,930
FINOVA Group, Inc. ........................................................ 4,635 225,956
Fund American Enterprises Holdings, Inc. * ................................ 4,090 331,290
Idex Corp. * .............................................................. 4,372 166,117
PMI Group, Inc. ........................................................... 3,400 144,500
Salomon, Inc. ............................................................. 2,270 99,880
Scotsman Industries, Inc. ................................................. 4,400 88,550
----------
2,079,715
----------
Motor Vehicles - 0.96%
Borg Warner Automotive, Inc. .............................................. 2,000 79,000
Excel Industries, Inc. .................................................... 2,800 35,000
Ford Motor Co. ............................................................ 2,850 92,269
General Motors Corp. ...................................................... 11,000 576,125
Harley-Davidson, Inc. ..................................................... 3,226 132,669
</TABLE>
FS-196
<PAGE>
<TABLE>
<S> <C> <C>
Myers Industries, Inc. .................................................... 4,720 87,910
Superior Industries International ......................................... 1,838 48,707
----------
1,051,680
----------
Non-Durables and Entertainment - 1.32%
Cracker Barrel Old Country Store, Inc. .................................... 26,500 642,625
CUC International, Inc. * ................................................. 2,250 79,875
Hasbro, Inc. .............................................................. 4,810 171,958
Lancaster Colony Corp. .................................................... 2,864 107,042
Luby's Cafeterias, Inc. ................................................... 4,630 108,805
Sbarro, Inc. .............................................................. 6,170 155,021
Service Corp. International ............................................... 3,000 172,500
----------
1,437,826
----------
Non-Ferrous Metals - 0.09%
DT Industries, Inc. ....................................................... 5,100 93,075
----------
Producer Goods - 1.83%
General Electric Co. ...................................................... 6,400 553,600
Hubbell, Inc. Class B ..................................................... 2,351 155,754
Illinois Tool Works, Inc. ................................................. 2,100 142,013
Ivax Corp. ................................................................ 4,500 71,438
Juno Lighting, Inc. ....................................................... 8,339 141,763
Stewart & Stevenson Services, Inc. ........................................ 29,400 668,850
Teleflex, Inc. ............................................................ 2,790 133,223
Trimas Corp. .............................................................. 5,735 134,056
----------
2,000,695
----------
Railroads and Shipping - 0.24%
Alexander & Baldwin, Inc. ................................................. 8,250 199,031
Illinois Central Corp. .................................................... 2,140 60,723
----------
259,754
----------
Retail - 1.39%
Albertsons, Inc. .......................................................... 3,200 132,400
Cato Corp. Class A ........................................................ 13,618 81,708
Home Depot, Inc. .......................................................... 3,500 189,000
Kohls Corp. * ............................................................. 1,764 64,607
May Department Stores Co. ................................................. 1,775 77,657
</TABLE>
FS-197
<PAGE>
<TABLE>
<S> <C> <C>
Proffitts, Inc. * ......................................................... 4,700 166,850
Stanhome, Inc. Voting ..................................................... 5,140 136,210
Talbots, Inc. ............................................................. 2,949 95,474
Toys R Us *................................................................ 15,400 438,900
Walgreen Co. .............................................................. 4,200 140,700
------------
1,523,505
------------
Soaps and Cosmetics - 0.19%
Unilever N. V ............................................................. 1,410 204,626
------------
Telephone - 2.65%
AT&T Corp. ................................................................ 15,900 985,800
AirTouch Communications, Inc. * ........................................... 5,000 141,250
Century Telephone Enterprises, Inc. ....................................... 20,700 659,813
MCI Communications Corp. .................................................. 43,200 1,107,000
------------
2,893,863
------------
Tires and Rubber Goods - 0.20%
Bandag Inc. Class A ....................................................... 4,700 220,313
------------
Tobacco - 0.70%
Loews Corp. ............................................................... 4,030 317,866
Philip Morris Companies, Inc. ............................................. 3,190 331,760
UST, Inc. ................................................................. 3,500 119,875
------------
769,501
------------
Travel and Recreation - 0.50%
Callaway Golf Co. ......................................................... 4,200 139,650
Carnival Corp. Class A .................................................... 5,000 144,375
Disney (Walt) Co. ......................................................... 2,100 132,038
Gaylord Entertainment Co. Class A ......................................... 4,515 127,549
------------
543,611
------------
Trucking and Freight - 0.45%
Ryder System, Inc. ........................................................ 17,400 489,375
------------
TOTAL COMMON STOCKS ................................................................ 55,622,822
(Cost $47,343,809) ------------
TOTAL INVESTMENTS .................................................................. $109,350,305
(Cost $100,692,794) ============
<FN>
* Non-income producing security.
</TABLE>
FS-198
<PAGE>
THE WOODWARD BALANCED FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996
Notes to Portfolio of Investments
The Fund invests in securities whose value is derived from an underlying pool
of mortgages or consumer loans. Some of these securities are collateralized
mortgage obligations (CMOs). CMOs are debt securities issued by U.S.
government agencies or by financial institutions and other mortgage lenders
which are collateralized by a pool of mortgages held under an indenture.
Adjustable Rate (AR)
Inverse Floaters (IF) represent securities that pay interest at a rate that
increases (decreases) with a decline (increase) in a specified index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more volatile
and there is a greater risk that the initial investment will not be fully
recouped. These securities are subject to accelerated principal paydowns as a
result of prepayments or refinancing of the underlying pool of mortgage
instruments. As a result, interest income may be reduced considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks as
those associated with IO securities. Unlike IO's the owner also has a right to
receive a very small portion of principal. The high interest rate results from
taking interest payments from other classes in the REMIC Trust and allocating
them to the small principal of the HB class.
Principal Only (PO) represents the right to receive the principal portion only
on an underlying pool of mortgage loans. The market value of these securities
is extremely volatile in response to changes in market interest rates. As
prepayments on the underlying mortgages of these securities increase, the yield
on these securities increases.
FS-199
<PAGE>
THE WOODWARD FUNDS
EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business
trust on April 21, 1987, and registered under the Investment Company Act of
1940, as amended, as an open-end investment company. As of June 30, 1996,
Woodward consisted of seventeen separate series. The five Equity Funds (Equity
Funds) included in these financial statements are described below.
Woodward Growth/Value Fund
Woodward Opportunity Fund
Woodward Intrinsic Value Fund
Woodward Capital Growth Fund
Woodward Balanced Fund
The Growth/Value, Opportunity and Intrinsic Value Funds commenced
operations on June 1, 1991, the Balanced Fund commenced operations on July 2,
1994, and the Capital Growth Fund commenced operations on July 2, 1994.
The remaining two Woodward Equity Funds, the Equity Index and
International Equity Funds, are each included on separate stand alone
financial statements.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed
by the Equity Funds in preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles for investment
companies. Following generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments
The Equity Funds value investment securities at market value which is
determined by a pricing service based upon quoted market prices or dealer
quotes. Securities for which market prices or dealer quotes are not readily
available are valued by the investment advisor, NBD Bank (NBD) in accordance
with procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day
after trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of
FS-200
<PAGE>
Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is required to equal or
exceed 102% of the funds advanced under the repurchase agreement including
accrued interest; 2) collateral is marked to market daily by NBD to assure its
value remains at least equal to 102% of the repurchase agreement amount; and
3) funds are not disbursed by Woodward or its agent unless collateral is
presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount on debt instruments. Bond
premiums and discounts are amortized/accreted as required by the Internal
Revenue Code. Premiums and discounts on mortgage-backed securities are
amortized/accreted using the effective interest rate method. As prepayments on
the underlying mortgages increase or decrease the expected life, the yield is
adjusted to amortize/accrete the security to its new expected life. Dividends
are recorded on the ex-dividend date.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
Net realized gains differ for financial statement and tax purposes
primarily because of the recognition of wash sale transactions and
post-October 31 capital losses. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed may differ
from the year that the income or realized gains were recorded by the Fund.
Certain book-to-tax timing differences for the funds are reflected as excess
distributions in the Statements of Changes in Net Assets. These distributions
do not constitute a tax return of capital.
Shareholder Dividends
Dividends from net investment income are declared and paid quarterly by
the Equity Funds. Net realized capital gains are distributed annually.
Distributions from net investment income and net realized gains are made
during each year to avoid the 4% excise tax imposed on regulated investment
companies by the Internal Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the
five year period beginning with the commencement of operations of each Series.
FS-201
<PAGE>
Expenses
Expenses are charged daily as a percentage of the Fund's assets.
Woodward monitors the rate at which expenses are charged to ensure that a
proper amount of expense is charged to income each year. This percentage is
subject to revision if there is a change in the estimate of the future net
assets of Woodward or a change in expectations as to the level of actual
expenses.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of005% of the Equity Funds' average net assets and Essex is
entitled to receive a fee at the annual rate of .10% of the aggregate average
net assets of Woodward's investment portfolios attributable to investments by
clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For
its advisory services to Woodward, NBD is entitled to a fee, computed daily
and payable monthly. Under the Advisory Agreement, NBD also provides Woodward
with certain administrative services, such as maintaining Woodward's general
ledger and assisting in the preparation of various regulatory reports. NBD
receives no additional compensation for such services.
NBD, FoM, and Essex have agreed that they may waive their fees in whole
or in part; and, if in part, may specify the particular fund to which such
waiver relates as may be required to satisfy any expense limitation imposed by
state securities laws or other applicable laws. At present, no restrictive
expense limitation is imposed on Woodward. Restrictive limitations could be
imposed as a result of changes in current state laws and regulations in those
states where Woodward has qualified its shares, or by a decision of the
Trustees to qualify the shares in other states having restrictive expense
limitations. For the period ended June 30, 1996, NBD reimbursed the Balanced
Fund for certain expenses in the amount of $18,406.
NBD is also compensated for its services as Woodward's Custodian,
Transfer Agent and Dividend Disbursing Agent, and is reimbursed for certain
out of pocket expenses incurred on behalf of Woodward.
FS-202
<PAGE>
On March 10, 1994, Woodward adopted The Woodward Funds Deferred
Compensation Plan (the "Plan"), an unfunded, nonqualified deferred
compensation plan. The Plan allows an individual trustee to elect to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
FS-203
<PAGE>
(4) Investment Securities Transactions
Information with respect to investment securities and security
transactions, excluding short-term securities is, as follows:
<TABLE>
<CAPTION>
GROWTH/VALUE OPPORTUNITY INTRINSIC VALUE
FUND FUND FUND
------------ ----------- ---------------
<S> <C> <C> <C>
Gross Unrealized Gains .... $ 156,598,423 $ 157,606,131 $ 42,073,344
Gross Unrealized Losses ... (8,357,386) (18,560,374) (1,691,728)
------------- ------------- -------------
$ 148,241,037 $ 139,045,757 $ 40,381,616
============= ============= =============
Federal Income Tax Cost ... $ 580,751,376 $ 564,200,829 $ 256,529,181
Purchases ................. $ 143,941,721 $ 156,401,931 $ 74,296,032
Sales, at value ........... $ 186,248,404 $ 172,105,711 $ 59,413,132
<CAPTION>
CAPITAL GROWTH BALANCED
FUND FUND
-------------- --------
<S> <C> <C>
Gross Unrealized Gains .... $ 48,035,439 $ 9,138,136
Gross Unrealized Losses ... (3,095,452) (480,625)
------------- -------------
$ 44,939,987 $ 8,657,511
============= =============
Federal Income Tax Cost ... $ 188,104,228 $ 100,824,143
Purchases ................. $ 54,943,862 $ 37,690,280
Sales, at value ........... $ 28,529,451 $ 21,764,985
</TABLE>
FS-204
<PAGE>
(5) Expenses
Following is a summary of total expense rates charged, advisory fee
rates payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the period ended June 30, 1996. The rates
shown are stated as a percentage of each fund's average net assets.
<TABLE>
<CAPTION>
GROWTH/VALUE OPPORTUNITY INTRINSIC VALUE
Effective Date FUND FUND FUND
- -------------- ------------ ----------- ---------------
<S> <C> <C> <C>
Expense Rates:
January 1 ...................... 0.82% 0.86% 0.88%
March 18 ....................... 0.80% 0.80% 0.85%
May 21 ......................... 0.80% 0.80% 0.83%
NBD Advisory Fee:
January 1 ...................... 0.75% 0.75% 0.75%
Amounts Paid:
Advisory Fee to NBD ............ $ 2,822,334 $ 2,540,002 $ 1,008,003
Distribution Fees to FoM & Essex $ 41,309 $ 47,710 $ 14,661
Other Fees & Out of Pocket
Expenses to NBD ............. $ 95,215 $ 125,832 $ 42,653
<CAPTION>
CAPITAL GROWTH BALANCED
Effective Date FUND FUND
- -------------- -------------- --------
<S> <C> <C>
Expense Rates:
January 1 ..................... 0.87% 0.93%
March 18 ....................... 0.88% 0.95%
May 21 ........................ 0.88% 0.95%
NBD Advisory Fee:
January 1 ...................... 0.75% 0.75%
Amounts Paid:
Advisory Fee to NBD ............ $ 817,701 $ 390,877
Distribution Fees to FoM & Essex $ 7,692 $ 7,342
Other Fees & Out of Pocket
Expenses to NBD ............. $ 27,617 $ 59,301
Expense
Reimbursements by NBD .......... (18,406)
</TABLE>
(6) Subsequent Event
On August 23, 1996, the Woodward Capital Growth Fund and Woodward
Balanced Fund merged with the Prairie Growth Fund and Prairie Managed
Assets Fund, respectively. The transaction was effected as a tax-free
reorganization under the Internal Revenue Code, so that none of the Funds'
shareholders recognized taxable gains or losses as a result of the
reorganization.
FS-205
<PAGE>
THE WOODWARD FUNDS
EQUITY FUNDS
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the Equity Funds'
net assets values have changed during the periods presented. Additional
quantitative measures expressed in ratio form analyze important relationships
between certain items presented in the financial statements. These financial
highlights have been derived from the financial statements of the Equity Funds
and other information for the periods presented.
<TABLE>
<CAPTION>
Growth/Value Fund
------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $ 13.16 $ 10.67 $ 11.16 $ 10.51 $ 9.86 $ 10.00
Income from investment
operations:
Net investment income ..... 0.09 0.21 0.23 0.20 0.22 0.14
Net realized and
unrealized gains
(losses) on investments .. 1.04 2.76 (0.17) 1.24 0.75 (0.14)
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .................. 1.13 2.97 0.06 1.44 0.97 --
------------ ------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income (0.08) (0.22) (0.21) (0.20) (0.22) (0.14)
From realized gains ....... -- (0.26) (0.30) (0.59) (0.10) --
In excess of realized gains -- -- (0.01) -- -- --
Tax return of capital ..... -- -- (0.03) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ........... (0.08) (0.48) (0.55) (0.79) (0.32) (0.14)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period ...................... $ 14.21 $ 13.16 $ 10.67 $ 11.16 $ 10.51 $ 9.86
============ ============ ============ ============ ============ ============
Total Return (b) .............. 17.22%(a) 28.04% 0.55% 13.79% 9.87% 0.17%(a)
Ratios/Supplemental Data
Net assets, end of period ..... $768,367,008 $737,167,067 $571,370,711 $429,635,045 $287,344,809 $238,085,630
Ratio of expenses to
average net assets ......... 0.80% 0.84% 0.84% 0.83% 0.83% 0.85%(a)
Ratio of net investment
income to average
net assets .................. 1.22% 1.73% 2.07% 1.84% 2.20%(a) 2.56%(a)
Portfolio turnover rate ....... 19.58% 26.80% 28.04% 42.31% 16.28% 0.94%
Average commission rate........ $ 0.04 $ 0.04
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-206
<PAGE>
<TABLE>
<CAPTION>
Opportunity Fund
-------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ......... $ 15.15 $ 13.34 $ 14.49 $ 12.37 $ 10.40 $ 10.00
Income from investment
operations:
Net investment income ..... 0.02 0.06 0.07 0.10 0.11 0.09
Net realized and
unrealized
gains (losses)
on investments .......... 1.61 2.57 (0.54) 2.87 2.43 0.43
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .................. 1.63 2.63 (0.47) 2.97 2.54 0.52
------------ ------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income (0.02) (0.06) (0.07) (0.10) (0.11) (0.09)
From realized gains ....... -- (0.76) (0.49) (0.75) (0.46) (0.03)
In excess of realized gains -- -- (0.02) -- -- --
Tax return of capital ..... -- -- (0.10) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ........... (0.02) (0.82) (0.68) (0.85) (0.57) (0.12)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period ...................... $ 16.76 $ 15.15 $ 13.34 $ 14.49 $ 12.37 $ 10.40
============ ============ ============ ============ ============ ============
Total Return (b) .............. 21.43%(a) 19.88% (3.27)% 24.01% 24.56% 8.92%(a)
Ratios/Supplemental Data
Net assets, end of period ..... $707,061,012 $650,952,268 $524,999,120 $365,664,513 $166,423,073 $108,046,450
Ratio of expenses
to average net
assets ...................... 0.82%(a) 0.89% 0.90% 0.86% 0.84% 0.84%(a)
Ratio of net investment
income to average
net assets .................. 0.24%(a) 0.37% 0.53% 0.71% 1.09% 1.56%(a)
Portfolio turnover rate ....... 23.58% 53.55% 37.51% 33.99% 34.44% 2.92%
Average commission rate ....... $ 0.03 $ 0.04
</TABLE>
FS-207
<PAGE>
<TABLE>
<CAPTION>
Intrinsic Value Fund
------------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ................. $ 11.89 $ 10.48 $ 11.05 $ 10.40 $ 9.89 $ 10.00
Income from investment
operations:
Net investment
income ............. 0.15 0.29 0.31 0.29 0.29 0.17
Net realized
and unrealized
gains (losses)
on investments ..... 1.11 2.24 (0.38) 1.23 1.14 (0.02)
------------ ------------ ------------ ------------ ------------ -----------
Total from investment
operations ............. 1.26 2.53 (0.07) 1.52 1.43 0.15
------------ ------------ ------------ ------------ ------------ -----------
Less distributions:
From net investment
income ........... (0.15) (0.30) (0.30) (0.28) (0.28) (0.17)
From realized gains .. -- (0.82) (0.20) (0.59) (0.64) (0.09)
------------ ------------ ------------ ------------ ------------ -----------
Total distributions ...... (0.15) (1.12) (0.50) (0.87) (0.92) (0.26)
------------ ------------ ------------ ------------ ------------ -----------
Net asset value,
end of period ......... $ 13.00 $ 11.89 $ 10.48 $ 11.05 $ 10.40 $ 9.89
============ ============ ============ ============ ============ ===========
Total Return (b) ......... 21.31%(a) 24.38% (0.60%) 14.71% 14.56% 2.70%(a)
Ratios/Supplemental Data
Net assets, end of period $295,817,289 $255,884,859 $220,028,096 $192,555,183 $107,260,873 $77,450,163
Ratio of expenses to
average net assets ..... 0.85 0.91% 0.91% 0.86% 0.84% 0.84%(a)
Ratio of net investment
income to average
net assets ............. 2.46% 2.49% 2.92% 2.67% 2.78% 3.03%(a)
Portfolio turnover rate .. 23.32% 45.55% 58.62% 63.90% 48.52% 1.80%
Average commission rate .. $ 0.00 $ 0.03
</TABLE>
FS-208
<PAGE>
<TABLE>
<CAPTION>
Capital Growth Fund Balanced Fund
---------------------------------------------- ----------------------------------------------
Six Months Six Months
Ended Ended
June 30, 1996 Year ended Period ended June 30, 1996 Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 (Unaudited) Dec. 31, 1995 Dec. 31, 1994
------------- -------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .............. $ 13.26 $ 10.44 $ 10.00 $ 11.24 $ 9.53 $ 10.00
Income from investment
operations:
Net investment income 0.03 0.08 0.05 0.18 0.35 0.28
Net realized and
unrealized
gains (losses)
on investments ..... 0.99 2.93 0.43 0.30 1.83 (0.48)
------------ ------------ ----------- ------------ ----------- -----------
Total from investment
operations ............. 1.02 3.01 0.48 0.48 2.18 (0.20)
------------ ------------ ----------- ------------ ----------- -----------
Less distributions:
From net investment
income ............. (0.03) (0.08) (0.04) (0.24) (0.35) (0.27)
From realized gains .. -- (0.11) -- -- (0.12) --
------------ ------------ ----------- ------------ ----------- -----------
Total distributions ...... (0.03) (0.19) (0.04) (0.24) (0.47) (0.27)
------------ ------------ ----------- ------------ ----------- -----------
Net asset value, end of
period ................. $ 14.25 $ 13.26 $ 10.44 $ 11.48 $ 11.24 $ 9.53
============ ============ =========== ============ =========== ===========
Total Return (b) ......... 15.41%(a) 28.90% 9.62%(a) 8.57%(a) 23.18% (1.95)%
Ratios/Supplemental Data
Net assets, end of period $233,617,570 $195,861,178 $81,269,604 $109,853,690 $93,623,801 $54,167,192
Ratio of expenses to
average net assets ..... 0.87%(a) 0.86% 0.85%(a) 0.94%(a) 0.91% 0.85%
Ratio of net investment
income to average
net assets ............. 0.40%(a) 0.65% 1.25%(a) 3.23%(a) 3.40% 3.41%
Ratio of expenses
to average net
assets without
fee waivers/
reimbursed expenses .... -- 0.90% 0.95%(a) 0.98%(a) 1.09% 1.56%
Ratio of net
investment income
to average net
assets without fee
waivers/reimbursed
expenses ............... -- 0.61% 1.15%(a) 3.19%(a) 3.22% 2.70%
Portfolio turnover rate .. 13.34% 6.97% 3.29% 23.88% 31.76% 37.49%
Average commission rate .. $ 0.05 $ 0.04 $ 0.04 $ 0.05
<FN>
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
FS-209
<PAGE>
RESULTS OF SPECIAL SHAREHOLDER MEETING (Unaudited)
On July 10, 1996 and July 31, 1996, special meetings of the shareholders
of The Woodward Growth/ Value, Opportunity, Intrinsic Value, Capital Growth ,
and Balanced Funds were held to approve the following proposals.
The shareholders approved these proposals with respect to The Woodward
Growth/Value, Opportunity, Intrinsic Value, Capital Growth, and Balanced Funds
are as follows:
1. To approve a new investment advisory agreement ("New Advisory Agreement")
between each Trust, NBD Bank ("NBD") and First Chicago Investment
Management Company ("FCIMCO")
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,697,375 569,461 428,342
Opportunity 29,002,795 239,823 189,058
Intrinsic Value 14,485,532 254,925 71,876
Capital Growth 8,987,121 322,943 69,443
Balanced 7,876,687 16,097 9,040
</TABLE>
2. To approve a change to the fundamental investment limitations of each
Fund of the Trust with regard to the following:
a) investment in commodities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 37,714,498 895,808 832,712
Opportunity 28,007,923 821,674 340,716
Intrinsic Value 14,242,959 379,208 91,019
Capital Growth 8,761,346 508,381 96,114
Balanced 7,853,765 35,605 12,454
</TABLE>
b) expanded power to borrow
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 37,808,221 850,023 784,774
Opportunity 28,041,208 832,447 296,658
Intrinsic Value 14,237,759 392,511 82,916
Capital Growth 8,781,777 489,751 94,313
Balanced 7,849,899 29,627 22,297
</TABLE>
c) issuing senior securities
FS-210
<PAGE>
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 37,860,869 777,283 804,867
Opportunity 28,128,015 686,609 355,689
Intrinsic Value 14,273,227 326,855 113,103
Capital Growth 8,799,493 463,111 103,238
Balanced 7,853,795 26,094 21,935
</TABLE>
3. To approve a change to the fundamental investment policies and
limitations of certain Funds of the Trusts, as follows:
c) to approve a change to the fundamental investment limitation
concerning concentration of investments in a particular industry
with respect to the Funds
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,190,362 743,968 508,689
Opportunity 28,257,950 658,048 254,316
Intrinsic Value 14,310,207 313,409 89,570
Capital Growth 8,842,837 445,620 77,383
Balanced 7,861,861 18,105 21,858
</TABLE>
4. To approve a change of the following fundamental policies and limitations
to non-fundamental policies and limitations:
b) limitation on investment in other investment companies
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,066,818 825,096 551,104
Opportunity 28,250,504 617,701 302,108
Intrinsic Value 14,303,918 330,470 78,798
Capital Growth 8,820,530 450,430 94,881
Balanced 7,867,137 15,625 19,062
</TABLE>
c) limitation on illiquid securities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,025,425 844,852 572,741
Opportunity 28,202,459 657,059 310,796
Intrinsic Value 14,263,943 356,029 93,213
Capital Growth 8,765,508 498,507 101,826
Balanced 7,866,803 13,025 21,995
</TABLE>
FS-211
<PAGE>
d) limitation on purchasing securities on margin
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,030,798 851,788 560,432
Opportunity 28,176,388 691,235 302,691
Intrinsic Value 14,264,733 361,080 87,373
Capital Growth 8,852,552 411,546 101,743
Balanced 7,868,320 11,884 21,621
</TABLE>
e) limitation on purchasing securities of companies for the
purpose of exercising control
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,037,340 843,099 562,580
Opportunity 28,199,207 669,563 301,544
Intrinsic Value 14,271,641 354,527 87,017
Capital Growth 8,858,369 412,785 94,687
Balanced 7,857,247 23,386 21,190
</TABLE>
f) limitation on writing or selling put options, call options,
straddles, spreads, or any combinations thereof
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,042,540 836,142 564,336
Opportunity 28,190,886 670,389 309,039
Intrinsic Value 14,266,607 366,739 79,839
Capital Growth 8,864,326 399,603 101,912
Balanced 7,862,705 16,908 22,211
</TABLE>
5. To approve certain changes to fundamental investment objectives.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,176,969.57 712,619.13 553,431.125
Opportunity 28,264,577.86 615,516.77 290,220.758
Capital Growth 8,901,322.25 389,056.76 75,463.220
</TABLE>
FS-212
<PAGE>
6. To ratify the appointment of two Trustees to the Board of Trustees
of each Trust.
Elected Trustees Current Trustees
Ms. Marilyn McCoy Mr. Will M. Caldwell Mr. Donald B. Sutherland
Mr. John P. Gould Dr. Nicholas J. DeGrazia Mr. Donald L. Tuttle
Mr. Julius L. Pallone
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,615,486 615,153 464,538
Opportunity 28,966,936 240,565 224,175
Intrinsic Value 14,488,742 239,325 84,266
Capital Growth 9,012,944 294,979 71,583
Balanced 7,897,014 10,057 17,477
</TABLE>
7. To approve amendments to the Amended and Restated Declaration of
Trust of The Woodward Funds.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value 38,215,003 766,803 461,212
Opportunity 28,664,222 266,248 239,844
Intrinsic Value 14,358,649 275,225 79,312
Capital Growth 10,788,885 339,108 121,069
Balanced Fund 7,857,439 18,996 25,389
</TABLE>
8. To transact such other business as may properly come before the
Meetings or any adjournment thereof.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Growth Value
Opportunity 28,701,598 383,407 346,670
Intrinsic Value 14,488,044 228,099 96,190
Capital Growth 8,862,036 440,186 77,285
Balanced Fund 7,892,907 13,250 18,390
</TABLE>
FS-213
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
<S> <C>
ASSETS:
Investment in securities:
At cost ..................................... $578,956,856
============
At value (Note 2) ........................... $759,315,146
Cash ............................................. 135,716
Income receivable ................................ 1,097,050
Deferred organization costs, net (Note 2) ........ 4,399
Prepaids and other assets ........................ 1,308
------------
TOTAL ASSETS ........................... 760,553,619
------------
LIABILITIES:
Payable for securities purchased ................. 38,575,891
Accrued investment advisory fee .................. 59,038
Accrued distribution fees ........................ 3,075
Accrued custodial fee ............................ 8,867
Dividends payable ................................ 636,315
Other payables and accrued expenses .............. 16,996
------------
TOTAL LIABILITIES ...................... 39,300,182
------------
NET ASSETS ............................. $721,253,437
============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) ............ $ 4,682,426
Additional paid-in capital ....................... 532,125,719
Accumulated undistributed net investment income .. 71,861
Accumulated undistributed net realized gains ..... 4,015,141
Net unrealized appreciation on investments ....... 180,358,230
------------
TOTAL NET ASSETS ....................... $721,253,437
============
Shares of capital stock outstanding .............. 46,824,262
============
Net asset value and redemption price per share ... $ 15.40
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-214
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
<S> <C>
INVESTMENT INCOME (Note 2)
Interest ...................................... $ 123,248
Dividends ...................................... 7,326,244
-----------
TOTAL INVESTMENT INCOME ................... 7,449,492
-----------
EXPENSES (Note 2, 3 and 5):
Investment advisory fee ....................... 317,984
Distribution fees ............................. 16,727
Professional fees ............................. 15,256
Custodial fee ................................. 64,051
Transfer and dividend disbursing agent fees ... 5,592
Amortization of deferred organization costs ... 2,200
Marketing expenses ............................ 16,312
Registration, filing fees and other expenses .. 68,099
-----------
TOTAL EXPENSES ........................... 506,221
-----------
NET INVESTMENT INCOME ............................. 6,943,271
-----------
REALIZED AND UNREALIZED GAINS ON
INVESTMENTS:
Net realized gains ............................ 6,583,094
Net change in unrealized appreciation on
investments ............................... 46,822,280
-----------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS ........................ 53,405,374
-----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ................................. $60,348,645
===========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-215
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months
Ended
June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995
------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ............... $ 6,943,271 $ 9,843,900
Net realized gains .................. 6,583,094 4,873,484
Net change in unrealized
appreciation on investments ....... 46,822,280 113,244,299
------------- -------------
Net increase in net assets
from operations ............... 60,348,645 127,961,683
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income .......... (7,013,688) (10,140,926)
From realized gains ................. -- (4,873,484)
In excess of realized gains ......... -- (90,675)
------------- -------------
Total distributions ............. (7,013,688) (15,105,085)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ........... 174,522,650 142,012,075
Net asset value of shares issued
in reinvestment of distributions
to shareholders .................. 5,940,482 13,655,168
------------- -------------
180,463,132 155,667,243
Less: payments for shares redeemed . (40,747,565) (81,128,978)
------------- -------------
Net increase in net assets from
capital share transactions ....... 139,715,567 74,538,265
------------- -------------
NET INCREASE IN NET ASSETS ............ 193,050,524 187,394,863
NET ASSETS:
Beginning of period ................. 528,202,913 340,808,050
------------- -------------
End of period ....................... $ 721,253,437 $ 528,202,913
============= =============
CAPITAL SHARE TRANSACTIONS:
Shares sold ........................... 11,848,974 10,856,382
Shares issued in reinvestment of
distributions to shareholders ....... 392,359 1,022,145
------------- -------------
12,241,333 11,878,527
Less: shares redeemed ................. (2,750,926) (6,539,777)
------------- -------------
NET INCREASE IN SHARES OUTSTANDING .... 9,490,407 5,338,750
CAPITAL SHARES:
Beginning of period ................. 37,333,855 31,995,105
------------- -------------
End of period ....................... 46,824,262 37,333,855
============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-216
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT - 4.67%
Salomon Brothers, Revolving Repurchase Agreement,
5.53%, 7/1/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/99 through
8/15/00, all held at Chemical Bank) .................................... $35,429,026 $35,429,026
(Cost $35,429,026) .......................................................... ----------- -----------
Shares
------
COMMON STOCKS - 95.33%
Aerospace - 2.24%
Boeing Co. ............................................................. 49,259 4,291,690
General Dynamics Corp. ................................................. 7,756 480,872
Goodrich (B. F.) Co. ................................................... 5,600 209,300
Lockheed Martin Corp. .................................................. 27,609 2,319,156
McDonnell Douglas Corp. ................................................ 35,202 1,707,297
Northrop Grumman Corp. ................................................. 7,872 536,280
Raytheon Co. ........................................................... 32,448 1,675,128
Rockwell International Corp. ........................................... 31,629 1,810,760
Textron, Inc. .......................................................... 12,533 1,001,074
TRW Inc. ............................................................... 11,070 994,916
United Technologies Corp. .............................................. 17,166 1,974,090
-----------
17,000,563
-----------
Air Transport - 0.43%
AMR Corp. * ............................................................ 12,704 1,156,064
Delta Air Lines, Inc. .................................................. 9,409 780,947
Federal Express Corp. * ................................................ 7,506 615,492
Southwest Airlines Co. ................................................. 18,300 532,987
USAir Group, Inc. * .................................................... 11,900 214,200
-----------
3,299,690
-----------
Apparel - 0.51%
Liz Claiborne, Inc. .................................................... 7,712 267,028
Nike, Inc. Class B ..................................................... 19,412 1,994,583
Reebok International Ltd. .............................................. 8,375 281,609
Russell Corp. .......................................................... 7,500 207,188
Spring Industries, Inc ................................................. 5,700 287,850
Stride Rite Corp. ...................................................... 43,800 361,350
</TABLE>
FS-217
<PAGE>
<TABLE>
<S> <C> <C>
V.F. Corp. ............................................................. 8,648 515,637
-----------
3,915,245
-----------
Banks - 6.91%
Banc One Corp. ......................................................... 63,787 2,168,758
Bank of Boston Corp. ................................................... 18,826 931,887
Bank of New York Co. Inc. .............................................. 27,990 1,434,487
BankAmerica Corp. ...................................................... 53,332 4,039,899
Bankers Trust New York Corp. ........................................... 11,194 826,957
Barnett Banks, Inc. .................................................... 12,604 768,844
Boatmens Bancshares, Inc. .............................................. 25,566 1,025,836
Chase Manhattan Corp. .................................................. 62,785 4,434,190
Citicorp ............................................................... 69,242 5,721,120
Comerica, Inc. ......................................................... 18,600 830,025
CoreStates Financial Corp. ............................................. 28,465 1,095,902
Dean Witter, Discover & Co. ............................................ 22,507 1,288,526
Fifth Third Bancorp .................................................... 14,600 788,400
First Bank System, Inc. ................................................ 20,560 1,192,480
First Chicago NBD Corp. ................................................ 47,916 1,874,714
First Union Corp. ...................................................... 40,590 2,470,916
Fleet Financial Group, Inc. ............................................ 35,095 1,526,632
J.P. Morgan & Co., Inc. ................................................ 26,222 2,219,037
KeyCorp ................................................................ 30,100 1,166,375
MBNA Corp. ............................................................. 28,882 823,137
Mellon Bank Corp. ...................................................... 18,154 1,034,778
National City Corp. .................................................... 29,800 1,046,725
NationsBank Corp. ...................................................... 44,550 3,680,944
Norwest Corp. .......................................................... 49,426 1,723,732
PNC Bank Corp. ......................................................... 52,665 1,566,784
Republic NY Corp. ...................................................... 9,292 578,427
Suntrust Banks, Inc. ................................................... 29,704 1,099,048
U.S. Bancorp ........................................................... 25,467 919,995
Wachovia Corp. ......................................................... 21,673 948,194
Wells Fargo & Co. ...................................................... 13,513 3,227,918
-----------
52,454,667
-----------
FS-218
<PAGE>
</TABLE>
<TABLE>
<S> <C> <C>
Business Machines - 4.74%
Amdahl Corp. * ......................................................... 17,500 188,125
Apple Computer, Inc. * ................................................. 18,306 384,426
Autodesk, Inc. ......................................................... 9,400 280,825
Bay Networks, Inc. * ................................................... 25,600 659,200
Ceridian Corp. * ....................................................... 7,300 368,650
Cisco System, Inc. * ................................................... 80,900 4,580,963
Compaq Computer Corp. * ................................................ 36,039 1,774,920
Cray Research, Inc. * .................................................. 1,210 29,191
Data General Corp. * ................................................... 13,000 169,000
Digital Equipment Corp. * .............................................. 19,447 875,115
DSC Communications Corp. * ............................................. 20,950 631,119
Honeywell, Inc. ........................................................ 19,577 1,066,947
Intergraph Corp. * ..................................................... 33,000 400,125
International Business Machines Corp. .................................. 76,837 7,606,863
Microsoft Corp. * ...................................................... 85,800 10,306,725
Novell, Inc. * ......................................................... 44,679 619,921
Pitney Bowes, Inc. ..................................................... 19,321 922,578
Silicon Graphics .* .................................................... 20,635 495,240
Sun Microsystems, Inc. * ............................................... 24,368 1,434,666
Tandem Computers, Inc. * ............................................... 34,900 431,887
Unisys Corp. * ......................................................... 27,600 196,650
Xerox Corp. ............................................................ 47,664 2,550,024
-----------
35,973,160
-----------
Business Services - 1.89%
Allergan, Inc. ......................................................... 6,247 245,195
Automatic Data Processing, Inc. ........................................ 40,236 1,554,116
Block (H.& R.), Inc. ................................................... 11,190 365,074
Browning-Ferris Industries, Inc. ....................................... 30,048 871,392
Computer Associates International, Inc. ................................ 33,871 2,413,309
Computer Sciences Corp. * .............................................. 8,460 632,385
Deluxe Corp. ........................................................... 11,409 405,019
Dial Corp. ............................................................. 8,718 249,553
Dun & Bradstreet Corp. ................................................. 22,531 1,408,187
Ecolab, Inc. ........................................................... 5,746 189,618
Harland (John H.) Co. .................................................. 17,200 423,550
</TABLE>
FS-219
<PAGE>
<TABLE>
<S> <C> <C>
Interpublic Group of Companies, Inc. ................................... 11,232 526,500
Laidlaw Inc., Class B .................................................. 47,242 478,325
Moore Corp. Ltd. ....................................................... 7,228 136,428
National Service Industries, Inc. ...................................... 4,600 179,975
Ogden Corp. ............................................................ 19,600 355,250
Shared Medical Systems, Inc. ........................................... 4,300 276,275
U.S. West Media Group .................................................. 73,631 1,343,766
WMX Technologies, Inc. ................................................. 69,554 2,277,893
-----------
14,331,810
-----------
Chemicals - 2.70%
Air Products & Chemicals, Inc. ......................................... 15,263 881,438
Dow Chemical Co. ....................................................... 36,145 2,747,020
duPont (E I) de Nemours & Co., Inc. .................................... 79,146 6,262,427
Grace (W.R.) & Co. ..................................................... 16,311 1,156,042
Great Lakes Chemical Corp. ............................................. 11,868 738,783
Hercules, Inc. ......................................................... 13,974 772,064
Monsanto Co. ........................................................... 83,885 2,726,263
Morton International, Inc. ............................................. 18,737 697,953
Nalco Chemical Co. ..................................................... 6,364 200,466
PPG Industries, Inc. ................................................... 25,304 1,233,570
Praxair, Inc. .......................................................... 23,614 997,692
Rohm & Haas Co. ........................................................ 8,529 535,194
Safety Kleen Corp. ..................................................... 11,900 208,250
Sigma-Aldrich Corp. .................................................... 9,100 486,850
Union Carbide Corp. .................................................... 22,284 885,789
-----------
20,529,801
-----------
Construction - 0.46%
Armstrong World Industries, Inc. ....................................... 3,327 191,718
Centex Corp. (with warrants to purchase interest in CDC L.P ............ 9,183 285,821
Class B units and shares of 3333 Holdings Corp)
Crane Co. .............................................................. 6,500 266,500
Fluor Corp. ............................................................ 11,763 769,006
Kaufman & Broad Home Corp. ............................................. 15,000 217,500
Masco Corp. ............................................................ 20,411 617,433
Owens-Corning Fiberglas Corp. .......................................... 4,189 180,127
Pulte Corp. ............................................................ 6,100 163,175
</TABLE>
FS-220
<PAGE>
<TABLE>
<S> <C> <C>
Sherwin Williams Co. ................................................... 10,704 497,736
Stanley Works .......................................................... 9,884 294,049
----------
3,483,065
----------
Consumer Durables - 0.37%
Black & Decker Corp. ................................................... 15,178 586,250
Jostens, Inc. .......................................................... 7,800 154,050
Maytag Corp. ........................................................... 9,270 193,511
Newell Co. ............................................................. 22,440 687,225
Outboard Marine Corp. .................................................. 8,800 159,500
Rubbermaid, Inc. ....................................................... 17,234 469,627
Whirlpool Corp. ........................................................ 11,603 575,799
----------
2,825,962
----------
Containers - 0.17%
Ball Corp. ............................................................. 4,800 138,000
Crown Cork & Seal Co., Inc. ............................................ 18,235 820,575
Stone Container Corp. .................................................. 24,382 335,252
----------
1,293,827
----------
Domestic Oil - 1.11%
Amerada Hess Corp. ..................................................... 11,888 637,494
Ashland Oil, Inc. ...................................................... 6,582 260,812
Atlantic Richfield Co. ................................................. 22,976 2,722,656
Kerr-McGee Corp. ....................................................... 6,121 372,616
Oryx Energy Co. * ...................................................... 11,900 193,375
Pennzoil Co. ........................................................... 9,808 453,620
Phillips Petroleum Co. ................................................. 36,853 1,543,219
Sun Co., Inc. .......................................................... 9,180 278,843
Unocal Corp. ........................................................... 32,556 1,098,765
USX-Marathon Group ..................................................... 43,963 884,755
----------
8,446,155
----------
Drugs and Medicine - 9.83%
Abbott Laboratories .................................................... 112,874 4,910,019
ALZA Corp. * ........................................................... 15,156 414,896
American Home Products Corp. ........................................... 90,272 5,427,604
Amgen, Inc. * .......................................................... 39,988 2,159,352
Bard (C.R.), Inc. ...................................................... 5,900 200,600
</TABLE>
FS-221
<PAGE>
<TABLE>
<S> <C> <C>
Bausch & Lomb, Inc. .................................................... 6,896 293,080
Baxter International, Inc. ............................................. 37,289 1,761,905
Becton Dickinson & Co. ................................................. 9,973 800,333
Beverly Enterprises, Inc. * ............................................ 18,900 226,800
Biomet, Inc. * ......................................................... 17,700 254,438
Bristol-Myers Squibb Co. ............................................... 71,542 6,438,780
Columbia/HCA Healthcare Corp. .......................................... 61,566 3,286,085
Community Psychiatric Centers * ........................................ 20,600 195,700
Eli Lilly & Co. ........................................................ 80,714 5,246,410
Humana, Inc. * ......................................................... 23,800 425,425
Johnson & Johnson ...................................................... 187,760 9,294,120
Mallinckrodt Group, Inc. ............................................... 10,469 406,982
Manor Care, Inc. ....................................................... 5,756 226,643
Medtronic, Inc. ........................................................ 31,932 1,788,192
Merck & Co., Inc. ...................................................... 175,376 11,333,674
Pall Corp. ............................................................. 16,845 406,386
Pfizer, Inc. ........................................................... 91,364 6,521,105
Pharmacia & Upjohn Co. ................................................. 69,725 3,094,047
St. Jude Medical, Inc. * ............................................... 51,706 3,244,551
Schering-Plough Corp. .................................................. 11,300 378,550
Tenet Healthcare Corp. * ............................................... 38,002 812,293
United Healthcare Corp. ................................................ 26,700 1,348,350
United States Surgical Co. ............................................. 9,300 288,300
U.S. HealthCare, Inc. .................................................. 21,700 1,193,500
Warner Lambert Co. ..................................................... 41,336 2,273,480
----------
74,651,600
----------
Electronics - 4.88%
3Com Corp. * ........................................................... 21,900 1,001,925
Advanced Micro Devices, Inc. * ......................................... 22,252 303,184
AMP, Inc. .............................................................. 28,276 1,134,575
Andrew Corp. * ......................................................... 6,075 326,531
Boston Scientific Corp. * .............................................. 27,035 1,216,575
E G & G, Inc. .......................................................... 9,300 198,788
EMC Corp. Mass * ....................................................... 38,800 722,650
First Data Corp. ....................................................... 31,600 2,516,150
General Instrument Corp. * ............................................. 15,500 447,562
</TABLE>
FS-222
<PAGE>
<TABLE>
<S> <C> <C>
General Signal Corp. ................................................... 6,053 229,257
Harris Corp. ........................................................... 7,507 457,927
Hewlett-Packard Co. .................................................... 72,000 7,173,000
Intel Corp. ............................................................ 115,724 8,498,481
Johnson Controls, Inc. ................................................. 6,808 473,156
LSI Logic Corp. * ..................................................... 22,200 577,200
Micron Technology, Inc. ................................................ 28,400 734,850
Motorola, Inc. ......................................................... 84,310 5,300,991
National Semiconductor Corp. * ......................................... 11,816 183,148
Northern Telecom Ltd. .................................................. 39,405 2,142,647
Perkin Elmer Corp. ..................................................... 4,400 212,300
Raychem Corp. .......................................................... 7,781 559,259
Scientific-Atlanta, Inc. ............................................... 14,000 217,000
Tektronix, Inc. ........................................................ 9,900 443,025
Teledyne, Inc. .* ...................................................... 5,800 209,525
Texas Instruments, Inc. ................................................ 27,628 1,377,947
Thomas & Betts Corp. ................................................... 11,200 420,000
----------
37,077,653
----------
Energy and Utilities - 4.01%
American Electric Power Co., Inc. ...................................... 24,465 1,042,821
Baltimore Gas & Electric Co. ........................................... 24,531 696,067
Carolina Power & Light Co. ............................................. 23,219 882,322
Central & SouthWest Corp. .............................................. 28,184 817,336
CINergy Corp. .......................................................... 21,342 682,944
Coastal Corp. .......................................................... 14,683 613,015
Columbia Gas System, Inc. .............................................. 11,100 578,588
Consolidated Edison Co. of New York, Inc. .............................. 37,328 1,091,844
Consolidated Natural Gas Co. ........................................... 13,336 696,806
Dominion Resources, Inc. ............................................... 28,359 1,134,360
DTE Energy ............................................................. 16,226 500,978
Duke Power Co. ......................................................... 30,009 1,537,961
Edison International ................................................... 65,871 1,160,976
Enron Corp. ............................................................ 34,508 1,410,515
Enserch Corp. .......................................................... 9,700 210,975
Entergy Corp. .......................................................... 29,860 847,278
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
FPL Group, Inc. ........................................................ 29,555 1,359,530
General Public Utilities Corp. ......................................... 18,943 667,741
Houston Industries, Inc. ............................................... 33,196 817,452
Niagara Mohawk Power Corp. * ........................................... 24,200 187,550
Nicor, Inc. ............................................................ 5,900 167,413
Noram Energy Inc. ...................................................... 22,600 245,775
Northern States Power Co. .............................................. 10,348 510,933
ONEOK Inc. ............................................................. 7,400 185,000
Ohio Edison Co. ........................................................ 22,903 501,003
PP & L Resources, Inc. ................................................. 17,300 408,712
Pacific Enterprises .................................................... 8,168 241,977
Pacific Gas & Electric Co. ............................................. 58,030 1,349,197
PacifiCorp ............................................................. 37,377 831,638
Panhandle Eastern Corp. ................................................ 23,380 768,617
PECO Energy Co. ........................................................ 26,467 688,142
Peoples Energy Corp. ................................................... 5,800 194,300
Public Service Enterprise Group, Inc. .................................. 32,772 897,133
Sonat, Inc. ............................................................ 14,848 668,160
Southern Co. ........................................................... 90,946 2,239,545
Texas Utilities Co. .................................................... 34,094 1,457,518
Unicom Corp. ........................................................... 25,976 724,081
Union Electric Co. ..................................................... 17,806 716,692
Williams Companies, Inc. ............................................... 14,094 697,653
----------
30,430,548
----------
Energy Raw Materials - 1.37%
Baker Hughes, Inc. ..................................................... 17,057 560,749
Barricks Gold Corp. .................................................... 46,402 1,258,654
Burlington Resources, Inc. ............................................. 16,352 703,136
Dresser Industries, Inc. ............................................... 21,730 641,035
Eastern Enterprises .................................................... 5,200 172,900
Halliburton Co. ........................................................ 16,418 911,199
Helmerich & Payne, Inc. ................................................ 11,300 413,863
Louisiana Land & Exploration Co. ....................................... 3,700 213,213
McDermott International, Inc. .......................................... 12,600 263,025
Nacco Industries, Inc. Class A ......................................... 2,300 127,362
Occidental Petroleum Corp. ............................................. 44,471 1,100,657
Rowan Companies, Inc. * ................................................ 21,600 318,600
Santa Fe Energy Resources, Inc. * ...................................... 25,600 304,000
</TABLE>
FS-224
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<TABLE>
<S> <C> <C>
Schlumberger Ltd. ...................................................... 33,775 2,845,544
Western Atlas, Inc. * .................................................. 9,654 562,345
----------
10,396,282
----------
Food and Agriculture - 5.95%
Archer Daniels Midland Co. ............................................. 81,929 1,566,892
Campbell Soup Co. ...................................................... 36,967 2,606,174
Coca-Cola Co. .......................................................... 354,396 17,321,105
ConAgra, Inc. .......................................................... 36,219 1,643,437
CPC International, Inc. ................................................ 19,187 1,381,464
Darden Restaurants, Inc. ............................................... 15,167 163,045
Fleming Companies, Inc. ................................................ 19,100 274,562
General Mills, Inc. .................................................... 20,667 1,126,352
Heinz (H.J.) Co. ....................................................... 53,743 1,632,444
Hershey Foods Corp. .................................................... 9,606 704,840
Kellogg Co. ............................................................ 32,737 2,397,985
Pepsico, Inc. .......................................................... 221,360 7,830,610
Pioneer Hi-Bred International, Inc. .................................... 13,526 715,187
Quaker Oats Co. ........................................................ 19,166 654,040
Ralston-Ralston Purina Group ........................................... 13,500 865,688
Sara Lee Corp. ......................................................... 67,055 2,170,906
Sysco Corp. ............................................................ 23,827 816,075
Whitman Corp. .......................................................... 20,500 494,562
Wrigley (Wm.) Jr Co. ................................................... 16,335 824,917
----------
45,190,285
----------
Gold - 0.21%
Homestake Mining Co. ................................................... 20,389 349,162
Placer Dome, Inc. ...................................................... 38,855 927,663
Santa Fe Pacific Gold Corp. ............................................ 24,998 353,097
----------
1,629,922
----------
Insurance - 3.22%
Aetna Life & Casualty Co. .............................................. 15,282 1,092,663
Alexander & Alexander Services, Inc. ................................... 20,200 398,950
Allstate Corp. ......................................................... 65,540 2,990,263
American General Corp. ................................................. 28,763 1,046,254
American International Group, Inc. ..................................... 66,348 6,543,571
AON Corp. .............................................................. 14,000 710,500
</TABLE>
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<TABLE>
<S> <C> <C>
Chubb Corp. ............................................................ 24,074 1,200,691
CIGNA Corp. ............................................................ 10,855 1,279,533
General Re Corp. ....................................................... 11,503 1,751,332
ITT Hartford Group, Inc. ............................................... 16,669 887,624
Jefferson-Pilot Corp. .................................................. 8,975 463,334
Lincoln National Corp. ................................................. 15,969 738,566
Marsh & McLennan Companies, Inc. ....................................... 9,432 910,188
Providian Corp. ........................................................ 15,597 668,721
SAFECO Corp. ........................................................... 17,292 611,705
St. Paul Companies ..................................................... 9,800 524,300
Torchmark Corp. ........................................................ 13,095 572,906
Transamerica Corp. ..................................................... 9,465 766,665
UNUM Corp. ............................................................. 8,400 522,900
USF&G Corp. ............................................................ 26,900 440,488
USLife Corp. ........................................................... 8,900 292,588
----------
24,413,742
----------
International Oil - 6.21%
Amoco Corp. ............................................................ 69,318 5,016,890
Chevron Corp. .......................................................... 91,614 5,405,226
Exxon Corp. ............................................................ 178,441 15,502,062
Mobil Corp. ............................................................ 57,276 6,422,072
Royal Dutch Petroleum Co., N.Y. Registry ............................... 76,254 11,724,053
Texaco, Inc. ........................................................... 36,533 3,064,205
----------
47,134,508
----------
Liquor - 0.65%
Anheuser-Busch Companies, Inc. ......................................... 35,161 2,637,075
Brown Forman Corp. Class B ............................................. 7,254 290,160
Coors (Adolph) Co. Class B ............................................. 9,700 173,388
Seagram Co. Ltd. ....................................................... 54,759 1,841,271
----------
4,941,894
----------
Media - 1.74%
Cabletron System, Inc. * ............................................... 9,070 622,429
Comcast Corp. Class A Special .......................................... 28,600 529,100
Donnelley (R.R.) & Sons Co. ............................................ 19,945 695,582
Dow Jones & Co., Inc. .................................................. 14,654 611,804
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Gannett Co., Inc. ...................................................... 19,839 1,403,609
King World Productions, Inc. * ......................................... 5,200 189,150
Knight-Ridder, Inc. .................................................... 8,721 632,272
McGraw Hill Companies, Inc. ............................................ 13,764 629,703
Meredith Corp. ......................................................... 5,100 212,925
New York Times Co. Class A ............................................. 19,326 630,511
Tele-Communications, Inc. Class A * .................................... 86,829 1,573,776
Time Warner, Inc. ...................................................... 55,673 2,185,165
Times Mirror Co. Class A ............................................... 15,209 661,591
Tribune Co. ............................................................ 8,657 628,715
Viacom, Inc. Class B Non-Voting * ..................................... 51,034 1,983,947
----------
13,190,279
----------
Miscellaneous and Conglomerates - 1.00%
Corning, Inc. .......................................................... 31,042 1,191,237
Eastman Chemical Co. ................................................... 11,460 697,627
ITT Corp. * ............................................................ 16,469 1,091,071
ITT Industries, Inc. ................................................... 12,269 308,259
Minnesota Mining & Manufacturing Co. ................................... 58,128 4,010,832
Tupperware Corp. * ..................................................... 7,324 309,439
----------
7,608,465
----------
Miscellaneous Finance - 2.71%
Ahmanson (H.F.) & Co. .................................................. 22,333 602,991
American Express Co. ................................................... 68,568 3,059,847
Beneficial Corp. ....................................................... 9,940 557,883
Federal Home Loan Mortgage Corp. ....................................... 25,200 2,154,600
Federal National Mortgage Association .................................. 155,388 5,205,498
Golden West Financial Corp. ............................................ 9,215 516,040
Great Western Financial Corp. .......................................... 20,728 494,881
Greentree Financial Corp. .............................................. 15,800 493,750
Household International, Inc. .......................................... 12,649 961,324
Merrill Lynch & Co., Inc. .............................................. 24,757 1,612,300
Morgan Stanley Group, Inc. ............................................. 24,000 1,179,000
Salomon, Inc. .......................................................... 16,626 731,544
Travelers, Inc. ........................................................ 65,628 2,994,277
----------
20,563,935
----------
</TABLE>
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<TABLE>
<S> <C> <C>
Motor Vehicles - 2.25%
Chrysler Corp. ......................................................... 53,514 3,317,868
Cummins Engine Co., Inc. ............................................... 5,600 226,100
Dana Corp. ............................................................. 16,524 512,244
Eaton Corp. ............................................................ 8,634 $ 506,168
Echlin, Inc. ........................................................... 11,869 449,539
Fleetwood Enterprises, Inc. ............................................ 8,700 269,700
Ford Motor Co. ......................................................... 167,328 5,417,244
General Motors Corp. ................................................... 107,570 5,633,979
Genuine Parts Co. ...................................................... 16,819 769,469
-----------
17,102,311
-----------
Non-Durables and Entertainment - 2.22%
American Greetings Corp. Class A ....................................... 7,080 193,815
Bally Entertainment Corp. * ............................................ 13,700 376,750
CUC International, Inc. * .............................................. 23,850 846,675
Harcourt General, Inc. ................................................. 9,876 493,800
Hasbro, Inc. ........................................................... 10,658 381,024
Kimberly-Clark Corp. ................................................... 39,417 3,044,963
Luby's Cafeterias, Inc. ................................................ 8,400 197,400
Mattel, Inc. ........................................................... 39,591 1,133,292
McDonalds Corp. ........................................................ 100,082 4,678,834
Oracle Systems Corp. * ................................................. 91,239 3,598,238
Ryan's Family Steak House * ............................................ 31,900 295,075
Service Corp. International ............................................ 15,686 901,945
Shoneys, Inc. * ........................................................ 33,700 366,487
Wendy's International, Inc. ............................................ 17,490 325,751
-----------
16,834,049
-----------
Non-Ferrous Metals - 0.88%
Alcan Aluminum Ltd. .................................................... 30,807 939,614
Aluminum Co. of America ................................................ 23,644 1,356,574
Asarco, Inc. ........................................................... 5,000 138,125
Cyprus Amax Minerals Co. ............................................... 18,163 410,938
Echo Bay Mines LTD ..................................................... 14,800 159,100
Engelhard Corp. ........................................................ 24,986 574,678
</TABLE>
FS-228
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<TABLE>
<S> <C> <C>
Freeport McMoran Copper Class B ........................................ 33,200 1,058,250
Inco Ltd. .............................................................. 14,174 457,112
Newmont Mining Corp. ................................................... 12,482 616,299
Phelps Dodge Corp. ..................................................... 9,358 583,705
Reynolds Metals Co. .................................................... 7,044 367,168
---------
6,661,563
---------
Optical Photographic Equipment - 0.57%
Eastman Kodak Co. ...................................................... 51,441 $3,999,538
Polaroid Corp. ......................................................... 7,796 355,692
---------
4,355,230
---------
Paper and Forest Products - 1.04%
Bemis, Inc. ............................................................ 5,800 203,000
Boise Cascade Corp. .................................................... 4,800 175,800
Champion International Corp. ........................................... 11,355 474,071
Georgia-Pacific Corp. .................................................. 14,426 1,024,246
International Paper Co. ................................................ 40,970 1,510,769
James River Corp. of Virginia .......................................... 13,338 351,790
Louisiana Pacific Corp. ................................................ 10,925 241,716
Mead Corp. ............................................................. 10,888 564,815
Potlatch Corp. ......................................................... 5,800 226,925
Temple-Inland, Inc. .................................................... 10,725 501,394
Union Camp Corp. ....................................................... 9,171 447,086
Westvaco Corp. ......................................................... 16,541 494,162
Weyerhaeuser Co. ....................................................... 26,766 1,137,555
Willamette Industries, Inc. ............................................ 9,700 577,150
---------
7,930,479
---------
Producer Goods - 5.45%
Alco Standard Corp. .................................................... 16,166 731,511
Allied Signal, Inc. .................................................... 39,148 2,236,330
Applied Materials Co.*.................................................. 24,780 755,790
Avery Dennison Corp. ................................................... 5,770 316,629
Briggs & Stratton Corp. ................................................ 4,000 164,500
Case Corp. ............................................................. 8,700 417,600
Caterpillar, Inc. ...................................................... 27,380 1,854,995
Cincinnati Milacron, Inc. .............................................. 17,600 422,400
</TABLE>
FS-229
<PAGE>
<TABLE>
<S> <C> <C>
Cooper Industries, Inc. ................................................ 17,359 720,399
Deere & Co. ............................................................ 36,323 1,452,920
Dover Corp. ............................................................ 16,762 773,147
Emerson Electric Co. ................................................... 31,442 2,841,571
FMC Corp. * ............................................................ 5,203 339,496
Foster Wheeler Corp. ................................................... 4,400 197,450
General Electric Co. ................................................... 237,542 20,547,383
Giddings & Lewis, Inc. ................................................. 9,200 149,500
Grainger (W.W.), Inc. .................................................. 6,712 520,180
Harnischfeger Industries, Inc. ......................................... 4,600 152,950
Illinois Tool Works, Inc. .............................................. 15,358 1,038,585
Ingersoll-Rand Co. ..................................................... 14,462 632,712
Millipore Corp. ........................................................ 5,500 230,312
Navistar International * ............................................... 18,600 183,675
Parker-Hannifin Corp. .................................................. 12,015 509,136
Snap-On, Inc. .......................................................... 6,000 284,250
Tenneco, Inc. .......................................................... 22,442 1,147,347
Timken Co. ............................................................. 10,500 406,875
Trinova Corp. .......................................................... 4,600 153,525
Tyco International Ltd. ................................................ 20,788 847,111
Varity Corp. * ......................................................... 7,100 341,688
Westinghouse Electric Corp. ............................................ 54,070 1,013,812
----------
41,383,779
----------
Railroads and Shipping - 0.98%
Burlington Northern Santa Fe ........................................... 20,825 1,684,222
Conrail, Inc. .......................................................... 10,666 707,956
CSX Corp. .............................................................. 32,140 1,550,755
Norfolk Southern Corp. ................................................. 18,576 1,574,316
Union Pacific Corp. .................................................... 27,367 1,912,269
----------
7,429,518
----------
Retail - 4.76%
Albertsons, Inc. ....................................................... 33,769 1,397,192
American Stores Co. .................................................... 22,564 930,765
Charming Shoppes, Inc. ................................................. 38,600 272,613
Circuit City Stores, Inc. .............................................. 10,964 396,075
Dayton Hudson Corp. .................................................... 9,944 1,025,475
</TABLE>
FS-230
<PAGE>
<TABLE>
<S> <C> <C>
Dillard Department Stores Class A ...................................... 15,130 552,245
Federated Department Stores, Inc. * .................................... 28,200 962,325
Gap, Inc. .............................................................. 38,912 1,250,048
Giant Food, Inc. Class A ............................................... 5,800 208,075
Great Atlantic & Pacific Tea Co., Inc. ................................. 8,000 263,000
Home Depot, Inc. ....................................................... 66,565 3,594,510
Kmart Corp. * .......................................................... 82,488 1,020,789
Kroger Co. * ........................................................... 19,345 764,128
Limited, Inc. .......................................................... 42,388 911,342
Longs Drug Stores Corp. ................................................ 4,400 196,350
Lowes Companies, Inc. .................................................. 20,584 743,597
May Department Stores Co. .............................................. 34,970 1,529,937
Melville Corp. ......................................................... 18,812 761,886
Mercantile Stores, Inc. ................................................ 3,900 228,637
Nordstrom, Inc. ........................................................ 10,393 462,488
J.C. Penney & Co., Inc. ................................................ 29,788 1,563,870
Pep Boys Manny Moe & Jack .............................................. 7,700 261,800
Price/Costco, Inc. * ................................................... 35,313 763,644
Rite-Aid Corp. ......................................................... 8,156 242,641
Sears, Roebuck & Co. ................................................... 58,209 2,830,413
Supervalu, Inc. ........................................................ 6,231 196,276
Tandy Corp. ............................................................ 9,138 432,913
TJX Companies, Inc. .................................................... 11,900 401,625
Toys R Us * ............................................................ 39,667 1,130,509
Wal Mart Stores, Inc. .................................................. 323,295 8,203,611
Walgreen Co. ........................................................... 34,086 1,141,881
Winn-Dixie Stores, Inc. ................................................ 25,374 897,605
Woolworth Corp. * ...................................................... 25,664 577,440
----------
36,115,705
----------
Soaps and Cosmetics - 2.66%
Alberto-Culver Co. Class B ............................................. 6,400 296,800
Avon Products, Inc. .................................................... 17,180 775,248
Clorox Co. ............................................................. 6,547 580,228
Colgate-Palmolive Co. .................................................. 22,827 1,934,588
Gillette Co. ........................................................... 62,618 3,905,798
International Flavors & Fragrances, Inc. ............................... 14,843 706,898
</TABLE>
FS-231
<PAGE>
<TABLE>
<S> <C> <C>
Procter & Gamble Co. ................................................... 96,687 8,762,259
Unilever N.V ........................................................... 22,114 3,209,294
----------
20,171,113
----------
Steel - 0.23%
Armco, Inc. * .......................................................... 35,700 178,500
Bethlehem Steel Corp. * ................................................ 23,638 280,701
Inland Steel Industries, Inc. .......................................... 10,372 203,551
Nucor Corp. ............................................................ 11,359 575,049
USX-U.S. Steel Group ................................................... 7,828 222,120
Worthington Industries, Inc. ........................................... 12,685 264,799
----------
1,724,720
----------
Telephone - 7.48%
AT & T Corp. ........................................................... 228,200 14,148,400
AirTouch Communications, Inc. * ........................................ 71,210 2,011,683
ALLTEL Corp. ........................................................... 24,305 747,379
Ameritech Corp. ........................................................ 79,912 4,744,775
Bell Atlantic Corp. .................................................... 60,490 3,856,237
Bellsouth Corp. ........................................................ 141,150 5,981,231
GTE Corp. .............................................................. 138,773 6,210,092
MCI Communications Corp. ............................................... 94,259 2,415,387
NYNEX Corp. ............................................................ 64,110 $3,045,225
Pacific Telesis Group .................................................. 61,110 2,062,462
SBC Communications Inc. ................................................ 90,176 4,441,168
Sprint Corp. ........................................................... 62,165 2,610,930
Tellabs, Inc. .......................................................... 13,948 932,772
U S WEST Communications Group * ........................................ 65,331 2,082,426
Worldcom, Inc. * ....................................................... 27,600 1,528,350
----------
56,818,517
----------
Tires and Rubber Goods - 0.18%
Cooper Tire & Rubber Co. ............................................... 17,642 392,534
Goodyear Tire & Rubber Co. ............................................. 19,742 952,552
----------
1,345,086
----------
Tobacco - 2.07%
American Brands, Inc. .................................................. 24,902 1,129,928
Loews Corp. ............................................................ 19,020 1,500,202
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Philip Morris Companies, Inc. .......................................... 117,323 12,201,592
UST, Inc. .............................................................. 25,615 877,314
------------
15,709,036
------------
Travel and Recreation - 1.12%
Brunswick Corp. ........................................................ 9,813 196,260
Disney (Walt) Co. ...................................................... 98,487 6,192,370
Harrahs Entertainment, Inc. * .......................................... 18,450 521,212
Hilton Hotels Corp. .................................................... 6,583 740,588
Marriott International, Inc. ........................................... 16,137 867,364
------------
8,517,794
------------
Trucking and Freight - 0.13%
Caliber System, Inc. ................................................... 3,773 128,282
Consolidated Freightways, Inc. ......................................... 6,200 130,975
PACCAR, Inc. ........................................................... 4,292 210,308
Ryder System, Inc. ..................................................... 10,999 309,347
Yellow Corp. ........................................................... 17,000 225,250
------------
1,004,162
------------
TOTAL COMMON STOCKS ................................................................ 723,886,120
(Cost $ 543,527,830) ------------
TOTAL INVESTMENTS .................................................................. $759,315,146
(Cost $578,956,856) ============
<FN>
* Non-income producing security
</TABLE>
FS-233
<PAGE>
THE WOODWARD FUNDS
EQUITY INDEX FUND
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business
trust on April 21, 1987, and registered under the Investment Company Act of
1940, as amended, as an open-end investment company. As of June 30, 1996,
Woodward consisted of seventeen separate series. The Woodward Equity Index
Fund (Equity Index Fund) commenced operations on July 10, 1992.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed
by the Equity Index Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies. Following generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Investments
The Equity Index Fund values investment securities at market value which
is determined by a pricing service based upon quoted market prices or dealer
quotes. Securities for which market prices or dealer quotes are not readily
available are valued by the investment advisor, NBD Bank (NBD) in accordance
with procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day
after trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is required to equal or
exceed 102% of the funds advanced under the repurchase agreement including
accrued interest; 2) collateral is marked to market daily by NBD to assure its
value remains at least equal to 102% of the repurchase agreement amount; and
3) funds are not disbursed by Woodward or its agent unless collateral is
presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount on debt instruments.
Dividends are recorded on the ex-dividend date.
FS-234
<PAGE>
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
Net realized gains differ for financial statement and tax purposes
primarily because of the recognition of wash sale transactions and
post-October 31 capital losses. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed may differ
from the year that the income or realized gains were recorded by the Fund.
Certain book-to-tax timing differences for the funds are reflected as excess
distributions in the Statements of Changes in Net Assets. These distributions
do not constitute a tax return of capital.
Shareholder Dividends
Dividends from net investment income are declared and paid quarterly by
the Equity Index Fund. Net realized capital gains are distributed annually.
Distributions from net investment income and net realized gains are made
during each year to avoid the 4% excise tax imposed on regulated investment
companies by the Internal Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the
five year period beginning with the commencement of operations of the Equity
Index Fund.
Expenses
Expenses are charged daily as a percentage of the Fund's net assets.
Woodward monitors the rate at which expenses are charged to ensure that a
proper amount of expense is charged to income each year. This percentage is
subject to revision if there is a change in the estimate of the future net
assets of Woodward or a change in expectations as to the level of actual
expenses.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of .005% of the Equity Index Fund's average net assets and
Essex is entitled to receive a fee at the annual rate of .10% of the aggregate
average net assets of Woodward's investment portfolios attributable to
investments by clients of Essex.
FS-235
<PAGE>
NBD is the investment advisor pursuant to the Advisory Agreement. For
its advisory services to Woodward, NBD is entitled to a fee, computed daily
and payable monthly. Under the Advisory Agreement, NBD also provides Woodward
with certain administrative services, such as maintaining Woodward's general
ledger and assisting in the preparation of various regulatory reports. NBD
receives no additional compensation for such services.
NBD, FoM, and Essex have agreed that they may waive their fees in whole
or in part; and, if in part, may specify the particular fund to which such
waiver relates as may be required to satisfy any expense limitation imposed by
state securities laws or other applicable laws. At present, no restrictive
expense limitation is imposed on Woodward. Restrictive limitations could be
imposed as a result of changes in current state laws and regulations in those
states where Woodward has qualified its shares, or by a decision of the
Trustees to qualify the shares in other states having restrictive expense
limitations.
NBD is also compensated for its services as Woodward's Custodian,
Transfer Agent and Dividend Disbursing Agent, and is reimbursed for certain
out of pocket expenses incurred on behalf of Woodward.
On March 10, 1994, Woodward adopted The Woodward Funds Deferred
Compensation Plan (the "Plan"), an unfunded, nonqualified deferred
compensation plan. The Plan allows an individual Trustee to elect to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
FS-236
<PAGE>
(4) Investment Securities Transactions
Information with respect to investment securities and security
transactions, excluding short-term securities, is as follows:
<TABLE>
<CAPTION>
<S> <C>
Gross Unrealized Gains ... $ 190,996,244
Gross Unrealized Losses .. $ (10,637,954)
-------------
$ 180,358,290
=============
Federal Income Tax Cost .. $ 581,958,015
Purchases ................ $ 167,659,655
Sales .................... $ 24,048,219
</TABLE>
(5) Expenses
Following is a summary of total expense rates charged, advisory fee
rates payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the period ended June 30, 1996. The rates
shown are stated as a percentage of each fund's average net assets.
<TABLE>
<CAPTION>
Effective Date
--------------
<S> <C>
Expense Rates:
January 1 ...................... 0.16%
NBD Advisory Fee:
January 1 ...................... 0.10%
Amounts Paid:
Advisory Fee to NBD ............. $317,984
Distribution Fees to FoM & Essex $ 16,727
Other Fees & Out of Pocket
Expenses to NBD .............. $ 70,184
FS-237
<PAGE>
THE WOODWARD FUNDS
EQUITY INDEX FUND
FINANCIAL HIGHLIGHTS
The Financial Highlights presents a per share analysis of how the Equity Index
Fund's net asset value has changed during the periods presented. Additional
quantitative measures expressed in ratio form analyze important relationships
between certain items presented in the financial statements. These financial
highlights have been derived from the financial statements of the Equity Index
Fund and other information for the periods presented.
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996 Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period .................. $ 14.15 $ 10.65 $ 11.15 $ 10.52 $ 10.00
Income from investment
operations:
Net investment income . 0.16 0.30 0.31 0.28 0.12
Net realized and
unrealized
gains (losses)
on investments .... 1.25 3.65 (0.20) 0.75 0.52
------------ ------------ ------------ ------------ ---------------
Total from investment
operations .............. 1.41 3.95 0.11 1.03 0.64
------------ ------------ ------------ ------------ ---------------
Less distributions:
From net investment
income .............. (0.16) (0.31) (0.30) (0.27) (0.12)
From realized gains.... -- (0.14) (0.23) (0.13) --
In excess of
realized gains ...... -- (0.00) (0.08) -- --
------------ ------------ ------------ ------------ ---------------
Total distributions ....... (0.16) (0.45) (0.61) (0.40) (0.12)
------------ ------------ ------------ ------------ ---------------
Net asset value, end of
period .................. $ 15.40 $ 14.15 $ 10.65 $ 11.15 $ 10.52
============ ============ ============ ============ ===============
Total Return .............. 20.04%(a) 37.35% 1.02% 9.77% 13.61%(a)
Ratios/Supplemental
Data
Net assets, end of period . $721,253,437 $528,202,913 $340,808,050 $325,328,903 $ 242,057,866
Ratio of expenses
to average net
assets .................. 0.16%(a) 0.15% 0.17% 0.20% 0.22%(a)
Ratio of net investment
income to
average net assets ...... 2.20%(a) 2.39% 2.71% 2.59% 2.71%(a)
Portfolio turnover rate ... 3.81% 10.66% 24.15% 16.01% 0.50%
Average commission rate ... $ 0.03 $ 0.03
<FN>
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
</TABLE>
FS-238
<PAGE>
RESULTS OF SPECIAL SHAREHOLDER MEETING (Unaudited)
On July 10,1996, a special meeting of the shareholders of The Woodward
Equity Index Fund was held to approve the following proposals.
The shareholders approved these proposals with respect to The Woodward
Equity Index Fund as follows:
1. To approve a new investment advisory agreement ("New Advisory Agreement")
between each Trust, NBD Bank ("NBD") and First Chicago Investment
Management Company ("FCIMCO")
Affirmative 34,417,695
Against 63,069
Abstain 14,393
2. To approve a change to the fundamental investment limitations of
each Fund of the Trust with regard to the following:
a) investment in commodities
Affirmative 33,503,852
Against 126,796
Abstain 864,509
b) expanded power to borrow
Affirmative 33,487,142
Against 144,746
Abstain 863,269
c) issuing senior securities
Affirmative 33,495,858
Against 111,208
Abstain 888,091
3. To approve a change to the fundamental investment policies and
limitations of certain Funds of the Trusts, as follows:
c) to approve a change to the fundamental investment limitation
concerning concentration of investments in a particular industry
with respect to the Funds
Affirmative 34,319,473
Against 133,179
Abstain 42,506
4. To approve a change of the following fundamental policies and
limitations to non-fundamental policies and limitations:
b) limitation on investment in other investment companies
Affirmative 34,341,054
Against 110,609
Abstain 43,495
c) limitation on illiquid securities
FS-239
<PAGE>
Affirmative 34,331,152
Against 120,339
Abstain 43,666
d) limitation on purchasing securities on margin
Affirmative 34,381,212
Against 72,095
Abstain 41,850
e) limitation on purchasing securities of companies for the
purpose of exercising control
Affirmative 33,586,096
Against 866,282
Abstain 42,779
f) limitation on writing or selling put options, call options,
straddles, spreads, or any combinations thereof
Affirmative 34,340,309
Against 111,924
Abstain 42,924
6. To ratify the appointment of two Trustees to the Board of Trustees
of each Trust.
Elected Trustees Current Trustees
Ms. Marilyn McCoy Mr.Will M. Caldwell Mr. Donald B. Sutherland
Mr. John P. Gould Dr. Nicholas J.DeGrazia Mr. Donald L. Tuttle
Mr. Julius L. Pallone
Affirmative 34,547,392
Against 24,423
Abstain 15,656
7. To approve amendments to the Amended and Restated Declaration of
Trust of The Woodward Funds.
Affirmative 34,412,698
Against 66,044
Abstain 16,414
8. To transact such other business as may properly come before the
Meetings or any adjournment thereof.
Affirmative 34,530,401
Against 33,164
Abstain 23,906
FS-240
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
<S> <C>
ASSETS:
Investment in securities:
At cost ..................................................... $158,349,956
============
At value (Note 2) ........................................... $171,165,200
Cash ............................................................. 157,211
Unrealized appreciation on foreign exchange contracts ............ 4,590
Withholding tax receivable ....................................... 235,655
Income receivable ................................................ 715,218
Deferred organization costs, net (Note 2) ........................ 42,883
Prepaids and other assets ........................................ 288
------------
TOTAL ASSETS ........................................... $172,290,763
============
LIABILITIES:
Payable for securities purchased ................................. 5,774,995
Unrealized depreciation on foreign exchange contracts ............ 11,096
Accrued investment advisory fee .................................. 99,420
Accrued distribution fees ........................................ 736
Accrued custodial fee ............................................ 22,561
Other payables and accrued expenses .............................. 57,784
------------
TOTAL LIABILITIES ...................................... 5,966,592
------------
NET ASSETS ............................................. $166,354,453
------------
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share).......................... $ 1,437,191
Additional paid-in capital ....................................... 151,085,550
Accumulated undistributed net investment income .................. 1,208,287
Accumulated undistributed net realized losses from investments and
foreign currency transactions .................................. (193,767)
Net unrealized appreciation on investments and
foreign currency translation ................................... 12,817,192
------------
TOTAL NET ASSETS ....................................... $166,354,453
============
Shares of capital stock outstanding .............................. 14,371,906
============
Net asset value and redemption price per share ................... $11.57
============
Maximum offering price per share ................................. $12.18
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-241
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
<S> <C>
INVESTMENT INCOME (Note 2)
Interest ..................................................... $ 313,551
Dividends (net of foreign taxes withheld of $201,056) ........ 1,676,338
-------------
TOTAL INVESTMENT INCOME .................................. 1,989,889
-------------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee ...................................... 508,218
Distribution fees ............................................ 3,848
Professional fees ............................................ 17,973
Custodial fee ................................................ 117,338
Amortization of deferred organization costs .................. 6,276
Marketing expenses ........................................... 13,928
Registration, filing fees and other expenses ................. 114,824
-------------
NET EXPENSES ............................................ 782,405
-------------
NET INVESTMENT INCOME ............................................ $ 1,207,484
-------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investment securities .................................... 3,083
Foreign currency transactions ............................ (42,594) (39,511)
-------------
Net change in unrealized appreciation (depreciation) on:
Investment securities .................................... 5,289,444
Assets and liabilities denominated
in foreign currencies .................................. (4,281) 5,285,163
------------- -------------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS AND FOREIGN CURRENCY ....................... 5,245,652
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ....................... $ 6,453,136
=============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-242
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended
June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995
--------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ...................................... $ 1,207,484 $ 1,001,636
Net realized losses from investments and foreign
currency transactions ................................ (39,511) (148,064)
Net change in unrealized appreciation on investments and
foreign currency translation ......................... 5,285,163 7,529,463
------------- -------------
Net increase in net assets from operations ................ 6,453,136 8,383,035
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................. -- (1,033,171)
In excess of realized gains ................................ -- (3,255)
------------- -------------
Total distributions ..................................... -- (1,036,426)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................................. 57,145,669 74,411,073
Net asset value of shares issued in reinvestment of
distributions to shareholders ............................ -- 720,012
------------- -------------
57,145,669 75,131,085
Less: payments for shares redeemed ......................... (4,532,653) (11,734,863)
------------- -------------
Net increase in net assets from capital share transactions . 52,613,016 63,396,222
------------- -------------
NET INCREASE IN NET ASSETS ................................... 59,066,152 70,742,831
NET ASSETS:
Beginning of period ........................................ 107,288,301 36,545,470
------------- -------------
End of period .............................................. $ 166,354,453 $ 107,288,301
============= =============
CAPITAL SHARE TRANSACTIONS:
Shares sold .................................................. 5,060,165 7,102,657
Shares issued in reinvestment of distributions to shareholders -- 65,214
------------- -------------
5,060,165 7,167,871
Less: shares redeemed ........................................ (401,150) (1,107,679)
------------- -------------
NET INCREASE IN SHARES OUTSTANDING ........................... 4,659,015 6,060,192
------------- -------------
CAPITAL SHARES:
Beginning of period ........................................ 9,712,891 3,652,699
------------- -------------
End of period .............................................. 14,371,906 9,712,891
============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-243
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT ---- 7.52%
Salomon Brothers, Revolving Repurchase Agreement,
5.53%, 7/1/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/99 through
8/15/00, all held at Chemical Bank)
(Cost $102,477) ..................................... $12,865,298 $ 12,865,298
-------------
SHARES
------
COMMON STOCKS ---- 92.48%
ARGENTINA ---- 1.31%
BANKS
Bco Frances Rio Pl ............................ 12,200 117,530
Bco De Galicia Bue 'B' ........................ 18,700 119,850
CONSTRUCTION
Astra Cia Argentin ............................ 21,000 50,471
Ciadea Sa ..................................... 14,100 100,252
Perez Companc Sa 'B' .......................... 57,600 382,141
Ypf Sa Class 'D' .............................. 22,900 524,007
FOOD & AGRICULTURE
Molinos Rio Plata 'B' ......................... 3,100 33,372
LIQUOR & TOBACCO
Ba Embotelladora 'B' .......................... 50 33,548
MISCELLANEOUS
Comercial Del Plata ........................... 31,700 99,679
NON-FERROUS METALS
Siderca Sa .................................... 164,600 224,998
TELEPHONE
Telefonica De Argentina Class 'B' ............. 186,700 557,155
-------------
2,243,003
-------------
AUSTRALIA ---- 1.87%
BANKS
National Australia Bank ........................... 40,112 370,951
Westpac Bank Corp ................................. 55,410 245,528
CHEMICALS
Ici Australia .................................... 11,453 100,417
CONSTRUCTION
Boral Limited ..................................... 17,000 44,154
Csr Limited ....................................... 27,466 97,061
</TABLE>
FS-244
<PAGE>
<TABLE>
<S> <C> <C>
Pioneer International ................................. 38,380 111,766
ENERGY RAW MATERIAL
Broken Hill Pty........................................ 38,550 533,089
Santos Limited ........................................ 33,203 114,983
FOOD & AGRICULTURE
Amcor Limited ......................................... 22,913 155,992
Goodman Fielder Limited ............................... 23,031 23,383
LIQUOR & TOBACCO
Coca-Cola Amatil ...................................... 14,601 162,379
Fosters Brewing Gp .................................... 22,347 38,518
MEDIA
News Corporation (Aust Listing) ....................... 37,849 214,780
News Corporation Preferred Limited Voting Shares ...... 36,099 176,153
MULTI-INDUSTRY & CONGLOMERATES
Pacific Dunlop Limited ................................ 44,367 99,869
NON-FERROUS METALS
Cra Limited ........................................... 10,570 162,723
Mim Holding Limited ................................... 24,231 31,277
WMC Ltd ............................................... 36,388 260,617
RAILROAD & SHIPPING
Brambles Inds Limited ................................. 8,027 111,696
REAL PROPERTY
Gen Property Tst Units (Aust Listing) ................. 40,000 68,631
RETAIL
Coles Myer Limited .................................... 18,791 68,328
------------
3,192,295
------------
BELGIUM---- 2.72%
BANKS
Generale De Banque .................................... 1,300 451,259
Kredietbank ........................................... 1,550 463,581
CHEMICALS
Solvay ................................................ 850 521,600
ENERGY & UTILITIES
Electrabel ............................................ 4,250 907,546
Tractebel Inv Cap ..................................... 1,300 532,175
</TABLE>
FS-245
<PAGE>
<TABLE>
<S> <C> <C>
INSURANCE
Fortis Ag ............................................. 3,780 495,892
Fortis Ag(VVPR) Strip ................................. 80 46
INTERNATIONAL OIL
Petrofina Sa .......................................... 2,160 677,047
NON-FERROUS METALS
Union Miniere * ....................................... 1,804 138,198
OTHER ENERGY SOURCES
Gpe Bruxelles Lam ..................................... 2,300 287,784
PRODUCER GOODS
Bekaert Sa ............................................ 220 176,258
------------
4,651,386
------------
DENMARK ---- 2.22%
BANKS
Den Danske Bank........................................ 5,341 357,870
Unidanmark 'A' (Regd) ................................. 5,235 242,770
BUSINESS MACHINE
Iss International Series 'B' .......................... 2,800 62,537
Sophus Berendsen 'B' .................................. 2,521 337,049
DRUGS & MEDINCINE
Novo-Nordisk As 'B' ................................... 3,626 513,117
FOOD & AGRICULTURE
Danisco ............................................... 7,019 349,436
LIQUOR & TOBACCO
Carlsberg 'A' ......................................... 275 16,176
Carlsberg 'B' ......................................... 3,943 231,929
RAILROAD & SHIPPING
D/S 1912 'B' ......................................... 23 521,542
D/S Svendborg 'B' .................................... 14 457,095
TELEPHONE
Tele Danmark 'B' ...................................... 14,030 702,349
------------
3,791,870
------------
FINLAND ---- 3.37%
BANKS
Merita Ltd 'A' * ...................................... 182,000 379,991
</TABLE>
FS-246
<PAGE>
<TABLE>
<S> <C> <C>
CONSTRUCTION
Metro AB 'A' .......................................... 3,900 176,284
ELECTRONICS
Nokia (AB) Oy Series 'K' .............................. 22,200 810,896
Nokia (AB) Oy Series 'A' .............................. 38,100 1,402,333
FOOD & AGRICULTURE
Cultor Oy Series 2 .................................... 3,000 153,684
Cultor Oy Series 1 .................................... 4,000 195,441
INSURANCE
Pohjola Series 'B' .................................... 6,000 101,380
Sampo 'A' ............................................. 3,500 202,652
NON-FERROUS METALS
Outokumpo Oy 'A' ...................................... 23,500 394,541
PAPER & FOREST PRODUCTS
UPM-'Kymmene Oy * ..................................... 63,900 1,321,765
PRODUCER GOODS
Kone Corp 'B' ......................................... 1,500 166,921
RETAIL
Kesko ................................................. 21,000 309,628
Stockmann Oy 'A' ...................................... 1,600 87,819
TRAVEL & RECREATION
Amer Group 'A' ........................................ 3,800 63,798
------------
5,767,133
------------
FRANCE ---- 5.05%
BANKS
Banque National Paris ................................. 3,615 126,888
Cie De Suez ........................................... 3,751 137,199
Cie Fin Paribas 'A' ................................... 3,671 216,776
Societe Generale ...................................... 2,829 311,031
CHEMICALS
Air Liquide ('L') ..................................... 2,559 451,844
Rhone Poulenc Sa 'A' ................................. 8,486 223,026
CONSTRUCTION
Cie De St Gobain ...................................... 2,634 352,524
Lafarge Coppee Sa (Br) ................................ 2,600 157,321
</TABLE>
FS-247
<PAGE>
<TABLE>
<S> <C> <C>
CONSUMER DURABLES
Printemps (Av) ........................................ 600 209,903
DRUGS & MEDICINE
L'Oreal ............................................... 1,235 409,980
Sanofi ................................................ 3,139 235,238
ELECTRONICS
Alcatel Alsthom (Cge) ................................. 4,194 365,787
Csf (Thomson) ......................................... 4,520 127,046
Legrand ............................................... 950 169,772
Schneider Sa (Ex-Sp) .................................. 4,780 250,695
ENERGY & UTILITIES
Eaux (Cie Generale) ................................... 4,357 486,642
Lyonnaise Des Eaux .................................... 2,103 200,819
FOOD & AGRICULTURE
Danone (Ex Bsn) ....................................... 1,913 289,472
Eridania Beghin Sa .................................... 1,111 173,941
Saint Louis ........................................... 350 92,937
INSURANCE
Axa ................................................... 4,312 235,866
INTERNATIONAL OIL
Elf Auqitaine (Soc Nat) ............................... 6,116 449,782
Total B .............................................. 6,566 486,957
LIQUOR & TOBACCO
Lvmh Moet-Hennessy .................................... 2,300 545,503
Pernod-Ricard ......................................... 1,114 71,409
MEDIA
Havas ................................................. 500 40,889
MOTOR VEHICLES
Peugeot Sa ............................................ 2,543 340,345
PRODUCER GOODS
Michelin (Cgde) Class 'B' (Brwn Bds)(Reg) ............. 5,200 254,137
REAL PROPERTY
Sefimeg (Regd) ........................................ 2,786 188,328
RETAIL
Carrefour ............................................. 886 496,344
Carrefour New(B/R 07/02/98) * ......................... 786 217,108
Promodes .............................................. 433 124,818
</TABLE>
FS-248
<PAGE>
<TABLE>
<S> <C> <C>
TRAVEL & RECREATION
Accor ................................................. 1,407 196,780
------------
8,637,107
------------
GERMANY ---- 6.22%
AIR TRANSPORT
Lufthansa Ag ......................................... 2,407 340,776
BANKS
Bayer Vereinsbank ..................................... 7,240 202,625
Deutsche Bank ......................................... 14,640 693,461
Dresdner Bank ......................................... 20,640 517,987
BONDS
Preussag 5.75% (W-Wts)05/17/01 ........................ 26,000 19,763
CHEMICALS
Basf (Var) ........................................... 1,526 434,600
Bayer (Var) ........................................... 17,000 598,073
Schering .............................................. 2,300 166,742
CONSTRUCTION
Hochtief .............................................. 657 293,508
ELECTRONICS
Siemens (Var) ......................................... 16,190 867,713
SAP N/V Pref .......................................... 1,700 252,631
ENERGY & UTILITIES
Rwe (Var) ............................................. 13,160 511,827
Veba .................................................. 14,250 757,372
INSURANCE
Munchener Ruckvers Reg Vink ........................... 195 398,420
Allianz (Regd) ........................................ 700 1,216,840
MOTOR VEHICLES
Daimler-Benz (Var) .................................... 1,434 769,221
Daimler-Benz Rts (07/03/96) * ........................ 1,434 188
Volkswagen (Var) ...................................... 706 262,755
PRODUCER GOODS
Linde ................................................. 456 295,534
Mannesmann (Var) ...................................... 1,446 497,789
Man AG Non Vtg Pref(Var) .............................. 900 175,017
</TABLE>
FS-249
<PAGE>
<TABLE>
<S> <C> <C>
RETAIL
Kaufhof Holding ....................................... 902 341,034
STEEL
Preussag Br (Var) ..................................... 1,374 346,177
Thyssen ............................................... 1,066 195,042
Viag (Var) ............................................ 1,019 405,688
Viag (RFD 01/01/96) * ................................. 204 78,537
------------
10,639,320
------------
HONG KONG ---- 3.27%
AIR TRANSPORT
Cathay Pacific Airways ................................ 82,000 150,429
BANKS
Hang Seng Bank ........................................ 61,900 623,758
ENERGY & UTILITIES
China Light & Power ................................... 51,700 234,438
Hong Kong Electric .................................... 20,000 60,978
Hong Kong & China Gas ................................. 141,760 226,178
Hong Kong & China Gas Wts 09/30/97 * .................. 8,480 2,218
INSURANCE
Hysan Development Wts (04/30/98) * .................... 500 265
MULTI-INDUSTY & CONGLOMERATES
Hutchinson Whampoa .................................... 122,000 767,572
MISCELLANEOUS FINANCE
Swire Pacific 'A' ..................................... 65,000 556,327
Wharf (Holding) ....................................... 46,000 164,615
Wing Lung Bank ........................................ 43,177 249,897
REAL PROPERTY
Cheung Kong (Holdings) ................................ 86,000 619,404
Hopewell Holdings ..................................... 130,000 70,538
Hysan Development ..................................... 40,000 122,473
New World Development Co .............................. 57,089 264,775
Sun Hung Kai Properties ............................... 76,700 775,372
TELEPHONE
Hong Kong Telecomm .................................... 395,846 710,840
------------
5,600,077
------------
</TABLE>
FS-250
<PAGE>
<TABLE>
<S> <C> <C>
IRELAND ---- 2.82%
BANKS
Allied Irish Banks .................................... 133,396 692,607
Bank of Ireland (Dublin Listing) ...................... 45,825 311,870
CONSTRUCTION
Crh ................................................... 109,159 1,077,727
FOOD & AGRICULTURE
Greencore ............................................. 92,777 481,709
Kerry Group 'A' ....................................... 60,002 616,364
INSURANCE
Irish Life ............................................ 111,061 438,247
MEDIA
Independent News (Dublin Listing) ..................... 74,356 332,610
PAPER & FOREST PRODUCTS
Smurfit(Jefferson) (Dublin Listing) ................... 325,442 873,461
------------
4,824,595
------------
JAPAN ---- 29.63%
AIR TRANSPORT
Japan Airlines Co ..................................... 57,000 460,962
BANK
Asahi Bank ............................................ 42,000 486,317
Bank of Tokyo MITS - Ex Mitsubishi Bank ............... 66,000 1,528,426
Dai-Ichi Kangyo Bank .................................. 58,000 1,078,760
Fuji Bank ............................................. 50,000 1,075,842
Industrial Bank of Japan .............................. 26,000 644,776
Joyo Bank ............................................. 36,000 272,753
Sakura Bank ........................................... 19,000 211,339
Sumitomo Bank ......................................... 52,000 1,005,092
Tokai Bank ............................................ 34,000 440,184
BUSINESS MACHINE
Canon Inc ............................................. 21,000 436,537
Fujitsu ............................................... 61,000 556,156
Ricoh ................................................. 55,000 581,684
CHEMICALS
Asahi Chemical Industries ............................. 78,000 556,119
Dainippon Ink & Chemical .............................. 60,000 307,436
</TABLE>
FS-251
<PAGE>
<TABLE>
<S> <C> <C>
Mitsubishi Gas Chemical ............................... 19,000 83,670
Sekisui Chemical ...................................... 26,000 317,647
Shin-Etsu Chemical .................................... 22,650 433,665
Showa Denko Kk *....................................... 102,000 314,328
Sumitomo Chemical ..................................... 92,000 438,688
Toray Industries Inc .................................. 57,000 392,883
CONSTRUCTION
Chichibu Onoda Cement ................................. 50,000 286,739
Daiwa House Industry .................................. 40,000 619,977
Fujita Corp ........................................... 6,000 27,899
Haseko Corp ........................................... 134,000 580,317
Kajima Corp ........................................... 11,000 113,328
Nihon Cement Co ....................................... 30,000 220,730
Obayashi Corp ......................................... 16,000 144,564
Sato Kogyo Co ......................................... 65,000 398,244
Sekisui House ......................................... 48,000 547,039
Shimizu Corp .......................................... 36,000 397,150
Taisei Corp ........................................... 47,000 333,384
Toto .................................................. 15,000 225,653
CONSUMER DURABLES
Matsushita Electric Industries ........................ 67,000 1,246,154
Sanyo Electric Co ..................................... 88,000 536,754
Sharp Corp ............................................ 30,000 525,157
DRUGS & MEDICINE
Daiichi Pharmacy Co ................................... 37,000 570,105
Sankyo Co ............................................. 23,000 595,543
Takeda Chemical Industries ............................ 46,000 813,629
ELECTRONICS
Hitachi ............................................... 97,000 902,067
Kyocera ............................................... 11,000 777,251
Mitsubishi Electric Corp .............................. 53,000 369,178
Omron Corp ............................................ 28,000 594,813
Sony .................................................. 17,000 1,117,509
ENERGY & UTILITIES
Kansai Electric Power ................................. 26,000 594,996
Osaka Gas Co .......................................... 124,000 453,349
Tokyo Electric Power .................................. 55,300 1,401,640
</TABLE>
FS-252
<PAGE>
<TABLE>
<S> <C> <C>
Tokyo Gas Co .......................................... 15,000 54,704
FOOD & AGRICULTURE
Ajinomoto Co .......................................... 54,000 644,958
Yamazaki Baking Co .................................... 14,000 259,114
INTERNATIONAL OIL
Japan Energy Corp ..................................... 107,000 397,050
Nippon Oil Co ......................................... 86,000 582,578
MEDIA
Dai Nippon Printing ................................... 33,000 637,847
MULTI-INDUSTRY
Itochu Corp ........................................... 124,000 865,998
Marubeni Corp ......................................... 163,000 891,673
Mitsubishi ............................................ 29,000 380,739
Sumitomo Corp ......................................... 34,000 301,929
MISCELLANEOUS FINANCE
Daiwa Securities ...................................... 107,000 1,375,528
Mitsubishi Trust & Banking ............................ 11,000 185,537
Nomura Securities ..................................... 61,000 1,190,173
Yamaichi Securities ................................... 105,000 719,903
MOTOR VEHICLES
Honda Motor Co ........................................ 30,000 776,795
Nissan Motor Co ....................................... 53,000 470,170
Toyota Motor Corp ..................................... 64,000 1,598,811
NON-FERROUS METALS
Mitsubishi Steel *..................................... 17,000 99,506
Tostem Corp ........................................... 13,000 382,836
PAPER & FOREST PRODUCTS
Daishowa Paper Manufacturing *......................... 13,000 100,154
Honshu Paper Co ....................................... 56,000 396,712
PRODUCER GOODS
Bridgestone Corp ...................................... 31,000 590,710
Komatsu ............................................... 33,000 324,941
Kubota Corp ........................................... 68,000 448,243
Mitsubishi Heavy Industries ........................... 138,000 1,199,054
Nippondenso Co ........................................ 28,000 607,577
Sumitomo Heavy Industries ............................. 83,000 362,477
Toyo Seikan Kaisha .................................... 12,000 417,937
</TABLE>
FS-253
<PAGE>
<TABLE>
<S> <C> <C>
Toyoda Auto Loom ...................................... 12,000 239,603
RAILROAD & SHIPPING
East Japan Railway .................................... 38 199,213
Hankyu Corp ........................................... 65,000 380,465
Hitachi Zosen Corp .................................... 12,000 67,942
Mitsui Osk Lines * .................................... 63,000 217,120
Nagoya Railroad Co .................................... 74,000 377,147
Tokyu Corp ............................................ 114,000 867,877
REAL PROPERTY
Mitsubishi Estate ..................................... 114,000 1,569,454
RETAIL
Ito-Yokado Co ......................................... 19,000 1,145,043
Nichii Co ............................................. 56,000 929,236
Seven-Elevan Japan Npv ................................ 15,000 955,950
STEEL
Kawasaki Steel Corp ................................... 47,000 169,263
Kobe Steel * .......................................... 69,000 198,165
Nippon Steel Corp ..................................... 108,000 370,236
Nkk Corp * ............................................ 48,000 145,293
Sumitomo Metal Industries ............................. 156,000 477,893
TRAVEL & RECREATION
Nikon ................................................. 13,000 149,342
------------
50,739,329
------------
MALAYSIA ---- 1.87%
AIR TRANSPORT
Malaysian Airline Systems ............................. 8,000 25,489
BANKS
Ammb Holdings Berhad .................................. 13,000 182,347
Commerce Asset Holding ................................ 5,000 30,458
Dcb Holdings Berhad ................................... 17,000 58,251
Malayan Bkg Berhad .................................... 32,000 307,786
Public Bank Berhad .................................... 14,000 23,565
Public Bank Berhad (Alien Market) ..................... 51,000 141,029
CONSTRUCTION
Hume Inds (M) Berhad .................................. 16,000 78,229
United Engineers Berhad ............................... 22,000 152,531
</TABLE>
FS-254
<PAGE>
<TABLE>
<S> <C> <C>
CONSUMER DURABLES
Tech Res Inds Berhad * ................................ 39,000 135,979
ENERGY & UTILITIES
Tenaga Nasional ....................................... 74,000 311,393
FOOD & AGRICULTURE
Golden Hope Plants .................................... 67,000 104,182
Nestle Malay Berhad ................................... 2,000 16,111
LIQUOR & TOBACCO
Rothmans Pall Mall .................................... 10,000 105,200
MISCELLANEOUS
Malayan Utd Inds ...................................... 229,000 185,385
MOTOR VEHICLES
Edaran Otomobil ....................................... 17,000 162,830
MULTI-INDUSTRY & CONGLOMERATES
Sime Darby Berhad ..................................... 52,200 144,347
PRODUCER GOODS
Leader Univ Holdings .................................. 41,333 116,782
RAILROAD & SHIPPING
Malaysian Int Ship (Alien Market) ..................... 22,000 68,330
REAL PROPERTY
Hong Leong Properties ................................. 123,000 142,952
TELEPHONE
Telekom Malaysia ...................................... 41,000 364,775
TRAVEL & RECREATION
Landmarks Berhad ...................................... 63,000 84,834
Magnum Corp Berhad .................................... 92,250 156,015
Resorts World Berhad .................................. 19,000 108,887
------------
3,207,687
------------
MEXICO ---- 1.26%
BANKS
Gpo Financiero Banamex-Ac Series 'B' .................. 43,000 89,634
Gpo Financiero Banamex-Ac Series 'L' .................. 21,016 39,926
CONSTRUCTION
Cemex Sa Ser 'A' ...................................... 53,937 194,977
FOOD & AGRICULTURE
Grupo Ind Bimbo Series 'A' ............................ 22,000 100,716
</TABLE>
FS-255
<PAGE>
<TABLE>
<S> <C> <C>
LIQUOR & TOBACCO
Empresas La Modern 'A' ................................ 7,000 31,307
MEDIA
Fomento Economico Mexico Series'B' .................... 17,000 48,669
Grupo Televisa Ptg Certs Repr 1 A,L,D Shs ............. 11,500 180,547
MISCELLANEOUS FINANCE
Grupo Financiero Bancomer Series 'B' .................. 55,000 23,945
Grupo Financiero Bancomer Series 'L' .................. 2,037 675
Grupo Carso Series 'A1' * ............................. 16,000 113,355
MULTI-INDUSTRY
Desc Sa de Cv Ser'B' .................................. 6,000 32,455
MULTI-INDUSTRY & CONGLOMERATES
Alfa Sa Series 'A' (Cpo) ............................ 64,400 289,725
NON-FERROUS METALS
Industrias Penoles .................................... 21,500 98,427
PAPER & FOREST PRODUCTS
Kimberly Clark Mexico 'A' ............................. 12,900 234,863
RETAIL
Cifra Sa De Cv 'B' * ................................. 159,000 229,488
TELEPHONE
Telefonos De Mexico Series 'L' (Ltd Vtg) .............. 260,000 441,809
------------
2,150,518
------------
NETHERLANDS ---- 4.99%
AIR TRANSPORT
Klm ................................................... 2,341 74,880
BANK
ABN Amro Holding ...................................... 14,194 761,680
CHEMICALS
Akzo Nobel Nv ......................................... 3,096 370,908
ELECTRONICS
Philips Electronic .................................... 11,082 360,316
FOOD & AGRICULTURE
Ahold (kon) Nv ........................................ 4,389 237,837
Unilever Nv Cva ....................................... 6,232 901,772
INSURANCE
ING Groep Nv Cva ...................................... 30,890 921,103
</TABLE>
FS-256
<PAGE>
<TABLE>
<S> <C> <C>
INTERNATIONAL OIL
Royal Dutch Petroleum (Br) ............................ 20,281 3,131,895
LIQUOR & TOBACCO
Heineken Nv ........................................... 1,734 387,438
MEDIA
Elsevier Nv ........................................... 23,480 356,263
Wolters Kluwer Cva .................................... 2,618 297,386
PAPER & FOREST PRODUCTS
KNP BT (Kon) Nv ....................................... 2,446 58,607
STEEL
Kon Hoogovens Nv Cva .................................. 1,568 58,054
TELEPHONE
Kon Ptt nederland ..................................... 16,563 626,822
------------
8,544,961
------------
NORWAY ---- 3.25%
AIR TRANSPORT
Helicopter Service .................................... 4,000 46,180
CHEMICALS
Dyno Industrier ....................................... 10,400 230,530
DRUGS & MEDICINE
Nycomed Series 'A' * .................................. 12,260 176,455
Nycomed Series 'B' * .................................. 8,468 117,315
ENERGY & UTILITIES
Hafslund Ser 'A' ...................................... 17,560 127,044
Hafslund Ser 'B' ...................................... 14,268 90,049
FOOD & AGRICULTURE
Orkla As 'A' ......................................... 9,100 479,070
Orkla As 'B' ......................................... 2,350 114,311
INSURANCE
Uni Storebrand As 'A' * ............................... 65,053 292,403
INTERNATIONAL OIL
Norsk Hydro As ........................................ 44,900 2,197,887
Transocean * .......................................... 14,721 381,829
MOTOR VEHICLES
Petroleum Geo Svs * ................................... 2,500 71,579
</TABLE>
FS-257
<PAGE>
<TABLE>
<S> <C> <C>
PAPER & FOREST PRODUCTS
Norske Skogsindust 'A' ................................ 5,800 174,991
PRODUCER GOODS
Kvaerner As Series 'A' ................................ 9,900 418,321
Kvaerner As Series 'B' ................................ 3,900 150,685
RAILROAD & SHIPPING
Bergesen Dy As 'A' ................................... 10,000 207,810
Bergesen Dy As 'B' Non-Voting ........................ 7,100 143,173
Leif Hoegh & Co ....................................... 4,600 80,014
Unitor As ............................................. 4,000 64,652
------------
5,564,298
------------
PAPUA NEW GUINEA -- 0.00%
GOLD
Highland Gold Ltd ..................................... 4,846 2,403
------------
2,403
------------
SINGAPORE ---- 2.84%
AIR TRANSPORT
Singapore Airlines (Alien Market) ..................... 70,000 738,960
BANK
Dev Bank Singapore (Alien Market) ..................... 35,250 439,550
Overseas Chinese Bank (Alien Market) .................. 45,833 535,795
United Overseas Bank (Alien Market) ................... 56,804 543,312
CONSUMER DURABLES
Jardine Matheson (Sing Quote) ......................... 2,041 15,001
ENERGY & UTILITIES
Singapore Telecom ..................................... 192,000 511,477
LIQUOR & TOBACCO
Fraser & Neave ........................................ 21,600 223,431
Straits Trading Co .................................... 36,000 94,372
MEDIA
Singapore Press Holdings (Alien Market) ............... 19,000 372,881
MOTOR VEHICLES
Cycle & Carriage ...................................... 30,000 320,948
MULTI-INDUSTRY & CONGLOMERATES
Straits Steamship ..................................... 44,000 147,140
Straits Steamship Wts 12/12/00 * ...................... 11,000 13,794
</TABLE>
FS-258
<PAGE>
<TABLE>
<S> <C> <C>
PRODUCER GOODS
Jurong Shipyard (Nl) .................................. 13,000 65,855
Keppel Corp ........................................... 50,000 418,012
REAL PROPERTY
City Developments ..................................... 44,600 347,588
Hong Kong Land Holdings (Sing Quote) .................. 25,975 58,444
RETAIL
Dairy Farms Intl (Sing Quote) ......................... 21,831 18,447
------------
4,865,007
------------
Spain ---- 3.37%
BANKS
Argentaria Corp Banc .................................. 6,069 264,609
Banco Bilbao Vizcaya (Regd) ........................... 14,688 594,573
Banco Central Hispan (Regd) ........................... 8,704 177,188
Banco Santander (Regd) ................................ 10,046 468,565
CONSTRUCTION
Fomento Const Y Contra ................................ 1,149 94,995
ENERGY & UTILITIES
Empresa Nac Electricid ................................ 13,522 842,680
Gas Natural Sdg Sa .................................... 1,963 411,858
Iberdrola Sa .......................................... 60,183 617,269
Union Electrical Fenosa ............................... 12,958 83,280
INSURANCE
Corporation Mapfre (Regd) ............................. 3,224 164,455
INTERNATIONAL OIL
Repsol Sa ............................................. 15,167 527,014
LIQUOR & TOBACCO
Tabacalera Sa Series 'A' (Regd) ....................... 1,599 80,442
NON-FERROUS METALS
Acerinox Sa (Regd) .................................... 1,136 118,286
PRODUCER GOODS
Zardoya-Otis .......................................... 1,196 114,536
RAILROAD & SHIPPING
Autopistas Cesa ....................................... 19,283 224,097
REAL PROPERTY
Vallehermoso Sa ....................................... 2,815 55,549
</TABLE>
FS-259
<PAGE>
<TABLE>
<S> <C> <C>
TELEPHONE
Telefonica De Espana .................................. 50,748 934,127
------------
5,773,523
------------
SWITZERLAND ---- 4.37%
BANKS
Cs Holding (Regd) .................................... 6,834 649,744
Schweiz Bangesellsch (Br) ............................. 566 553,953
Schweiz Bangesellsch (Regd) ........................... 252 53,354
Schweiz Bankverein (Regd) ............................. 1,150 226,942
CHEMICALS
Ciba-Geigy (Br) ....................................... 260 315,330
Ciba-Geigy (Regd) ..................................... 380 462,992
CONSTRUCTION
Holderbank Fn Glarus (Br) ............................. 338 270,045
CONSUMER DURABLES
Smh Ag Neuenburg (Regd) ............................... 475 74,193
Smh Ag Neuenburg (Br) ................................. 105 72,984
DRUGS & MEDICINE
Roche Holdings Genusscheine Npv ....................... 137 1,044,760
Roche Holdings (Br) ................................... 44 546,642
Sandoz (Regd) ......................................... 935 1,068,985
ELECTRONICS
Abb (Br) .............................................. 340 420,504
Sgs Holding (Br) ...................................... 24 57,429
FOOD & AGRICULTURE
Merkur Hldg Ag (Regd) ................................. 80 16,810
Nestle Sa (Regd) ...................................... 924 1,054,932
INSURANCE
Zurich Versicherun (Regd) ............................ 1,650 449,530
NON-FERROUS METALS
Alusuisse-Lonza Holdings (Regd) ....................... 158 130,400
PRODUCER GOODS
Sulzer Ag Ptg ......................................... 13 7,790
------------
7,477,319
------------
</TABLE>
FS-260
<PAGE>
<TABLE>
<S> <C> <C>
UNITED KINGDOM -- 12.05%
AIR TRANSPORT
British Airways ....................................... 44,575 383,704
BANKS
Abbey National ........................................ 38,813 326,264
Barclays .............................................. 62,474 750,367
Hsbc Holdings (UK Regd) ............................... 50,350 771,386
Hsbc Holdings (UK Regd) ............................... 26,947 422,052
LLoyds Bank ........................................... 149,093 729,731
CHEMICALS
Boc Group ............................................. 19,232 276,116
Imperial Chemical Industries .......................... 25,167 308,143
CONSTRUCTION
English China Clay .................................... 33,609 135,254
Rmc Group ............................................. 19,470 306,458
Taylor Woodrow ........................................ 91,386 221,513
DRUGS & MEDICINE
Glaxo Holdings ........................................ 77,813 1,047,649
Smithkline Beecham .................................... 63,516 679,489
Zeneca Group .......................................... 25,438 562,449
ELECTRONICS
General Electric Co ................................... 69,443 374,415
ENERGY & UTILITIES
British Gas ........................................... 133,516 373,423
National Power ........................................ 40,500 327,230
Thames Water .......................................... 26,744 235,616
FOOD & AGRICULTURE
Associated British Foods .............................. 41,799 251,346
Cadbury Schweppes ..................................... 27,535 217,770
Kingfisher ............................................ 31,197 313,626
Sainsbury (J) ......................................... 48,409 285,076
Tesco ................................................. 47,446 216,741
Unilever .............................................. 17,926 356,524
INSURANCE
Prudential Corp ....................................... 79,566 501,936
INTERNATIONAL OIL
British Petroleum ..................................... 145,089 1,272,605
</TABLE>
FS-261
<PAGE>
<TABLE>
<S> <C> <C>
LIQUOR & TOBACCO
BAT Industries ........................................ 74,310 578,469
Bass .................................................. 32,124 403,806
Grand Metropolitan .................................... 47,103 312,516
Guinness .............................................. 64,119 466,260
MEDIA
British Sky Broadcasting .............................. 47,324 323,541
Reuters Holdings ...................................... 47,479 574,691
MULTI-INDUSTRY
Inchcape .............................................. 14,451 66,015
MULTI-INDUSTRY & CONGLOMERATES
Hanson ................................................ 145,900 409,192
PRODUCER GOODS
Btr ................................................... 114,438 450,758
Rolls Royce ........................................... 79,712 277,439
Rtz Corp (Regd) ....................................... 30,154 446,512
Smiths Industries ..................................... 28,460 311,317
REAL PROPERTY
Mepc .................................................. 52,543 331,464
RETAIL
Argos ................................................. 23,339 270,530
Boots Co .............................................. 31,574 284,056
Great Univ Stores ..................................... 19,328 196,408
Marks & Spencer ....................................... 86,326 631,097
Sears ................................................. 86,891 133,661
STEEL
British Steel ......................................... 84,490 215,957
TELEPHONE
British Telecom ....................................... 168,816 907,580
Cable & Wireless ...................................... 75,770 501,536
Vodafone Group ........................................ 98,389 366,140
</TABLE>
FS-262
<PAGE>
<TABLE>
<S> <C> <C>
TRAVEL & RECREATION
Ladbroke Group ........................................ 64,565 180,578
Thorn Emi ............................................. 12,257 341,665
------------
20,628,071
------------
TOTAL COMMON STOCKS ................................... 158,299,902
------------
(COST $145,484,658)
TOTAL INVESTMENTS ..................................... $171,165,200
============
(COST $158,349,956)
<FN>
* Non Income producing security
</TABLE>
FS-263
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
Notes to Portfolio of Investments
At June 30, 1996, sector diversification of the Woodward International
Equity Funds equity investments was as follows:
% of
Sector Diversification Investments
---------------------- -----------
<S> <C>
Banks/Finance ........... 21.66%
Consumer Non-Durables ... 18.16
Materials and Services .. 15.44
Utilities ............... 9.62
Temporary Cash Investment 7.52
Technology............... 7.27
Energy................... 6.45
Capital Goods ........... 4.99
Consumer Durables ....... 3.71
Transportation .......... 3.63
Miscellaneous ........... 1.55
------
Total Investments........ 100.00%
======
</TABLE>
FS-264
<PAGE>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business
trust on April 21, 1987, and registered under the Investment Company Act of
1940, as amended, as an open-end investment company. As of June 30, 1996,
Woodward consisted of seventeen separate series. The Woodward International
Equity Fund (International Fund) commenced operations on December 3, 1994.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed in
the preparation of the financial statements. The policies are in conformity
with generally accepted accounting principles for investment companies.
Following generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Investments
The International Fund values investment securities at market value which
is determined by a pricing service based upon quoted market prices or dealer
quotes at the close of the respective foreign securities exchange. Securities
for which market prices or dealer quotes are not readily available are valued
by the investment advisor, NBD Bank, (NBD) in accordance with procedures
approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day
after trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is required to equal or
exceed 102% of the funds advanced under the repurchase agreement including
accrued interest; 2) collateral is marked to market daily by NBD to assure its
value remains at least equal to 102% of the repurchase agreement amount: and
3) funds are not disbursed by Woodward or its agent unless collateral is
presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis. Dividends are
recorded on the ex-dividend date or upon receipt of ex-dividend notification
in the case of certain foreign securities. Investment income is recorded net
of foreign taxes ??????? of these taxes is uncertain.
FS-265
<PAGE>
Forward Foreign Currency Contracts
The International Fund may enter into a forward foreign currency contract
which is an agreement between two parties to buy and sell a currency at a set
price on a future date. The market value of the contract will fluctuate with
changes in currency exchange rates. The contract is "marked-to-market" daily
using the prevailing exchange rate and the change in market value is recorded
as an unrealized gain or loss. When the contract is closed, a realized gain or
loss is recorded equal to the difference between the value of the contract at
the time it was entered into and the value at the time it was closed.
The International Fund may enter into forward contracts with the
objective of minimizing its risk from adverse changes in the relationship
between currencies or to enhance income. The International Fund may also enter
into a forward contract in relation to a security denominated in a foreign
currency when it anticipates receipt in a foreign currency of dividend
payments in order to "lock in" the U.S. dollar price of a security or the U.S.
dollar equivalent of such dividend payments.
These contracts involve market risk in excess of the amounts reflected in
the International Fund's Statement of Assets and Liabilities. The face or
contract amount in U.S. dollars, as reflected in Footnote 6, reflects the
total exposure the fund has in that particular currency contract. Losses may
arise due to changes in the value of the foreign currency or if the
counterparty does not perform under the contract.
Foreign Currency Translations
The accounting records of the International Fund are maintained in U.S.
dollars. Foreign currency-denominated assets and liabilities are
"marked-to-market" daily using the prevailing exchange rate and the change in
value is recorded as an unrealized gain or loss. Upon receipt or payment, a
realized gain or loss is recorded equal to the difference between the original
value and the settlement value of the asset or liability. Purchases and sales
of securities, income, and expenses are translated into U.S. dollars at
prevailing exchange rate on the respective date of the transaction.
Net realized gains and losses on foreign currency transactions represent
gains and losses from sales and maturities of forward foreign currency
contracts, disposition of foreign currencies and currency gains and losses
realized between trade and settlement dates on securities transactions and
between the ex, pay and settlement dates on dividend income. Exchange rate
fluctuations on investments are not segregated in the statement of operations
from changes arising in market price movements. The effects of changes in
foreign currency exchange rates on investments in securities are included
within the net realized gain or loss on securities sold and net unrealized
appreciation or depreciation on investment securities held.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
FS-266
<PAGE>
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to differing treatments for
foreign currency transactions, wash sales and post October 31 capital losses.
Also, due to the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the net investment
income or realized gains (losses) were recorded by the Fund. Certain
book-to-tax timing differences for the Fund are reflected as excess
distributions in the Statement of Changes in Net Assets. These distributions
do not constitute a tax return of capital.
Shareholder Dividends
Dividends from net investment income are declared and paid annually. Net
realized capital gains are distributed annually. Distributions from net
investment income and net realized gains are made during each year to avoid
the 4% excise tax imposed on regulated investment companies by the Internal
Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the
five year period beginning with the commencement of operations of the Fund.
Expenses
Expenses are charged daily as a percentage of the Fund's assets. Woodward
monitors the rate at which expenses are charged to ensure that a proper amount
of expense is charged to income each year. This percentage is subject to
revision if there is a change in the estimate of the future net assets of the
International Fund or change in expectations as to the level of actual
expenses.
Concentration of Risk
Investing in securities of foreign issuers and currency transactions, may
involve certain considerations and risks not typically associated with
investing in U.S. companies and U.S. government securities. These risks
include revaluation of currencies, adverse fluctuations in foreign currency
values and possible adverse political, social and economic developments,
including those particular to a specific industry, country or region, which
could cause the securities and their markets to be less liquid and price more
volatile than those of comparable U.S. companies and U.S. government
securities.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of 005% of the International Fund's average net assets and
Essex is entitled to receive a fee at the annual rate of .10% of the aggregate
average net assets of Woodward's investment portfolios, attributable to
investments by clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For its
advisory services to Woodward, NBD is entitled to a fee, computed daily and
FS-267
<PAGE>
payable monthly. Under the Advisory Agreement, NBD also provides Woodward with
certain administrative services, such as maintaining Woodward's general ledger
and assisting in the preparation of various regulatory reports. NBD receives
no additional compensation for such services.
NBD, FoM, and Essex have agreed that they may waive their fees in whole
or in part; and, if in part, may specify the particular fund to which such
waiver relates as may be required to satisfy any expense limitation imposed by
state securities laws or other applicable laws. At present, no restrictive
expense limitation is imposed on Woodward. Restrictive limitations could be
imposed as a result of changes in current state laws and regulations in those
states where Woodward has qualified its shares, or by a decision of the
Trustees to qualify the shares in other states having restrictive expense
limitations.
NBD is also compensated for its services as Woodward's Custodian,
Transfer Agent and Dividend Disbursing Agent, and is reimbursed for certain
out of pocket expenses incurred on behalf of Woodward.
On March 10, 1994, Woodward adopted the Woodward Funds Deferred
Compensation Plan (the "Plan"), an unfunded, nonqualified deferred
compensation plan. The Plan allows an individual trustee to elect to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed. Liability for payment of the Trustees' Fees is allocated
equally among each of the individual Woodward Funds. The return on the
Trustees' balances is based on the 90-day Treasury bill rate. The liability is
immaterial at this time.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
FS-268
<PAGE>
(4) Investment Securities Transactions
Information with respect to investment securities and
security transactions, excluding short-term securities, is as
follows:
<TABLE>
<S> <C>
Gross Unrealized Gains $ 16,356,311
Gross Unrealized Losses (3,541,067)
-------------
$ 12,815,244
=============
Federal Income Tax Cost $ 158,349,956
Purchases .............. $ 49,906,238
Sales, at value ........ $ 0
</TABLE>
(5) Expenses
Following is a summary of total expense rates charged,
advisory fee rates payable to NBD, and amounts paid to NBD, FoM,
and Essex pursuant to the agreements described in Note 3 for the
period ended June 30, 1996. The rates shown are stated as a
percentage of the Fund's average net assets.
<TABLE>
<S> <C>
Expense Rates:
January 1 ........................... 1.17%
March 18 ............................. 1.16%
May 21 ............................... 1.15%
NBD Advisory Fee:
January 1 ........................... 0.75%
Amounts Paid:
Advisory Fee to NBD .................. $ 508,218
Distribution Fees to FoM & Essex...... $ 3,848
Other Fees & Out of Pocket
Expenses to NBD ................... $ 120,426
</TABLE>
FS-269
<PAGE>
(6) Forward Foreign Currency Contracts
As of June 30, 1996 the Fund had entered into five forward foreign
currency exchange contracts that obligate the Fund to deliver currencies
at specified future dates.
Outstanding contracts as June 30, 1996 are as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Currency to Value as of Currency to Value as of Unrealized
Settlement Date be Delivered June 30, 1996 be Received June 30, 1996 Gain (Loss)
------------ ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
July 1, 1996 ..... 1,100,848 $1,100,848 120,742,650 $ 1,098,525 $ (2,323)
U.S. Dollars Japanese Yen
July 2, 1996 ..... 808,794 808,794 3,757,576 804,111 (4,683)
U.S. Dollars Finnish Marks
July 2, 1996 ..... 688,422 688,422 75,507,151 684,333 (4,089)
U.S. Dollars Japanese Yen
July 3, 1996 ..... 908,180 908,180 584,489 911,288 3,108
U.S. Dollars G.B. Pounds
July 3, 1996 ..... 666,483 666,483 417,184 667,965 1,482
U.S. Dollars Irish Punt
----------- -------------- -------------
$ 4,172,727 $ 4,166,222 $ (6,505)
=========== ============== =============
</TABLE>
(7) Subsequent Event
On August 23, 1996, the Woodward International Equity Fund merged with
the Prairie International Equity Fund. The transaction was effected as a
tax-free reorganization under the Internal Revenue Code, so that none of the
Fund's shareholders recognized taxable gains or losses as a result of the
reorganization.
FS-270
<PAGE>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the International
Equity Fund's net asset values have changed during the periods presented.
Additional quantitative measures expressed in ratio form analyze important
relationships between certain items presented in the financial statements.
These Financial Highlights have been derived from the financial statements of
the International Equity Fund and other information for the periods presented.
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1996 Year Ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994
----------- ------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of
period ........................... $ 11.05 $ 10.01 $ 10.00
Income from investment operations:
Net investment income ............ 0.10 0.10 0.01
Net realized and unrealized
gains on investments.......... 0.42 1.05 --
--------------- --------------- ---------------
Total from investment operations ..... 0.52 1.15 0.01
--------------- --------------- ---------------
Less distributions:
From net investment income ....... -- (0.11) --
From realized gains .............. -- -- --
--------------- --------------- ---------------
Total distributions .................. -- (0.11) --
--------------- --------------- ---------------
Net asset value, end of
period ........................... $ 11.57 $ 11.05 $ 10.01
=============== =============== ===============
Total Return (b) ..................... 9.58%(a) 11.47% 1.26%(a)
Ratios/Supplemental Data
Net assets, end of period ............ $ 166,354,453 $ 107,288,301 $ 36,545,470
Ratio of expenses to average net
assets ........................... 1.15%(a) 1.16% 1.15%(a)
Ratio of net investment income to
average net assets ............... 1.78%(a) 1.43% 1.18%(a)
Ratio of expenses to average net
assets without reimbursed expenses -- 1.24% 1.92%(a)
Ratio of net investment income
to average net assets without
reimbursed expenses .............. -- 1.35% 0.41%(a)
Portfolio turnover rate .............. 0.00% 2.09% 0.30%
Average commission rate .............. $ 0.1 $ .05
<FN>
- -------------------------------------------------
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented does not include any applicable sales load.
</TABLE>
FS-271
<PAGE>
RESULTS OF SPECIAL SHAREHOLDER MEETING (Unaudited)
On July 10,1996, a special meeting of the shareholders of The Woodward
International Equity Fund was held to approve the following proposals.
The shareholders approved these proposals with respect to The Woodward
International Equity Fund as follows:
1. To approve a new investment advisory agreement ("New Advisory Agreement")
between each Trust, NBD Bank ("NBD") and First Chicago Investment
Management Company ("FCIMCO")
Affirmative 9,126,519
Against 137,907
Abstain 18,593
2. To approve a change to the fundamental investment limitations of each
Fund of the Trust with regard to the following:
a) investment in commodities
Affirmative 9,008,745
Against 241,192
Abstain 33,083
b) expanded power to borrow
Affirmative 9,007,444
Against 248,907
Abstain 26,669
c) issuing senior securities
Affirmative 9,014,825
Against 226,112
Abstain 42,083
3. To approve a change to the fundamental investment policies and
limitations of certain Funds of the Trusts, as follows:
a) to approve a change of the diversification policy of the
International Equity and Municipal Bond Funds from a
diversified to a non-diversified policy
Affirmative 9,014,021
Against 232,693
Abstain 36,305
c) to approve a change to the fundamental investment limitation
concerning concentration of investments in a
particular industry with respect to the Funds
Affirmative 9,035,260
Against 210,111
Abstain 37,649
4. To approve a change of the following fundamental policies and
limitations to non-fundamental policies and limitations:
b) limitation on investment in other investment companies
Affirmative 9,033,904
Against 215,700
Abstain 33,415
c) limitation on illiquid securities
Affirmative 9,030,678
Against 218,607
Abstain 33,734
FS-272
<PAGE>
d) limitation on purchasing securities on margin
Affirmative 9,013,199
Against 235,383
Abstain 34,437
e) limitation on purchasing securities of companies for the purpose
of exercising control
Affirmative 9,033,905
Against 217,621
Abstain 31,493
f) limitation on writing or selling put options, call options,
straddles, spreads, or any combinations thereof
The Woodward International Equity Fund.
Affirmative 9,033,277
Against 219,098
Abstain 30,644
5. To approve certain changes to fundamental investment objectives of the
The Woodward International Equity Fund.
Affirmative 9,044,735
Against 208,414
Abstain 29,870
6. To ratify the appointment of two Trustees to the Board of Trustees
of each Trust.
Elected Trustees Current Trustees
---------------- ----------------
Ms. Marilyn McCoy Mr. Will M. Caldwell Mr. Donald B. Sutherland
Mr. John P. Gould Dr. Nicholas J. DeGrazia Mr. Donald L. Tuttle
Mr. Julius L. Pallone
Affirmative 9,131,820
Against 127,803
Abstain 31,238
7. To approve amendments to the Amended and Restated Declaration of
Trust of The Woodward Funds.
Affirmative 9,114,161
Against 133,498
Abstain 35,361
8. To transact such other business as may properly come before the
Meetings or any adjournment thereof.
Affirmative 9,109,780
Against 129,051
Abstain 52,030
FS-273
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
BOND FUND
-------------
<S> <C>
ASSETS:
Investment in securities:
At cost ........................................ $535,540,172
============
At value (Note 2) .............................. 540,348,346
Cash ................................................ 470,327
Interest receivable ................................. 5,770,290
Deferred organization costs, net (Note 2) ........... --
Prepaids and other assets ........................... 980
------------
TOTAL ASSETS .............................. 546,589,943
------------
LIABILITIES:
Payable for securities purchased .................... 6,463,976
Accrued investment advisory fee ..................... 281,815
Accrued distribution fees ........................... 4,977
Accrued custodial fee ............................... 6,925
Dividends payable ................................... --
Other payables and accrued expenses ................. 59,937
------------
TOTAL LIABILITIES ......................... 6,817,630
------------
NET ASSETS ................................ $539,772,313
============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) ............. $ 5,388,005
Additional paid-in capital .......................... 552,636,306
Accumulated undistributed net investment income ..... 1,060,633
Accumulated undistributed net realized gains (losses) (24,120,806)
Net unrealized appreciation (depreciation)
on investments .................................... 4,808,175
------------
TOTAL NET ASSETS .......................... $539,772,313
============
Shares of capital stock outstanding ................. 53,880,046
============
Net asset value and redemption price per share ...... $ 10.02
============
Maximum offering price per share .................... $ 10.52
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-274
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At cost ............................................ $384,600,325 $164,016,417 $89,007,482 $54,733,368
============ ============ =========== ===========
At value (Note 2) .................................. $381,102,839 $163,688,796 $89,077,459 $54,423,188
Cash .................................................... 9,459,905 689.310 -- --
Interest receivable ..................................... 4,708,987 2,509,389 1,660,987 707,535
Deferred organization costs, net (Note 2) ............... -- 22,103 4,800 4,800
Prepaids and other assets ............................... 730 61,366 46,042 39,239
------------ ------------ ----------- -----------
TOTAL ASSETS .................................. 395,272,461 166,970,964 90,789,288 55,174,762
------------ ------------ ----------- -----------
LIABILITIES:
Payable for securities purchased ........................ 4,176,722 1,988,916 -- --
Accrued investment advisory fee ......................... 206,248 87,985 47,627 28,816
Accrued distribution fees ............................... 2,325 696 1,234 1,764
Accrued custodial fee ................................... 5,839 3,299 1,799 1,300
Dividends payable ....................................... -- -- 216,445 138,612
Other payables and accrued expenses ..................... 63,101 429 943 1,267
------------ ------------ ----------- -----------
TOTAL LIABILITIES ............................. 4,454,235 2,081,325 268,048 171,759
------------ ------------ ----------- -----------
NET ASSETS .................................... $390,818,226 $164,889,639 $90,521,240 $55,003,003
============ ============ =========== ===========
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value
$.10 per share) ....................................... $ 3,877,073 $ 1,633,064 $ 873,780 $ 536,709
Additional paid-in capital .............................. 399,129,726 163,040,690 90,068,258 54,767,240
Accumulated undistributed net investment income ......... 497,956 206,265 5,578 (1,578)
Accumulated undistributed net realized gains (losses) ... (9,189,045) 337,241 (496,353) 10,812
Net unrealized appreciation on investments .............. (3,497,484) (327,621) 69,977 (310,180)
------------ ------------ ----------- -----------
TOTAL NET ASSETS .............................. $390,818,226 $164,889,639 $90,521,240 $55,003,003
============ ============ =========== ===========
Shares of capital stock outstanding ..................... 38,770,728 16,330,640 8,737,797 5,367,093
============ ============ =========== ===========
Net asset value and redemption price per share .......... $ 10.08 $ 10.10 $ 10.36 $ 10.25
============ ============ =========== ===========
Maximum offering price per share ........................ $ 10.58 $ 10.41 $ 10.87 $ 10.76
============ ============ =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-275
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
BOND FUND
------------
<S> <C>
INTEREST INCOME (Note 2) ................................. $ 19,197,401
------------
EXPENSES (Notes 2, 3 and 6):
Investment advisory fee .............................. 1,680,455
Distribution fees .................................... 30,077
Professional fees .................................... 15,256
Custodial fee ........................................ 43,230
Transfer and dividend disbursing agent fees .......... 17,789
Amortization of deferred organziation costs .......... 6,439
Marketing expense .................................... 26,445
Security pricing services ............................ 7,167
Registration, filing fees and other expenses ........ 36,933
Less:
Expense reimbursement ............................ --
------------
NET EXPENSES ..................................... 1,863,791
------------
NET INVESTMENT INCOME .................................... 17,333,610
------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) .......................... 3,804,179
Net change in unrealized appreciation (depreciation)
on investments ..................................... (26,317,524)
------------
NET REALIZED AND UNREALIZED LOSSES ON
INVESTMENTS ............................... (22,497,042)
------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .... $ (5,179,735)
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-276
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
INTEREST INCOME (Note 2) ................................. $ 13,356,145 $ 5,022,420 $ 2,278,912 $ 1,450,133
------------ ----------- ----------- -----------
EXPENSES (Notes 2, 3 and 6):
Investment advisory fee .............................. 1,274,959 532,308 271,410 172,437
Distribution fees .................................... 14,580 4,221 7,666 10,997
Professional fees .................................... 12,518 15,256 15,256 15,256
Custodial fee ........................................ 37,018 20,664 11,701 8,440
Transfer and dividend disbursing agent fees .......... 8,895 2,368 5,310 7,548
Amortization of deferred organziation costs .......... 3,565 3,401 1,516 1,516
Marketing expense .................................... 19,334 14,084 15,242 15,666
Security pricing services ............................ 7,167 7,167 9,015 9,015
Registration, filing fees and other expenses ........ 30,402 35,406 6,447 8,890
Less:
Expense reimbursement ............................ -- -- (2,250) (32,420)
------------ ----------- ----------- -----------
NET EXPENSES .................................... 1,408,438 634,875 341,313 217,345
------------ ----------- ----------- -----------
NET INVESTMENT INCOME .................................... 11,947,707 4,387,545 1,937,599 1,232,788
------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) .......................... 1,584,614 297,039 (66,049) 43,574
Net change in unrealized appreciation
(depreciation) on investments....................... (12,789,445) (2,611,795) (2,431,870) (1,869,583)
------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED LOSSES ON
INVESTMENTS ............................... (11,204,831) (2,314,756) (2,497,919) (1,826,009)
------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .... $ 742,876 $ 2,072,789 $ (560,320) $ (593,221)
============ =========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-277
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
BOND FUND
-----------------------------------
Six Months Ended
June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995
----------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ........................ $ 17,333,610 $ 30,487,886
Net realized gains (losses) .................. 3,804,179 (1,566,826)
Net change in unrealized appreciation
(depreciation) on investments .............. (26,317,524) 72,514,668
------------- -------------
Net increase (decrease) in net assets
from operations .................... (5,179,735) 101,435,728
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income ................... (16,506,339) (31,071,705)
From realized gains .......................... -- --
------------- -------------
Total distributions ....................... (16,506,339) (31,071,705)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................... 78,556,127 81,776,844
Net asset value of shares issued in
reinvestment of distributions
to shareholders ............................ 13,302,100 24,963,507
------------- -------------
91,858,227 106,740,351
Less: payments for shares redeemed .......... (47,965,419) (86,707,190)
------------- -------------
Net increase (decrease) in net assets
from capital share transactions ......... 43,892,808 20,033,161
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS .......... 22,206,734 90,397,184
NET ASSETS:
Beginning of period .......................... 517,565,579 427,168,395
------------- -------------
End of period ................................ $ 539,772,313 $ 517,565,579
============= =============
CAPITAL SHARE TRANSACTIONS:
Shares sold .................................... 7,707,350 8,355,987
Shares issued in reinvestment of
distributions to shareholders .............. 1,313,291 2,525,870
------------- -------------
9,020,641 10,881,857
Less: shares redeemed .......................... (4,664,438) (8,790,418)
------------- -------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING ....................... 4,356,203 2,091,439
CAPITAL SHARES:
Beginning of period .......................... 49,523,843 47,432,404
------------- -------------
End of period ................................ 53,880,046 49,523,843
============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-278
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
INTERMEDIATE BOND FUND SHORT BOND FUND
---------------------------------- ----------------------------------
Six Months Ended Six Months Ended
June 30, 1996 Year Ended June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995 (Unaudited) Dec. 31, 1995
---------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ...................... $ 11,947,707 $ 24,249,471 $ 4,387,545 $ 5,750,588
Net realized gains (losses) ................ 1,584,614 (4,126,208) 297,039 97,446
Net change in unrealized appreciation
(depreciation) on investments ............ (12,789,445) 52,637,906 (2,611,795) 3,290,608
------------- -------------- ------------ ------------
Net increase (decrease) in net asset
from operations ..................... 742,876 72,761,169 2,072,789 9,138,642
------------- -------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income ................. (11,741,638) (24,265,050) (4,246,758) (5,697,455)
From realized gains ........................ -- -- -- (25,517)
------------- -------------- ------------ ------------
Total distributions ..................... (11,741,638) (24,265,050) (4,246,758) (5,722,972)
------------- -------------- ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................. 46,700,134 47,268,989 22,207,990 114,313,557
Net asset value of shares issued in
reinvestment of distributions to
shareholders ........................... 9,111,108 19,077,115 1,797,267 3,924,968
------------- -------------- ------------ ------------
55,811,242 66,346,104 24,005,257 118,238,525
Less: payments for shares redeemed ........ (59,304,193) (102,551,4510) (20,278,504) (22,556,503)
------------- -------------- ------------ ------------
Net increase (decrease) in net assets from
capital share transactions ............. (3,492,951) (36,205,348) 3,726,753 95,682,022
------------- -------------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ........ (14,491,713) 12,290,771 1,552,784 99,097,692
NET ASSETS:
Beginning of period ........................ 405,309,939 393,019,168 163,336,855 64,239,163
------------- -------------- ------------ ------------
End of period .............................. $ 390,818,226 $ 405,309,939 $164,889,639 $163,336,855
============= ============== ============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold .................................. 4,562,448 4,818,378 2,182,552 11,284,693
Shares issued in reinvestment of distributions
to shareholders .......................... 895,970 1,922,824 177,284 388,668
------------- ------------- ------------ ------------
5,458,418 6,741,202 2,359,836 11,673,361
Less: shares redeemed ........................ (5,780,224) (10,335,186) (1,992,684) (2,236,808)
------------- ------------- ------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (321,806) (3,593,984) 367,152 9,436,553
CAPITAL SHARES:
Beginning of period ........................ 39,092,534 42,686,518 15,963,488 6,526,935
------------- ------------- ------------ ------------
End of period .............................. 38,770,728 39,092,534 16,330,640 15,963,488
============= ============= ============ ============
See accompanying notes to financial statements.
</TABLE>
FS-279
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
MICHIGAN
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------------------- -------------------------------
Six Months Ended Six Months Ended
June 30, 1996 Year Ended June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995 (Unaudited) Dec. 31, 1995
---------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income .......................... $ 1,937,599 $ 3,150,282 $ 1,232,788 $ 2,357,562
Net realized gains (losses) .................... (66,049) (132,105) 43,574 95,495
Net change in unrealized appreciation
(depreciation) on investments ................ (2,431,870) 7,347,301 (1,869,583) 5,119,573
----------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations ........................ (560,320) 10,365,478 (593,221) 7,572,630
----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income ..................... (1,937,128) (3,149,113) (1,236,300) (2,358,540)
From realized gains ............................ -- -- -- --
----------- ------------ ------------ ------------
Total distributions ......................... (1,937,128) (3,149,113) (1,236,300) (2,358,540)
----------- ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ...................... 21,316,633 25,660,467 7,496,325 12,994,627
Net asset value of shares issued in reinvestment
of distributions to shareholders ............. 738,830 964,584 463,577 927,746
----------- ------------ ------------ ------------
22,055,463 26,625,051 7,959,902 13,922,373
Less: payments for shares redeemed ............ (6,000,339) (18,133,625) (4,580,538) (10,946,362)
----------- ------------ ------------ ------------
Net increase (decrease) in net assets from
capital share transactions .................. 16,055,124 8,491,426 3,379,364 2,976,011
----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ............ 13,557,676 15,707,791 1,549,843 8,190,101
NET ASSETS:
Beginning of period ............................ 76,963,564 61,255,773 53,453,160 45,263,059
----------- ------------ ------------ ------------
End of period .................................. $90,521,240 $ 76,963,564 $ 55,003,003 $ 53,453,160
=========== ============ ============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold ...................................... 2,034,316 2,502,764 721,787 1,290,446
Shares issued in reinvestment of
distribution to shareholder .................. 70,764 93,325 44,733 90,653
----------- ------------ ------------ ------------
2,105,080 2,596,089 766,520 1,381,098
Less: shares redeemed ............................ (572,717) (1,774,851) (441,176) (1,085,688)
----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING .... 1,532,363 821,238 325,344 295,410
CAPITAL SHARES:
Beginning of period ............................ 7,205,434 6,384,196 5,041,749 4,746,339
----------- ------------ ------------ ------------
End of period .................................. 8,737,797 7,205,434 5,367,093 5,041,749
=========== ============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
TEMPORARY CASH INVESTMENTS - 5.93%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96
(secured by various U.S. Treasury Strips with maturities ranging
from 2/15/99 through 8/15/00, all held at Chemical Bank) ................. $20,534,030 $20,534,030
Daiwa, Securities America, Inc., Revolving Repurchase Agreement,
5.50%, 7/1/96 (secured by U.S. Treasury Bills due 12/19/96,
held at the bank of New York) ............................................ 11,500,000 11,500,000
-----------
(Cost $32,034,030) 32,034,030
-----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 77.50%
U.S. Treasury Securities - 35.22%
Principal Strip from U.S. Treasury Securities due:
5/15/17 .............................................................. 10,420,000 2,370,967
8/15/17 .............................................................. 31,915,000 7,126,300
Strip from U.S. Treasury Securities due:
5/15/98 .............................................................. 1,800,000 1,608,318
8/15/98 .............................................................. 1,500,000 1,317,990
11/15/98 ............................................................. 1,700,000 1,469,752
2/15/99 .............................................................. 10,805,000 9,185,763
8/15/99 .............................................................. 3,000,000 2,465,598
5/15/05 .............................................................. 3,950,000 2,173,053
2/15/11 .............................................................. 4,525,000 1,633,570
5/15/11 .............................................................. 9,338,000 3,308,453
2/15/12 .............................................................. 4,555,000 1,525,652
5/15/13 .............................................................. 10,594,000 3,230,217
2/15/14 .............................................................. 15,700,000 4,532,747
5/15/18 .............................................................. 15,620,000 3,310,815
11/15/18 ............................................................. 49,840,000 10,185,302
U.S. Treasury Bonds:
12.750%, 11/15/10 .................................................... 6,850,000 9,618,907
10.375%, 11/15/12 .................................................... 12,965,000 16,459,457
12.500%, 8/15/14 ..................................................... 1,300,000 1,914,654
8.750%, 5/15/17 ...................................................... 1,000,000 1,186,875
U.S. Treasury Notes:
6.125%, 7/31/96 ...................................................... 1,000,000 1,000,780
8.000%, 10/15/96 ..................................................... 4,400,000 4,431,636
</TABLE>
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<S> <C> <C>
7.250%, 11/15/96 ..................................................... 3,890,000 3,914,935
8.500%, 4/15/97 ...................................................... 1,270,000 1,296,784
8.500%, 5/15/97 ...................................................... 3,130,000 3,201,896
6.750%, 5/31/97 ...................................................... 1,000,000 1,008,440
5.875%, 7/31/97 ...................................................... 2,100,000 2,100,000
8.625%, 8/15/97 ...................................................... 18,900,000 19,452,258
8.750%, 10/15/97 ..................................................... 6,150,000 6,361,376
5.250%, 12/31/97 ..................................................... 8,410,000 8,323,259
7.875%, 1/15/98 ...................................................... 7,592,000 7,795,997
8.125%, 2/15/98 ...................................................... 3,000,000 3,093,750
7.875%, 4/15/98 ...................................................... 14,125,000 14,542,111
6.875%, 7/31/99 ...................................................... 7,410,000 7,515,370
7.750%, 11/30/99 ..................................................... 19,815,000 20,632,369
7.250%, 5/15/04 ...................................................... 1,000,000 1,035,625
-----------
(Cost $188,826,366) 190,330,976
-----------
Agency Obligations - 42.28%
Federal Home Loan Mortgage Corp. Participation Ctfs.:
#170269, 12.000%, 8/1/15 ............................................. 1,694,998 1,896,155
#200070, 7.500%, 4/1/02 .............................................. 264,359 264,845
#274081, 7.500%, 7/1/16 .............................................. 86,778 86,103
#289711, 7.500%, 4/1/17 .............................................. 155,346 154,009
#555238, 12.000%, 7/1/19 ............................................. 806,535 903,025
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 10 Class D, 10.000%, 7/15/18 .................................. 902,902 927,632
Series 11 Class D, 9.500%, 7/15/19 ................................... 3,000,000 3,258,687
Series 22 Class C, 9.500%, 4/15/20 ................................... 1,104,876 1,205,906
Series 23 Class E, 9.400%, 8/15/19 ................................... 672,904 695,224
Series 23 Class F, 9.600%, 4/15/20 ................................... 1,375,000 1,503,190
Series 29 Class SD, IO, IF, 4/25/24 .................................. 21,046,201 539,204
Series 32 Class B, 9.500%, 8/15/19 ................................... 684,614 697,875
Series 38 Class C, 9.500%, 1/15/19 ................................... 415,500 425,971
Series 41 Class I, HB, 84.000%, 5/15/20 .............................. 123,007 356,721
Series 47 Class F, 10.000%, 6/15/20 .................................. 500,000 550,635
Series 51 Class D, 10.000%, 5/15/19 .................................. 117,372 117,126
Series 82 Class D, 8.900%, 10/15/20 .................................. 1,000,000 1,003,789
</TABLE>
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<TABLE>
<S> <C> <C>
Series 99 Class Z, 9.500%, 1/15/21 ................................... 1,915,624 2,041,287
Series 129 Class E, 8.850%, 6/15/09 .................................. 3,189,484 3,221,663
Series 134 Class B, IO, 9.000%, 8/15/22 .............................. 1,033,152 324,151
Series 204 Class E, HB, IF, 5/15/23 .................................. 2,174,473 500,129
Series 1022 Class G, 8.000%, 2/15/19 ................................. 136,960 136,969
Series 1045 Class G, HB, 1066.2085%, 2/15/21 ......................... 438,612 135,312
Series 1051 Class D, 7.000%, 11/15/19 ................................ 1,091,458 1,096,063
Series 1065 Class J, 9.000%, 4/15/21 ................................. 2,000,000 2,118,058
Series 1072 Class A, HB, 1008.500%, 5/15/06 .......................... 3,051,994 738,277
Series 1079 Class S, IF, 5/15/21 ..................................... 1,169,612 1,218,222
Series 1084 Class F, AR, 5/15/21 ..................................... 2,000,000 2,038,578
Series 1084 Class S, IF, 5/15/21 ..................................... 1,400,000 1,610,000
Series 1089 Class C, IO, IF, 6/15/21 ................................. 7,927,260 1,011,592
Series 1098 Class M, HB, 10.080%, 6/15/06 ............................. 1,351,278 324,307
Series 1144 Class KB, 8.500%, 9/15/21 .................................. 2,000,000 2,071,298
Series 1172 Class L, HB, 1167.776%, 11/15/21 ........................... 1,977,643 624,935
Series 1196 Class B, HB, IF, 1/15/22 ................................... 8,036,510 773,112
Series 1295 Class JB, 4.500%, 3/15/07 .................................. 2,400,000 2,051,662
Series 1297 Class H, 7.500%, 1/15/20 ................................... 1,764,136 1,715,762
Series 1298 Class L, HB, 981.8667, 6/15/07 ............................. 900,000 355,500
Series 1329 Class S, IO, IF, 8/15/99 ................................... 4,455,276 233,902
Series 1360 Class PK, 10.000%, 12/15/20 ................................ 3,500,000 3,922,447
Series 1370 Class F, 6.750%, 3/15/19 ................................... 600,000 588,677
Series 1378 Class H, 10.000%, 1/15/21 .................................. 1,500,000 1,675,843
Series 1378 Class JZ, 7.500%, 11/15/21 ................................. 2,367,728 2,181,301
Series 1418 Class B, 6.500%, 11/15/19 .................................. 2,250,000 2,164,462
Series 1465 Class SA, IO, IF, 2/15/08 .................................. 25,247,923 1,199,276
Series 1483 Class E, 6.500%, 2/15/20 ................................... 3,150,000 3,020,091
Series 1489 Class L, 5.500%, 4/15/08 ................................... 1,945,626 1,846,417
Series 1506 Class F, AR, 5/15/08 ....................................... 1,508,437 1,493,352
Series 1506 Class S, IF, 5/15/08 ....................................... 538,727 430,982
Series 1506 Class SD, IO, IF, 5/15/08 .................................. 23,761,300 1,076,625
Series 1508 Class KB, IO, IF, 5/15/23 .................................. 8,086,045 510,391
Series 1531 Class K, 6.000%, 4/15/08 ................................... 1,127,152 1,053,953
Series 1554 Class KA, PO, 8/15/08 ...................................... 871,080 566,202
Series 1575, Class FB, AR, 8/15/08 ..................................... 2,685,107 2,664,968
Series 1575, Class SB, AR, 8/15/08 ..................................... 895,035 519,121
</TABLE>
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<S> <C> <C>
Series 1583 Class NS, IF, 9/15/23 ...................................... 1,270,128 781,129
Series 1585 Class NB, IF, 9/15/23 ...................................... 2,271,596 1,553,204
Series 1586 Class A, 6.000%, 9/15/08 ................................... 1,474,998 1,366,998
Series 1595 Class S, IO, IF, 10/15/11 .................................. 13,699,724 642,106
Series 1602, Class O, 6.000%, 10/15/23 ................................. 1,300,000 1,146,443
Series 1604 Class SE, IF, 11/15/08 .................................... 701,374 506,742
Series 1628 Class S, IF, 12/15/23 ...................................... 2,550,000 1,198,500
Series 1640 Class A, 5.500%, 10/15/07 .................................. 1,024,748 976,440
Series 1655 Class F, AR, 12/15/08 ...................................... 1,494,755 1,457,386
Series 1655 Class SA, IF, 12/15/08 ..................................... 344,875 230,418
Series 1681 Class K, 7.000%, 8/15/23 ................................... 1,089,788 1,030,829
Series 1686 Class SH, IF, 2/15/24 ...................................... 1,535,892 936,894
Series 1686 Class SL, IF, 2/15/24 ...................................... 1,201,836 874,336
Series 1689 Class SD, IF, 3/15/24 ...................................... 1,725,000 1,306,687
Series 1694 Class SE, IF, 5/15/23 ...................................... 1,401,417 1,171,935
Series 1706 Class LA, 7.000%, 3/15/24 .................................. 4,903,757 4,736,142
Series 1757-A, Class A, 9.500%, 5/15/23 ................................ 3,219,129 3,396,181
Series 1796-A, Class S, IF, 2/15/09 .................................... 1,000,000 660,000
Series 1798-B, Class C, 6.500%, 3/15/08 ................................ 2,250,000 2,103,253
Series 1807, Class G, 9.000%, 1/01/06 .................................. 2,542,113 2,650,153
Series 1825, Class C, 5.7999%, 12/15/23 ................................ 2,000,000 1,705,620
Series 1854, Class C, PO, 4/15/08 ...................................... 2,250,000 1,262,092
Federal Housing Administration Merrill Lynch Project
Pass Thru Ctfs., 7.430%, 8/1/20 ...................................... 1,351,708 1,355,763
Federal Housing Administration Project #073-35307, 7.430%, 1/1/22 ........ 1,794,408 1,796,203
Federal Housing Administration Greystone, 7.430%, 11/1/22 ................ 2,644,411 2,647,055
Federal National Mortgage Assn. Mortgage Backed Securities,
Stripped Trust:
23, Class 2, IO, 10.000%, 9/1/17 ..................................... 1,223,229 405,195
50, Class 2, IO, 10.500%, 3/25/19 .................................... 164,626 49,799
Federal National Mortgage Assn. Pass Thru Securities:
Pool #44699, 7.000%, 4/1/17 .......................................... 313,578 306,360
Pool #50966, 7.000%, 1/1/24 .......................................... 1,962,510 1,899,296
Pool #70226, Adjustable Rate, 1/1/19 ................................. 565,352 556,165
Pool #116612, Adjustable Rate, 3/1/19 ................................ 2,351,257 2,422,470
Pool #160330, 6.345%, 3/1/99 ......................................... 2,373,167 2,350,930
</TABLE>
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<S> <C> <C>
Pool #303306, 12.500%, 1/1/16 ........................................ 1,924,476 2,215,012
Federal National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 ...................................... 726,189 767,740
1988 Class 17-B, 9.400%, 10/25/17 .................................... 568,500 586,947
1989 Class 27-D, 10.000%, 1/25/16 .................................... 597,208 615,309
1989 Class 34-E, 9.850%, 8/25/14 ..................................... 1,000,000 1,050,395
1989 Class 69-G, 7.600%, 10/25/19 .................................... 2,250,000 2,186,008
1989 Class 70-G, 8.000%, 10/25/19 .................................... 2,000,000 2,033,078
1989 Class 73-C, PO, 10/25/19 ........................................ 1,299,464 972,973
1989 Class 78-H, 9.400%, 11/25/19 .................................... 1,250,000 1,356,586
1990 Class 1-D, 8.800%, 1/25/20 ...................................... 3,200,000 3,333,661
1990 Class 60-K, 5.500%, 6/25/20 ..................................... 750,000 681,464
1990 Class 63-H, 9.500%, 6/25/20 ..................................... 900,000 977,345
1990 Class 93-G, 5.500%, 8/25/20 ..................................... 1,500,000 1,361,173
1990 Class 94-H, HB, 505.000%, 8/25/20 ............................... 3,376,441 550,360
1990 Class 95-J, HB, 1118.040%, 8/25/20 .............................. 1,841,849 711,875
1990 Class 102-J, 6.500%, 8/25/20 .................................... 4,000,000 3,829,276
1990 Class 120-H, 9.000%, 10/25/20 ................................... 2,500,000 2,670,522
1990 Class 134-SC, IF, 11/25/20 ...................................... 1,063,660 1,151,412
1990 Class 140-K, HB, 652.1454%, 12/25/20 ............................ 1,829,206 515,836
1991 Class 4-N, HB, 758.750%, 1/25/06 ................................ 948,273 183,017
1991 Class 7-K, HB, 908.500%, 2/25/21 ................................ 700,030 175,007
1991 Class 33-J, HB, 1008.250%, 4/25/06 .............................. 881,356 210,556
1991 Class 55-G, HB, 1148.550%, 2/25/05 .............................. 149,738 4,193
1991 Class 144-PZ, 8.500%, 6/25/21 ................................... 2,227,174 2,302,695
1992 Class 13-S, HB, IF, 1/25/99 ..................................... 3,154,661 233,445
1992 Class 135-LC, 7.500%, 9/25/07 ................................... 1,000,000 1,016,359
1992 Class 137-BA, 3.500%, 1/25/17 .................................. 2,003,750 1,875,506
1992 Class 186-M, 6.000%, 9/25/07 ................................... 1,281,026 1,176,736
1992 Class 199-S, IO, IF, 11/25/99 .................................. 11,934,175 507,202
1992 Class 204-B, 6.000%, 10/25/20 .................................. 4,300,000 3,891,926
1992 Class 215-PM, 7.875%, 11/25/21 ................................. 1,600,000 1,653,582
1993 Class 8-SB, IO, IF, 8/25/06 .................................... 13,789,057 637,744
1993 Class 12-S, IO, IF, 2/25/23 .................................... 6,750,262 405,016
1993 Class 12-SB, IF, 2/25/23 ....................................... 5,337,417 507,055
1993 Class 13-G, 6.000%, 6/25/20 .................................... 2,000,000 1,866,678
</TABLE>
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<S> <C> <C>
1993 Class 15-K, 7.000%, 2/25/08 .................................... 760,583 725,793
1993 Class 19-G, 5.000%, 5/25/19 .................................... 3,265,000 2,974,216
1993 Class 32-K, 6.000%, 3/25/23 .................................... 1,613,359 1,374,983
1993 Class 38-S, IO, IF, 11/25/22 ................................... 27,598,140 827,944
1993 Class 44-S, IO, IF, 4/25/23 .................................... 11,488,923 800,548
1993 Class 58-J, 5.500%, 4/25/23 .................................... 1,803,121 1,612,098
1993 Class 94-K, 6.750%, 5/25/23 .................................... 1,234,154 1,154,586
1993 Class 113-S, IO, IF, 7/25/23 ................................... 8,229,764 488,601
1993 Class 139-SG, IF, 8/25/23 ...................................... 3,450,311 1,802,787
1993 Class 152-D, PO, 8/25/23 ....................................... 1,000,000 736,250
1993 Class 155-LA, 6.500%, 5/25/23 .................................. 4,166,134 4,033,188
1993 Class 155-SB, IO, IF, 9/25/23 .................................. 10,250,574 651,834
1993 Class 156-SD, IF, 10/25/19 ..................................... 1,250,000 706,250
1993 Class 167-S, IF, 9/25/23 ....................................... 1,776,420 1,056,970
1993 Class X-188A, WA, IO, NTL, 10/01/93 ............................ 6,745,833 881,208
1993 Class 190-SE, IF, 10/25/08 ..................................... 1,719,713 1,190,351
1993 Class 207-SC, IF, 11/25/23 ..................................... 3,435,541 1,990,449
1993 Class 209-KB, 5.659%, 8/25/08 .................................. 4,380,356 3,968,993
1993 Class 214-L, 6.000%, 12/25/08 .................................. 787,497 741,979
1993 Class 220-SD, IF, 11/25/13 ..................................... 2,087,684 1,216,076
1993 Class 223-FB, AR, 12/25/23 ..................................... 5,732,752 5,532,106
1993 Class 223-SB, IF, 12/25/23 ..................................... 2,901,860 2,009,538
1993 Class X-225C, FP, IF, 12/25/22 ................................. 900,000 872,819
1993 Class X-225C, VO, IF, 12/25/22 ................................. 1,600,000 1,256,000
1994 Class 19-C, 5.000%, 1/25/24 .................................... 2,519,478 2,197,890
1994 Class 26-G, PO, 2/25/24 ........................................ 2,278,569 1,184,856
1994 Class 30-LA, 6.500%, 2/25/09 ................................... 1,903,228 1,829,209
1994 Class 36-SG, IO, IF, 8/25/23 ................................... 7,651,123 542,694
1994 Class 36-SE, IF, 11/25/23 ...................................... 2,061,342 1,350,179
1994 Class 39-F, AR, 3/25/24 ........................................ 1,129,623 1,104,907
1994 Class 39-S, IF, 3/25/24 ........................................ 434,470 340,377
1994 Class 53-CA, PO, 11/25/23 ...................................... 2,500,000 1,718,750
1994 Class 82-SA, IO, IF, 5/25/23 ................................... 38,352,830 1,150,585
1995 Class 13-B, 6.500%, 3/25/09 .................................... 3,383,505 3,192,435
1995 Class XG1C C, 8.800%, 1/25/25 .................................. 1,000,000 1,004,535
1992-G Class 15-Z, 7.000%, 1/25/22 ................................. 1,691,466 1,474,145
1992-G Class 27-G, HB, IF, 5/25/22 ................................. 674,016 967,415
</TABLE>
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<S> <C> <C>
1992-G Class 42-Z, 7.000%, 7/25/22 ................................. 1,708,703 1,540,200
1992-G Class 59-C, 6.000%, 12/25/21 ................................ 1,800,000 1,657,510
1992-G Class 61-Z, 7.000%, 10/25/22 ................................ 1,020,588 838,729
1993 Class 19-K, 6.500%, 6/25/19 .................................... 2,208,259 2,068,584
1993 Class 27-SE, IF, 8/25/23 ....................................... 1,343,715 527,408
1994 Class 13-ZB, 7.000%, 11/17/24 .................................. 2,457,068 2,118,678
1996-20, Class L, PO, 9/25/08 ....................................... 3,165,000 1,688,306
Government National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
1994 Class 4-SA, IF, 10/16/22 ....................................... 7,700,000 446,215
Government National Mortgage Assn. Pass Thru Pool:
#023594, 8.500%, 7/15/08 ............................................ 440,906 460,015
#190923, 9.000%, 12/15/16 ........................................... 414,605 439,747
#297628, 8.000%, 9/15/22 ............................................ 3,208,105 3,255,775
#313110, 7.500%, 11/15/22 ........................................... 1,948,103 1,935,828
#345288, 7.500%, 3/15/23 ............................................ 792,346 786,704
International Bank For Reconstruction & Development,
2/15/15 ............................................................. 2,000,000 501,254
-----------
(Cost $226,214,613) 228,465,894
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS ...................................... 418,796,870
(Cost $415,024,675) -----------
CORPORATE BONDS AND NOTES - 13.59%
Finance - 12.42%
American Express Co., 11.625%, 12/12/00 ................................. 1,400,000 1,517,250
Associates Corp. of North America:
9.125%, 4/1/00 ...................................................... 2,350,000 2,532,466
8.150%, 8/1/09 ...................................................... 3,085,000 3,236,227
Case Equipment, 5.500%, 2/15/03 ......................................... 4,940,000 4,895,288
Chase Manhattan Grantor Trust, Series 95-B, 5.900%, 11/15/01 ............ 1,343,247 1,341,929
Collaterized Mortgage Securities Corp. CMO:
Trust 10-Z, 8.950%, 12/1/16 ......................................... 2,736,794 2,749,353
Trust 12-D, 9.500%, 2/1/17 .......................................... 808,986 837,534
Trust 16-Q, 14.750%, 3/20/18 ........................................ 429,967 451,465
First USA Credit Card Master Trust, VR, 10/15/01 ........................ 4,100,000 4,106,105
Ford Credit Grantor Trust, Series 94-A, 6.350%, 5/15/99 ................. 1,443,232 1,450,432
</TABLE>
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<S> <C> <C>
General Motors Acceptance Corp. Medium Term Note,
7.550%, 1/14/97 ..................................................... 2,500,000 2,519,525
Government National Mortgage Assn. Backed Trust I CMO,
Class A, Zero Coupon, PO, 5/20/17 .................................. 309,439 229,226
Green Tree, 5.700%, 2/15/26 ............................................. 1,683,490 1,679,936
Kidder Peabody Mortgage Assets Trust CMO, Series 24
Class E, 8.940%, 4/1/19 ............................................. 1,125,000 1,160,594
Merrill Lynch Trust Series 43 Class E CMO, 6.500%, 8/27/15 .............. 4,000,000 3,797,836
Merrill Lynch Home Equity Loan, 1992-1, Class A, Variable Rate, 7/15/22 2,517,739 2,523,200
MLMBS 144-s, 7.430%, 7/25/24 ............................................ 4,750,332 4,560,319
Morgan Stanley Mortgage Trust CMO:
Series 35-2, HB, IF, 4/20/21 ........................................ 460,886 672,755
Series 37-2, HB, IF, 7/20/21 ........................................ 521,055 703,424
Series 39-3, PO, 12/20/21 ........................................... 865,939 630,776
Navistar, Class A-2, 6.550%, 11/20/01 ................................... 3,600,443 3,656,822
ONYX Acceptance, 5.400%, 2/15/01 ........................................ 1,265,468 1,251,597
PaineWebber CMO Trust:
Series H-4, 8.750%, 4/1/18 .......................................... 890,805 925,448
Series P-4, 8.500%, 8/1/19 .......................................... 2,586,613 2,661,416
Rural Housing Trust 1987-1 Sr. Mortgage Pass Thru Ctf.,
Class 3-B, 7.330%, 4/1/26 ........................................... 1,101,796 1,116,416
Shearson Lehman, Inc. CMO, Mortgage Backed Sequential
Pay Bond, Series U, Sequence U-1, 8.750%, 8/27/17 ................... 188,879 189,702
Standard Credit Card Master Trust Asset Backed Ctf.,
Series 1995-5, Class A, Adjustable Rate, 5/8/00 ..................... 4,000,000 4,060,396
Superior Wholesale, 1996-A, Adjustable Rate, 3/15/01 .................... 2,700,000 2,700,000
Toyota Auto Receivables Grantor Trust, Series 95-A
Class A, 5.850%, 3/15/01 ............................................ 959,375 959,595
World Omni Automobile LSE SEC Trust, Series 95-5
Class A, 6.050%, 11/25/01 ........................................... 8,000,000 8,013,032
----------
(Cost $64,750,239) 67,130,064
----------
Industrial - 0.90%
Boeing Co., 7.950%, 8/15/24 ............................................ 1,730,000 1,832,675
General Motors Corp., 8.800%, 3/1/21 ................................... 2,695,000 3,020,260
----------
(Cost $4,522,779) 4,852,935
----------
</TABLE>
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Public Utility - 0.27%
Nippon Telegraph & Telephone Corp., 9.500%, 7/27/98 .................. 1,355,000 1,431,219
(Cost $1,430,628) -----------
TOTAL CORPORATE BONDS AND NOTES ............................................ 73,414,218
(Cost $70,703,646) -----------
FOREIGN - 2.98%
African Development Bank Note, 9.300%, 7/1/00 ........................ 1,572,000 1,703,010
Kingdom of Belgium Put Euro Dollar, 9.200%, 6/28/10 .................. 2,000,000 2,312,500
Metropolis of Tokyo, 8.700%, 10/05/99 ................................ 2,250,000 2,403,625
National Australia Bank Ltd, 9.700%, 10/15/98 ........................ 800,000 853,040
Province of Ontario, 15.750%, 3/15/12 ................................ 1,415,000 1,581,206
Province of Ontario Eurobond, 7.375%, 1/27/03 ........................ 4,400,000 4,519,500
Province of Quebec, 9.125%, 8/22/01 .................................. 2,515,000 2,730,347
------------
(Cost $17,761,517) 16,103,228
------------
TOTAL INVESTMENTS .......................................................... $540,348,346
============
(Cost $535,540,172)
</TABLE>
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<PAGE>
THE WOODWARD FUNDS
BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996
(Unaudited)
Notes to Portfolio of Investments
(a) The Fund invests in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture.
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified
index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks
as those associated with IO securities. Unlike IO's the owner also has a
right to receive a very small portion of principal. The high interest
rate results from taking interest payments from other classes in the
REMIC Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represent the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market
interest rates. As prepayments on the underlying mortgages of these
securities increase, the yield on these securities increases.
(b) Based upon estimated future cash flows, income is currently not being
recognized on certain IO, HB, and CMO securities with an aggregate
market value of $3,730,108. The book cost of certain IO and HB securities
includes a write down in the amount of $6,056,100 taken during 1993
to properly state the net realizable value of the securities. The write
down results in a lower cost of investments than the tax cost disclosed
in Note 4 in Notes to Financial Statements.
FS-290
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
TEMPORARY CASH INVESTMENTS - 1.17%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96,
(secured by various U.S. Treasury Strips with maturities ranging
from 2/15/99 through 8/15/00, call held at Chemical Bank) ...... $ 4,475,055 $ 4,475,055
(Cost $ 4,475,055)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 83.29%
U.S. Treasury Securities - 46.97%
Strips from U.S. Treasury Securities due:
5/15/98 .................................................... 6,600,000 5,897,166
11/15/98 ................................................... 7,600,000 6,570,656
2/15/99 .................................................... 9,660,000 8,212,352
5/15/05 .................................................... 5,660,000 3,113,792
8/15/08 .................................................... 5,350,000 2,327,304
2/15/09 .................................................... 4,300,000 1,803,033
11/15/10 ................................................... 5,000,000 1,840,750
U.S. Treasury Bonds:
12.750%, 11/15/10 .......................................... 4,581,000 6,432,732
10.375%, 11/15/12 .......................................... 7,765,000 9,857,900
12.500%, 8/15/14............................................ 1,000,000 1,472,811
U.S. Treasury Notes:
7.375%, 5/15/96
6.125%, 7/31/96 ............................................ 1,000,000 1,000,780
7.250%, 11/15/96 ........................................... 2,000,000 2,012,820
8.500%, 4/15/97 ............................................ 3,640,000 3,716,768
6.875%, 4/30/97 ............................................ 10,000,000 10,092,200
8.500%, 5/15/97 ............................................ 11,470,000 11,733,466
6.750%, 5/31/97 ............................................ 2,000,000 2,016,880
5.875%, 7/31/97 ............................................ 5,000,000 5,000,000
8.625%, 8/15/97 ............................................ 3,000,000 3,087,660
8.750%, 10/15/97 ........................................... 9,950,000 10,291,982
5.250%, 12/31/97 ........................................... 19,140,000 18,942,590
7.875%, 1/15/98 ............................................ 13,710,000 14,078,388
8.125%, 2/15/98 ............................................ 8,300,000 8,559,375
7.875%, 4/15/98 ............................................ 10,425,000 10,732,850
5.125%, 4/30/98 ............................................ 3,320,000 3,263,958
</TABLE>
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<S> <C> <C>
6.875%, 7/31/99 ............................................ 8,000,000 8,113,760
7.750%, 11/30/99 ........................................... 17,080,000 17,784,550
7.250%, 5/15/04 ............................................ 1,000,000 1,035,625
---------- -----------
(Cost $180,614,081) 178,992,148
-----------
Agency Obligations - 36.32%
Federal Home Loan Mortgage Corp. Participation Ctf.:
#170269,12.000%, 8/01/15 ......................................... 1,340,590 1,499,687
#252600, 7.500%, 9/1/08 .......................................... 341,481 345,426
#252601, 8.000%, 6/1/01 .......................................... 336,081 340,507
#555238, 12.000%, 7/1/19 ......................................... 612,147 685,381
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 10 Class D, 10.000%, 7/15/18 .............................. 1,436,435 1,475,778
Series 11 Class D, 9.500%, 7/15/19 ............................... 1,300,000 1,412,098
Series 14 Class A, 9.000%, 12/15/19 .............................. 10,647 10,626
Series 18 Class A, 9.000%, 11/15/19 .............................. 80,381 80,234
Series 23 Class E, 9.400%, 8/15/19 ............................... 448,603 463,482
Series 30 Class C, 9.500%, 5/15/18 ............................... 506,917 517,145
Series 32 Class B, 9.500%, 8/15/19 ............................... 1,860,365 1,896,398
Series 38 Class C, 9.500%, 1/15/19 ............................... 277,000 283,980
Series 39 Class E, 10.000%, 10/15/19 ............................. 599,452 615,007
Series 41 Class I, 84.000%, 5/15/20 .............................. 92,255 267,541
Series 47 Class F, 10.000%, 6/15/20 .............................. 500,000 550,635
Series 51 Class D, 10.000%, 5/15/19 .............................. 76,785 76,625
Series 63 Class F, 9.350%, 10/15/19 .............................. 154,482 155,876
Series 82 Class D, 8.900%, 10/15/20 .............................. 700,000 702,652
Series 99 Class Z, 9.500%, 1/15/21 ............................... 1,915,624 2,041,287
Series 129 Class E, 8.850%, 6/15/09 .............................. 2,460,459 2,485,283
Series 204 Class E, HB, IF, 5/15/23 .............................. 7,008 161,183
Series 1022 Class G, 8.000%, 2/15/19 ............................. 128,742 128,751
Series 1072 Class A, HB, 1008.500%, 5/15/06 ...................... 20,276 490,485
Series 1079 Class S, IF, 5/15/21 ................................. 877,209 913,666
Series 1084 Class F, AR, 5/15/21 ................................. 500,000 509,645
Series 1084 Class S, IF, 5/15/21 ................................. 350,000 402,500
Series 1098 Class M, HB, 10.080%, 6/15/06 ........................ 3,003 72,063
Series 1144 Class KB, 8.500%, 9/15/21 ............................ 2,000,000 2,071,298
</TABLE>
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<S> <C> <C>
Series 1172 Class L, HB, 1167.776%, 11/15/21 ..................... 17,080 539,716
Series 1196 Class B, HB, IF, 1/15/22 ............................. 52,581 505,825
Series 1295 Class JB, 4.500%, 3/15/07 ............................ 1,500,000 1,282,289
Series 1298 Class L, HB, 981.86%, 6/15/07 ........................ 6,000 237,000
Series 1329 Class S, IO, IF, 8/15/99 ............................. 3,818,305 200,461
Series 1360 Class PK, 10.000%, 12/15/20 .......................... 2,500,000 2,801,748
Series 1378 Class H, 10.000%, 1/15/21 ............................ 1,500,000 1,675,844
Series 1418 Class B, 6.500%, 11/15/19 ............................ 1,250,000 1,202,479
Series 1465 Class SA, IO, IF, 02/15/08 ........................... 23,271,999 1,105,420
Series 1489 Class L, 5.500%, 4/15/08 ............................. 1,626,544 1,543,605
Series 1506 Class F, IF, 5/15/08 ................................. 1,005,624 995,568
Series 1506 Class SD, IO, IF, 5/15/08 ............................ 13,090,716 593,140
Series 1506 Class S, IF, 5/15/08 ................................. 359,152 287,321
Series 1508 Class KB, IF, 5/15/23 ................................ 4,204,743 265,403
Series 1531 Class K, 6.000%, 4/15/08 ............................. 1,040,448 972,880
Series 1583 Class NS, IF, 9/15/23 ................................ 982,727 604,377
Series 1585 Class NB, IF, 9/15/23 ................................ 2,513,255 1,718,438
Series 1586 Class A, 6.000%, 9/15/08 ............................. 1,374,430 1,273,793
Series 1595 Class S, IO, IF, 10/15/13 ............................ 19,310,781 905,096
Series 1628 Class S, IF, 12/15/23 ................................ 2,500,000 1,175,000
Series 1640 Class A, 5.500%, 10/15/07 ............................ 1,852,429 1,765,104
Series 1655 Class F, AR, 12/15/08 ................................ 970,128 945,875
Series 1655 Class SA, IF, 12/15/08 ............................... 223,945 149,622
Series 1689 Class SD, IF, 10/15/23 ............................... 1,500,000 1,136,250
Series 1694 Class SE, IF, 5/15/23 ................................ 1,073,704 897,885
Series 1706 Class LA, 7.000%, 3/15/24 ............................ 3,189,436 3,080,418
Series 1757-A Class A, 9.500%, 5/15/23 ........................... 2,414,347 2,547,136
Series 1796-A, Class S, IF, 2/15/09 .............................. 1,391,843 918,616
Series 1807, Class G, 9.000%, 1/1/06 ............................. 1,314,886 1,370,769
GNMA Series 29 Class SD, IO, IF, 4/25/24 ......................... 12,218,404 313,036
Federal Housing Administration Project #07335307
7.430%, 1/1/22 ................................................... 996,894 997,890
Federal Housing Administration Greystone 1996-2
7.430 %, 11/01/22 ................................................ 1,996,470 1,998,467
</TABLE>
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<TABLE>
<S> <C> <C>
Federal National Mortgage Assn. Mortgage Backed Securities
Stripped Trust:
46, Class 1, 7.000%, 12/25/03 .................................... 251,832 250,258
50, Class 2, IO, 10.500%, 3/25/19 ................................ 260,657 78,849
Federal National Mortgage Assn. Pass Thru Securities:
Guaranteed Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 .................................. 710,738 751,405
1988 Class 17-B, 9.400%, 10/25/17 ................................ 98,801 102,007
1989 Class 26-D, 10.000%, 5/25/04 ................................ 896,882 943,555
1989 Class 27-D, 10.000%, 1/25/16 ................................ 1,089,905 1,122,939
1989 Class 34-D, 9.850%, 7/25/13 ................................. 345,126 347,755
1989 Class 70-G, 8.000%, 10/25/19 ................................ 2,000,000 2,033,078
1989 Class 73-C, PO, 10/25/19 .................................... 275,805 206,509
1989 Class 78-H, 9.400%, 11/25/19 ................................ 1,750,000 1,899,221
1990 Class 1-D, 8.800%, 1/25/20 .................................. 950,000 989,681
1990 Class 60-K, 5.500%, 6/25/20 ................................. 1,250,000 1,135,774
1990 Class 63-H, 9.500%, 6/25/20 ................................. 755,000 819,884
1990 Class 93-G, 5.500%, 8/25/20 ................................. 1,250,000 1,134,311
1990 Class 94-H, HB, 505.000%, 8/25/20 ........................... 19,999 325,983
1990 Class 95-J, HB, 1118.040%, 8/25/20 .......................... 9,209 355,938
1990 Class 102-J, 6.500%, 8/25/20 ................................ 4,600,000 4,403,667
1990 Class 120-H, 9.000%, 10/25/20 ............................... 900,000 961,388
1990 Class 134-SC, IF, 11/25/20 .................................. 632,246 684,406
1990 Class 140-K, HB, 652.145%, 12/25/20 ......................... 17,072 481,444
1991 Class 4-N, HB, 758.750%, 1/25/06 ............................ 3,347 64,589
1991 Class 7-K, HB, 908.500%, 2/25/21 ............................ 1,750 43,752
1991 Class 20-M, HB, 908.750%, 3/25/06 ........................... 1,746 39,282
1991 Class 33-J, HB, 1008.250%, 4/25/06 .......................... 4,113 98,260
1991 Class 55-G, HB, 1148.550%, 2/25/05 .......................... 1,872 5,241
1991 Class 161-H, 7.500%, 2/25/21 ................................ 618,695 625,574
1992 Class 13-S, HB, IF, 1/25/99 ................................. 9,341 69,123
1992 Class 137-BA, 3.500%, 1/25/17 ............................... 1,717,500 1,607,576
1992 Class 199-S, IO, IF, 11/25/99 ............................... 8,315,671 353,416
1992 Class 204-B, 6.000%, 10/25/20 ............................... 2,000,000 1,810,198
1993 Class 8-SB, IO, IF, 8/25/06 ................................. 13,258,708 613,215
1993 Class 12-S, IO, IF, 2/25/23 ................................. 4,269,933 256,196
1993 Class 12-SB, HB, IF, 2/25/23 ................................ 47,095 447,401
</TABLE>
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<S> <C> <C>
1993 Class 19-G, 5.000%, 5/25/19 .................................. 3,530,000 3,215,615
1993 Class 38-S, IO, IF, 11/25/22 ................................. 25,915,015 777,450
1993 Class 58-J, 5.500%, 4/25/23 .................................. 1,352,341 1,209,074
1993 Class 94-K, 6.750%, 5/25/23 .................................. 822,769 769,724
1993 Class 110-SC, IO, IF, 7/25/23 ................................ 3,347,674 125,538
1993 Class 113-S, IO, IF, 7/25/23 ................................. 7,369,461 437,525
1993 Class 139-SG, IF, 8/25/23 .................................... 2,597,473 1,357,180
1993 Class 152-D, PO, 8/25/23 ..................................... 700,000 515,375
1993 Class 155-LA, 6.500%, 5/25/23 ................................ 1,735,889 1,680,495
1993 Class 155-SB, IO, IF, 9/25/23 ................................ 7,380,413 469,320
1993 Class 156-SD, IF, 10/25/19 ................................... 1,000,000 565,000
1993 Class 167-S, IF, 9/25/23 ..................................... 2,138,284 1,272,279
1993 Class 190-SE, IF, 10/25/08 ................................... 1,495,403 1,035,088
1993 Class 207-SC, IF, 11/25/23 ................................... 2,366,706 1,371,198
1993 Class 209-KB, 5.659%, 8/25/08 ................................ 3,599,652 3,261,605
1993 Class 214-L, 6.000%, 12/25/08 ................................ 1,574,994 1,483,958
1993 Class 215-PM, 7.875%, 11/25/21 ............................... 1,200,000 1,240,187
1993 Class 220-SD, IF, 11/25/13 ................................... 1,242,669 723,855
1993 Class 223-FB, AR, 12/25/23 ................................... 721,333 696,087
1993 Class 223-SB, IF, 12/25/23 ................................... 651,339 451,052
1993 Class X225-C, FP, IF, 10/25/22 ............................... 1,100,000 1,066,779
1993 Class X225-C, VO, IF, 12/25/22 ............................... 2,000,000 1,570,000
1994 Class 19-C, 5.000%, 1/25/24 .................................. 2,082,214 1,816,438
1994 Class 26-G, PO, 2/25/24 ...................................... 2,199,391 1,143,684
1994 Class 30-LA, 6.500%, 2/25/09 ................................. 2,068,725 1,988,271
1994 Class 36-SE, IF, 11/25/23 .................................... 1,198,454 784,988
1994 Class 36-SG, IO, IF, 8/25/23 ................................. 3,480,275 246,856
1994 Class 39-F, AR, 3/25/24 ...................................... 1,016,661 994,416
1994 Class 39-S, IF, 3/25/24 ...................................... 391,023 306,339
1994 Class 53-CA, PO, 11/25/23 .................................... 3,352,442 2,304,804
1994 Class 82-SA, IO, IF, 5/25/23 ................................. 18,904,968 567,149
1995 Class 13-B, 6.500%, 3/25/09 .................................. 2,443,643 2,305,648
1995 Class X-GIC C, 8.800%, 1/25/25 ............................... 1,000,000 1,004,535
1996 Class 20-L, PO, 9/25/08 ...................................... 1,655,000 882,827
1992-G Class 27-SQ, HB, IF, 5/25/22 ............................... 3,397 487,616
1992-G Class 42-Z, 7.000%, 7/25/22 ................................ 657,193 592,385
1993-G Class 8-PG, 6.500%, 7/25/18 ................................ 1,000,000 969,819
</TABLE>
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1993-G Class 13-G, 6.000%, 6/25/20 ................................ 1,000,000 933,339
1993-G Class 19-K, 6.500%, 6/25/19 ................................ 1,613,728 1,511,658
1993-G Class 27-SE, IF, 8/25/23 ................................... 1,535,674 602,752
1994-G Class 13-ZB, 7.000%, 11/17/24 .............................. 2,457,068 2,118,678
Federal National Mortgage Assn. Pass Thru Pool:
#111366, Adjustable Rate, 8/01/19 ................................. 496,193 513,188
#116612, Adjustable Rate, 3/01/19 ................................. 1,508,354 1,554,037
#160330, 6.345%, 3/1/99 ........................................... 2,373,167 2,350,930
#303306, 12.500%, 1/1/16 .......................................... 1,270,154 1,461,908
Government National Mortgage Assn. Pass Thru Pool:
#297628, 8.000%, 9/15/22 .......................................... 2,138,737 2,170,516
#313110, 7.500%, 11/15/22 ......................................... 1,803,799 1,792,434
-----------
(Cost $140,212,374) 138,423,184
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS .................................... 317,415,332
(Cost $320,826,455) -----------
CORPORATE BONDS AND NOTES - 13.78%
Finance - 13.78%
American Express Co., 11.625%, 12/12/00 ............................... 1,250,000 1,354,688
American Express Credit Corp., 8.500%, 6/15/99 ........................ 300,000 313,530
Associates Corp. of North America:
9.125%, 4/1/00 .................................................... 1,675,000 1,805,055
8.150%, 8/1/09 .................................................... 3,625,000 3,802,698
Case Equipment Loan Trust Asset Backed Ctf. Series
1994 Series A, Class A2, 4.650%, 8/15/99 .......................... 845,846 838,825
1994 Series C, Class A2, 8.100%, 6/15/01 .......................... 2,000,000 2,053,978
1996 Series A, Class A2, 5.500%, 2/15/03 .......................... 5,030,000 4,984,473
Chase Manhattan Grantor Trust Automobile Loan Pass Thru Ctfs
Series 1995-B, Class A, 5.900%, 11/15/01 .......................... 1,151,354 1,150,225
Collaterized Mortgage Obligation Trust CMO:
Series 10, Class Z, 8.950%, 12/1/16 ............................... 4,413,080 4,433,332
Series 12, Class D, 9.500%, 2/1/17 ................................ 404,493 418,767
Series 16, Class Q, 14.750%, 3/20/18 .............................. 242,501 254,626
Series 88-2 Class B, 8.800%, 4/20/19 .............................. 518,561 538,128
First USA Credit Card Master Trust Asset Backed Pass Thru Ctf
Series 1995-1, Class A, IF, 10/15/01 .............................. 2,000,000 2,002,978
</TABLE>
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<S> <C> <C>
General Motors Acceptance Corp. Medium Term Note,
7.550%, 1/14/97 ............................................... 4,735,000 4,771,980
Goldman Sachs Trust 7-C CMO, Series 7, Class C-2, .
9.100%, 4/27/17 .
Green Tree Financial Corp. Loan Trust Asset Backed Ctf .
Series 1996-A, Class A, 5.700%, 2/15/26 ...................... 1,282,659 1,279,951
Merrill Lynch Home Equity Loan Asset Backed Pass Thru Ctf .
Series 1992-1, Class A, IF, 7/15/22 ........................... 2,014,191 2,018,560
Merrill Lynch MBS Inc. Project Pass Thru Ctf .
Series 144-S, IF, 7/25/24 ..................................... 548,115 526,191
Merrill Lynch Trust 43-E CMO, Series 43, Class E,
6.500%, 8/27/15 ............................................... 1,500,000 1,424,189
Morgan Stanley Mortgage Trust, CMO: .
Series 35-2, HB, IF, 4/20/21 ................................. 3,512 512,575
Series 37-2, HB, IF, 7/20/21 .................................. 3,533 476,901
Series 39-3, PO, 12/20/21 .................................... 673,508 490,603
Navistar Financial Corp. Owner Trust Asset Backed Pass Thru Ctf
Series 1995-A, Class A2, 6.550%, 11/20/01 ..................... 2,800,344 2,844,195
Onyx Acceptance Grantor Trust Auto Loan Pass Thru Ctf
Series 1996-1, Class A, 5.400%, 5/15/01 ....................... 1,265,468 1,251,598
Rural Housing Trust 1987-1, Senior Mortgage Pass Thru Ctf.,
Sub Class 3-B, 7.330%, 4/1/26 ................................. 492,974 499,515
Standard Credit Card Master Trust Asset Backed Ctf
Series 1995-5, Class A, IF, 5/8/00
Series 1995-10, Class A, 5.900%, 2/7/01 ....................... 2,520,000 2,489,556
Series 1995-2, Class A, 8.625%, 1/7/02 ........................ 1,300,000 1,319,629
Superior Wholesale Inventory Fing Trust Asset Backed Ctf
Series 1996-A, Class A, IF, 3/15/01 ........................... 2,000,000 2,000,000
Toyota Auto Receivable Grantor Trust Asset Backed Ctf
Series 1995-A, Class A, 5.850%, 3/15/01 ....................... 957,285 957,504
World Omni Automobile Lse Sec Trust Asset Backed Ctf
Series 1995-A, Class A, 6.050%, 11/25/01 ...................... 5,700,000 5,709,285
----------
TOTAL CORPORATE BONDS AND NOTES ............................................. 52,523,535
(Cost $51,065,191) ----------
FOREIGN - 1.76%
African Development Bank Note, 9.300%, 7/1/00 ......................... 983,000 1,064,923
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<S> <C> <C>
Metropolis of Tokyo, 8.700%, 10/5/99 .................................. 1,500,000 1,602,417
National Australia Bank Ltd., 9.700%, 10/15/98 ........................ 400,000 426,520
Province of Ontario, 7.375%, 1/27/03 .................................. 3,500,000 3,595,057
------------
(Cost $8,233,624) 6,688,917
------------
TOTAL INVESTMENTS ........................................................... $381,102,839
============
(Cost $384,600,325)
</TABLE>
FS-298
<PAGE>
THE WOODWARD FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Notes to Portfolio of Investments
(a) The Fund invests in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture.
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified
index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks
as those associated with IO securities. Unlike IO's the owner also has a
right to receive a very small portion of principal. The high interest
rate results from taking interest payments from other classes in the
REMIC Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represent the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market
interest rates. As prepayments on the underlying mortgages of these
securities increase, the yield on these securities increases.
(b) Based upon estimated future cash flows, income is currently not being
recognized on certain IO, HB, and CMO securities with an aggregate
market value of $1,900,046. The book cost of certain IO and HB securities
includes a write down in the amount of $2,639,653 taken during 1993
to properly state the net realizable value of the securities. The write
down results in a lower cost of investments than the tax cost disclosed
in Note 4 in Notes to Financial Statements.
FS-299
<PAGE>
THE WOODWARD FUNDS
SHORT BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 1.26%
Salomon Brothers, Revolving Repurchase Agreement,
5.53%, 7/1/96, (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/99
through 8/15/00, all held at Chemical Bank) ........................ $2,067,822 $2,067,822
----------
(Cost $ 2,067,822)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 82.44%
U.S. Treasury Securities -- 65.59%
Strips from U.S. Treasury Note Principal due:
8/15/98 ........................................................ 500,000 439,330
U.S. Treasury Notes:
8.500%, 7/15/97 ................................................ 250,000 256,522
5.750%, 9/30/97 ................................................ 30,269,000 30,212,246
8.750%, 10/15/97 ............................................... 490,000 506,841
5.750%, 10/31/97 ............................................... 250,000 249,375
7.375%, 11/15/97 ............................................... 3,500,000 3,562,342
5.375%, 11/30/97 ............................................... 4,100,000 4,066,687
5.250%, 12/31/97 ............................................... 3,830,000 3,790,497
7.875%, 1/15/98 ................................................ 11,265,000 11,567,691
5.625%, 1/31/98 ................................................ 1,450,000 1,441,169
7.875%, 4/15/98 ................................................ 9,200,000 9,471,676
5.125%, 4/30/98 ................................................ 1,000,000 983,120
9.000%, 5/15/98 ................................................ 4,500,000 4,727,115
5.375%, 5/31/98 ................................................ 1,100,000 1,085,392
5.125%, 6/30/98 ................................................ 4,500,000 4,416,345
5.250%, 7/31/98 ................................................ 3,000,000 2,947,980
5.125%, 11/30/98 ............................................... 5,000,000 4,878,900
8.875%, 2/15/99 ................................................ 1,000,000 1,062,186
5.875%, 3/31/99 ................................................ 1,000,000 990,000
7.000%, 4/15/99 ................................................ 1,000,000 1,017,970
6.500%, 4/30/99 ................................................ 3,000,000 3,015,930
6.750%, 5/31/99 ................................................ 2,200,000 2,225,432
6.375%, 7/15/99 ................................................ 1,700,000 1,702,924
6.875%, 7/31/99 ................................................ 1,315,000 1,333,699
6.875%, 8/31/99 ................................................ 1,000,000 1,014,220
7.125%, 9/30/99 ................................................ 1,000,000 1,021,870
7.500%, 10/31/99 ............................................... 2,500,000 2,581,650
</TABLE>
FS-300
<PAGE>
<TABLE>
<S> <C> <C>
7.875%, 11/15/99 ............................................... 1,000,000 1,044,530
7.750%, 11/30/99 ............................................... 2,250,000 2,342,813
7.750%, 12/31/99 ............................................... 1,000,000 1,041,870
7.750%, 1/31/00 ................................................ 1,300,000 1,355,042
6.875%, 3/31/00 ................................................ 500,000 507,655
6.375%, 8/15/02 ................................................ 500,000 495,468
-----------
(Cost $107,699,171) 107,356,487
-----------
Agency Obligations -- 16.85%
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 2 Class Z, 9.300%, 3/15/19 .............................. 1,242,507 1,311,800
Series 10 Class D, 10.000%, 7/15/18 ............................ 205,205 210,825
Series 11 Class C, 9.500%, 4/15/19 ............................. 482,698 497,782
Series 26 Class F, 9.500%, 2/15/20 ............................. 1,652,966 1,761,251
Series 81 Class A, 8.125%, 11/15/20 ............................ 428,196 428,196
Series 85 Class C, 8.600%, 1/15/21 ............................. 950,840 988,011
Series 99 Class Z, 9.500%, 1/15/21 ............................. 957,812 1,020,644
Series 192 Class H, 9.000%, 7/15/21 ............................ 401,566 412,219
Series 1045 Class G, HB, 1066.2085%, 2/15/21 ................... 2,193 67,656
Series 1096 Class D, 7.000%, 6/15/20 ........................... 927,440 932,846
Series 1477 Class F, 6.650%, 5/15/18 ........................... 300,000 297,276
Series 1559 Class VF, 6.250%, 2/15/20 .......................... 500,000 485,474
Series 1578 Class -- C, 5.500%, 11/15/12 ....................... 916,477 912,517
Series 1623 Class PC, 5.000%, 11/15/07 ......................... 440,000 436,026
Series 1669 Class C, 5.100%, 8/15/12 ........................... 740,000 731,652
Series 1671 Class D, 5.750%, 11/15/16 .......................... 250,000 246,367
Series 1722 Class PB, 6.500%, 2/15/09 .......................... 438,915 438,775
Series 1727 Class E, 6.500%, 4/15/18 ........................... 1,000,000 990,369
Series 1807 Class G, 9.000%, 1/1/06 ............................ 876,591 913,846
Federal National Mortgage Assn. Medium Term Note
4.920%, 9/28/98 ................................................ 220,000 212,454
Federal National Mortgage Assn. Mortgage Backed
Securities
Stripped Trust 268, Class 2, IO, 9.000%, 12/25/21 .................. 247,226 81,122
Federal National Mortgage Assn. Pass Thru
Securities:
Pool #070226, AR, 1/1/19 ....................................... 339,212 333,699
Pool #111366, AR, 8/1/19 ....................................... 400,771 414,498
Pool #116612, AR, 3/1/19 ....................................... 842,903 868,433
</TABLE>
FS-301
<PAGE>
<TABLE>
<S> <C> <C>
Federal National Mortgage Assn. Pass Thru
Securities
Gtd. Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 ................................ 772,541 816,745
1988 Class 15-A, 9.000%, 6/25/18 ............................... 164,729 172,469
1988 Class 16-B, 9.500%, 6/25/18 ............................... 986,955 1,054,618
1988 Class 17-B, 9.400%, 10/25/17 .............................. 49,400 51,003
1988 Class 19-H, 9.500%, 7/25/17 ............................... 33,442 33,435
1989 Class 27-D, 10.000%, 1/25/16 .............................. 149,302 153,827
1989 Class 31-D, 9.150%, 8/25/18 ............................... 267,766 274,858
1989 Class 73-C, PO, 10/25/19 .................................. 212,157 158,853
1990 Class 77-C, 9.000%, 7/25/19 ............................... 311,992 323,570
1990 Class 94-C, 8.000%, 1/25/19 ............................... 120,745 122,024
1991 Class 16-G, 8.000%, 3/25/04 ............................... 1,038,591 1,046,037
1991 Class 41-O, 9.000%, 8/25/06 ............................... 375,000 389,565
1991 Class 56-K, 8.600%, 2/25/20 ............................... 950,000 973,502
1992 Class 13-S, HB, IF, 1/25/99 ............................... 3,970 29,378
1992 Class 137-BA, 3.500%, 1/25/17 ............................. 286,250 267,929
1993 Class 35-C, 5.500%, 10/25/01 .............................. 124,597 123,978
1993 Class 85-PD, 5.500%, 7/25/03 .............................. 300,000 296,484
1993 Class 103-PC, 5.300%, 11/25/11 ............................ 500,000 496,974
1993 Class 107-D, 6.500%, 12/25/06 ............................. 900,000 884,726
1993 Class 252-C, 5.400%, 1/25/12 .............................. 250,000 248,105
1994 Class 32-PB, 5.500%, 3/25/03 .............................. 3,000,000 2,973,567
1994-G Class 7-PB, 6.000%, 4/17/08 ............................. 1,000,000 998,559
1994-G Class 8-B, 6.650%, 8/17/07 .............................. 700,000 701,595
-----------
(Cost $27,603,500) 27,585,539
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS ........................... 134,942,026
-----------
(Cost $135,302,671)
CORPORATE BONDS AND NOTES -- 16.30%
Finance -- 13.07%
American Southwest Financial Corp. CMO, Series
67-D, 9.450%, 3/1/15 .......................................... 175,005 174,950
Associates Corp. of North America:
9.700%, 5/1/97 ................................................. 765,000 787,216
6.800%, 12/15/97 ............................................... 800,000 807,041
</TABLE>
FS-302
<PAGE>
<TABLE>
<S> <C> <C>
8.500%, 1/10/00 ................................................ 500,000 528,053
7.550%, 8/23/01 ................................................ 250,000 257,155
Associates Corp. of North America Medium Term
Note
Tranche #SR 00455, 7.480%, 7/27/02 ............................. 300,000 307,318
Beneficial Finance Corp. Medium Term Note:
Tranche #00107, 9.250%, 10/15/96 ............................... 1,150,000 1,162,579
Tranche #00490, 7.200%, 2/21/97 ................................ 400,000 403,487
Tranche #00659, 7.340%, 11/26/99 ............................... 200,000 203,845
CFC-7 Grantor Trust Asset Backed Ctf., 8.650%,
10/15/96 ............................................................. 213,533 213,727
Chemical Bank Grantor Trust 1989-B Participation
Marine Contracts, Class 1, 8.900%, 12/15/96 .................... 175,252 176,726
Citicorp Mortgage Securities, Inc. Remic Pass
Thru Ctf.,
Series 89-16, Class A-1, AR, 4/1/19 ............................ 299,990 299,990
Collaterized Mortgage Obligations Trust CMO:
Trust 12, Class D, 9.500%, 2/1/17 .............................. 202,247 209,384
Ford Credit Grantor Trust Asset Backed Ctf .......................
Series 1994-B, Class A, 7.300%, 10/15/99 ....................... 403,264 408,712
Ford Motor Credit Co.:
7.250%, 5/15/99 ................................................ 640,000 650,577
9.500%, 4/15/00 ................................................ 730,000 792,739
Ford Motor Credit Co. Medium Term Note:
9.000%, 7/26/96 ................................................ 500,000 501,488
Tranche #TR 00493, 6.450%, 7/21/97 ............................. 300,000 301,026
Tranche #00281, 7.470%, 7/29/99 ................................ 1,000,000 1,021,931
Tranche #00442, 7.590%, 4/06/00 ................................ 300,000 307,438
General Electric Capital Corp., 8.75%, 11/26/96 .................. 500,000 505,868
General Electric Capital Corp. Medium Term Note
Tranche #TR 00624, 7.665%, 2/3/97 .............................. 500,000 505,492
General Motors Acceptance Corp. Medium Term Note
Tranche #00162, 7.750%, 2/20/97 ................................ 250,000 252,902
Lomas Mortgage Funding Corp. II, CMO, Series
88-1A, 9.000%, 9/20/15 ......................................... 30,896 30,986
MBNA Master Credit Card Trust Asset Backed Ctf ...................
Trust 91-1, Series 1991-1A, 7.750%, 10/15/98 ................... 1,458,333 1,467,053
Trust 92-1, Series 1992-1A, 7.250%, 6/15/99 .................... 750,000 758,872
Merrill Lynch Home Equity Loan Asset Backed Pass Thru Ctf ........
Series 1992-1, Class A, IF, 7/15/22 ............................ 839,246 841,067
</TABLE>
FS-303
<PAGE>
<TABLE>
<S> <C> <C>
Morgan Stanley Mortgage Trust, CMO, Series 38-4,
PO, 11/20/21 ................................................... 62,482 44,987
Navistar Financial Corp. Owner Trust Asset Backed Pass Thru
Ctf Series 1995-A, Class A2, 6.550%, 11/20/01 .................. 2,080,256 2,112,831
Ryland Acceptance Corp. Four, CMO, Series 78,
Class 78-B, 9.550%, 3/1/16 ..................................... 518,998 534,547
Shearson Lehman, Inc. CMO, Mortgage Backed
Sequential Pay Bond, Series U, Sequence U-1,
8.750%, 8/27/17 ................................................ 18,084 18,163
Standard Credit Card Master Trust Asset Backed
Ctf Series 1995-2, Class A, 8.625%, 1/7/02 ..................... 2,000,000 2,030,198
Western Financial Grantor Trust Auto Receivable
P/T Ctf: 1993-4, Class A1, 4.600%, 4/1/99 ...................... 446,602 442,386
1993-3, Class A, 6.650%, 12/1/99 ............................... 318,743 321,220
World Omni Automobile Lse Sec Trust Asset Backed
Ctf Series 1995-A, Class A, 6.050%, 11/25/01 ................... 2,000,000 2,003,258
------------
(Cost $21,337,988) 21,385,212
------------
Industrial -- 3.23%
Ford Holdings Inc.:
9.250%, 3/1/00 ................................................. 2,053,000 2,209,732
9.250%, 7/15/97 ................................................ 1,716,000 1,768,021
Pepsico, Inc.:
7.875%, 8/15/96 ................................................ 510,000 511,369
7.000%, 11/15/96 ............................................... 252,000 253,137
Waste Management Inc., 7.875%, 8/15/96 ........................... 550,000 551,477
------------
(Cost $5,307,936) 5,293,736
------------
TOTAL CORPORATE BONDS AND NOTES ...................................... 26,678,948
(Cost $26,645,923) ------------
TOTAL INVESTMENTS .................................................... $163,688,796
(Cost $164,016,417) ============
</TABLE>
FS-304
<PAGE>
THE WOODWARD FUNDS
SHORT BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996
(Unaudited)
Notes to Portfolio of Investments
(a) The Funds invest in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture. Descriptions of certain collateralized mortgage
obligations are as follows:
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks as
those associated with IO securities. Unlike IO's, the owner also has a
right to receive a very small portion of principal. The high interest rate
results from taking interest payments from other classes in the REMIC
Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represent the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market interest
rates. As prepayments on the underlying mortgages of these securities
increase, the yield on these securities increases.
FS-305
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
WOODWARD MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
MUNICIPAL BONDS - 99.83%
Alaska - 2.83%
Fairbanks North Star Borough S (MBIA Insured), 5.45%, 3/1/06 ........... $2,500,000 $2,517,725
----------
Arizona - .74%
Salt River Project Agricultural Improvement Power District
Revenue, Electric System Series D, 6.00%, 1/1/08 .................... 625,000 662,331
----------
California - 6.51%
Orange Co Recovery CTFS PRTN CA (MBIA Insured)
Series A, 5.80%, 7/1/16 .............................................. 2,815,000 2,765,963
Sacramento, California M.U.D. (MBIA Insured) 5.75%, 1/1/10 ............. 3,000,000 3,030,600
----------
5,796,563
----------
Florida - 5.29%
Florida State Pollution Control Series Y, 6.40%, 7/1/08 ................ 1,400,000 1,490,062
St Petersburg Excise Tax Revenue FL (FGIC Insured), 5.00%, 10/01/16 .... 3,585,000 3,221,840
----------
4,711,902
----------
Georgia - 5.39%
Gainesville Water & Sewer RV GA (FGIC Insured)
Water Utility Improvements, Series B, 6.00%, 11/15/12 .............. 3,950,000 4,143,708
Georgia State Housing And Finance Authority Revenue
Series B, 6.10%, 12/1/12 ............................................. 650,000 656,156
----------
4,799,864
----------
Illinois - 10.68%
Chicago Metropolitan Water Capital Improvement, 5.50%, 12/1/12 ......... 1,000,000 990,360
Chicago O'Hare International Airport RV ILL (MBIA Insured)
Refunding 2nd Lien Series C, 5.00%, 01/01/18 ........................ 3,000,000 2,627,070
DuPage Co. Forest Preservation District, 6.00%, 11/1/03 ................ 1,750,000 1,860,723
Evanston General Obligation Unlimited Tax, 6.10%, 12/1/09 .............. 1,000,000 1,041,930
Illinois Health Facilities Authority Revenue Northwestern Memorial
Hospital Series A, 5.60%, 8/15/06 .................................... 1,000,000 1,015,380
Illinois Housing Development, Series A, 5.95%, 7/1/21 .................. 2,000,000 1,974,380
----------
9,509,843
----------
</TABLE>
FS-306
<PAGE>
<TABLE>
<S> <C> <C>
Indiana - 6.84%
Ball State University Revenue (FGIC Insured) Student Fee Series G,
6.125%, 7/1/09 ...................................................... 400,000 412,100
Fort Wayne Sewer Works Improvement Revenue Indiana (FGIC Insured),
5.75%, 8/1/10 ....................................................... 1,100,000 1,102,728
Indiana State Vocational Technology Revenue Series D, 5.90%, 7/1/06 .... 1,000,000 1,041,400
Indiana Transportation Finance Authority, Series A
6.25%, 11/1/16 ...................................................... 1,500,000 1,513,410
North Adams Community Schools Participation Ctfs., 5.75%, 7/15/12 ...... 1,000,000 994,790
St. Joseph Co. Hospital Authority Facilities Revenue (MBIA Insured),
Memorial Hospital South Bend Project, 6.25%, 8/15/12 ................ 1,000,000 1,031,500
----------
6,095,928
----------
Kansas - 3.09%
Johnson Co Unified School District #229 KS
Series A, General Obligation Unlimited Tax, 5.00%, 10/1/16 .......... 3,000,000 2,752,680
----------
Kentucky - 1.35%
Kentucky State Turnpike Authority Economic Development Revenue
(AMBAC Insured) Refunding, 5.50%, 7/1/06 ............................. 1,175,000 1,204,997
----------
Maryland - 1.14%
Maryland State Community Development Administration Dept ...............
Housing & Community Development, First Series, 5.80%, 4/1/07 ...... 1,000,000 1,019,300
----------
Massachusetts - 7.05%
Massachusetts Housing Finance Agency Revenue (AMBAC Insured)
Single Family, 6.00%, 12/1/15 ........................................ 4,000,000 3,977,120
Massachusetts State Finance Agency, Series F
6.00%, 1/1/15 ........................................................ 2,265,000 2,302,635
----------
6,279,755
----------
Michigan - 6.81%
Grand Rapids Water Supply System Revenue (FGIC Insured),
6.30%, 1/1/04 ......................................................... 250,000 266,703
</TABLE>
FS-307
<PAGE>
<TABLE>
<S> <C> <C>
Michigan State Building Authority Revenue Series I,
6.40%,10/1/04 ....................................................... 600,000 644,730
Michigan State Housing Development Authority Revenue
Series C, 6.375%, 12/1/11 ........................................... 1,450,000 1,481,465
Rochester Community School District School Building & Site
Unlimited Tax, 6.50%, 5/1/06 ........................................ 250,000 270,350
Royal Oak Hospital Finance Authority Revenue, William
Beaumont Hospital:
Series C, 7.20%, 1/1/05 ........................................... 250,000 270,810
Series G, 5.60%, 11/15/11 ......................................... 850,000 831,105
Saranac Community School District, 6.00%, 5/1/13 ....................... 250,000 253,570
Wyandotte Electric Revenue, 6.25%, 10/1/17 ............................. 2,000,000 2,043,700
---------- ----------
6,062,432
----------
Missouri - 5.25%
Missouri Health & EDL Facilities Authority Revenue
Series C, 3.70%, 9/1/30 ............................................. 2,800,000 2,800,000
Kansas City School District Building Revenue Elementary School
Project Series D, 5.10%, 2/1/07 ..................................... 1,905,000 1,875,834
----------
4,675,834
----------
New Jersey - 0.47%
Gloucester Co. Improvement Authority Gtd. Revenue, Solid Waste
Landfill Project Series AA, 6.20%, 9/1/07 ........................... 400,000 418,500
----------
New York - 0.31%
Tri-Borough Bridge & Tunnel Authority Revenue General Purpose
Series X, 6.625%, 1/1/12 ............................................ 250,000 276,327
----------
North Carolina - 1.15%
North Carolina Municipal Power Agency Catawba Electric Revenue,
6.00%, 1/1/05 ....................................................... 1,000,000 1,026,780
----------
Ohio - 4.52%
Franklin Co. Hospital Revenue, Children's Hospital Series A,
6.50%, 5/1/07 ....................................................... 950,000 1,009,527
Ohio State Building Authority Revenue, State Facilities Adult
Correctional Building Fund Series A, 6.125%, 10/1/09 ................ 250,000 260,273
Ohio General Obligation State of Public & Sewer Imports
Unlimited Tax, 6.00%, 8/1/07 ....................................... 1,000,000 1,066,730
</TABLE>
FS-308
<PAGE>
<TABLE>
<S> <C> <C>
Ohio Housing Financial Agency Mortgage Revenue
Residential GNMA Series A-1, 6.20%, 9/1/14 ............................. 1,670,000 1,693,246
----------
4,029,776
----------
South Carolina - 2.19%
Greenville Hospital System Facilities Revenue SC
Health Hospital Nursing Home Improvements
Series A, 5.60%, 5/1/10 ............................................. 2,000,000 1,952,840
----------
South Dakota - 8.06%
Heartland Consumers Power District Electric Revenue
Refunding Electric Light & Power Improvements, 6.00%, 1/1/17 ........ 2,500,000 2,568,600
South Dakota Housing Development Authority AA1/AAA
5.70%, 5/1/08 ....................................................... 2,300,000 2,294,710
South Dakota Housing Development Authority Revenue
Series C, 6.25%, 5/1/15 .............................................. 1,000,000 1,007,730
South Dakota State Building Authority Lease Revenue (AMBAC
Insured), 6.625%, 9/1/12 ............................................ 1,200,000 1,309,884
----------
7,180,924
----------
Tennessee - 0.77%
Metropolitan Government Nashville/Davis County Revenue,
7.00%, 1/1/14 ....................................................... 675,000 690,066
----------
Texas - 7.69%
Austin Utilities System Revenue (AMBAC Insured), 6.50%, 5/15/11 ........ 250,000 262,245
Harris Co. Flood Control District Refunding General Obligation,
6.25%,10/1/05 ....................................................... 250,000 262,855
Houston General Obligation Series C, 6.00%, 3/1/05 ..................... 400,000 417,312
San Antonio Water Revenue (MBIA Insured), 6.50%, 5/15/10 ............... 250,000 264,485
Tarrant Co. Water Control & Improvement District #1 Revenue
Series A, 6.10%, 3/1/05 ............................................. 400,000 415,744
Texas General Obligation , 7.70%, 8/1/06 ............................... 1,305,000 1,408,800
Texas General Obligation Refunding Series A Unlimited Tax
6.00%, 10/1/05 ...................................................... 1,000,000 1,066,430
</TABLE>
FS-309
<PAGE>
<TABLE>
<S> <C> <C>
Texas Turnpike Austin Dallas Northway RV (FGIC Insured)
President George Bush Turnpike Highway Improvements, 5.25%, 1/1/23 .. 3,000,000 2,747,730
----------
6,845,601
----------
Virginia - 6.19%
Virginia State Housing Development Authority Revenue,
5.60%, 11/1/10 ...................................................... 1,500,000 1,466,655
Virginia State Housing Development Commonwealth
Series H, 6.20%, 1/1/08 ............................................. 1,000,000 1,022,450
Virginia State Public School Authority Revenue Series A,
6.25%, 1/1/11 ....................................................... 500,000 513,190
Virginia State Transportation Board Contract Revenue
#58 Corridor, 6.00%, 5/15/19 ...................................... 2,500,000 2,508,375
----------
5,510,670
----------
Washington - 2.15%
Kent General Obligation (AMBAC Insured) Unlimited Tax, 5.40%,
12/1/06 .............................................................. 1,300,000 1,312,532
King Co. General Obligation Series A, 7.00%, 12/1/07 ................... 550,000 598,840
----------
1,911,372
----------
Wisconsin - 3.36%
Wisconsin Housing And Economic Development Authority Revenue
Series A, 6.15%, 9/1/17 .............................................. 1,500,000 1,502,160
Wisconsin State Health & Educational Facilities Authority
Revenue, Lutheran Hospital Benevolent Development Fund
Series A, 5.60%, 2/15/09 ............................................ 450,000 447,552
Wisconsin State Transportation Revenue Series B, 5.75%, 7/1/12 ......... 1,000,000 1,046,950
----------
2,996,662
----------
TOTAL MUNICIPAL BONDS ....................................................... 88,928,672
(Cost - $88,858,696) ----------
TEMPORARY CASH INVESTMENT - 0.17%
Woodward Tax Exempt Money Market Fund .................................. 148,787 148,787
(Cost - $148,786) ----------
TOTAL INVESTMENTS ........................................................... $89,077,459
===========
(Cost - $89,007,482)
</TABLE>
FS-310
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
WOODWARD MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
MUNICIPAL BONDS - 95.48%
Michigan - 93.50%
Allegan Public School District General Obligation (AMBAC
Insured), Unlimited Tax,5.75%,5/1/12 ................................. $ 200,000 $ 201,178
Dearborn Economic Division Oakwood Obligation Group
Series, 5.60%, 11/15/08 ........................................... 1,690,000 1,698,366
Detroit Sewer Disposal Revenue (FGIC Insured):
6.00%, 7/1/00 ..................................................... 1,225,000 1,283,923
Series A, Sewer Improvement, 5.30%, 7/1/06 ........................ 455,000 456,097
East China Township School District School Building & Site,
Unlimited Tax, 6.00%, 5/1/03 ...................................... 400,000 421,484
Eastern Michigan University General Obligation Revenue
(AMBAC Insured), 5.125%, 6/1/11 ...................................... 500,000 467,570
Eastern Michigan University General Sinking Fund, 6.375%,
6/1/14 ............................................................... 1,000,000 1,035,560
Ferndale School District, 5.50%, 5/1/11 .............................. 1,000,000 991,920
Grand Haven Electric Revenue, 5.25%, 7/1/13 .......................... 1,315,000 1,232,050
Grand Traverse Co. Hospital Finance Authority Revenue
(AMBAC Insured), Munson Healthcare Series A, 5.90%, 7/1/04 ........... 1,000,000 1,048,040
Hartland Consolidated School District General Obligation
(AMBAC Insured), Unlimited Tax, 6.00%, 5/1/11 ........................ 650,000 666,513
Holland Electric Revenue, 5.00%, 7/1/09: ............................. 625,000 591,231
Lansing Building Authority (AMBAC Insured), 6.00%, 6/1/05 ............ 1,000,000 1,065,320
Livingston Co. General Obligation Bldg. Authority Limited Tax,
5.80%, 7/1/08 ................................................... 1,330,000 1,357,917
Marysville Public School District, 5.60%, 5/1/09 ..................... 620,000 621,810
Michigan General Obligation Environmental Protection Program:
6.25%, 11/1/08 .................................................... 450,000 489,874
Michigan Municipal Bond Authority Revenue:
Local Government Loan Program Series A, 5.70%, 8/1/07 ............. 1,145,000 1,165,942
Michigan State Building Authority Revenue Series I:
(AMBAC Insured), 5.00%, 10/1/06 ................................... 950,000 929,062
Michigan State Comprehensive Transportation Revenue Series B,
5.75%, 5/15/11 .................................................... 2,140,000 2,122,966
Michigan State Hospital Finance Authority Revenue:
3.55%, 12/1/23 .................................................... 900,000 900,000
</TABLE>
FS-311
<PAGE>
<TABLE>
<S> <C> <C>
Detroit Medical Center - B (AMBAC Insured), 5.00%,
8/15/06 ......................................................... 1,000,000 965,260
Henry Ford Hospital, 6.00%, 9/1/11 ................................ 1,250,000 1,272,487
Henry Ford Hospital, 5.75%, 9/1/17 ................................ 750,000 727,612
Mercy Mt. Clemens, 6.25%, 5/15/11 ................................. 500,000 509,175
Refunding Hospital Daughters Charity, 5.25%, 11/1/15 .............. 1,000,000 912,620
Michigan State Housing Development Authority Revenue:
Rental, Series A, 6.20%, 4/1/03 ................................... 1,000,000 1,037,820
Single Family Mortgage Series B, 6.30%, 4/1/03 .................... 1,000,000 1,001,210
Series A, 6.00%, 12/1/15 .......................................... 3,000,000 2,969,310
Series C, 6.375%, 12/1/11 ......................................... 750,000 766,275
Michigan State University Revenue Series A:
6.25%, 8/15/15 .................................................... 2,000,000 2,036,780
Newaygo Public Schools General Obligation Unlimited Tax,
6.00%, 5/1/12 ..................................................... 300,000 307,506
Norway Vulcan Area Schools, 5.75%, 5/1/13 ............................ 250,000 248,115
Novi Community Schools, 6.125%, 5/1/13 ............................... 750,000 769,215
Novi General Obligation Series A & B Recreational Facilities
& Public Improvements, 5.00%, 10/1/11 ............................. 725,000 668,805
Oak Park School District (AMBAC Insured):
6.00%, 6/1/09 ..................................................... 250,000 258,740
Oakland Community College Refunding & Improvement Limited
Tax: 5.15%, 5/1/09 ................................................ 910,000 856,574
General Obligation, 5.20%, 5/1/10 ................................. 700,000 652,773
Ottawa Co. General Obligation Water Supply System, 6.00%,
8/1/08 ............................................................ 1,950,000 2,027,123
Perry Public Schools General Obligation Unlimited Tax,
6.00%, 5/1/12 ..................................................... 250,000 253,915
Rockford Public Schools, 5.875%, 5/1/12 .............................. 500,000 506,055
Royal Oak Hospital Finance Authority Revenue,
William Beaumont Hospital - G,5.25%, 11/15/19 ..................... 2,000,000 1,833,740
William Beaumont Hospital - G, 5.60%, 11/15/11 .................... 2,000,000 1,955,540
Saranac Community School District, 6.00%, 5/1/13 ..................... 250,000 253,570
Traverse City Area Public School District, Series I, 5.70%,
5/1/12 ............................................................ 2,400,000 2,413,296
Troy City School District, School Improvements, 6.40%,
5/1/12 ............................................................ 400,000 419,352
</TABLE>
FS-312
<PAGE>
<TABLE>
<S> <C> <C>
University of Michigan Revenue Hospital Series A:
5.75%, 12/1/12 ...................................................... 850,000 836,663
5.50%, 12/1/21 ...................................................... 450,000 415,863
University of Michigan Revenue Medical Service Plan, 6.20%, 12/1/03 .... 1,000,000 1,075,120
University of Michigan Revenue Student Fee Series A, 5.25%, 4/1/15 ..... 1,000,000 937,520
Wayne State University (AMBAC Insured):
5.50%, 11/15/07 ...................................................... 1,000,000 1,013,330
5.65%, 11/15/15 ...................................................... 800,000 783,352
Wayne Westland Community Schools (FGIC Insured), Unlimited Tax,
5.75%, 5/1/11 ........................................................ 350,000 349,968
Webberville Community School, 5.60%, 5/1/11 ............................ 500,000 492,535
Western University Revenue (FGIC Insured), 6.25%, 11/15/12 ............. 250,000 260,732
Wyoming Public School, 5.875%, 5/1/13 .................................. 350,000 352,608
----------
50,887,382
----------
Puerto Rico - 1.98%
Puerto Rico Commonwealth GO (MBIA Insured) Unlimited Tax
Public Improvements, 6.25%, 7/1/12 .................................. 1,000,000 1,078,040
----------
TOTAL MUNICIPAL BONDS .................................................... 51,965,422
(Cost - $52,275,602)
TEMPORARY CASH INVESTMENT - 4.52%
Woodward Michigan Tax-Exempt Money Market Fund ......................... 2,457,766
(Cost - $2,457,766) ----------
TOTAL INVESTMENTS ........................................................ $54,423,188
(Cost - $54,733,368) ===========
</TABLE>
FS-313
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business trust
on April 21, 1987, and registered under the Investment Company Act of 1940, as
amended, as an open-end investment company. As of June 30, 1996, Woodward
consisted of seventeen separate series of which there were five Bond Funds, as
described below.
Woodward Bond Fund
Woodward Intermediate Bond Fund
Woodward Short Bond Fund
Woodward Municipal Bond Fund
Woodward Michigan Municipal Fund
The Bond and Intermediate Bond Funds commenced operations on June 1, 1991.
The Municipal Bond and Michigan Municipal Bond Funds commenced operations
February 1, 1993. The Short Bond Fund commenced operations on September 17,
1994.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Bond Funds in the preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies. Following generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments
The Bond Funds value investment securities at market value which is determined
by a pricing service based upon quoted market prices or dealer quotes.
Securities for which market prices or dealer quotes are not readily available
are valued by the investment advisor, NBD Bank (NBD), in accordance with
procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day after
trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is
FS-314
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
required to equal or exceed 102% of the funds advanced under the repurchase
agreement including accrued interest; 2) collateral is marked to market daily
by NBD to assure its value remains at least equal to 102% of the repurchase
agreement amount; and 3) funds are not disbursed by Woodward or its agent
unless collateral is presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount on debt instruments. Bond
premiums and discounts are amortized/accreted as required by the Internal
Revenue Code. Premiums and discounts on mortgage-backed securities are
amortized/accreted using the effective interest rate method. As prepayments on
the underlying mortgages increase or decrease the expected life, the yield is
adjusted to amortize/accrete the security to its new expected life.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M of the
Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
As of December 31, 1995, the Bond Funds had capital loss carryforwards and
related expiration dates as follows:
<TABLE>
<CAPTION>
Fund 2002 2003 Total
- ---- ---- ---- -----
<S> <C> <C> <C>
Bond ...................... $19,955,806 $1,041,792 $20,997,598
Intermediate .............. 3,916,956 2,190,497 6,107,453
Municipal Bond ............ 96,878 333,098 429,976
Michigan Municipal Bond ... 29,400 -- 29,400
</TABLE>
Shareholder Dividends
Dividends from net investment income are declared and paid monthly by the Bond
Funds. Net realized capital gains are distributed annually. Distributions from
net investment income and net realized gains are made during each year to
avoid the 4% excise tax imposed on regulated investment companies by the
Internal Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the five
year period beginning with the commencement of operations of each series.
FS-315
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
When Issued/To Be Announced (TBA) Securities.
The Bond Funds may purchase securities on a "when issued" basis. These
securities have been registered by a municipality or government agency, but
have not yet been issued to the public. These transactions involve a
commitment by the Funds to purchase particular securities, with payment and
delivery taking place at a future date, for which all specific information,
such as the face amount and maturity date of such investment security, is not
known at the time of the trade. These transactions are subject to market
fluctuations and the risk that the value at delivery may be more or less than
the purchase price at which the transactions were entered. The current value
of these securities is determined in the same manner as that of other
portfolio securities. Although the Bond Funds generally purchase these
securities with the intention of acquisition, such securities may be sold
before the settlement date.
Expenses
Expenses are charged daily as a percentage of the Fund's assets. Woodward
monitors the rate at which expenses are charged to ensure that a proper amount
of expense is charged to income each year. This percentage is subject to
revision if there is a change in the estimate of the future net assets of
Woodward or a change in expectations as to the level of actual expenses.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of .005% of the Bond Funds' average net assets and Essex is
entitled to receive a fee at the annual rate of .10% of the aggregate average
net assets of Woodward's investment portfolios attributable to investments by
clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For its
advisory services to Woodward, NBD is entitled to a fee, computed daily and
payable monthly. Under the Advisory Agreement, NBD also provides Woodward with
certain administrative services, such as maintaining Woodward's general ledger
and assisting in the preparation of various regulatory reports. NBD receives
no additional compensation for such services.
FS-316
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
NBD, FoM, and Essex have agreed that they may waive their fees in whole or in
part; and, if in part, may specify the particular fund to which such waiver
relates as may be required to satisfy any expense limitation imposed by state
securities laws or other applicable laws. At present, no restrictive expense
limitation is imposed on Woodward. Restrictive limitations could be imposed as
a result of changes in current state laws and regulations in those states
where Woodward has qualified its shares, or by a decision of the Trustees to
qualify the shares in other states having restrictive expense limitations. For
the period ended June 30, 1996, NBD reimbursed the Municipal Bond and
Michigan Municipal Bond Funds for certain expenses in the amount of $2,250 and
$32,420, respectively.
On March 10, 1994, Woodward adopted the Woodward Funds Deferred Compensation
Plan (the "Plan"), an unfunded, nonqualified deferred compensation plan. The
Plan allows an individual trustee to elect to defer receipt of all or a
percentage of fees which otherwise would be payable for services performed.
NBD is also compensated for its services as Woodward's Custodian, Transfer
Agent and Dividend Disbursing Agent, and is reimbursed for certain out of
pocket expenses incurred on behalf of Woodward.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
(4) Investment Securities Transactions
Information with respect to investment securities and security transactions,
based on the aggregate cost of investments for federal income tax purposes,
excluding short-term securities, is as follows:
<TABLE>
<CAPTION>
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Gross Unrealized Gains ........ $ 16,834,834 $ 6,946,212 $ 413,684 $ 910,576 $ 437,472
Gross Unrealized Losses ....... (18,066,456) (13,083,350) (741,305) (840,599) (747,652)
------------ ------------ ------------ ----------- -----------
$ (1,231,622) $ (6,137,138) $ (327,621) $ 69,977 $ (310,180)
============ ============ ============ =========== ===========
Federal Income Tax Cost ....... $541,579,968 $387,239,977 $164,016,417 $89,007,483 $54,733,368
Purchases ..................... $147,238,139 $103,517,584 $106,220,541 $32,497,031 $ 6,962,400
Sales & Maturities, at value .. $ 75,620,922 $ 80,110,091 $ 93,939,578 $22,025,859 $ 6,099,489
</TABLE>
FS-317
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
(5) Expenses
Following is a summary of total expense rates charged, advisory fee
rates payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the period ended June 30, 1996. The rates
shown are stated as a percentage of each fund's average net assets.
<TABLE>
<CAPTION>
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
Effective Date BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
- -------------- ----------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Expense Rates:
January 1 ............ 0.73% 0.72% 0.77% 0.82% 0.82%
March 18 ............. 0.72% 0.72% 0.78% 0.82% 0.82%
May 21 ............... 0.71% 0.71% 0.78% 0.82% 0.82%
NBD Advisory Fee:
January 1 ............ 0.65% 0.65% 0.65% 0.65% 0.65%
Amounts Paid:
Advisory Fee to NBD .. $1,680,455 $1,274,959 $432,308 $271,410 $172,437
Distribution Fees to
FoM & Essex ....... $ 30,077 $ 14,580 $ 4,221 $ 7,666 $ 10,997
Other Fees & Out
of Pocket
Expenses to NBD ...... $ 64,444 $ 47,397 $ 23,081 $ 17,705 $ 17,182
Expense Reimbursement
by NBD ............... -- -- -- $ 2,250 $ 32,420
</TABLE>
(6) Portfolio Composition
Although the Municipal Bond Fund has a diversified investment portfolio,
the Fund has investments greater than 10% of its total investments in the
state of Illinois. The Michigan Municipal Bond Fund does not have a
diversified portfolio since all of its investments are within the state of
Michigan. Such concentrations within particular states may subject the Funds
more significantly to economic changes occuring within those states.
(7) Subsequent Event
On August 23, 1996, the Woodward Bond Fund merged with the Prairie Bond
Fund. The transaction was effected as a tax-free reorganization under the
Internal Revenue Code, so that none of the Fund's shareholders recognized
taxable gains or losses as a result of the reorganization.
On or about September 13, 1996, the Woodward Municipal Bond Fund will
merge with the Prairie Municipal Bond Fund.
FS-318
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the Bond
Funds' net assets values have changed during the periods presented. Additional
quantitative measures expressed in ratio form analyze important relationships
between certain items presented in the financial statements. These financial
highlights have been derived from the financial statements of the Bond Funds
and other information for the periods presented below.
<TABLE>
<CAPTION>
Bond Fund
---------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ........................ $ 10.45 $ 9.01 $ 10.32 $ 10.25 $ 10.55 $ 10.00
Income from investment
operations:
Net investment income ....... 0.33 0.63 0.61 0.76 0.83 0.51
Net realized and unrealized
gains (losses) on
investments ............. (0.44) 1.45 (1.31) 0.38 (0.17) 0.57
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .................. (0.11) 2.08 (0.70) 1.14 0.66 1.08
------------ ------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment ......... (0.32) (0.64) (0.59) (0.76) (0.83) (0.51)
income
From realized gains ......... -- -- (0.02) (0.31) (0.13) (0.02)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ............. (0.32) (0.64) (0.61) (1.07) (0.96) (0.53)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period ...................... $ 10.02 $ 10.45 $ 9.01 $ 10.32 $ 10.25 $ 10.55
============ ============ ============ ============ ============ ============
Total Return (b) ................ (2.09)%(a) 23.75% (6.99)% 11.39% 6.56% 18.45%(a)
Ratios/Supplemental Data
Net assets, end of period ....... $539,772,313 $517,565,579 $427,168,395 $501,196,278 $321,758,333 $237,673,316
Ratio of expenses to average
net assets ................. 0.71%(a) 0.74% 0.74% 0.73% 0.73% 0.75%(a)
Ratio of net investment income
to average net assets ....... 6.63%(a) 6.39% 6.36% 7.20% 8.08% 8.44%(a)
Portfolio turnover rate ......... 14.30% 41.91% 75.67% 111.52% 90.45% 8.19%
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-319
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Intermediate Bond Fund
-------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ...................... $ 10.37 $ 9.21 $ 10.41 $ 10.28 $ 10.55 $ 10.00
Income from investment
operations:
Net investment income ....... 0.30 0.59 0.56 0.59 0.71 0.40
Net realized and unrealized
gains (losses) on
investments ............. (0.29) 1.16 (1.20) 0.26 (0.10) 0.57
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations...................... 0.01 1.75 (0.64) 0.85 0.61 0.97
------------ ------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income... (0.30) (0.59) (0.55) (0.59) (0.71) (0.40)
From realized gains ......... -- -- (0.01) (0.13) (0.17) (0.02)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ............. (0.30) (0.59) (0.56) (0.72) (0.88) (0.42)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of period... $ 10.08 $ 10.37 $ 9.21 $ 10.41 $ 10.28 $ 10.55
============ ============ ============ ============ ============ ============
Total Return (b) ................ 0.35%(a) 19.48% (6.31)% 8.41% 6.00% 16.62%(a)
Ratios/Supplemental Data
Net assets, end of period ....... $390,818,226 $405,309,939 $393,019,168 $429,789,857 $220,432,255 $130,367,032
Ratio of expenses to average
net assets ................. 0.71%(a) 0.73% 0.74% 0.74% 0.74% 0.75%(a)
Ratio of net investment income
to average net assets ....... 6.04%(a) 5.98% 5.73% 5.44% 6.91% 6.59%(a)
Portfolio turnover rate ......... 20.12% 36.47% 54.60% 92.80% 56.30% 7.38%
</TABLE>
FS-320
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Short Bond Fund
---------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994
-------------- -------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 10.23 $ 9.84 $ 10.00
Income from investment operations:
Net investment income ........... 0.27 0.58 0.17
Net realized and unrealized
gains (losses) on investments (0.14) 0.39 (0.16)
------------ ------------ -----------
Total from investment operations .... 0.13 0.97 0.01
------------ ------------ -----------
Less distributions:
From net investment
income ...................... (0.26) (0.58) (0.17)
From realized gains ............. -- -- --
------------ ------------ -----------
Total distributions ................. (0.26) (0.58) (0.17)
------------ ------------ -----------
Net asset value, end of
period .......................... $ 10.10 $ 10.23 $ 9.84
============ ============ ===========
Total return (b) .................... 2.52%(a) 10.07% 0.21%(a)
Ratios/Supplemental Data
Net assets, end of period ........... $164,889,639 $163,336,855 $64,239,163
Ratio of expenses to average net
assets .......................... 0.77%(a) 0.75% 0.75%(a)
Ratio of net investment income to
average net assets .............. 5.35%(a) 5.74% 5.92%(a)
Ratio of expenses to average net
assets without fee waivers/
reimbursed expenses ............. -- 0.81% 0.93%(a)
Ratio of net investment income
to average net assets without fee
waivers/reimbursed expenses ..... -- 5.68% 5.74%(a)
Portfolio turnover rate ............. 57.24% 30.94% 10.20%
</TABLE>
FS-321
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Municipal Bond Fund
---------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year Ended Year Ended Period Ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 10.68 $ 9.59 $ 10.69 $ 10.00
Income from investment operations:
Net investment income ........... 0.24 0.48 0.50 0.45
Net realized and unrealized
gains (losses) on investments (0.32) 1.08 (1.11) 0.69
----------- ----------- ----------- -----------
Total from investment operations .... (0.08) 1.56 (0.61) 1.14
----------- ----------- ----------- -----------
Less distributions:
From net investment
income ...................... (0.24) (0.47) (0.49) (0.44)
From realized gains ............. -- -- -- (0.01)
----------- ----------- ----------- -----------
Total distributions ................. (0.24) (0.47) (0.49) (0.45)
----------- ----------- ----------- -----------
Net asset value, end of
period .......................... $ 10.36 $ 10.68 $ 9.59 $ 10.69
=========== =========== =========== ===========
Total return (b) .................... (1.55)%(a) 16.54% (5.72)% 12.69 (a)
Ratios/Supplemental Data
Net assets, end of period ........... $90,521,240 $76,963,564 $61,255,773 $54,703,974
Ratio of expenses to average net
assets .......................... 0.82%(a) 0.79% 0.53% 0.19%(a)
Ratio of net investment income to
average net assets .............. 4.63%(a) 4.63% 4.94% 5.27%(a)
Ratio of expenses to average net
assets without fee waivers/
reimbursed expenses ............. 0.82%(a) 0.93% 0.88% 1.12%(a)
Ratio of net investment income
to average net assets without fee
waivers/reimbursed expenses ..... 4.63%(a) 4.49% 4.59% 4.34%(a)
Portfolio turnover rate ............. 26.99% 20.46% 19.11% 11.12%
</TABLE>
FS-322
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Michigan Municipal Bond Fund
---------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year Ended Year Ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
--------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 10.60 $ 9.54 $ 10.60 $ 10.00
Income from investment operations:
Net investment income ........... 0.24 0.48 0.50 0.44
Net realized and unrealized
gains (losses) on investments (0.35) 1.06 (1.06) 0.59
----------- ----------- ----------- -----------
Total from investment operations .... (0.11) 1.54 (0.56) 1.03
----------- ----------- ----------- -----------
Less distributions:
From net investment
income ...................... (0.24) (0.48) (0.50) (0.43)
From realized gains ............. -- -- -- --
----------- ----------- ----------- -----------
Total distributions ................. (0.24) (0.48) (0.50) (0.43)
----------- ----------- ----------- -----------
Net asset value, end of
period .......................... $ 10.25 $ 10.60 $ 9.54 $ 10.60
=========== =========== =========== ===========
Total return (b) .................... (2.16)%(a) 6.49% (5.42)% 11.50%(a)
Ratios/Supplemental Data
Net assets, end of period ........... $55,003,003 $53,453,160 $45,263,059 $42,113,795
Ratio of expenses to average net
assets .......................... 0.82%(a) 0.79% 0.53% 0.19%(a)
Ratio of net investment income to
average net assets .............. 4.61%(a) 4.71% 5.01% 5.12%(a)
Ratio of expenses to average net
assets without fee waivers/
reimbursed expenses ............. 0.93%(a) 1.04% 1.05% 1.21%(a)
Ratio of net investment income
to average net assets without fee
waivers/reimbursed expenses ..... 4.50%(a) 4.46% 4.49% 4.10%(a)
Portfolio turnover rate ............. 11.77% 26.97% 25.93% 41.70%
<FN>
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
FS-323
<PAGE>
RESULTS OF SPECIAL SHAREHOLDER MEETING (Unaudited)
On July 10, 1996, July 31, 1996, and August 14, 1996 special meetings of
the shareholders of The Woodward Bond, Intermediate, Short Bond, Municipal ,
and MI. Municipal Funds were held to approve the following proposals.
The shareholders approved these proposals with respect to The Woodward
Bond, Intermediate, Short Bond, Municipal, and MI. Municipal Funds are as
follows:
1. To approve a new investment advisory agreement ("New Advisory
Agreement") between each Trust, NBD Bank ("NBD") and First Chicago
Investment Management Company ("FCIMCO")
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,307,211 318,154 328,809
Intermediate 22,944,773 1,432,426 257,485
Short Bond 10,433,399 10,526 90,755
Municipal 5,263,616 54,710 53,915
Mich Municipal 3,104,687 51,897 141,228
</TABLE>
2. To approve a change to the fundamental investment limitations of
each Fund of the Trust with regard to the following:
a) investment in commodities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 24,907,043 524,065 446,863
Intermediate 22,710,386 1,493,601 362,712
Short Bond Fund 10,294,683 104,488 113,532
Municipal 5,003,336 208,220 85,478
Mich Municipal 2,876,994 250,066 136,458
</TABLE>
b) expanded power to borrow
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 24,887,424 579,395 411,152
Intermediate 22,706,601 1,549,366 310,731
Short Bond 10,314,370 90,236 108,097
Municipal 4,957,872 227,516 111,645
Mich Municipal 2,961,040 147,333 155,146
</TABLE>
c) issuing senior securities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,015,352 437,271 425,349
Intermediate 22,704,780 1,462,351 399,568
Short Bond 10,367,475 22,453 122,774
Municipal 5,033,294 164,206 99,534
Mich Municipal 3,044,629 77,656 141,234
</TABLE>
FS-324
<PAGE>
3. To approve a change to the fundamental investment policies and
limitations of certain Funds of the Trusts, as follows:
a) to approve a change of the diversification policy of the
Municipal Bond Fund from a diversified to a non-diversified
policy
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Municipal 5,054,157 83,564 159,314
</TABLE>
c) to approve a change to the fundamental investment limitation
concerning concentration of investments in a particular industry
with respect to the Funds
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,012,877 436,057 429,038
Intermediate 22,840,260 1,441,641 284,798
Short Bond 10,366,391 54,576 91,735
Municipal 5,087,970 62,993 146,071
Mich Municipal 2,991,355 103,035 169,129
</TABLE>
4. To approve a change of the following fundamental policies and
limitations to non-fundamental policies and limitations:
a) limitation prohibiting investing, with respect to 50% of its
total assets, more than 5% of its assets in the securities of
any one issuer
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Mich Municipal 2,168,092 60,758 107,626
</TABLE>
b) limitation on investment in other investment companies
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,045,699 425,366 406,907
Intermediate 22,854,609 1,420,937 291,153
Short Bond 10,377,966 25,662 109,074
Municipal 5,084,746 94,580 117,708
Mich Municipal 3,001,967 125,664 135,887
</TABLE>
c) limitation on illiquid securities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 24,980,768 430,468 466,736
Intermediate 22,802,881 1,453,967 309,851
Short Bond 10,343,453 60,175 109,074
Municipal 5,100,147 103,934 92,953
Mich Municipal 3,039,205 93,085 131,228
</TABLE>
d) limitation on purchasing securities on margin
FS-325
<PAGE>
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,038,543 422,092 417,336
Intermediate 22,781,701 1,463,123 321,875
Short Bond 10,376,781 26,847 109,074
Municipal 5,062,732 111,188 123,113
Mich Municipal 3,056,357 76,237 130,924
</TABLE>
e) limitation on purchasing securities of companies for the
purpose of exercising control
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,026,946 426,973 424,053
Intermediate 22,811,628 1,450,797 304,275
Short Bond 10,378,176 25,452 109,074
Municipal 5,098,123 105,066 93,844
Mich Municipal 3,031,995 109,222 122,301
</TABLE>
f) limitation on writing or selling put options, call options,
straddles, spreads, or any combinations thereof
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,053,258 393,787 430,927
Short Bond 10,339,635 63,994 109,074
Municipal 5,018,571 172,826 105,638
Mich Municipal 3,072,261 68,957 122,301
</TABLE>
6. To ratify the appointment of two Trustees to the Board of Trustees of
each Trust.
Elected Trustees Current Trustees
Ms. Marilyn McCoy Mr. Will M. Caldwell Mr. Donald L. Tuttle
Mr. John P. Gould Dr. Nicholas J. DeGrazia Mr. Donald B. Sutherland
Mr. Julius L. Pallone
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,286,806 274,474 392,893
Intermediate 22,977,680 1,372,752 284,253
Short Bond 10,424,050 19,343 91,287
Municipal 5,289,174 7,953 75,115
Mich Municipal 3,116,022 43,973 137,817
</TABLE>
FS-326
<PAGE>
7. To approve amendments to the Amended and Restated Declaration of
Trust of The Woodward Funds.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 39,811,506 469,411 499,440
Intermediate 26,239,768 1,436,755 306,806
Short Bond 14,526,132 75,598 159,476
Municipal 5,537,082 283,839 98,607
Mich Municipal 3,461,981 86,932 163,829
</TABLE>
8. To transact such other business as may properly come before the
Meetings or any adjournment thereof.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,289,548 218,371 446,254
Intermediate 22,993,450 1,349,962 291,272
Short Bond 10,380,424 16,265 137,990
Municipal 5,267,301 37,135 67,805
Mich Municipal 3,139,579 22,433 135,800
</TABLE>
FS-327
<PAGE>
[ INTENTIONALLY LEFT BLANK ]
FS-328
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
GROWTH/VALUE
FUND
------------
<S> <C>
ASSETS:
Investment in securities:
At cost $598,057,275
============
At value (Note 2) $738,017,171
Cash --
Receivable for shares purchased 10,466
Receivable for securities sold --
Income receivable 1,492,249
Deferred organization costs, net (Note 2) 7,429
Prepaids and other assets 5,141
------------
TOTAL ASSETS 739,532,456
------------
LIABILITIES:
Payable for securities purchased 1,109,508
Payable for shares redeemed 56,779
Accrued investment advisory fee 463,866
Accrued distribution fees 3,092
Accrued custodial fee 8,632
Dividends payable 612,601
Other payables and accrued expenses 110,911
------------
TOTAL LIABILITIES 2,365,389
------------
NET ASSETS $737,167,067
============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) $ 5,599,664
Additional paid-in capital 585,240,911
Accumulated undistributed net investment income 40,678
Accumulated undistributed net realized gains 6,325,918
Net unrealized appreciation on investments 139,959,896
------------
TOTAL NET ASSETS $737,167,067
============
Shares of capital stock outstanding 55,996,649
============
Net asset value and redemption price per share $ 13.16
============
Maximum offering price per share $ 13.85
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-329
<PAGE>
<TABLE>
<CAPTION>
OPPORTUNITY INTRINSIC VALUE CAPITAL GROWTH BALANCED
FUND FUND FUND FUND
------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At cost $544,177,289 $231,447,596 $164,013,755 $ 83,617,256
============ ============ ============ ============
At value (Note 2) $643,022,640 $258,251,034 $196,462,000 $ 93,092,772
Cash 17,377 -- -- 79,791
Receivable for shares purchased 24,818 1,900 22,908 10,020
Receivable for securities sold 8,064,596 -- -- 126,207
Income receivable 630,474 841,061 179,422 487,653
Deferred organization costs, net (Note 2) 3,243 2,323 28,388 28,315
Prepaids and other assets 5,141 5,945 43,804 35,774
------------ ------------ ------------ ------------
TOTAL ASSETS 651,768,289 259,102,263 196,736,522 93,860,532
------------ ------------ ------------ ------------
LIABILITIES:
Payable for securities purchased -- 2,638,759 459,114 115,985
Payable for shared redeemed -- 10,509 218,571 9,057
Accrued investment advisory fee 404,734 159,538 123,751 59,011
Accrued distribution fees 2,698 1,064 825 393
Accrued custodial fee 8,431 3,766 2,805 6,415
Dividends payable 122,691 301,351 56,269 38,528
Other payables and accrued expenses 277,467 102,417 14,009 7,342
------------ ------------ ------------ ------------
TOTAL LIABILITIES 816,021 3,217,404 875,344 236,731
------------ ------------ ------------ ------------
NET ASSETS $650,952,268 $255,884,859 $195,861,178 $ 93,623,801
============ ============ ============ ============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) $ 4,296,018 $ 2,152,537 $ 1,476,584 $ 832,868
Additional paid-in capital 546,076,193 224,411,095 161,372,369 83,021,763
Accumulated undistributed net investment income 977 110,249 11,301 28,937
Accumulated undistributed net realized gains 1,733,729 2,407,540 552,679 264,717
Net unrealized appreciation on investments 98,845,351 26,803,438 32,448,245 9,475,516
------------ ------------ ------------ ------------
TOTAL NET ASSETS $650,952,268 $255,884,859 $195,861,178 $ 93,623,801
============ ============ ============ ============
Shares of capital stock outstanding 42,960,183 21,525,367 14,765,837 8,328,682
============ ============ ============ ============
Net asset value and redemption price per share $ 15.15 $ 11.89 $ 13.26 $ 11.24
============ ============ ============ ============
Maximum offering price per share $ 15.95 $ 12.52 $ 13.96 $ 11.83
============ ============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-330
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
GROWTH/VALUE
FUND
------------
<S> <C>
INVESTMENT INCOME (Note 2)
Interest $ 2,809,867
Dividends 14,058,482
------------
TOTAL INVESTMENT INCOME 16,868,349
------------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee 4,951,664
Distribution fees 67,240
Professional fees 53,872
Custodial fee 96,218
Transfer and dividend disbursing agent fees 78,475
Amortization of deferred organization costs 17,828
Marketing expenses 40,193
Registration, filing fees and other expenses 207,105
Less:
Expense reimbursement --
------------
NET EXPENSES 5,512,595
------------
NET INVESTMENT INCOME 11,355,754
------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains 21,032,338
Net change in unrealized appreciation on
investments 130,722,828
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 151,755,166
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $163,110,920
============
<FN>
See accompanying notes to financial statements
</TABLE>
FS-331
<PAGE>
<TABLE>
<CAPTION>
OPPORTUNITY INTRINSIC VALUE CAPITAL GROWTH BALANCED
FUND FUND FUND FUND
----------- --------------- -------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 2)
Interest $ 1,558,492 $ 2,056,046 $ 436,419 $ 2,380,276
Dividends 5,940,727 6,149,838 1,676,890 806,598
------------- ------------ ------------ ------------
TOTAL INVESTMENT INCOME 7,499,219 8,205,884 2,113,309 3,186,874
------------ ------------ ------------ ------------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee 4,490,930 1,817,833 1,064,273 570,525
Distribution fees 80,463 24,640 9,455 11,148
Professional fees 53,872 53,872 56,031 59,307
Custodial fee 97,189 46,198 30,473 73,464
Transfer and dividend disbursing agent fees 134,736 35,266 12,933 18,045
Amortization of deferred organization costs 7,783 5,575 8,111 9,434
Marketing expenses 45,500 34,242 32,082 31,058
Registration, filing fees and other expenses 403,502 176,642 51,617 35,253
Less:
Expense reimbursement -- -- (58,424) (136,954)
------------ ------------ ------------ ------------
NET EXPENSES 5,313,975 2,194,268 1,206,551 671,280
------------ ------------ ------------ ------------
NET INVESTMENT INCOME 2,185,244 6,011,616 906,758 2,515,594
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains 33,998,949 18,391,186 2,343,100 1,548,275
Net change in unrealized appreciation on
investments 70,828,164 28,180,120 30,092,839 11,071,176
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 104,827,113 46,571,306 32,435,939 12,619,451
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $107,012,357 $ 52,582,922 $ 33,342,697 $ 15,135,045
============ ============ ============ ============
</TABLE>
FS-332
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
GROWTH/VALUE OPPORTUNITY
FUND FUND
-------------------------------- -------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 11,355,754 $ 10,988,308 $ 2,185,244 $ 2,549,199
Net realized gains (losses) 21,032,338 12,792,234 33,998,949 16,116,289
Net change in unrealized appreciation
(depreciation) on investments 130,722,828 (21,338,549) 70,828,164 (35,552,031)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets from
operations 163,110,920 2,441,993 107,012,357 (16,886,543)
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income (11,928,616) (10,560,126) (2,383,890) (2,336,343)
From realized gains (14,216,458) (15,490,059) (31,302,346) (18,160,909)
In excess of realized gains -- (489,962) -- (962,874)
Tax return of capital -- (1,387,986) -- (3,857,441)
------------- ------------- ------------- -------------
Total distributions (26,145,074) (27,928,133) (33,686,236) (25,317,567)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 129,170,938 236,571,313 138,422,625 239,540,057
Net asset value of shares issued in reinvestment of
distributions to shareholders 22,736,385 25,441,184 32,652,833 24,557,678
------------- ------------- ------------- -------------
151,907,323 262,012,497 171,075,458 264,097,735
Less: payments for shares redeemed (123,076,813) (94,790,691) (118,448,431) (62,559,018)
------------- ------------- ------------- -------------
Net increase in net assets from capital share
transactions 28,830,510 167,221,806 52,627,027 201,538,717
------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS 165,796,356 141,735,666 125,953,148 159,334,607
NET ASSETS:
Beginning of period 571,370,711 429,635,045 524,999,120 365,664,513
------------- ------------- ------------- -------------
End of period $ 737,167,067 $ 571,370,711 $ 650,952,268 $ 524,999,120
============= ============= ============= =============
CAPITAL SHARE TRANSACTIONS:
Shares sold 10,922,667 21,126,574 9,374,983 16,685,198
Shares issued in reinvestment of distributions to
shareholders 1,788,703 2,363,365 2,199,921 1,834,826
------------- ------------- ------------- -------------
12,711,370 23,489,939 11,574,904 18,520,024
Less: shares redeemed (10,251,504) (8,442,703) (7,969,587) (4,398,758)
------------- ------------- ------------- -------------
NET INCREASE IN SHARES OUTSTANDING 2,459,866 15,047,236 3,605,317 14,121,266
CAPITAL SHARES:
Beginning of period 53,536,783 38,489,547 39,354,866 25,233,600
------------- ------------- ------------- -------------
End of period 55,996,649 53,536,783 42,960,183 39,354,866
============= ============= ============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-333
<PAGE>
<TABLE>
<CAPTION>
INTRINSIC VALUE CAPITAL GROWTH BALANCED
FUND FUND FUND
----------------------------- ---------------------------- -----------------------------
Year Ended Year Ended Year Ended Period Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 6,011,616 $ 6,245,776 $ 906,758 $ 418,787 $ 2,515,594 $ 1,181,465
Net realized gains (losses) 18,391,186 4,420,719 2,343,100 (174,336) 1,548,275 (295,624)
Net change in unrealized
appreciation (depreciation)
on investments 28,180,120 (11,608,354) 30,092,839 2,355,406 11,071,176 (1,595,660)
------------- ------------ ------------ ----------- ------------ ------------
Net increase (decrease) in net
assets from operations 52,582,922 (941,859) 33,342,697 2,599,857 15,135,045 (709,819)
------------- ------------ ------------ ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
(Note 2):
From net investment income (6,247,197) (6,000,928) (933,730) (380,514) (2,524,322) (1,143,800)
From realized gains (16,471,970) (4,141,890) (1,616,085) -- (987,934) --
In excess of realized gains -- -- -- -- -- --
Tax return of capital -- -- -- -- -- --
------------- ------------ ------------ ----------- ------------ ------------
Total distributions (22,719,167) (10,142,818) (2,549,815) (380,514) (3,512,256) (1,143,800)
------------- ------------ ------------ ----------- ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 39,975,498 66,411,165 116,265,186 89,598,698 47,232,261 61,358,453
Net asset value of shares issued
in reinvestment of distributions
to shareholders 21,049,306 8,927,141 2,306,069 262,019 3,343,276 1,087,022
------------- ------------ ------------ ----------- ------------ ------------
61,024,804 75,338,306 118,571,255 89,860,717 50,575,537 62,445,475
Less: payments for shares redeemed (55,031,796) (36,780,716) (34,772,563) (10,810,456) (22,741,717) (6,424,664)
------------- ------------ ------------ ----------- ------------ ------------
Net increase in net assets from
capital share transactions 5,993,008 38,557,590 83,798,692 79,050,261 27,833,820 56,020,811
------------- ------------ ------------ ----------- ------------ ------------
NET INCREASE IN NET ASSETS 35,856,763 27,472,913 114,591,574 81,269,604 39,456,609 54,167,192
NET ASSETS:
Beginning of period 220,028,096 192,555,183 81,269,604 -- 54,167,192 --
------------- ------------ ------------ ----------- ------------ ------------
End of period $ 255,884,859 $220,028,096 $195,861,178 $81,269,604 $ 93,623,801 $ 54,167,192
============= ============ ============ =========== ============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold 3,432,079 6,127,697 9,733,178 8,792,790 4,495,916 6,238,090
Shares issued in reinvestment
of distributions to shareholders 1,777,948 845,552 177,953 25,058 306,837 113,081
------------- ------------ ------------ ----------- ------------ ------------
5,210,027 6,973,249 9,911,131 8,817,848 4,802,753 6,351,171
Less: shares redeemed (4,687,782) (3,402,089) (2,927,524) (1,035,618) (2,160,736) (664,506)
------------- ------------ ------------ ----------- ------------ ------------
NET INCREASE IN SHARES OUTSTANDING 522,245 3,571,160 6,983,607 7,782,230 2,642,017 5,686,665
CAPITAL SHARES:
Beginning of period 21,003,122 17,431,962 7,782,230 -- 5,686,665 --
------------- ------------ ------------ ----------- ------------ ------------
End of period 21,525,367 21,003,122 14,765,837 7,782,230 8,328,682 5,686,665
============= ============ ============ =========== ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-334
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
GROWTH/VALUE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 3.30%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96 (secured by various U.S.
Treasury Strips with maturities ranging from
2/15/96 through 11/15/05 and U.S. Treasury
Notes, 5.50%, 11/15/98, all held at Chemical
Bank) $ 24,354,633 $ 24,354,633
------------
(Cost $24,354,633)
Shares
------------
COMMON STOCKS -- 96.70%
Aerospace -- 3.13%
Boeing Co. 295,000 23,120,625
------------
Apparel -- 1.76%
Russell Corp. 467,000 12,959,250
------------
Banks -- 4.73%
Barnett Banks, Inc. 254,000 14,986,000
Fleet Financial Group, Inc. 489,000 19,926,750
------------
34,912,750
------------
Business Machines -- 0.71%
Autodesk, Inc. 153,900 5,271,075
------------
Business Services -- 7.14%
Deluxe Corp. 454,000 13,166,000
Dun & Bradstreet Corp. 240,000 15,540,000
Interpublic Group of Companies, Inc. 227,100 9,850,463
WMX Technologies, Inc. 473,000 14,130,875
------------
52,687,338
------------
Chemicals -- 6.31%
Dow Chemical Co. 199,000 14,004,625
Great Lakes Chemical Corp. 274,000 19,728,000
Sigma-Aldrich Corp. 259,000 12,820,500
------------
46,553,125
------------
Construction -- 7.30%
Masco Corp. 489,000 15,342,375
Stanley Works 315,000 16,222,500
York International Corp. 474,000 22,278,000
------------
53,842,875
------------
Consumer Durables -- 2.21%
Rubbermaid, Inc. 640,000 16,320,000
------------
Containers -- 1.07%
Crown Cork & Seal Co., Inc. * 189,000 7,890,750
------------
Drugs and Medicine -- 12.07%
Abbott Laboratories Corp. 337,000 14,069,750
Bristol-Myers Squibb Co. 218,000 18,720,750
Merck & Co., Inc. 227,000 14,925,250
Schering-Plough Corp. 405,000 22,173,750
U.S. HealthCare, Inc. 412,000 19,158,000
------------
89,047,500
------------
Electronics -- 2.95%
General Motors Corp. Class E 419,000 21,788,000
FS-335
<PAGE>
------------
Energy and Utilities -- 3.55%
Entergy Corp. 237,000 6,932,250
MCN Corp. 830,000 19,297,500
------------
26,229,750
------------
Energy Raw Materials -- 4.88%
Burlington Resources, Inc. 310,000 12,167,500
Schlumberger Ltd. 344,000 23,822,000
------------
35,989,500
------------
Food and Agriculture -- 4.00%
ConAgra, Inc. 265,000 10,931,250
Sysco Corp. 573,000 18,622,500
------------
29,553,750
------------
Insurance -- 7.85%
American International Group, Inc. 185,000 17,112,500
Chubb Corp. 237,000 22,929,750
First Colony Corp. 706,000 17,914,750
------------
57,957,000
------------
International Oil -- 1.53%
Royal Dutch Petroleum Co., N.Y. Registry 80,000 11,290,000
------------
Liquor -- 2.31%
Anheuser-Busch Companies, Inc. 255,000 17,053,125
------------
Media -- 4.99%
Gannett Co., Inc. 310,000 19,026,250
Washington Post Co. Class B 63,000 17,766,000
------------
36,792,250
------------
Motor Vehicles -- 1.96%
General Motors Corp. 273,000 14,434,875
------------
Non-Durables and Entertainment -- 1.38%
Cracker Barrel Old Country Store, Inc. 592,000 10,212,000
------------
Producer Goods -- 4.25%
General Electric Co. 221,000 15,912,000
Stewart & Stevenson Services, Inc. 612,000 15,453,000
------------
31,365,000
------------
Retail -- 1.52%
Toys R Us * 517,000 11,244,750
------------
Telephone -- 7.04%
AT&T Corp. 211,000 13,662,250
Century Telephone Enterprises, Inc. 486,000 15,430,500
MCI Communications Corp. 874,000 22,833,250
------------
51,926,000
------------
Trucking and Freight -- 2.06%
Ryder System, Inc. 615,000 15,221,250
------------
TOTAL COMMON STOCKS 713,662,538
------------
(Cost $573,702,642)
TOTAL INVESTMENTS $738,017,171
============
(Cost $598,057,275)
<FN>
* Non-income producing security.
</TABLE>
FS-336
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 1.37%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2//96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05, and U.S. Treasury Notes, 5.50%,
11/15/98, all held at Chemical Bank) $8,833,683 $ 8,833,683
-------------
(Cost $8,833,683)
Shares
------
COMMON STOCKS -- 98.63%
Air Transport -- 1.57%
Air Express International Corp. 438,500 10,085,500
-------------
Apparel -- 1.24%
Nine West Group, Inc. * 212,850 7,981,875
-------------
Banks -- 4.66%
Charter One Financial, Inc. 385,000 11,790,625
Commerce Bancshares, Inc. 139,255 5,326,511
TCF Financial Corp. 387,600 12,839,250
-------------
29,956,386
-------------
Business Machines -- 5.88%
Autodesk, Inc. 221,330 7,580,552
Diebold, Inc. 182,250 10,092,094
InterVoice, Inc. * 175,000 3,325,000
Komag, Inc. * 185,200 8,542,350
Xilinx, Inc. * 271,200 8,271,600
-------------
37,811,596
-------------
Business Services -- 8.37%
American Management Systems, Inc. * 316,700 9,501,000
CDI Corp. * 207,300 3,731,400
DST Systems, Inc. * 120,100 3,422,850
G & K Services, Inc. Class A 248,700 6,341,850
Omnicom Group, Inc. 239,220 8,910,945
SunGard Data Systems, Inc. * 335,300 9,556,050
Zilog, Inc. * 337,900 12,375,587
-------------
53,839,682
-------------
Chemicals -- 1.50%
RPM, Inc. 584,673 9,647,096
-------------
Construction -- 2.37%
Crane Co. 413,146 15,234,759
-------------
Consumer Durables -- 2.12%
Durakon Industries, Inc. * 314,892 3,936,150
Invacare Corp. 122,600 3,095,650
Leggett & Platt, Inc. 270,910 6,569,567
-------------
13,601,367
-------------
Containers -- 1.88%
AptarGroup, Inc. 323,200 12,079,600
-------------
Drugs and Medicine -- 5.90%
Community Health System, Inc. * 186,600 6,647,625
Health Care & Retirement Corp. * 189,556 6,634,460
Scherer (R.P.) Corp. * 149,464 7,342,419
Sybron International Corp. * 383,000 9,096,250
Vivra, Inc. * 326,400 8,200,800
-------------
37,921,554
-------------
FS-337
<PAGE>
Electronics -- 9.59%
Allen Group, Inc. 373,947 8,367,064
Belden, Inc. 530,000 13,647,500
Dynatech Corp. * 601,200 10,220,400
Holophane Corp. * 412,000 8,961,000
MEMC Electronic Materials * 182,600 5,957,325
Molex, Inc. Class A Non-Voting 246,607 7,552,339
3COM Corp. * 66,748 3,112,126
Vishay Intertechnology, Inc. * 121,900 3,839,850
-------------
61,657,604
-------------
Energy Raw Materials -- 2.93%
Apache Corp. 382,374 11,280,033
Southwestern Energy Co. 593,074 7,561,694
-------------
18,841,727
-------------
Food and Agriculture -- 1.19%
Universal Foods Corp. 191,001 7,663,915
-------------
Insurance -- 3.24%
Citizens Corp. 498,502 9,284,600
Transatlantic Holdings, Inc. 157,746 11,574,613
-------------
20,859,213
-------------
Media -- 1.59%
Banta Corp. 232,510 10,230,440
-------------
Miscellaneous and Conglomerates -- 11.78%
Arctco, Inc. 351,316 4,567,108
Culligan Water Technologies, Inc. * 280,000 6,790,000
DENTSPLY International, Inc. 274,200 10,968,000
Department 56, Inc. * 96,800 3,714,700
Greenfield Industries, Inc. 404,900 12,653,125
Health Management Associates, Inc. Class A * 343,075 8,962,834
Littlefuse, Inc. * 247,500 9,095,625
Minerals Technologies, Inc. 215,665 7,871,773
Wolverine Tube, Inc. * 297,000 11,137,500
-------------
75,760,665
-------------
Miscellaneous Finance -- 12.53%
A.G. Edwards, Inc. 401,580 9,587,723
CMAC Investment Corp. 186,000 8,184,000
Executive Risk, Inc. 368,300 10,680,700
FINOVA Group, Inc. 384,165 18,535,961
Idex Corp. 171,329 7,024,468
PMI Group, Inc. 235,300 10,647,325
Prudential Reinsurance Holdings 422,700 9,880,613
Scotsman Industries, Inc. 342,000 6,027,750
-------------
80,568,540
-------------
Motor Vehicles -- 5.11%
Excel Industries, Inc. 496,065 6,944,910
Harley-Davidson, Inc. 483,474 13,899,878
Myers Industries, Inc. 358,120 5,864,215
Superior Industries International 232,444 6,130,71
-------------
32,839,714
-------------
Non-Durables and Entertainment -- 1.53%
Lancaster Colony Corp. 263,796 9,826,401
-------------
Non-Ferrous Metals -- 0.86%
DT Industries, Inc. 408,500 5,514,750
-------------
Producer Goods -- 8.55%
Hubbell, Inc. Class B 234,413 15,412,655
Juno Lighting, Inc. 505,611 8,089,776
Stewart & Stevenson Services, Inc. 267,000 6,741,750
Teleflex, Inc. 108,760 4,459,160
Trimas Corp. 439,465 8,294,902
Watts Industries, Inc. Class A 515,002 11,973,796
-------------
54,972,039
-------------
FS-338
<PAGE>
Retail -- 2.80%
Cato Corp. Class A 1,019,082 7,897,885
Kohls Corp. * 122,118 6,411,195
Talbots, Inc. 128,701 3,700,154
-------------
18,009,234
-------------
Travel and Recreation -- 1.44%
Callaway Golf Co. 410,400 9,285,300
-------------
TOTAL COMMON STOCKS 634,188,957
-------------
(Cost $535,343,601)
TOTAL INVESTMENTS $643,022,640
============
(Cost $544,177,289)
<FN>
* Non-income producing security.
</TABLE>
FS-339
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTRINSIC VALUE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 6.44%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05 and U.S. Treasury Notes, 5.50%,
11/15/98, all held at Chemical Bank) $16,639,265 $ 16,639,265
------------
(Cost $16,639,265)
CONVERTIBLE BONDS -- 9.26%
Chubb Capital Corp., 6.00%, 5/15/98 5,650,000 6,384,500
Consolidated Natural Gas Co., 7.25%, 12/15/15 5,218,500 5,414,194
Price Co., 6.75%, 3/1/01 5,400,000 5,487,750
Unifi, Inc., 6.00%, 3/15/02 6,566,000 6,615,245
------------
(Cost $23,403,674) 23,901,689
------------
Shares
------
COMMON STOCKS -- 84.30%
Apparel -- 3.13%
Reebok International Ltd. 128,530 3,630,972
Unifi Inc. 82,900 1,834,163
V. F. Corp. 49,600 2,616,400
------------
8,081,535
------------
Banks -- 4.36%
Bancorp Hawaii, Inc. 156,400 5,610,850
First Union Corp. 101,500 5,645,938
------------
11,256,788
------------
Business Services -- 5.34%
Angelica Corp. 120,200 2,464,100
Harland (John H.) Co. 247,500 5,166,562
National Service Industries, Inc. 190,200 6,157,725
------------
13,788,387
------------
Chemicals -- 2.21%
NCH Corp. 98,800 5,705,700
------------
Consumer Durables -- 4.29%
Hillenbrand Industries, Inc. 90,800 3,075,850
National Presto Industries, Inc. 78,800 3,132,300
Thiokol Corp. 143,700 4,867,838
------------
11,075,988
------------
Domestic Oil -- 4.61%
Atlantic Richfield Co. 37,200 4,119,900
MAPCO, Inc. 142,700 7,794,988
------------
11,914,888
------------
Drugs and Medicine -- 2.84%
Block Drug, Inc. Class A 45,700 1,588,075
Bristol-Myers Squibb Co. 66,800 5,736,450
------------
7,324,525
------------
Energy and Utilities -- 5.34%
American Water Works Co., Inc. 76,435 2,971,411
Equitable Resources, Inc. 128,200 4,006,250
Sierra Pacific Resources 291,900 6,823,162
------------
13,800,823
------------
FS-340
<PAGE>
Energy Raw Materials -- 1.09%
Ashland Coal, Inc. 131,300 2,806,537
------------
Insurance -- 13.18%
Allmerica Property & Casualty Co. 129,500 3,496,500
AMBAC, Inc. 94,600 4,434,375
Financial Security Assurance Holdings 126,500 3,146,688
Home Beneficial Corp. Class B 246,900 5,925,600
Marsh & McLennan Companies, Inc. 34,200 3,035,250
Mid Ocean Ltd. 76,100 2,825,213
Old Republic International Corp. 223,900 7,948,450
SAFECO Corp. 93,600 3,229,200
------------
34,041,276
------------
International Oil -- 3.62%
Amoco Corp. 61,900 4,449,062
Texaco, Inc. 62,500 4,906,250
------------
9,355,312
------------
Liquor -- 1.44%
Anheuser-Busch Companies, Inc. 55,800 3,731,625
------------
Media -- 1.64%
Gannett Co., Inc. 69,000 4,234,875
------------
Miscellaneous Finance -- 7.91%
Federal National Mortgage Association 75,800 9,408,675
Fund American Enterprises Holdings, Inc. 112,365 8,371,192
Salomon, Inc. 74,300 2,637,650
------------
20,417,517
------------
Motor Vehicles -- 1.01%
Ford Motor Co. 89,798 2,604,142
------------
Non-Durables and Entertainment -- 3.53%
Hasbro, Inc. 181,000 5,611,000
Luby's Cafeterias, Inc. 37,800 841,050
Sbarro, Inc. 123,700 2,659,550
------------
9,111,600
------------
Railroads and Shipping -- 3.23%
Alexander & Baldwin, Inc. 252,600 5,809,800
Norfolk Southern Corp. 31,900 2,532,062
------------
8,341,862
------------
Retail -- 7.89%
May Department Stores Co. 155,900 6,586,775
Melville Corp. 201,500 6,196,125
Mercantile Stores, Inc. 62,000 2,867,500
Stanhome, Inc. Voting 162,200 4,724,075
------------
20,374,475
------------
Soaps and Cosmetics -- 2.33%
Unilever N. V. 42,800 6,024,100
------------
Tires and Rubber Goods -- 1.13%
Bandag, Inc. Class A 54,900 2,909,700
------------
Tobacco -- 4.18%
Loews Corp. 77,400 6,066,225
Philip Morris Companies, Inc. 52,400 4,742,200
------------
10,808,425
------------
TOTAL COMMON STOCKS 217,710,080
------------
(Cost $191,404,657)
TOTAL INVESTMENTS $258,251,034
============
(Cost $231,447,596)
<FN>
* Non-income producing security.
</TABLE>
FS-341
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 2.52%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96, (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05 and U.S. Treasury Notes, 5.50%,
11/15/98, all held at Chemical Bank) $4,958,619 $ 4,958,619
------------
(Cost $4,958,619)
Shares
COMMON STOCKS -- 97.48%
Banks -- 3.67%
Banc One Corp. 80,000 3,020,000
Norwest Corp. 127,000 4,191,000
------------
7,211,000
------------
Business Machines -- 4.03%
Autodesk, Inc. 90,400 3,096,200
Microsoft Corp. * 55,000 4,826,250
------------
7,922,450
------------
Business Services -- 6.26%
Automatic Data Processing, Inc. 58,000 4,306,500
Interpublic Group of Companies, Inc. 105,000 4,554,375
WMX Technologies, Inc. 115,000 3,435,625
------------
12,296,500
------------
Chemicals -- 3.56%
Great Lakes Chemical Corp. 58,000 4,176,000
Sigma-Aldrich Corp. 57,000 2,821,500
------------
6,997,500
------------
Construction -- 4.84%
Fluor Corp. 73,000 4,818,000
York International Corp. 100,000 4,700,000
------------
9,518,000
------------
Consumer Durables -- 2.88%
Newell Co. 140,000 3,622,500
Rubbermaid, Inc. 80,000 2,040,000
------------
5,662,500
------------
Containers -- 2.13%
Crown Cork & Seal Co., Inc. * 100,000 4,175,000
------------
Drugs and Medicine -- 12.79%
Johnson & Johnson 70,000 5,993,750
Medtronic, Inc. 67,000 3,743,625
Pall Corp. 225,000 6,046,875
Stryker Corp. 83,000 4,357,500
United Healthcare Corp. 76,000 4,978,000
------------
25,119,750
------------
Electronics -- 6.26%
General Motors Corp., Class E 95,000 4,940,000
Hewlett-Packard Co. 37,000 3,098,750
Intel Corp. 75,000 4,256,250
------------
12,295,000
------------
Energy and Utilities -- 1.94%
Enron Corp. 100,000 3,812,500
------------
FS-342
<PAGE>
Energy Raw Materials -- 4.15%
Schlumberger Ltd. 52,000 3,601,000
Western Atlas, Inc. * 90,000 4,545,000
------------
8,146,000
------------
Food and Agriculture -- 3.86%
CPC International, Inc. 57,000 3,911,625
Sysco Corp. 113,000 3,672,500
------------
7,584,125
------------
Insurance -- 4.84%
AFLAC, Inc. 100,000 4,337,500
American International Group, Inc. 56,000 5,180,000
------------
9,517,500
------------
Media -- 2.20%
Donnelley (R.R.) & Sons Co. 110,000 4,331,250
------------
Miscellaneous and Conglomerates -- 2.37%
Duracell International, Inc. 90,000 4,657,500
------------
Non-Durables and Entertainment -- 6.05%
Cracker Barrel Old Country Store, Inc. 250,000 4,312,500
CUC International, Inc *. 73,650 2,513,306
Service Corp. International 115,000 5,060,000
------------
11,885,806
------------
Producer Goods -- 3.57%
Illinois Tool Works, Inc. 76,000 4,484,000
Stewart & Stevenson Services, Inc. 100,000 2,525,000
------------
7,009,000
------------
Retail -- 8.95%
Albertsons, Inc. 132,000 4,339,500
Home Depot, Inc. 135,000 6,463,125
Toys R Us * 130,000 2,827,500
Walgreen Co. 132,000 3,943,500
------------
17,573,625
------------
Telephone -- 4.77%
AirTouch Communications, Inc. * 170,000 4,802,500
MCI Communications Corp. 175,000 4,571,875
------------
9,374,375
------------
Tobacco -- 1.87%
UST, Inc. 110,000 3,671,250
------------
Travel and Recreation -- 6.49%
Carnival Corp. Class A 180,000 4,387,500
Disney (Walt) Co. 80,000 4,720,000
Gaylord Entertainment Co. Class A 131,000 3,635,250
------------
12,742,750
------------
TOTAL COMMON STOCKS 191,503,381
------------
(Cost $159,055,136)
TOTAL INVESTMENTS $196,462,000
============
(Cost $164,013,755)
<FN>
* Non-income producing security
</TABLE>
FS-343
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BALANCED FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 11.13%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05, and U.S. Treasury Notes, 5.50%,
11/15/98, all held at Chemical Bank) $10,363,688 $10,363,688
-----------
(Cost $10,363,688)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 33.62%
U.S. Treasury Securities -- 15.64%
Principal Strips from U.S. Treasury Securities
due:
8/15/98 500,000 436,475
5/15/18 600,000 149,664
11/15/18 600,000 145,734
8/15/20 4,765,000 1,037,245
Strips from U.S. Treasury Securities due:
5/15/98 200,000 176,984
2/15/99 100,000 84,995
2/15/11 600,000 242,940
5/15/11 1,083,000 431,077
2/15/12 280,000 105,795
8/15/12 750,000 273,848
5/15/13 760,000 264,290
2/15/14 200,000 66,210
U.S. Treasury Bonds:
12.750%, 11/15/10 395,000 601,632
10.375%, 11/15/12 495,000 684,338
U.S. Treasury Notes:
7.375%, 5/15/96 350,000 352,681
7.250%, 11/15/96 200,000 203,312
8.500%, 4/15/97 165,000 171,626
8.625%, 8/15/97 850,000 894,625
8.750%, 10/15/97 200,000 211,968
8.875%, 11/15/97 800,000 851,496
7.875%, 1/15/98 2,400,000 2,521,872
7.875%, 4/15/98 3,870,000 4,086,488
5.375%, 5/31/98 350,000 351,148
6.875%, 7/31/99 200,000 210,000
-----------
(Cost $13,572,976) 14,556,443
-----------
Agency Obligations -- 17.98%
Federal Home Loan Mortgage Corp. Participation
Ctf.
#555238, 12.000%, 7/1/19 177,465 198,989
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 22 Class C, 9.500%, 4/15/20 138,110 156,469
Series 11 Class D, 9.500%,7/15/19 200,000 222,572
Series 99 Class Z, 9.500%, 1/15/21 109,086 117,377
Series 1051 Class D, 7.000%, 11/15/19 194,946 197,330
Series 1065 Class J, 9.000%, 4/15/21 100,000 108,781
Series 1084 Class F, AR, 5/15/21 250,000 254,990
Series 1084 Class S, IF, 5/15/21 175,000 227,500
Series 1144 Class KB, 8.500%, 9/15/21 250,000 264,635
Series 1295 Class JB, 4.500%, 3/15/07 300,000 271,701
Series 1297 Class H, 7.500%, 1/15/20 130,723 133,925
Series 1360 Class PK, 10.000%, 12/15/20 150,000 172,192
Series 1370 Class F, 6.750%, 3/15/19 260,000 262,743
Series 1378 Class H, 10.000%, 1/15/21 100,000 115,208
Series 1378 Class JZ, 7.500%, 11/15/21 253,428 257,659
Series 1456 Class G, 6.500%,12/15/18 300,000 300,315
Series 1465 Class SA, IF, 2/15/08 1,584,527 78,228
Series 1483 Class E, 6.500%, 2/15/20 367,500 367,283
Series 1489 Class L, 5.500%, 4/15/08 208,713 203,631
Series 1491 Class F, 5.000%, 8/15/19 400,000 375,472
Series 1508 Class KB, IO, IF, 5/15/23 709,793 45,689
Series 1531 Class K, 6.000%, 4/15/08 346,816 336,404
FS-344
<PAGE>
Series 1554 Class KA, PO, 8/15/08 84,308 66,971
Series 1583 Class NS, IF, 9/15/23 115,888 85,757
Series 1585 Class NB, IF, 9/15/23 144,996 117,446
Series 1586 Class A, 6.000%, 9/15/08 167,962 161,611
Series 1595 Class S, IO, IF, 10/15/13 1,582,125 64,266
Series 1604 Class SE, IF, 11/15/08 187,033 149,626
Series 1606 Class LD, IF, 5/15/08 393,649 295,358
Series 1681 Class K, 7.000%, 8/15/23 446,020 436,243
Series 1686 Class A, 5.000%, 2/15/24 92,449 82,440
Series 1689 Class SD, IF, 10/15/23 100,000 89,000
Series 1706 Class LA, 7.000%, 3/15/24 425,008 416,402
Series 1757-A, Class A, 9.500%, 5/15/23 176,610 187,868
Series 1796-A, Class S, IF, 2/15/09 100,000 75,500
Federal Housing Administration Merrill Lynch
Project Pool 170 Pass thru Ctf., 7.430%, 8/1/20 228,368 235,931
Federal National Mortgage Assn. Pass Thru
Securities Pool #116612, AR, 3/1/19 120,860 125,058
Federal National Mortgage Assn. Pass Thru
Securities Guaranteed Remic Trust:
1989 Class 34-D, 9.850%, 7/25/13 100,480 101,805
1989 Class 69-G, 7.600%, 10/25/19 800,000 825,385
1989 Class 78-H, 9.400%, 11/25/19 250,000 278,605
1990 Class 1-D, 8.800%, 1/25/20 150,000 159,384
1990 Class 140-K, HB, 652.1454%, 12/25/20 1,859 34,111
1990 Class 143-J, 8.750%, 12/25/20 125,000 134,010
1991 Class 144-PZ, 8.500%, 6/25/21 213,482 225,832
1991 Class 161-H, 7.500%, 2/25/21 195,157 198,564
1992 Class 204-B, 6.000%, 10/25/20 250,000 241,885
1993 Class 13-G, 6.000%, 6/25/20 200,000 196,274
1993 Class 15-K, 7.000%, 02/25/08 198,103 197,104
1993 Class 19-G, 5.000%, 5/25/19 250,000 237,095
1993 Class 32-K, 6.000%, 3/25/23 398,757 383,429
1993 Class 38-S, IO, IF, 11/25/22 1,167,204 32,098
1993 Class 44-S, IO, IF, 4/25/23 440,206 19,395
1993 Class 58-J, 5.500%, 4/25/23 172,150 160,876
1993 Class 94-K, 6.750%, 5/25/23 129,919 127,147
1993 Class 139-SG, IF, 8/25/23 242,431 187,959
1993 Class 155-LA, 6.500%, 5/25/23 347,178 342,498
1993 Class 155-SB, IO, IF, 9/25/23 855,151 46,495
1993 Class 190-SE, IF, 10/25/08 49,847 38,740
1993 Class 207-SC, IF, 11/25/23 286,295 208,995
1993 Class 209-KB, 5.659%, 8/25/08 186,995 178,470
1993 Class 214-L, 6.000%, 12/25/08 167,752 165,801
1993 Class 220-SD, IF, 11/25/13 49,707 38,631
1993 Class 223-FB, AR, 12/25/23 371,360 365,790
1993 Class 223-SB, IF, 12/25/23 165,265 132,212
1994 Class 8-G, PO, 11/25/23 259,594 188,206
1994 Class 19-C, 5.000%, 1/25/24 341,483 315,697
1994 Class 30-LA, 6.500%, 2/25/09 84,934 83,897
1994 Class 36-SE, IF, 11/25/23 136,624 109,299
1994 Class 39-F, AR, 3/25/24 226,630 225,071
1994 Class 39-S, IF, 3/25/24 87,166 77,413
1994 Class 53-CA, PO, 11/25/23 460,000 318,550
1994 Class 59-PK, 6.000%, 3/25/24 176,633 171,714
1994 Class 82-SA, IO, 5/25/23 1,931,538 51,900
1995 Class 13-B, 6.500%, 3/25/09 576,322 563,533
1992-G Class 15-Z, 7.000%, 1/25/22 196,015 190,649
1992-G Class 42-Z, 7.000%, 7/25/22 633,918 624,341
1992-G Class 59-C, 6.000%, 12/25/21 200,000 194,128
1993-G Class 19-K, 6.500%, 6/25/19 254,799 250,365
1994-G Class 13-ZB, 7.000%, 11/17/24 107,229 102,640
Government National Mortgage Assn. Pass Thru
Securities
Guaranteed Remic Trust:
1994 Class 4-SA, IO, IF, 10/16/22 600,000 38,250
Government National Mortgage Assn. Pass Thru:
Pool #297628, 8.000%, 9/15/22 190,467 198,974
Pool #313110, 7.500%, 11/15/22 499,859 515,218
-----------
(Cost $15,517,459) 16,737,005
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS 31,293,448
-----------
(Cost $29,090,435)
CORPORATE BONDS AND NOTES -- 1.95%
Finance -- 1.12%
Associates Corp. of North America:
9.125%, 4/1/00 85,000 95,937
8.150%, 8/1/09 200,000 227,996
Ford Credit Grantor Trust Asset Backed Ctf.
Series 1994-A, Class A, 6.350%, 5/15/99 272,012 274,846
FS-345
<PAGE>
Merrill Lynch Trust 43 E CMO, Series 43-E,
6.500%, 8/27/15 200,000 198,998
Nationsbank Auto Grantor Trust Asset Backed Ctf.
Series 1995-A, Class A, 5.850%, 6/15/02 96,427 96,983
Standard Credit Card Master Trust Asset Backed
Ctf. Series 1995-5, Class A, AR, 5/8/00 150,000 150,046
-----------
(Cost $1,000,850) 1,044,806
-----------
Industrial -- 0.42%
Boeing Co., 7.950%, 8/15/24 110,000 129,493
Proctor & Gamble Co., 8.000%, 10/26/96 220,000 262,544
-----------
(Cost $360,295) 392,037
-----------
Public Utility -- 0.41%
New England Telephone & Telegraph Co., 7.875%,
11/15/29 250,000 294,213
Nippon Telegraph & Telephone Corp., 9.500%,
7/27/98 80,000 87,370
-----------
(Cost $351,127) 381,583
-----------
TOTAL CORPORATE BONDS AND NOTES 1,818,426
-----------
(Cost $1,712,272)
CONVERTIBLE BONDS -- 0.52%
Chubb Capital Corp., 6.00%, 5/15/98 121,000 136,730
Consolidated Natural Gas Co., 7.25%, 12/15/15 98,100 101,779
Price Co., 6.75%, 3/1/01 112,000 113,820
Unifi, Inc., 6.00%, 3/15/02 130,000 130,975
-----------
(Cost $473,776) 483,304
-----------
Shares
------
COMMON STOCKS -- 52.78%
Aerospace -- 1.06%
Boeing Co. 12,600 987,525
-----------
Air Transport -- 0.15%
Air Express International Corp. 6,225 143,175
-----------
Apparel -- .90%
Nine West Group, Inc. * 2,950 110,625
Reebok International Ltd. 2,780 78,535
Russell Corp. 20,000 555,000
Unifi Inc. 1,640 36,285
V.F. Corp. 1,050 55,388
-----------
835,833
-----------
Banks -- 2.58%
Banc One Corp. 3,100 117,025
Bancorp Hawaii, Inc. 3,390 121,616
Barnett Banks, Inc. 10,800 637,200
Charter One Financial Inc. 5,200 159,250
Commerce Bancshares, Inc. 1,975 75,530
First Union Corp. 2,200 122,375
Fleet Financial Group, Inc. 20,900 851,675
Norwest Corp. 4,000 132,000
TCF Financial Corp. 5,600 185,500
-----------
2,402,171
-----------
Business Machines -- 1.01%
Autodesk, Inc. 12,370 423,673
Diebold, Inc. 2,613 144,695
InterVoice, Inc. * 2,500 47,500
Komag, Inc. * 2,700 124,538
Microsoft Corp. * 1,100 96,525
Xilinx, Inc. * 3,350 102,174
-----------
939,105
-----------
FS-346
<PAGE>
Business Services -- 3.94%
American Management System, Inc. * 4,500 135,000
Angelica Corp. 2,600 53,300
Automatic Data Processing, Inc. 1,800 133,650
CDI Corp. * 2,900 52,200
Deluxe Corp. 19,400 562,600
DST Systems, Inc. * 1,600 45,600
Dun & Bradstreet Corp. 10,300 666,925
G & K Services, Inc. Class A 3,400 86,700
Harland (John H.) Co. 5,360 111,890
Interpublic Group of Companies, Inc. 12,600 546,525
National Service Industries, Inc. 4,120 133,385
Omnicom Group, Inc. 3,380 125,905
SunGard Data Systems, Inc. * 4,500 128,250
WMX Technologies, Inc. 23,500 702,063
Zilog, Inc. * 5,000 183,125
-----------
3,667,118
-----------
Chemicals -- 2.64%
Dow Chemical Co. 8,500 598,188
Great Lakes Chemical Corp. 13,600 979,200
NCH Corp. 2,140 123,585
RPM, Inc. 8,265 136,372
Sigma-Aldrich Corp. 12,500 618,750
-----------
2,456,095
-----------
Construction -- 3.00%
Crane Co. 5,604 206,648
Fluor Corp. 2,100 138,600
Masco Corp. 20,900 655,737
Stanley Works 13,500 695,250
York International Corp. 23,300 1,095,100
-----------
2,791,335
-----------
Consumer Durables -- 1.43%
Durakon Industries, Inc. * 4,508 56,350
Hillenbrand Industries, Inc. 1,970 66,734
Invacare Corp. 1,700 42,925
Leggett & Platt, Inc. 3,840 93,120
National Presto Industries, Inc. 1,710 67,973
Newell Co. 4,300 111,263
Rubbermaid, Inc. 30,700 782,850
Thiokol Corp. 3,110 105,350
-----------
1,326,565
-----------
Containers -- 0.65%
AptarGroup, Inc. 4,600 171,925
Crown Cork & Seal Co., Inc. * 10,400 434,200
-----------
606,125
-----------
Domestic Oil -- 0.27%
Atlantic Richfield Co. 810 89,708
MAPCO, Inc. 2,940 160,597
-----------
250,305
-----------
Drugs and Medicine -- 5.52%
Abbott Laboratories 14,400 601,200
Block Drug, Inc. Class A 1,000 34,750
Bristol-Myers Squibb Co. 10,790 926,591
Community Health System 2,600 92,625
Health Care & Retirement Corp. * 2,594 90,790
Johnson & Johnson 1,700 145,563
Medtronic, Inc. 2,400 134,100
Merck & Co., Inc. 9,700 637,775
Pall Corp. 5,800 155,875
Scherer (R.P.) Corp. * 2,286 112,300
Schering-Plough Corp. 17,300 947,175
Stryker Corp. 900 47,250
Sybron International Corp. * 5,400 128,250
United Healthcare Corp. 2,400 157,200
U.S. HealthCare, Inc. 17,600 818,400
Vivra, Inc. * 4,500 113,062
-----------
5,142,906
-----------
FS-347
<PAGE>
Electronics -- 2.28%
Allen Group, Inc. 5,393 120,668
Belden, Inc. 7,500 193,125
Dynatech Corp. * 8,000 136,000
General Motors Corp. Class E 20,400 1,060,800
Hewlett Packard Co. 1,500 125,625
Holophane Corp. * 5,100 110,925
Intel Corp. 1,600 90,800
MEMC Electronic Materials * 2,500 81,563
Molex, Inc. Class A Non-Voting 3,550 108,719
3COM Corp. * 952 44,387
Vishay Intertechnology, Inc. * 1,700 53,550
-----------
2,126,162
-----------
Energy and Utilities -- 1.62%
American Water Works Co., Inc. 1,800 69,975
Enron Corp. 1,500 57,188
Entergy Corp. 10,200 298,350
Equitable Resources, Inc. 2,770 86,563
MCN Corp. 36,300 843,974
Sierra Pacific Resources 6,320 147,730
-----------
1,503,780
-----------
Energy Raw Materials -- 2.27%
Apache Corp. 5,076 149,742
Ashland Coal, Inc. 2,810 60,064
Burlington Resources, Inc. 13,300 522,025
Schlumberger Ltd. 16,500 1,142,625
Southwestern Energy Co. 8,476 108,069
Western Atlas, Inc. * 2,500 126,250
-----------
2,108,775
-----------
Food and Agriculture -- 1.71%
ConAgra, Inc. 11,300 466,125
CPC International, Inc. 1,500 102,938
Sysco Corp. 28,300 919,750
Universal Foods Corp. 2,549 102,278
-----------
1,591,091
-----------
Insurance -- 3.97%
AFLAC, Inc. 1,400 60,725
Allmerica Property & Casualty Co. 2,800 75,600
AMBAC, Inc. 2,050 96,094
American International Group, Inc. 9,400 869,500
Chubb Corp. 10,200 986,850
Citizens Corp. 6,548 121,957
Financial Security Assurance Holdings 2,440 60,695
First Colony Corp. 30,200 766,325
Home Beneficial Corp. Class B 5,350 128,400
Marsh & McLennan Companies, Inc. 740 65,675
Mid Ocean Ltd. 1,570 58,286
Old Republic International Corp. 4,880 173,240
SAFECO Corp. 2,020 69,690
Transatlantic Holdings, Inc. 2,254 165,387
-----------
3,698,424
-----------
International Oil -- 0.73%
Amoco Corp. 1,340 96,313
Royal Dutch Petroleum Co., N.Y. Registry 3,400 479,825
Texaco, Inc. 1,350 105,975
-----------
682,113
-----------
Liquor -- 0.87%
Anheuser Busch Companies, Inc. 12,120 810,525
-----------
Media -- 2.04%
Banta Corp. 3,290 144,760
Donnelley (R.R.) & Sons Co. 2,200 86,625
Gannett Co., Inc. 14,790 907,736
Washington Post Co. Class B 2,700 761,400
-----------
1,900,521
-----------
FS-348
<PAGE>
Miscellaneous and Conglomerates -- 1.24%
Arctco, Inc. 4,983 64,779
Culligan Water Technologies, Inc. * 3,700 89,725
DENTSPLY International, Inc. 3,700 148,000
Department 56, Inc. * 1,200 46,050
Duracell International, Inc. 2,200 113,850
Greenfield Industries, Inc. 5,700 178,125
Health Management Associates, Inc. Class A * 4,862 127,020
Littlefuse, Inc. * 3,500 128,625
Minerals Technologies, Inc. 3,085 112,602
Wolverine Tube, Inc. * 4,000 150,000
-----------
1,158,776
-----------
Miscellaneous Finance -- 1.68%
A.G. Edwards, Inc. 5,755 137,401
CMAC Investment Corp. 2,300 101,200
Executive Risk, Inc. 5,200 150,800
Federal National Mortgage Association 1,640 203,565
FINOVA Group, Inc. 5,535 267,064
Fund American Enterprises Holdings, Inc. 2,310 172,095
Idex Corp. 2,472 101,332
PMI Group, Inc. 3,200 144,800
Prudential Reinsurance Holding 6,000 140,250
Salomon, Inc. 1,610 57,154
Scotsman Industries, Inc. 4,900 86,362
-----------
1,562,023
-----------
Motor Vehicles -- 1.22%
Excel Industries, Inc. 7,035 98,490
Ford Motor Co. 1,861 53,969
General Motors Corp. 11,700 618,638
Harley-Davidson, Inc. 6,926 199,123
Myers Industries, Inc. 4,520 74,014
Superior Industries International 3,338 88,040
-----------
1,132,274
-----------
Non-Durables and Entertainment -- 1.12%
Cracker Barrel Old Country Store, Inc. 32,000 552,000
CUC International, Inc. 2,250 76,781
Hasbro, Inc. 3,920 121,520
Lancaster Colony Corp. 3,764 140,209
Luby's Cafeterias, Inc. 820 18,245
Sbarro, Inc. 2,280 49,020
Service Corp. International 2,000 88,000
-----------
1,045,775
-----------
Non-Ferrous Metals -- 0.08%
DT Industries, Inc. 5,200 70,200
-----------
Producer Goods -- 2.52%
General Electric Co. 9,500 684,000
Hubbell, Inc. Class B 3,351 220,328
Illinois Tool Works, Inc. 2,100 123,900
Juno Lighting, Inc. 7,239 115,824
Stewart & Stevenson Services, Inc. 33,400 843,350
Teleflex, Inc. 1,590 65,190
Trimas Corp. 6,235 117,686
Watts Industries, Inc. Class A 7,398 172,003
-----------
2,342,281
-----------
Railroads and Shipping -- 0.19%
Alexander & Baldwin, Inc. 5,470 125,810
Norfolk Southern Corp. 690 54,769
-----------
180,579
-----------
FS-349
<PAGE>
Retail -- 1.70%
Albertsons, Inc. 3,200 105,200
Cato Corp. Class A 14,518 112,515
Home Depot, Inc. 2,500 119,688
Kohls Corp. * 1,732 90,930
May Department Stores Co. 3,380 142,805
Melville Corp. 4,360 134,070
Mercantile Stores Inc. 1,200 55,500
Stanhome, Inc. Voting 3,510 102,229
Talbots, Inc. 1,949 56,034
Toys R Us * 24,900 541,575
Walgreen Co. 4,200 125,474
-----------
1,586,020
-----------
Soaps and Cosmetics -- 0.12%
Unilever N. V. 810 114,007
-----------
Telephone -- 2.64%
AT&T Corp. 9,000 582,750
AirTouch Communications, Inc. * 3,300 93,225
Century Telephone Enterprises, Inc. 21,500 682,625
MCI Communications Corp. 42,000 1,097,250
-----------
2,455,850
-----------
Tires and Rubber Goods -- 0.06%
Bandag, Inc. Class A 1,050 55,650
-----------
Tobacco -- 0.38%
Loews Corp. 1,700 133,238
Philip Morris Companies, Inc. 1,130 102,265
UST, Inc. 3,500 116,812
-----------
352,315
-----------
Travel and Recreation -- 0.49%
Callaway Golf Co. 5,600 126,700
Carnival Corp. Class A 5,000 121,875
Disney (Walt) Co. 1,600 94,400
Gaylord Entertainment Co. Class A 4,130 114,608
-----------
457,583
-----------
Trucking and Freight -- 0.70%
Ryder System, Inc. 26,300 650,924
-----------
TOTAL COMMON STOCKS 49,133,906
-----------
(Cost $41,977,085)
TOTAL INVESTMENTS $93,092,772
===========
(Cost $83,617,256)
<FN>
* Non-income producing security.
</TABLE>
FS-350
<PAGE>
THE WOODWARD FUNDS
BALANCED FUND
PORTFOLIO OF INVESTMENTS (Continued)
Notes to Portfolio of Investments
The Fund invests in securities whose value is derived from an underlying pool
of mortgages or consumer loans. Some of these securities are collateralized
mortgage obligations (CMOs). CMOs are debt securities issued by U.S.
government agencies or by financial institutions and other mortgage lenders
which are collateralized by a pool of mortgages held under an indenture.
Descriptions of certain collateralized mortgage obligations are as follows:
Adjustable Rate (AR)
Inverse Floaters (IF) represent securities that pay interest at a rate that
increases (decreases) with a decline (increase) in a specified index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more volatile
and there is a greater risk that the initial investment will not be fully
recouped. These securities are subject to accelerated principal paydowns as a
result of prepayments or refinancing of the underlying pool of mortgage
instruments. As a result, interest income may be reduced considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks as
those associated with IO securities. Unlike IO's, the owner also has a right
to receive a very small portion of principal. The high interest rate results
from taking interest payments from other classes in the REMIC Trust and
allocating them to the small principal of the HB class.
Principal Only (PO) represents the right to receive the principal portion only
on an underlying pool of mortgage loans. The market value of these securities
is extremely volatile in response to changes in market interest rates. As
prepayments on the underlying mortgages of these securities increase, the
yield on these securities increases.
FS-351
<PAGE>
THE WOODWARD FUNDS
EQUITY FUNDS
NOTES TO FINANCIAL STATEMENTS
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business
trust on April 21, 1987, and registered under the Investment Company Act of
1940, as amended, as an open-end investment company. As of December 31, 1995,
Woodward consisted of seventeen separate series. The five Equity Funds (Equity
Funds) included in these financial statements are described below.
Woodward Growth/Value Fund
Woodward Opportunity Fund
Woodward Intrinsic Value Fund
Woodward Capital Growth Fund
Woodward Balanced Fund
The Growth/Value, Opportunity and Intrinsic Value Funds commenced
operations on June 1, 1991, the Balanced Fund commenced operations on
January 1, 1994, and the Capital Growth Fund commenced operations on
July 2, 1994.
The remaining two Woodward Equity Funds, the Equity Index and
International Equity Funds, are each included on separate stand alone
financial statements.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Equity Funds in preparation of the financial statements. The policies are
in conformity with generally accepted accounting principles for investment
companies. Following generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments
The Equity Funds value investment securities at market value which is
determined by a pricing service based upon quoted market prices or dealer
quotes. Securities for which market prices or dealer quotes are not readily
available are valued by the investment advisor, NBD Bank (NBD) in accordance
with procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day
after trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is required to equal or
exceed 102% of the funds advanced under the repurchase agreement including
accrued interest; 2) collateral is marked to market daily by NBD to assure its
value remains at least equal to 102% of the repurchase agreement amount; and
3) funds are not disbursed by Woodward or its agent unless collateral is
presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount on debt instruments. Bond
premiums and discounts are amortized/accreted as required by the Internal
Revenue Code. Premiums and discounts on mortgage-backed securities are
amortized/accreted using the effective interest rate method. As prepayments on
the underlying mortgages increase or decrease the expected life, the yield is
adjusted to amortize/accrete the security to its new expected life. Dividends
are recorded on the ex-dividend date.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to
its shareholders. Therefore, no federal income tax provision is required in
the accompanying financial statements.
FS-352
<PAGE>
Net realized gains differ for financial statement and tax purposes
primarily because of the recognition of wash sale transactions and
post-October 31 capital losses. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed may differ
from the year that the income or realized gains were recorded by the Fund.
Certain book-to-tax timing differences for the funds are reflected as excess
distributions in the Statements of Changes in Net Assets. These distributions
do not constitute a tax return of capital.
Shareholder Dividends
Dividends from net investment income are declared and paid quarterly by
the Equity Funds. Net realized capital gains are distributed annually.
Distributions from net investment income and net realized gains are made
during each year to avoid the 4% excise tax imposed on regulated investment
companies by the Internal Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the
five year period beginning with the commencement of operations of each series.
Expenses
Expenses are charged daily as a percentage of the respective Fund's net
assets. Woodward monitors the rate at which expenses are charged to ensure
that a proper amount of expense is charged to income each year. This
percentage is subject to revision if there is a change in the estimate of the
future net assets of Woodward or a change in expectations as to the level of
actual expenses.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of .005% of the Equity Funds' average net assets and Essex
is entitled to receive a fee at the annual rate of .10% of the aggregate
average net assets of Woodward's investment portfolios attributable to
investments by clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For
its advisory services to Woodward, NBD is entitled to a fee, computed daily
and payable monthly. Under the Advisory Agreement, NBD also provides Woodward
with certain administrative services, such as maintaining Woodward's general
ledger and assisting in the preparation of various regulatory reports. NBD
receives no additional compensation for such services.
A reorganization of Woodward and The Prairie Funds is being considered
by the Board of Trustees of both funds. In connection with the proposed
reorganization, the Board of Trustees of Woodward and the Board of Trustees of
Prairie must approve certain reorganization agreements. The transaction is
intended to be effected as a tax-free reorganization under the Internal
Revenue Code, so that none of the Funds' shareholders will recognize taxable
gains or losses as a result of the reorganization. A proxy
statement/prospectus describing the reorganization and the reasons therefore
will be sent to shareholders.
NBD, FoM, and Essex have agreed that they may waive their fees in whole
or in part; and, if in part, may specify the particular fund to which such
waiver relates as may be required to satisfy any expense limitation imposed by
state securities laws or other applicable laws. At present, no restrictive
expense limitation is imposed on Woodward. Restrictive limitations could be
imposed as a result of changes in current state laws and regulations in those
states where Woodward has qualified its shares, or by a decision of the
Trustees to qualify the shares in other states having restrictive expense
limitations. For the period ended December 31, 1995, NBD reimbursed the
Capital Growth Fund and Balanced Fund for certain expenses in the amounts of
$58,424 and $136,954, respectively.
NBD is also compensated for its services as Woodward's Custodian,
Transfer Agent and Dividend Disbursing Agent, and is reimbursed for certain
out of pocket expenses incurred on behalf of Woodward.
FS-353
<PAGE>
On March 10, 1994, Woodward adopted The Woodward Funds Deferred
Compensation Plan (the "Plan"), an unfunded, nonqualified deferred
compensation plan. The Plan allows an individual Trustee to elect to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
(4) Investment Securities Transactions
Information with respect to investment securities and security
transactions based on the aggregate cost of investments for federal income tax
purposes, excluding short-term securities, is as follows:
<TABLE>
<CAPTION>
Growth/Value Opportunity Intrinsic Value
Fund Fund Fund
------------ ------------ ---------------
<S> <C> <C> <C>
Gross Unrealized Gains $151,285,779 $121,714,875 $ 32,487,357
Gross Unrealized Losses (11,595,221) (23,828,874) (5,683,919)
------------ ------------ ------------
$139,690,558 $ 97,886,001 $ 26,803,438
============ ============ ============
Federal Income Tax Cost $598,326,613 $545,136,639 $231,447,596
Purchases $226,974,931 $334,152,727 $100,553,869
Sales, at value $164,369,937 $305,957,872 $104,699,734
</TABLE>
<TABLE>
<CAPTION>
Capital Growth Balanced
Fund Fund
------------- --------
<S> <C> <C>
Gross Unrealized Gains $ 36,159,065 $10,960,819
Gross Unrealized Losses (3,710,820) (1,616,652)
------------ -----------
$ 32,448,245 $ 9,344,167
============ ===========
Federal Income Tax Cost $164,013,755 $83,748,605
Purchases $ 94,109,852 $38,447,984
Sales, at value $ 9,347,828 $20,747,860
</TABLE>
FS-354
<PAGE>
(5) Expenses
Following is a summary of total expense rates charged, advisory fee
rates payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the year ended December 31, 1995. The rates
shown are stated as a percentage of each fund's average net assets.
<TABLE>
<CAPTION>
Growth/Value Opportunity Intrinsic Value
Effective Date Fund Fund Fund
-------------- ------------ ----------- --------------
<S> <C> <C> <C>
Expense Rates:
January 1 0.84% 0.90% 0.91%
August 9 0.83% 0.88% 0.90%
November 9 0.83% 0.86% 0.90%
NBD Advisory Fee:
January 1 0.75% 0.75% 0.75%
Amounts Paid:
Advisory Fee to NBD $4,951,664 $4,490,930 $1,817,833
Distribution Fees to FoM & Essex $ 67,240 $ 80,463 $ 24,640
Other Fees & Out of Pocket Expenses to NBD $ 183,590 $ 247,535 $ 85,169
</TABLE>
<TABLE>
<CAPTION>
Capital Growth Balanced
Effective Date Fund Fund
-------------- -------------- --------
<S> <C> <C>
Expense Rates:
January 1 0.85% 0.87%
March 21 0.85% 0.90%
August 9 0.85% 0.90%
November 9 0.87% 0.92%
NBD Advisory Fee:
January 1 0.75% 0.75%
Amounts Paid:
Advisory Fee to NBD $1,064,273 $ 570,525
Distribution Fees to FoM & Essex $ 9,455 $ 11,148
Other Fees & Out of Pocket
Expenses to NBD $ 44,622 $ 93,196
Expense Reimbursements by NBD $ (58,424) $(136,954)
</TABLE>
FS-355
<PAGE>
THE WOODWARD FUNDS
EQUITY FUNDS
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the Equity
Funds' net asset values have changed during the periods presented. Additional
quantitative measures expressed in ratio form analyze important relationships
between certain items presented in the financial statements. These financial
highlights have been derived from the financial statements of the Equity Funds
and other information for the periods presented.
<TABLE>
<CAPTION>
Growth/Value Fund
Year Ended Year Ended Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.67 $ 11.16 $ 10.51 $ 9.86 $ 10.00
Income from investment operations:
Net investment income 0.21 0.23 0.20 0.22 0.14
Net realized and unrealized
gains (losses) on investments 2.76 (0.17) 1.24 0.75 (0.14)
------------ ------------ ------------ ------------ ------------
Total from investment operations 2.97 0.06 1.44 0.97 --
------------ ------------ ------------ ------------ -----------
Less distributions:
From net investment income (0.22) (0.21) (0.20) (0.22) (0.14)
From realized gains (0.26) (0.30) (0.59) (0.10) --
In excess of realized gains -- (0.01) -- -- --
Tax return of capital -- (0.03) -- -- --
------------ ------------ ------------ ------------ ------------
Total distributions (0.48) (0.55) (0.79) (0.32) (0.14)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 13.16 $ 10.67 $ 11.16 $ 10.51 $ 9.86
============ ============ ============ ============ ============
Total Return (b) 28.04% 0.55% 13.79% 9.87% 0.17%(a)
Ratios/Supplemental Data
Net assets, end of period $737,167,067 $571,370,711 $429,635,045 $287,344,809 $238,085,630
Ratio of expenses to average net assets 0.84% 0.84% 0.83% 0.83% 0.85%(a)
Ratio of net investment income to
average net assets 1.73% 2.07% 1.84% 2.20% 2.56%(a)
Portfolio turnover rate 26.80% 28.04% 42.31% 16.28% 0.94%
<FN>
</TABLE>
See accompanying notes to financial statements.
FS-356
<PAGE>
<TABLE>
<CAPTION>
Opportunity Fund
-----------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.34 $ 14.49 $ 12.37 $ 10.40 $ 10.00
Income from investment operations:
Net investment income 0.06 0.07 0.10 0.11 0.09
Net realized and unrealized gains
losses) on investments 2.57 (0.54) 2.87 2.43 0.43
------------ ------------ ------------ ------------ ------------
Total from investment operations 2.63 (0.47) 2.97 2.54 0.52
------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income (0.06) (0.07) (0.10) (0.11) (0.09)
From realized gains (0.76) (0.49) (0.75) (0.46) (0.03)
In excess of realized gains -- (0.02) -- -- --
Tax return of capital -- (0.10) -- -- --
------------ ------------ ------------ ------------ ------------
Total distributions (0.82) (0.68) (0.85) (0.57) (0.12)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 15.15 $ 13.34 $ 14.49 $ 12.37 $ 10.40
============ ============ ============ ============ ============
Total Return (b) 19.88% (3.27%) 24.01% 24.56% 8.92%(a)
Ratios/Supplemental Data
Net assets, end of period $650,952,268 $524,999,120 $365,664,513 $166,423,073 $108,046,450
Ratio of expenses to average net assets 0.89% 0.90% 0.86% 0.84% 0.84%(a)
Ratio of net investment income
to average net assets 0.37% 0.53% 0.71% 1.09% 1.56(a)
Portfolio turnover rate 53.55% 37.51% 33.99% 34.44% 2.92%
Average commission rate $ 0.04
</TABLE>
<TABLE>
<CAPTION>
Intrinsic Value Fund
-----------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.48 $ 11.05 $ 10.40 $ 9.89 $ 10.00
Income from investment operations:
Net investment income 0.29 0.31 0.29 0.29 0.17
Net realized and unrealized gains
(losses) on investments 2.24 (0.38) 1.23 1.14 (0.02)
------------ ------------ ------------ ------------ ------------
Total from investment operations 2.53 (0.07) 1.52 1.43 0.15
------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income (0.30) (0.30) (0.28) (0.28) (0.17)
From realized gains (0.82) (0.20) (0.59) (0.64) (0.09)
------------ ------------ ------------ ------------ ------------
Total distributions (1.12) (0.50) (0.87) (0.92) (0.26)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 11.89 $ 10.48 $ 11.05 $ 10.40 $ 9.89
============ ============ ============ ============ ===========
Total Return (b) 24.38% (0.60%) 14.71% 2.70%(a)
Ratios/Supplemental Data
Net assets, end of period $255,884,859 $220,028,096 $192,555,183 $107,260,873 $77,450,163
Ratio of expenses to average net assets 0.91% 0.91% 0.86% 0.84 0.84%(a)
Ratio of net investment income
to average net assets 2.49% 2.92% 2.67% 2.78% 3.03%(a)
Portfolio turnover rate 45.55% 58.62% 63.90% 48.52% 1.80%
Average commission rate $ 0.03
</TABLE>
FS-357
<PAGE>
<TABLE>
<CAPTION>
Capital Growth Fund Balanced Fund
----------------------------- -----------------------------
Year Ended Period Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.44 $ 10.00 $ 9.53 $ 10.00
Income from investment operations:
Net investment income 0.08 0.05 0.35 0.28
Net realized and unrealized gains
(losses) on investments 2.93 0.43 1.83 (0.48)
------------ ----------- ----------- -----------
Total from investment operations 3.01 0.48 2.18 (0.20)
------------ ----------- ----------- -----------
Less distributions:
From net investment income (0.08) (0.04) (0.35) (0.27)
From realized gains (0.11) -- (0.12) --
------------ ----------- ----------- -----------
Total distributions (0.19) (0.04) (0.47) (0.27)
------------ ----------- ----------- -----------
Net asset value, end of period $ 13.26 $ 10.44 $ 11.24 $ 9.53
============ =========== =========== ===========
Total Return (b) 28.90% 9.62%(a) 23.18% (1.95)%
Ratios/Supplemental Data
Net assets, end of period $195,861,178 $81,269,604 $93,623,801 $54,167,192
Ratio of expenses to average net assets 0.86% 0.85%(a) 0.91% 0.85%
Ratio of net investment income to
average net assets 0.65% 1.25%(a) 3.40% 3.41%
Ratio of expenses to average net assets
without fee waivers/ reimbursed expenses 0.90% 0.95%(a) 1.09% 1.56%
Ratio of net investment income to
average net assets without fee waivers/
reimbursed expenses 0.61% 1.15%(a) 3.22% 2.70%
Portfolio turnover rate 6.97% 3.29% 31.76% 37.49%
Average commission rate $ 0.04 $ 0.05
<FN>
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
FS-358
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees and Shareholders of
The Woodward Equity Funds:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Equity Funds of THE WOODWARD
FUNDS (comprising, as indicated in Note 1, the Growth/Value, Opportunity,
Intrinsic Value, Capital Growth and Balanced Funds) as of December 31, 1995,
and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods from
inception (as indicated in Note 1) through December 31, 1995. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included physical counts and
confirmation of securities owned as of December 31, 1995, by inspection and
correspondence with custodians, banks and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective funds constituting the Equity Funds of The
Woodward Funds as of December 31, 1995, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended and the financial highlights for each of the periods
from inception (as indicated in Note 1) through December 31, 1995 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
February 19, 1996.
FS-359
<PAGE>
[ INTENTIONALLY LEFT BLANK ]
FS-360
<PAGE>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities:
At cost $100,165,227
============
At value (Note 2) $107,690,899
Cash 364,232
Receivable for securities sold 8,253
Unrealized appreciation on foreign exchange contracts 52
Withholding tax receivable 140,894
Income receivable 178,985
Deferred organization costs, net (Note 2) 49,159
Prepaids and other assets 27,321
------------
TOTAL ASSETS 108,459,795
------------
LIABILITIES:
Payable for securities purchased 770,234
Unrealized depreciation on foreign exchange contracts 267
Accrued investment advisory fee 67,327
Accrued distribution fees 516
Accrued custodial fee 14,528
Dividends payable 306,527
Other payables and accrued expenses 12,095
------------
TOTAL LIABILITIES 1,171,494
------------
NET ASSETS $107,288,301
============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) $ 971,289
Additional paid-in capital 98,938,436
Accumulated undistributed net investment income 803
Accumulated undistributed net realized losses from
investments and foreign currency transactions (154,256)
Net unrealized appreciation on investments and
foreign currency translation 7,532,029
------------
TOTAL NET ASSETS $107,288,301
============
Shares of capital stock outstanding 9,712,891
============
Net asset value and redemption price per share $ 11.05
============
Maximum offering price per share $ 11.63
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-361
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<S> <C> <C>
INVESTMENT INCOME (Note 2)
Interest $ 538,478
Dividends (net of foreign taxes withheld of $98,515) 1,279,198
----------
TOTAL INVESTMENT INCOME 1,817,676
----------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee 529,312
Distribution fees 4,063
Professional fees 66,313
Custodial fee 133,650
Amortization of deferred organization costs 10,714
Marketing expenses 46,449
Registration, filing fees and other expenses 77,246
Less: Expense reimbursement (51,707)
----------
NET EXPENSES 816,040
----------
NET INVESTMENT INCOME 1,001,636
----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized loss on:
Investment securities (147,589)
Foreign currency transactions (475) (148,064)
---------
Net change in unrealized appreciation on:
Investment securities 7,523,087
Assets and liabilities denominated in foreign
currencies 6,376 7,529,463
--------- ----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
AND FOREIGN CURRENCY 7,381,399
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $8,383,035
==========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-362
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 1,001,636 $ 32,338
Net realized losses on investments and foreign
currency transactions (148,064) (2,937)
Net change in unrealized appreciation on
investments and foreign currency translation 7,529,463 2,566
------------ -----------
Net increase in net assets from operations 8,383,035 31,967
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,033,171) --
In excess of realized gains (3,255) --
------------ -----------
Total distributions (1,036,426) --
------------ -----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 74,411,073 36,626,877
Net asset value of shares issued in reinvestment of
distributions to shareholders 720,012 --
------------ -----------
75,131,085 36,626,877
Less: payments for shares redeemed (11,734,863) (113,374)
------------ -----------
Net increase in net assets from capital share
transactions 63,396,222 36,513,503
------------ -----------
NET INCREASE IN NET ASSETS 70,742,831 36,545,470
NET ASSETS:
Beginning of period 36,545,470 --
------------ -----------
End of period $107,288,301 $36,545,470
============ ===========
CAPITAL SHARE TRANSACTIONS:
Shares sold 7,102,657 3,664,087
Shares issued in reinvestment of distributions to
shareholders 65,214 --
------------ -----------
7,167,871 3,664,087
Less: shares redeemed (1,107,679) (11,388)
------------ -----------
NET INCREASE IN SHARES OUTSTANDING 6,060,192 3,652,699
------------ -----------
CAPITAL SHARES:
Beginning of period 3,652,699 --
------------ -----------
End of period 9,712,891 3,652,699
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-363
<PAGE>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
<TABLE>
<CAPTION>
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 4.48%
Salomon Brothers, Revolving Repurchase Agreement,
5.875%, 1/3/95 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/95
through 5/15/99, all held at Chemical Bank) $4,819,555 $4,819,555
---------- ----------
(Cost $4,819,555)
Shares
------
<S> <C> <C>
COMMON STOCKS -- 95.52%
AUSTRALIA -- 2.42%
BANKS
National Australia Bank 38,710 348,421
Westpac Bank Corp 55,410 245,657
CHEMICALS
Ici Australia 11,453 87,751
CONSTRUCTION
Boral Limited 17,000 42,996
Csr Limited 27,466 89,488
Pioneer International 13,882 35,832
ENERGY & RAW MATERIALS
Broken Hill Pty 28,140 397,716
Santos Limited 33,203 97,066
FOOD & AGRICULTURE
Amcor Limited 9,799 69,247
Goodman Fielder Limited 23,031 23,128
LIQUOR & TOBACCO
Coca-Cola Amatil 14,487 115,631
Fosters Brewing Gp 22,347 36,737
MEDIA
News Corporation (Aust Listing) 37,765 201,702
News Corporation Preferred Limited Voting
Shares 30,504 142,726
MISCELLANEOUS
Pacific Dunlop Limited 44,367 103,960
NON-FERROUS METALS
Cra Limited 10,619 155,938
Mim Holding Limited 23,841 32,986
Western Mining Corp 36,388 233,866
RAILROAD & SHIPPING
Brambles Inds Ltd. 8,027 89,565
RETAIL
Coles Myer Ltd. 18,791 58,568
----------
2,608,981
----------
BELGIUM -- 4.30%
BANKS
Generale De Banque 1,300 460,514
Kredietbank 1,550 423,985
CHEMICALS
Solvay 850 459,240
ENERGY & UTILITIES
Electrabel 4,250 1,010,905
Tractebel Inv Cap 1,300 536,714
INSURANCE
Fortis Ag 3,700 450,099
Fortis Ag(VVPR) 80 9,745
INTERNATIONAL OIL
Petrofina Sa 2,160 661,305
NON-FERROUS METALS
Union Miniere * 1,804 120,761
OTHER ENERGY SOURCES
Gpe Bruxelles Lam 2,300 319,259
PRODUCER GOODS
Bekaert Sa 220 181,282
----------
4,633,809
----------
FS-364
<PAGE>
DENMARK -- 2.11%
BANKS
Den Danske Bank 3,641 251,634
Unidanmark 'A' (Reg'd) 3,535 175,417
BUSINESS MACHINE
Iss International Series 'B' 2,800 63,156
Sophus Berendsen 'B' 1,175 132,516
DRUGS & MEDICINE
Novo-Nordisk As 'B' 2,449 335,855
FOOD & AGRICULTURE
Danisco 3,695 178,689
LIQUOR & TOBACCO
Carlsberg 'A' 275 15,383
Carlsberg 'B' 2,018 112,884
RAILROAD & SHIPPING
D/S 1912 'B' 15 286,910
D/S Svendborg 'B' 9 248,475
TELEPHONE
Tele Danmark 'B' 8,786 480,378
----------
2,281,297
----------
FINLAND -- 3.55%
BANKS
Unitas Ser 'A' * 119,766 303,414
CONSTRUCTION
Metro AB 'A' 2,000 82,450
ELECTRONICS
Nokia (AB) Oy Series 'K' 18,600 736,802
Nokia (AB) Oy Series 'A' 24,500 964,876
FOOD & AGRICULTURE
Cultor Oy Series '2' 500 20,728
Cultor Oy Series '1' 2,500 103,639
INSURANCE
Pohjola Series 'B' 3,800 49,010
Sampo 'A' 2,200 118,056
NON-FERROUS METALS
Outokumpo Oy 'A' 19,500 309,880
PAPER & FOREST PRODUCTS
Kymmene Corp 12,500 331,068
Repola 23,400 441,915
PRODUCER GOODS
Kone Corp 'B' 700 58,521
RETAIL
Kesko 12,000 149,516
Stockmann Oy 'A' 1,600 91,386
TRAVEL & RECREATION
Amer Group 'A' 3,800 59,424
----------
3,820,685
----------
FRANCE -- 4.91%
BANKS
Banque National Paris 3,615 163,291
Cie De Suez 1,251 51,673
Cie Fin Paribas 'A' 2,318 127,267
Society Generale 1,829 226,270
CHEMICALS
Air Liquide ('L') 996 165,173
Rhone Poulenc Sa 'A' 5,686 121,966
CONSTRUCTION
Cie De St Gobain 1,834 203,262
Lafarge Coppee Sa (Br) 1,800 116,126
CONSUMER DURABLES
Printemps (Av) 600 119,868
DRUGS & MEDICINE
L'Oreal 985 264,056
Sanofi 2,339 150,134
ELECTRONICS
Alcatel Alsthom (Cge) 2,544 219,631
Csf (Thomson) 3,520 78,528
Legrand 500 77,295
Schneider Sa (Ex-Sp) 3,630 124,257
ENERGY & UTILITIES
Eaux (Cie Generale) 2,307 230,635
Lyonnaise Des Eaux 1,753 169,013
FOOD & AGRICULTURE
Danone (Ex Bsn) 1,520 251,138
Eridania Beghin Sa 861 147,890
Saint Louis 350 93,040
INSURANCE
Axa 1,981 133,677
FS-365
<PAGE>
INTERNATIONAL OIL
Elf Auqitaine (Soc Nat) 5,566 410,646
Total B 4,716 318,715
LIQUOR & TOBACCO
Lvmh Moet-Hennessy 2,000 417,146
Pernod-Ricard 1,114 63,395
MOTOR VEHICLES
Peugeot Sa 793 104,752
PRODUCER GOODS
Carnaud Metal Box 766 35,086
Michelin (Cgde) Class 'B' (Brwn Bds)(Reg'd) 2,150 85,861
REAL PROPERTY
Sefimeg (Reg'd) 986 65,527
RETAIL
Carrefour 586 356,006
Promodes 433 101,912
TRAVEL & RECREATION
Accor 757 98,139
----------
5,291,375
----------
GERMANY -- 4.93%
AIR TRANSPORT
Lufthansa Ag 1,707 236,739
BANKS
Bayer Vereinsbank (Var) 5,140 154,422
Deutsche Bank (Var) 10,440 496,734
Dresdner Bank (Var) 7,140 191,810
CHEMICALS
Basf (Var) 1,026 231,540
Bayer (Var) 1,100 292,662
Schering 1,350 89,888
CONSTRUCTION
Hochtief 357 152,899
ELECTRONICS
Siemens (Var) 704 387,592
SAP N/V Pref 600 91,303
ENERGY & UTILITIES
Rwe (Var) 516 188,010
Veba (Var) 10,150 435,422
INSURANCE
Munchener Ruckvers Reg Vink * 145 313,042
Allianz (Regd) 250 491,869
MOTOR VEHICLES
Daimler-Benz (Var) 384 194,243
Volkswagen (Var) 506 170,048
PRODUCER GOODS
Linde 156 92,645
Mannesmann (Var) 1,146 365,512
RETAIL
Kaufhof Holding 402 122,739
STEEL
Preussag Br (Var) 1,074 303,153
Thyssen * 716 130,917
Viag (Var) 419 173,014
----------
5,306,203
----------
HONG KONG -- 2.40%
AIR TRANSPORT
Cathay Pacific Airways 37,000 56,467
BANKS
Hang Seng Bank 39,400 352,881
ENERGY & UTILITIES
China Light & Power 34,700 159,769
Hong Kong Electric 20,000 65,572
Hong Kong & China Gas 34,800 56,035
MISCELLANEOUS
Hutchinson Whampoa 56,000 341,131
MISCELLANEOUS FINANCE
Swire Pacific 'A' 23,500 182,361
Wharf (Holding) 30,000 99,910
Wing Lung Bank 16,848 94,351
REAL PROPERTY
Cheung Kong (Holdings) 40,000 243,665
Hopewell Holdings 50,000 28,777
Hysan Development 10,000 26,449
New World Infrastr * 52 100
New World Development Co 31,366 136,710
Sun Hung Kai Properties 45,700 373,842
FS-366
<PAGE>
TELEPHONE
Hong Kong Telecomm 203,600 363,386
----------
2,581,406
----------
IRELAND -- 1.95%
BANKS
Allied Irish Banks 82,680 447,907
Bank of Ireland (Dublin Listing) 26,825 193,904
CONSTRUCTION
Crh 48,929 367,014
FOOD & AGRICULTURE
Greencore 24,349 209,568
Kerry Group 'A' 28,760 218,954
INSURANCE
Irish Life 56,656 215,211
MEDIA
Independent News 18,405 117,406
PAPER & FOREST PRODUCTS
Smurfit(Jefferson) (Dublin Listing) 139,859 329,517
----------
2,099,481
----------
JAPAN -- 30.54%
AIR TRANSPORT
Japan Airlines Co * 46,000 305,472
BANK
Asahi Bank 34,000 428,495
Bank of Tokyo 28,000 491,315
Dai-Ichi Kangyo Bank 40,000 787,190
Fuji Bank 43,000 950,445
Industrial Bank of Japan 23,000 697,904
Joyo Bank 36,000 289,671
Sakura Bank 19,000 241,295
Sumitomo Bank 37,000 785,542
Tokai Bank 25,000 349,001
BUSINESS MACHINE
Canon Inc 21,000 380,702
Fujitsu 10,000 111,486
Ricoh Co. 55,000 602,511
CHEMICALS
Asahi Chemical Industries 63,000 482,493
Dainippon Ink & Chemical 19,000 88,598
Mitsubishi Gas Chemical 19,000 85,651
Sekisui Chemical 15,000 221,034
Shin-Etsu Chemical Co. 13,000 269,700
Showa Denko Kk * 102,000 320,383
Sumitomo Chemical 92,000 459,324
Toray Industries Inc 20,000 131,845
CONSTRUCTION
Chichibu Onoda Cement 6,000 32,050
Fujita Corp 6,000 27,106
Haseko Corp 57,000 230,428
Kajima Corp 11,000 108,772
Nihon Cement Co 30,000 200,675
Obayashi Corp 8,000 63,596
Sato Kogyo Co 12,000 73,872
Sekisui House 43,000 550,258
Shimizu Corp 25,000 254,480
Taisei Corp 47,000 313,936
Toto 15,000 209,400
CONSUMER DURABLES
Matsushita Electric Industries 56,000 912,055
Sanyo Electric Co 34,000 196,119
Sharp Corp 24,000 383,901
DRUGS & MEDICINE
Daiichi Pharmacy Co 33,000 470,278
Sankyo Co 15,000 337,367
Takeda Chemical Industries 24,000 395,534
ELECTRONICS
Hitachi * 78,000 786,415
Kyocera 11,000 817,922
Mitsubishi Electric Corp 48,000 345,743
Omron Corp 17,000 392,238
ENERGY & UTILITIES
Kansai Electric Power 13,900 336,883
Osaka Gas Co 124,000 429,154
Tokyo Electric Power 36,600 979,296
Tokyo Gas Co 15,000 52,932
FOOD & AGRICULTURE
Ajinomoto Co., Inc. 36,000 401,351
Yamazaki Baking Co 14,000 260,587
FS-367
<PAGE>
INTERNATIONAL OIL
Japan Energy Corp 19,000 63,731
Nippon Oil Co 86,000 540,253
MEDIA
Dai Nippon Printing 33,000 559,855
MULTI-INDUSTRY
Itochu Corp 38,000 256,031
Marubeni Corp 68,000 368,506
Mitsubishi 26,000 320,111
Sumitomo Corp 34,000 346,092
MISCELLANEOUS FINANCE
Daiwa Securities 34,000 520,786
Mitsubishi Trust & Banking 11,000 183,419
Nomura Securities 44,000 959,752
Yamaichi Securities Co. 34,000 264,678
MOTOR VEHICLES
Honda Motor Co 27,000 557,528
Nissan Motor Co 53,000 407,449
Toyota Motor Corp 56,000 1,188,929
NON-FERROUS METALS
Mitsubishi Steel * 17,000 88,995
Tostem Corp 5,000 166,260
PAPER & FOREST PRODUCTS
Daishowa Paper Manufacturing * 13,000 100,822
Honshu Paper Co 48,000 294,091
PRODUCER GOODS
Bridgestone Corp 31,000 492,866
Komatsu 33,000 271,930
Kubota Corp 60,000 386,809
Mitsubishi Heavy Industries 79,000 630,305
Nippondenso Co 25,000 467,758
Sumitomo Heavy Industries * 83,000 298,522
Toyo Seikan Kaisha 12,000 359,471
Toyoda Auto Loom 12,000 215,217
RAILROAD & SHIPPING
Hankyu Corp * 65,000 356,029
Mitsui Osk Lines * 63,000 202,159
Nagoya Railroad Co 61,000 307,508
Tokyu Corp 47,000 332,161
REAL PROPERTY
Mitsubishi Estate 49,000 612,787
RETAIL
Ito-Yokado Co 6,000 369,941
Nichii Co 47,000 624,226
Seven-Elevan Japan Npv 7,000 494,030
STEEL
Kawasaki Steel Corp 47,000 164,030
Kobe Steel * 34,000 105,146
Nippon Steel Corp 108,000 370,638
Nkk Corp * 48,000 129,362
Sumitomo Metal Industries * 156,000 473,360
----------
32,893,948
----------
MALAYSIA -- 2.03%
AIR TRANSPORT
Malaysian Airline Systems 8,000 25,995
BANKS
Ammb Holdings Berhad 6,000 68,534
Commerce Asset Holding 5,000 25,208
Dcb Holdings Berhad 17,000 49,549
Malayan Bkg Berhad 32,000 269,723
Public Bank Berhad 14,000 19,631
Public Bank Berhad (Alien Market) 51,000 97,625
CONSTRUCTION
Hume Inds (M) Berhad 16,000 76,884
United Engineers Berhad 8,000 51,046
CONSUMER DURABLES
Tech Res Inds Berhad * 21,000 62,035
ENERGY & UTILITIES
Tenaga Nasional 74,000 291,465
FOOD & AGRICULTURE
Golden Hope Plants 31,000 51,770
Nestle Malay Berhad 2,000 14,652
LIQUOR & TOBACCO
Rothmans Pall Mall 10,000 82,319
MISCELLANEOUS
Malayan Utd Inds 28,000 22,718
MOTOR VEHICLES
Edaran Otomobil 17,000 127,890
MULTI-INDUSTRY
Sime Darby Berhad 52,200 138,780
FS-368
<PAGE>
PRODUCER GOODS
Leader Univ Holdings 41,333 94,423
RAILROAD & SHIPPING
Malaysian Int Ship (Alien Market) 22,000 57,623
REAL PROPERTY
Hong Leong Properties 7,000 7,279
TELEPHONE
Telekom Malaysia 41,000 319,744
TRAVEL & RECREATION
Landmarks Berhad 6,000 7,988
Magnum Corp Berhad 61,500 116,271
Resorts World Berhad 19,000 101,775
----------
2,180,927
----------
MEXICO -- 1.03%
BANKS
Gpo Financiero Banamex-Ac Series 'B' 13,700 22,831
Gpo Financiero Banamex-Ac Series 'L' 685 1,006
CONSTRUCTION
Cemex Sa Ser 'A' 29,937 98,692
FOOD & AGRICULTURE
Grupo Ind Bimbo Series 'A' 12,000 49,061
MEDIA
Fomento Economico Mexico Series 'B' 17,000 39,274
Grupo Televisa Ptg Certs Repr 1 A,L,D Shs 11,500 130,452
MISCELLANEOUS FINANCE
Grupo Financiero Bancomer Series 'B' 55,000 15,490
Grupo Financiero Bancomer Series 'L' 2,037 523
Grupo Carso Series 'A1' * 16,000 85,350
MULTI-INDUSTRY
Alfa Sa Series 'A' (Cpo) 3,500 44,791
NON-FERROUS METALS
Industrias Penoles 10,000 41,273
PAPER & FOREST PRODUCTS
Kimberly Clark Mexico 'A' 11,000 166,326
RETAIL
Cifra Sa De Cv 'B' * 147,000 154,542
TELEPHONE
Telefonos De Mexico Series 'L' (Ltd Voting) 162,000 258,620
----------
1,108,231
----------
NETHERLANDS -- 6.11%
AIR TRANSPORT
KLM 2,341 82,366
BANK
ABN Amro Holding 11,227 511,977
CHEMICALS
Akzo Nobel Nv 2,562 296,638
ELECTRONICS
Philips Electronic 11,082 400,974
FOOD & AGRICULTURE
Ahold (kon) Nv 4,389 179,340
Unilever Nv Cva 5,151 724,616
INSURANCE
ING Groep Nv Cva 8,743 584,689
INTERNATIONAL OIL
Royal Dutch Petroleum (Br) 16,546 2,314,186
LIQUOR & TOBACCO
Heineken Nv 1,734 307,968
MEDIA
Elsevier Nv 23,480 313,460
Wolters Kluwer Cva 2,079 196,877
PAPER & FOREST PRODUCTS
KNP BT (Kon) Nv 2,446 62,867
STEEL
Kon Hoogovens Nv Cva 1,568 52,528
TELEPHONE
Kon Ptt Nederland 15,198 552,744
----------
6,581,230
----------
NORWAY -- 3.41%
CHEMICALS
Dyno Industrier 4,900 114,786
DRUGS & MEDICINE
Hafslund Nycomed Series 'A' 10,010 262,218
Hafslund Nycomed Series 'B' 6,018 152,882
FS-369
<PAGE>
FOOD & AGRICULTURE
Orkla As 'A' 6,150 306,631
Orkla As 'B' 1,200 57,361
INSURANCE
Uni Storebrand As 'A' * 51,053 282,826
INTERNATIONAL OIL
Norsk Hydro As 35,100 1,477,812
Transocean * 14,721 255,142
PAPER & FOREST PRODUCTS
Norske Skogsindust 'A' 4,100 120,706
PRODUCER GOODS
Kvaerner As Series 'A' 5,750 203,867
Kvaerner As Series 'B' 3,900 130,867
RAILROAD & SHIPPING
Bergesen Dy As 'A' 7,100 141,599
Bergesen Dy As 'B' Non-Voting 2,400 47,105
Leif Hoegh & Co 4,600 68,441
Unitor As 4,000 55,081
----------
3,677,324
----------
SINGAPORE -- 3.35%
AIR TRANSPORT
Singapore Airlines (Alien Market) 48,000 447,943
BANK
Dev Bank Singapore (Alien Market) 35,250 438,611
Overseas Chinese Bank (Alien Market) 33,833 423,371
United Overseas Bank (Alien Market) 40,804 392,328
CONSUMER DURABLES
Jardine Matheson (Sing Quote) 2,041 13,981
LIQUOR & TOBACCO
Fraser & Neave 18,000 229,062
Straits Trading Co 36,000 84,498
MEDIA
Singapore Press Holdings (Alien Market) 16,000 282,792
MOTOR VEHICLES
Cycle & Carriage 30,000 299,053
MULTI-INDUSTRY
Straits Steamship 44,000 148,692
PRODUCER GOODS
Jurong Shipyard (Nl) 13,000 100,179
Keppel Corp 45,000 400,858
REAL PROPERTY
City Developments 37,600 273,799
Hong Kong Land Holdings (Sing Quote) 25,975 48,054
RETAIL
Dairy Farms Intl (Sing Quote) 21,831 20,084
----------
3,603,305
----------
SPAIN -- 2.31%
BANKS
Argentaria Corp Banc 3,909 161,108
Banco Bilbao Vizcaya (Reg'd) 5,568 200,568
Banco Central Hispan (Reg'd) 3,721 75,453
Banco Santander (Reg'd) 4,588 230,315
CONSTRUCTION
Fomento Const Y Contra 588 45,076
ENERGY & UTILITIES
Empresa Nac Electricid 6,839 387,285
Gas Natural Sdg Sa 1,341 208,916
Iberdrola Sa 19,807 181,227
Union Electrical Fenosa 12,958 77,973
INSURANCE
Corporation Mapfre (Reg'd) 947 53,003
INTERNATIONAL OIL
Repsol Sa 8,351 273,626
LIQUOR & TOBACCO
Tabacalera Sa Series 'A' (Reg'd) 1,599 60,630
NON-FERROUS METALS
Acerinox Sa (Reg'd) 401 40,557
PRODUCER GOODS
Zardoya-Otis 310 33,858
RAILROAD & SHIPPING
Autopistas Cesa 6,059 68,923
REAL PROPERTY
Vallehermoso Sa 2,815 52,325
TELEPHONE
Telefonica De Espana 24,037 332,867
----------
2,483,710
----------
FS-370
<PAGE>
SWITZERLAND -- 5.46%
BANKS
Cs Holding (Reg'd) 6,034 620,102
Schweiz Bangesellsch (Br) 566 614,870
Schweiz Bangesellsch (Reg'd) 252 57,380
Schweiz Bankverein (Reg'd) 700 143,267
CHEMICALS
Ciba-Geigy (Br) 120 105,332
Ciba-Geigy (Reg'd) 380 335,202
CONSTRUCTION
Holderbank Fn Glarus (Br) 135 103,833
Holderbank Fn Glarus Wts (Pur Br) * 55 50
CONSUMER DURABLES
Smh Ag Neuenburg (Reg'd) 475 62,334
Smh Ag Neuenburg (Br) 25 14,992
DRUGS & MEDICINE
Roche Holdings Genusscheine Npv 113 896,124
Roche Holdings (Br) 44 617,564
Sandoz (Reg'd) 835 766,314
ELECTRONICS
Bbc Brown Boveri (Br) 240 279,494
Sgs Holding (Br) 24 47,764
FOOD & AGRICULTURE
Merkur Hldg Ag (Reg'd) 80 17,590
Nestle Sa (Reg'd) 673 746,315
INSURANCE
Zurich Versicherun (Reg'd) 1,200 359,796
NON-FERROUS METALS
Alusuisse-Lonza Holdings (Reg'd) 108 85,788
PRODUCER GOODS
Sulzer Ag Ptg 13 6,947
----------
5,881,058
----------
UNITED KINGDOM -- 14.71%
AIR TRANSPORT
British Airways 44,575 322,505
BANKS
Abbey National 38,813 383,260
Barclays 34,087 391,104
Hsbc Holdings (UK Reg'd) 42,779 652,231
Hsbc Holdings (UK Reg'd) 24,871 388,464
LLoyds Bank 74,113 381,450
CHEMICALS
Boc Group 13,799 193,033
Imperial Chemical Industries 17,053 202,016
CONSTRUCTION
English China Clay 33,609 165,415
Rmc Group 19,470 299,571
Taylor Woodrow 91,386 166,716
DRUGS & MEDICINE
Glaxo Holdings 63,234 898,321
Smithkline Beecham/ Bec Unts (1bch 'B'
12.5P&1sbc Pfd) 22,566 245,953
Smithkline Beecham 'A' 24,860 274,043
Zeneca Group 17,984 347,908
ELECTRONICS
General Electric Co 59,140 325,964
ENERGY & UTILITIES
British Gas 123,228 485,962
National Power 34,132 238,205
Thames Water 26,744 233,358
FOOD & AGRICULTURE
Associated British Foods 33,128 189,793
Cadbury Schweppes 27,535 227,434
Kingfisher 11,117 93,551
Sainsbury (J) 32,305 197,116
Tesco 47,446 218,784
Unilever 14,698 301,910
INSURANCE
Prudential Corp 68,435 440,947
INTERNATIONAL OIL
British Petroleum 125,393 1,049,353
LIQUOR & TOBACCO
BAT Industries 67,568 595,342
Bass 24,550 274,056
Grand Metropolitan 47,103 339,333
Guinness 59,179 435,517
MEDIA
Reuters Holdings 39,031 357,537
FS-371
<PAGE>
MULTI-INDUSTRY
Hanson 107,145 320,230
Inchcape 11,605 44,865
PRODUCER GOODS
Btr * 78,087 398,873
Rolls Royce 54,712 160,548
Rtz Corp (Reg'd) 27,830 404,435
Smiths Industries 22,799 225,130
REAL PROPERTY
Mepc 15,356 94,175
RETAIL
Argos 17,988 166,452
Boots Co 16,552 150,594
Great Univ Stores 19,328 205,559
Marks & Spencer 53,864 376,332
Sears 50,391 81,367
STEEL
British Steel 37,990 95,995
TELEPHONE
British Telecom 130,594 717,771
Cable & Wireless 52,660 376,096
Vodafone Group 74,958 268,255
TRAVEL & RECREATION
Ladbroke Group 64,565 146,857
Thorn Emi 12,257 288,688
------------
15,838,374
------------
TOTAL COMMON STOCKS 102,871,344
(COST $95,345,672) ------------
TOTAL INVESTMENTS $107,690,899
(COST $100,165,227) ============
<FN>
* Non Income producing security
</TABLE>
FS-372
<PAGE>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
Notes to Portfolio of Investments
At December 31, 1995, industry diversification of the Woodward
International Equity Fund investments was as follows:
<TABLE>
<CAPTION>
% of
Sector Diversification Investments
---------------------- -----------
<S> <C>
Banks/Finance 22.51%
Materials and Services 14.89
Consumer Non-Durables 14.01
Utilities 8.39
International Oil 6.87
Drugs and Medicine 5.96
Capital Goods 5.74
Electronics 5.73
Consumer Durables 4.52
Temporary Cash Investment 4.48
Transportation 3.47
Miscellaneous 2.33
Technology 0.59
Energy 0.51
------
Total Investments 100.00%
======
</TABLE>
FS-373
<PAGE>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business
trust on April 21, 1987, and registered under the Investment Company Act of
1940, as amended, as an open-end investment company. As of December 31, 1995,
Woodward consisted of seventeen separate series. The Woodward International
Equity Fund (International Fund) commenced operations on December 3, 1994.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed
in the preparation of the financial statements. The policies are in conformity
with generally accepted accounting principles for investment companies.
Following generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Investments
The International Fund values investment securities at market value
which is determined by a pricing service based upon quoted market prices or
dealer quotes at the close of the respective foreign securities exchange.
Securities for which market prices or dealer quotes are not readily available
are valued by the investment advisor, NBD Bank, (NBD) in accordance with
procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day
after trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is required to equal or
exceed 102% of the funds advanced under the repurchase agreement including
accrued interest; 2) collateral is marked to market daily by NBD to assure its
value remains at least equal to 102% of the repurchase agreement amount; and
3) funds are not disbursed by Woodward or its agent unless collateral is
presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis. Dividends are
recorded on the ex-dividend date or upon receipt of ex-dividend notification
in the case of certain foreign securities. Investment income is recorded net
of foreign taxes withheld where recovery of such taxes is uncertain.
Forward Foreign Currency Contracts
The International Fund may enter into a forward foreign currency
contract which is an agreement between two parties to buy and sell a currency
at a set price on a future date. The market value of the contract will
fluctuate with changes in currency exchange rates. The contract is
"marked-to-market" daily using the prevailing exchange rate and the change in
market value is recorded as an unrealized gain or loss. When the contract is
closed, a realized gain or loss is recorded equal to the difference between
the value of the contract at the time it was entered into and the value at the
time it was closed.
The International Fund may enter into forward foreign currency contracts
with the objective of minimizing its risk from adverse changes in the
relationship between currencies or to enhance income. The International Fund
may also enter into a forward contract in relation to a security denominated
in a foreign currency when it anticipates receipt in a foreign currency of
dividend payments in order to "lock in" the U.S. dollar price of a security or
the U.S. dollar equivalent of such dividend payments.
These contracts involve market risk in excess of the amounts reflected
in the International Fund's Statement of Assets and Liabilities. The face or
contract amount in U.S. dollars, as reflected in Footnote 6, reflects the
total exposure the fund has in that particular currency contract. Losses may
arise due to changes in the value of the foreign currency or if the
counterparty does not perform under the contract.
FS-374
<PAGE>
Foreign Currency Translations
The accounting records of the International Fund are maintained in U.S.
dollars. Foreign currency-denominated assets and liabilities are
"marked-to-market" daily using the prevailing exchange rate and the change in
value is recorded as an unrealized gain or loss. Upon receipt or payment, a
realized gain or loss is recorded equal to the difference between the original
value and the settlement value of the asset or liability. Purchases and sales
of securities, income, and expenses are translated into U.S. dollars at
prevailing exchange rate on the respective date of the transaction.
Net realized gains and losses on foreign currency transactions represent
gains and losses from sales and maturities of forward foreign currency
contracts, disposition of foreign currencies and currency gains and losses
realized between trade and settlement dates on securities transactions and
between the ex, pay and settlement dates on dividend income. Exchange rate
fluctuations on investments are not segregated in the statement of operations
from changes arising in market price movements. The effects of changes in
foreign currency exchange rates on investments in securities are included
within the net realized gain or loss on securities sold and net unrealized
appreciation or depreciation on investment securities held.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to differing treatments for
foreign currency transactions, wash sales and post October 31 capital losses.
Also, due to the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the net investment
income or realized gains (losses) were recorded by the Fund. Certain
book-to-tax timing differences for the Fund are reflected as excess
distributions in the Statement of Changes in Net Assets. These distributions
do not constitute a tax return of capital.
Shareholder Dividends
Dividends from net investment income are declared and paid annually. Net
realized capital gains are distributed annually. Distributions from net
investment income and net realized gains are made during each year to avoid
the 4% excise tax imposed on regulated investment companies by the Internal
Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the
five year period beginning with the commencement of operations of the Fund.
Expenses
Expenses are charged daily as a percentage of the Fund's assets.
Woodward monitors the rate at which expenses are charged to ensure that a
proper amount of expense is charged to income each year. This percentage is
subject to revision if there is a change in the estimate of the future net
assets of the International Fund or change in expectations as to the level of
actual expenses.
Concentration of Risk
Investing in securities of foreign issuers and currency transactions may
involve certain considerations and risks not typically associated with
investing in U.S. companies and U.S. government securities. These risks
include revaluation of currencies, adverse fluctuations in foreign currency
values and possible adverse political, social and economic developments,
including those particular to a specific industry, country or region, which
could cause the securities and their markets to be less liquid and price more
volatile than those of comparable U.S. companies and U.S. government
securities.
FS-375
<PAGE>
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive
a fee at the annual rate of .005% of the International Fund's average net
assets and Essex is entitled to receive a fee at the annual rate of .10% of
the aggregate average net assets of Woodward's investment portfolios,
attributable to investments by clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For
its advisory services to Woodward, NBD is entitled to a fee, computed daily
and payable monthly. Under the Advisory Agreement, NBD also provides Woodward
with certain administrative services, such as maintaining Woodward's general
ledger and assisting in the preparation of various regulatory reports. NBD
receives no additional compensation for such services.
A reorganization of Woodward and The Prairie Funds is being considered
by the Board of Trustees of both funds. In connection with the proposed
reorganization, the Board of Trustees of Woodward and the Board of Trustees of
Prairie must approve certain reorganization agreements. The transaction is
intended to be effected as a tax-free reorganization under the Internal
Revenue Code, so that none of the Fund's shareholders will recognize taxable
gains or losses as a result of the reorganization. A proxy
statement/prospectus describing the reorganization and the reasons therefore
will be sent to shareholders.
NBD, FoM, and Essex have agreed that they may waive their fees in whole
or in part; and, if in part, may specify the particular fund to which such
waiver relates as may be required to satisfy any expense limitation imposed by
state securities laws or other applicable laws. At present, no restrictive
expense limitation is imposed on Woodward. Restrictive limitations could be
imposed as a result of changes in current state laws and regulations in those
states where Woodward has qualified its shares, or by a decision of the
Trustees to qualify the shares in other states having restrictive expense
limitations. For the year ended December 31, 1995, NBD reimbursed the
International Fund for certain expenses in the amount of $51,707.
NBD is also compensated for its services as Woodward's Custodian,
Transfer Agent and Dividend Disbursing Agent, and is reimbursed for certain
out of pocket expenses incurred on behalf of Woodward.
On March 10, 1994, Woodward adopted the Woodward Funds Deferred
Compensation Plan (the "Plan"), an unfunded, nonqualified deferred
compensation plan. The Plan allows an individual trustee to elect to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
FS-376
<PAGE>
(4) Investment Securities Transactions
Information with respect to investment securities and security
transactions based on the aggregate cost of investments for federal income tax
purposes, excluding short-term securities, is as follows:
<TABLE>
<S> <C>
Gross Unrealized Gains $ 10,121,293
Gross Unrealized Losses (2,595,621)
------------
$ 7,525,672
============
Federal Income Tax Cost $100,165,227
Purchases $ 65,664,939
Sales, at value $ 1,353,172
</TABLE>
(5) Expenses
Following is a summary of total expense rates charged, advisory fee
rates payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the year ended December 31, 1995. The rates
shown are stated as a percentage of the Fund's average net assets.
<TABLE>
<CAPTION>
Effective Date
- --------------
<S> <C>
Expense Rates:
January 1 1.15%
November 9 1.17%
NBD Advisory Fee:
January 1 0.75%
Amounts Paid:
Advisory Fee to NBD $529,312
Distribution Fees to FoM & Essex $ 4,063
Other
Fees & Out of Pocket Expenses to NBD $140,786
Expense reimbursements by NBD $(51,707)
</TABLE>
FS-377
<PAGE>
(6) Forward Foreign Currency Contracts
As of December 31, 1995, the Fund had entered into two forward foreign
currency exchange contracts that obligate the Fund to deliver currencies at
specified future dates.
Outstanding contracts as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Currency To Value As Of Currency To Value as of Unrealized
Settlement Date Be Delivered Dec. 31, 1995 Be Received Dec. 31, 1995 Gain (Loss)
- --------------- ------------ ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Jan. 2, 1996 770,501 $770,501 3,344,361 $770,234 $(267)
U.S. Dollars Finnish Marks
Jan. 3, 1996 5,349 (8,305) 8,253 (8,253) 52
G.B. Pounds U.S. Dollars
-------- -------- -----
$762,196 $761,981 $(215)
======== ======== =====
</TABLE>
FS-378
<PAGE>
THE WOODWARD FUNDS
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the International
Equity Fund's net asset values have changed during the periods presented.
Additional quantitative measures expressed in ratio form analyze important
relationships between certain items presented in the financial statements.
These Financial Highlights have been derived from the financial statements of
the International Equity Fund and other information for the periods presented.
<TABLE>
<CAPTION>
Year Ended Period ended
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
Net asset value, beginning of period $ 10.01 $ 10.00
Income from investment operations:
Net investment income 0.10 0.01
Net realized and unrealized gains on investments 1.05 --
------------ -----------
Total from investment operations 1.15 0.01
------------ -----------
Less distributions:
From net investment income (0.11) --
In excess of realized gains (0.00) --
------------ -----------
Total distributions (0.11) --
------------ -----------
Net asset value, end of period $ 11.05 $ 10.01
============ ===========
Total Return (b) 11.47% 1.26%(a)
Ratios/Supplemental Data
Net assets, end of period $107,288,301 $36,545,470
Ratio of expenses to average net assets 1.16% 1.15%(a)
Ratio of net investment income to average net assets 1.43% 1.18%(a)
Ratio of expenses to average net assets without
reimbursed expenses 1.24% 1.92%(a)
Ratio of net investment income to average net assets
without reimbursed expenses 1.35% 0.41%(a)
Portfolio turnover rate 2.09% 0.30%
Average commission rate $ 0.05
<FN>
- ----------------
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
See accompanying notes to financial statements.
</TABLE>
FS-379
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees and Shareholders of
The Woodward International Equity Fund:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The Woodward International Equity
Fund as of December 31, 1995, and the related statement of operations for the
year then ended, the statements of changes in net assets and the financial
highlights for each of the periods from inception (as indicated in Note 1)
through December 31, 1995. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included physical counts and
confirmation of securities owned as of December 31, 1995, by inspection and
correspondence with custodians, banks and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Woodward International Equity Fund as of December 31, 1995,
the results of its operations for the year then ended, the changes in its net
assets and the financial highlights for each of the periods from inception (as
indicated in Note 1) through December 31, 1995 in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
February 19, 1996.
FS-380
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<S> <C>
ASSETS:
Investment in securities:
At cost $404,271,461
============
At value (Note 2) $537,807,471
Receivable for shares purchased 5,500
Receivable for securities sold 276,211
Income receivable 960,384
Deferred organization costs, net (Note 2) 6,599
Prepaids and other assets 18,025
------------
TOTAL ASSETS 539,074,190
------------
LIABILITIES:
Payable for securities purchased 10,245,243
Payable for shares redeemed 174,627
Accrued investment advisory fee 43,456
Accrued distribution fees 2,173
Accrued custodial fee 8,503
Dividends payable 378,684
Other payables and accrued expenses 18,591
TOTAL LIABILITIES 10,871,277
------------
NET ASSETS $528,202,913
============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) $ 3,733,385
Additional paid-in capital 393,359,193
Accumulated undistributed net investment income 142,278
Accumulated undistributed net realized (losses) (2,567,953)
Net unrealized appreciation on investments 133,536,010
------------
TOTAL NET ASSETS $528,202,913
============
Shares of capital stock outstanding 37,333,855
============
Net asset value and redemption price per share $ 14.15
============
Maximum offering price per share $ 14.15
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-381
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<S> <C>
INVESTMENT INCOME (Note 2):
Interest $ 104,661
Dividends 10,355,653
------------
TOTAL INVESTMENT INCOME 10,460,314
------------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee 411,792
Distribution fees 21,253
Professional fees 53,872
Custodial fee 79,955
Transfer and dividend disbursing agent fees 7,135
Amortization of deferred organization costs 4,399
Marketing expenses 35,105
Registration, filing fees and other expenses 2,903
------------
TOTAL EXPENSES 616,414
------------
NET INVESTMENT INCOME 9,843,900
------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains 4,873,484
Net change in unrealized appreciation on
investments 113,244,299
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 118,117,783
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $127,961,683
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-382
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 9,843,900 $ 8,937,984
Net realized gains 4,873,484 6,401,604
Net change in unrealized appreciation
(depreciation) on investments 113,244,299 (11,009,072)
------------- -------------
Net increase in net assets from operations 127,961,683 4,330,516
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income (10,140,926) (8,745,069)
From realized gains (4,873,484) (7,135,458)
In excess of realized gains (90,675) (2,477,278)
------------- -------------
Total distributions (15,105,085) (18,357,805)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 142,012,075 123,274,323
Net asset value of shares issued in reinvestment
of distributions to shareholders 13,655,168 17,030,652
------------- -------------
155,667,243 140,304,975
Less: payments for shares redeemed (81,128,978) (110,798,539)
------------- -------------
Net increase in net assets from capital share
transactions 74,538,265 29,506,436
------------- -------------
NET INCREASE IN NET ASSETS 187,394,863 15,479,147
NET ASSETS:
Beginning of year 340,808,050 325,328,903
------------- -------------
End of year $ 528,202,913 $ 340,808,050
============= =============
CAPITAL SHARE TRANSACTIONS:
Shares sold 10,856,382 11,159,448
Shares issued in reinvestment of distributions
to shareholders 1,022,145 1,593,566
------------- -------------
11,878,527 12,753,014
Less: shares redeemed (6,539,777) (9,938,857)
------------- -------------
NET INCREASE IN SHARES OUTSTANDING 5,338,750 2,814,157
CAPITAL SHARES:
Beginning of year 31,995,105 29,180,948
------------- -------------
End of year 37,333,855 31,995,105
============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-383
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
EQUITY INDEX FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 1.92%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05 and U.S. Treasury Notes,
5.50%, 11/15/98, all held at Chemical Bank) $10,340,932 $ 10,340,932
------------
(Cost $10,340,932)
Shares
------
COMMON STOCKS -- 98.08%
Aerospace -- 2.41%
Boeing Co. 39,459 3,092,599
General Dynamics Corp. 7,756 458,574
Goodrich (B.F.) Co. 2,800 190,750
Lockheed Martin Corp. 23,009 1,817,711
Loral Corp. 19,100 675,663
McDonnell Douglas Corp. 12,351 1,136,292
Northrop Grumman Corp. 4,572 292,608
Raytheon Co. 27,748 1,311,093
Rockwell International Corp. 25,129 1,328,696
Textron, Inc. 9,333 629,978
TRW, Inc. 8,170 633,174
United Technologies Corp. 14,966 1,419,898
------------
12,987,036
------------
Air Transport -- 0.38%
AMR Corp. * 10,104 750,222
Delta Air Lines, Inc. 4,609 340,490
Federal Express Corp. * 5,806 428,918
Southwest Airlines Co. 14,400 334,800
USAir Group, Inc. * 13,700 181,525
------------
2,035,955
------------
Apparel -- 0.47%
Fruit of the Loom, Inc. Class A * 7,600 185,250
Liz Claiborne, Inc. 7,712 214,008
Nike, Inc. Class B 16,012 1,114,836
Reebok International Ltd. 8,375 236,594
Russell Corp. 7,500 208,124
Spring Industries, Inc 4,400 182,050
Stride Rite Corp. 10,700 80,250
V.F. Corp. 6,348 334,856
------------
2,555,968
------------
Banks -- 6.64%
Banc One Corp. 44,743 1,689,048
Bank of Boston Corp. 13,126 607,078
Bank of New York Co., Inc. 23,190 1,130,513
BankAmerica Corp. 41,132 2,663,297
Bankers Trust New York Corp. 7,894 524,951
Barnett Banks, Inc. 12,604 743,636
Boatmens Bancshares, Inc. 15,366 628,085
Chase Manhattan Corp. 20,182 1,223,534
Chemical Banking Corp. 30,052 1,765,555
Citicorp 48,842 3,284,625
Comerica, Inc. 12,500 501,563
CoreStates Financial Corp. 13,765 521,349
Dean Witter, Discover & Co. 17,707 832,229
First Bank System, Inc. 14,360 712,615
First Chicago NBD Corp. 34,916 1,379,182
First Fidelity Bancorp 8,427 635,185
First Interstate Bancorp 8,270 1,128,855
First Union Corp. 20,814 1,157,779
Fleet Financial Group, Inc. 29,695 1,210,071
J.P. Morgan & Co., Inc. 23,022 1,847,516
KeyCorp 26,700 967,875
FS-384
<PAGE>
MBNA Corp. 19,255 710,028
Mellon Bank Corp. 18,154 975,777
National City Corp. 14,600 483,625
NationsBank Corp. 31,150 2,168,819
Norwest Corp. 42,526 1,403,358
PNC Bank Corp. 29,365 947,021
Republic NY Corp. 5,292 328,766
Suntrust Banks, Inc. 11,752 805,012
U.S. Bancorp 17,367 583,964
Wachovia Corp. 21,673 991,540
Wells Fargo & Co. 5,433 1,173,527
------------
35,725,978
------------
Business Machines -- 4.51%
Amdahl Corp. * 18,600 158,100
Apple Computer, Inc. 11,306 360,379
Autodesk, Inc. 4,800 164,400
Ceridian Corp. * 7,300 301,125
Cisco System, Inc. * 30,300 2,261,138
Compaq Computer Corp. * 30,539 1,465,872
Cray Research, Inc. * 6,500 160,875
Data General Corp. * 14,700 202,125
Digital Equipment Corp. * 15,647 1,003,364
DSC Communications Corp. * 11,450 422,219
Honeywell, Inc. 14,577 708,807
Intergraph Corp. * 14,000 220,500
International Business Machines Corp. 65,437 6,003,845
Microsoft Corp. * 68,100 5,975,775
Novell, Inc. * 37,179 529,801
Pitney Bowes, Inc. 16,721 785,887
Silicon Graphics * 21,335 586,712
Sun Microsystems, Inc. * 24,368 1,111,790
Tandem Computers, Inc. * 11,500 122,187
Xerox Corp. 12,388 1,697,155
------------
24,242,056
------------
Business Services -- 2.00%
Allergan, Inc. 6,247 203,027
Automatic Data Processing, Inc. 18,218 1,352,687
Block (H.&R.), Inc. 11,190 453,195
Browning-Ferris Industries, Inc. 21,348 629,766
Computer Associates International, Inc. 26,271 1,494,163
Computer Sciences Corp. * 5,160 362,490
Deluxe Corp. 7,609 220,661
Dial Corp. 8,718 258,271
Dun & Bradstreet Corp. 20,331 1,316,433
Ecolab, Inc. 5,746 172,380
Harland (John H.) Co. 6,200 129,425
Interpublic Group of Companies, Inc. 11,232 487,188
Laidlaw Inc., Class B 25,242 258,731
Moore Corp. Ltd. 7,228 134,622
National Service Industries, Inc. 5,000 161,875
Ogden Corp. 7,200 153,900
Shared Medical Systems, Inc. 4,900 266,438
U S West Media Group * 59,131 1,123,488
WMX Technologies, Inc. 53,154 1,587,975
------------
10,766,715
------------
Chemicals -- 2.73%
Air Products & Chemicals, Inc. 11,263 594,123
Dow Chemical Co. 30,045 2,114,417
duPont (E I) de Nemours & Co., Inc. 64,446 4,503,164
Grace (W.R.) & Co. 9,911 585,988
Great Lakes Chemical Corp. 7,468 537,696
Hercules, Inc. 11,874 669,397
Monsanto Co. 13,277 1,626,433
Morton International, Inc. 15,537 557,390
Nalco Chemical Co. 6,364 191,716
PPG Industries, Inc. 25,304 1,157,658
Praxair, Inc. 17,414 585,546
Rohm & Haas Co. 9,529 613,428
Safety Kleen Corp. 12,300 192,187
Sigma-Aldrich Corp. 4,800 237,600
Union Carbide Corp. 14,084 528,150
------------
14,694,893
------------
FS-385
<PAGE>
Construction -- 0.51%
Armstrong World Industries, Inc. 3,327 206,274
Centex Corp. (with warrants to purchase
interest in CDC L.P. Class B units and shares
Of 3333 Holdings Corp) 9,783 339,959
Crane Co. 5,200 191,750
Fluor Corp. 7,963 525,558
Masco Corp. 15,411 483,520
Owens-Corning Fiberglas Corp. * 4,189 187,982
Pulte Corp. 6,400 215,200
Sherwin Williams Co. 7,904 322,088
Stanley Works 4,942 254,513
------------
2,726,844
------------
Consumer Durables -- 0.40%
Black & Decker Corp. 8,478 298,850
Jostens, Inc. 8,100 196,425
Maytag Corp. 9,270 187,718
Newell Co. 17,640 456,435
Outboard Marine Corp. 9,000 183,375
Rubbermaid, Inc. 17,234 439,467
Whirlpool Corp. 7,503 399,534
------------
2,161,804
------------
Containers -- 0.13%
Ball Corp. 4,800 132,000
Crown Cork & Seal Co., Inc. * 10,435 435,661
Stone Container Corp. 8,382 120,491
------------
688,152
------------
Domestic Oil -- 1.13%
Amerada Hess Corp. 9,788 518,764
Ashland, Inc. 6,582 231,193
Atlantic Richfield Co. 18,776 2,079,442
Kerr-McGee Corp. 4,421 280,734
Oryx Energy Co. * 13,100 175,213
Pennzoil Co. 3,908 165,113
Phillips Petroleum Co. 30,153 1,028,970
Sun Co., Inc. 9,180 251,302
Unocal Corp. 25,256 735,581
USX-Marathon Group 31,263 609,629
------------
6,075,941
------------
Drugs and Medicine -- 10.35%
Abbott Laboratories 90,874 3,793,990
ALZA Corp. * 6,556 162,261
American Home Products Corp. 35,936 3,485,792
Amgen, Inc. * 29,188 1,733,038
Bard (C.R.), Inc. 6,300 203,175
Bausch & Lomb, Inc. 6,896 273,254
Baxter International, Inc. 31,689 1,326,977
Becton Dickinson & Co. 6,973 522,975
Beverly Enterprises, Inc. * 14,300 151,938
Biomet, Inc. * 11,900 212,712
Bristol-Myers Squibb Co. 59,742 5,130,344
Columbia/HCA Healthcare Corp. 51,766 2,627,125
Community Psychiatric Centers 16,800 205,800
Eli Lilly & Co. 65,314 3,673,913
Humana, Inc. * 16,000 438,000
Johnson & Johnson 74,480 6,377,350
Mallinckrodt Group, Inc. 10,469 380,810
Manor Care, Inc. 5,756 201,460
Medtronic, Inc. 27,732 1,549,526
Merck & Co., Inc. 141,076 9,275,747
Pall Corp. 16,845 452,709
Pfizer, Inc. 71,564 4,508,532
Pharmacia & Upjohn Co. 57,225 2,217,468
St. Jude Medical, Inc. 6,900 296,700
Schering-Plough Corp. 41,606 2,277,929
Tenet Healthcare Corp. 20,102 417,117
United Healthcare Corp. 20,100 1,316,550
United States Surgical Co. 7,300 156,036
U.S. HealthCare, Inc. 16,300 757,950
Warner Lambert Co. 15,568 1,512,041
------------
55,639,219
------------
FS-386
<PAGE>
Electronics -- 4.51%
Advanced Micro Devices, Inc. * 10,652 175,758
AMP, Inc. 22,676 870,192
Andrew Corp. * 4,050 154,913
Boston Scientific Corp. * 20,835 1,020,915
E G & G, Inc. 9,700 235,225
First Data Corp. 26,300 1,758,813
General Signal Corp. 6,453 208,916
Harris Corp. 3,007 164,258
Hewlett-Packard Co. 58,800 4,924,500
Intel Corp. 94,724 5,375,587
Johnson Controls, Inc. 3,508 241,175
LSI Logic Corp. * 14,300 468,325
Micron Technology, Inc. 22,500 891,563
Motorola, Inc. 67,810 3,865,170
National Semiconductor Corp. * 11,816 262,906
Northern Telecom Ltd. 31,505 1,354,715
Perkin Elmer Corp. 4,400 166,100
Raychem Corp. 3,881 220,732
Scientific-Atlanta, Inc. 15,100 226,500
Tektronix, Inc. 3,400 167,024
Teledyne, Inc. 6,300 161,437
Texas Instruments, Inc. 22,928 1,186,523
Thomas & Betts Corp. 2,400 177,000
------------
24,278,247
------------
Energy and Utilities -- 4.52%
American Electric Power Co., Inc. 19,165 776,183
Baltimore Gas & Electric Co. 14,831 422,684
Carolina Power & Light Co. 16,419 566,456
Central & SouthWest Corp. 19,584 545,904
CINergy Corp. 21,342 653,599
Coastal Corp. 14,683 546,942
Columbia Gas System, Inc. * 5,000 219,375
Consolidated Edison Co. of New York, Inc. 24,428 781,696
Consolidated Natural Gas Co. 13,336 605,121
Detroit Edison Co. 16,226 559,797
Dominion Resources, Inc. 21,159 872,809
Duke Power Co. 24,609 1,165,851
Enron Corp. 28,208 1,075,430
Enserch Corp. 10,100 164,125
Entergy Corp. 29,860 873,405
FPL Group, Inc. 22,855 1,059,901
General Public Utilities Corp. 11,743 399,262
Houston Industries, Inc. 33,196 805,003
Niagara Mohawk Power Corp. 17,000 163,625
Nicor, Inc. 6,100 167,750
Noram Energy Inc. 23,600 209,450
Northern States Power Co. 5,948 292,196
ONEOK Inc. 7,600 173,850
Ohio Edison Co. 13,703 322,021
PP&L Resources, Inc. 17,300 432,500
Pacific Enterprises 8,168 230,746
Pacific Gas & Electric Co. 47,730 1,354,339
PacifiCorp 37,377 794,261
Panhandle Eastern Corp. 15,080 420,355
PECO Energy Co. 22,567 679,831
Peoples Energy Corp. 6,000 190,500
Public Service Enterprise Group, Inc. 25,672 786,205
SCE Corp. 50,271 892,310
Sonat, Inc. 8,648 308,085
Southern Co. 75,746 1,865,245
Texas Utilities Co. 27,494 1,130,691
Unicom Corp. 22,576 739,363
Union Electric Co. 10,806 451,150
Williams Companies, Inc. 14,094 618,373
------------
24,316,389
------------
Energy Raw Materials -- 1.37%
Baker Hughes, Inc. 12,357 301,202
Barricks Gold Corp. 37,602 991,753
Burlington Resources, Inc. 12,952 508,366
Dresser Industries, Inc. 17,030 415,106
Eastern Enterprises 5,500 193,875
Halliburton Co. 11,218 567,911
Helmerich & Payne, Inc. 11,600 345,100
Louisiana Land & Exploration Co. 4,500 192,938
FS-387
<PAGE>
McDermott International, Inc. 9,700 213,400
Nacco Industries, Inc. Class A 2,400 133,200
Occidental Petroleum Corp. 33,871 723,993
Pittston Services Group 6,600 207,075
Rowan Companies, Inc. * 22,800 225,150
Santa Fe Energy Resources, Inc. * 19,500 187,688
Schlumberger Ltd. 27,075 1,874,944
Western Atlas, Inc. * 5,154 260,276
------------
7,341,977
------------
Food and Agriculture -- 5.84%
Archer Daniels Midland Co. 67,129 1,208,322
Campbell Soup Co. 28,867 1,732,020
Coca-Cola Co. 144,248 10,710,414
ConAgra, Inc. 28,219 1,164,034
CPC International, Inc. 16,087 1,103,970
Darden Restaurants, Inc. 15,167 180,108
Fleming Companies, Inc. 7,800 160,875
General Mills, Inc. 16,867 974,069
Heinz (H.J.) Co. 42,444 1,405,941
Hershey Foods Corp. 9,606 624,390
Kellogg Co. 25,837 1,995,908
Pepsico, Inc. 90,580 5,061,158
Pioneer Hi-Bred International, Inc. 8,826 490,946
Quaker Oats Co. 12,966 447,327
Ralston-Ralston Purina Group 11,200 698,600
Sara Lee Corp. 55,655 1,774,003
Sysco Corp. 23,827 774,378
Whitman Corp. 9,800 227,850
Wrigley (Wm.) Jr Co. 12,335 647,588
------------
31,381,901
----------
Gold -- 0.20%
Homestake Mining Co. 20,389 318,578
Placer Dome, Inc. 25,255 609,277
Santa Fe Pacific Gold Corp. 10,698 129,713
------------
1,057,568
------------
Insurance -- 3.35%
Aetna Life & Casualty Co. 12,182 843,604
Alexander & Alexander Services, Inc. 7,300 138,700
Allstate Corp. 53,240 2,189,495
American General Corp. 22,363 779,910
American International Group, Inc. 54,548 5,045,690
Chubb Corp. 10,537 1,019,455
CIGNA Corp. 8,555 883,304
General Re Corp. 9,103 1,410,965
ITT Hartford Group, Inc. * 12,269 593,513
Jefferson-Pilot Corp. 6,776 315,061
Lincoln National Corp. 10,969 589,584
Marsh & McLennan Companies, Inc. 9,432 837,090
Providian Corp. 9,897 403,303
SAFECO Corp. 17,292 596,574
St. Paul Companies 9,800 545,125
Torchmark Corp. 6,795 307,474
Transamerica Corp. 9,465 689,761
UNUM Corp. 8,400 462,000
USF&G Corp. 10,400 175,500
USLIFE Corp. 6,400 191,200
------------
18,017,308
------------
International Oil -- 6.64%
Amoco Corp. 57,118 4,105,356
Chevron Corp. 77,214 4,053,735
Exxon Corp. 142,741 11,437,123
Mobil Corp. 45,476 5,093,312
Royal Dutch Petroleum Co., N.Y. Registry 61,354 8,658,583
Texaco, Inc. 30,133 2,365,441
------------
35,713,550
------------
FS-388
<PAGE>
Liquor -- 0.71%
Anheuser-Busch Companies, Inc. 29,261 1,956,829
Brown Forman Corp. Class B 7,254 264,771
Coors (Adolph) Co. Class B 9,700 214,613
Seagram Co. Ltd. 40,159 1,390,505
------------
3,826,718
------------
Media -- 2.40%
Cabletron System, Inc. * 7,670 621,270
Capital Cities/ABC, Inc. 17,650 2,177,569
Comcast Corp., Class A Special 22,800 414,675
Donnelley (R.R.) & Sons Co. 16,445 647,522
Dow Jones & Co., Inc. 9,154 365,016
Gannett Co., Inc. 16,139 990,531
King World Productions, Inc. * 5,100 198,263
Knight-Ridder, Inc. 5,021 313,813
McGraw Hill Companies, Inc. 6,882 599,594
Meredith Corp. 5,300 221,938
New York Times Co. Class A 10,426 308,870
Tele-Communications, Inc. Class A * 75,829 1,507,102
Time Warner, Inc. 46,173 1,748,802
Times Mirror Co. Class A 11,909 403,417
Tribune Co. 8,657 529,159
Viacom, Inc. Class B Non-Voting * 39,334 1,863,447
------------
12,910,988
------------
Miscellaneous and Conglomerates -- 1.07%
Corning, Inc. 31,042 993,344
Eastman Chemical Co. 8,060 504,758
ITT Corp. 12,269 650,257
ITT Industries, Inc. 12,269 294,456
Minnesota Mining & Manufacturing Co. 50,228 3,327,605
------------
5,770,420
------------
Miscellaneous Finance -- 2.70%
Ahmanson (H.F.) & Co. 11,433 302,975
American Express Co. 54,068 2,237,064
Beneficial Corp. 5,140 239,653
Federal Home Loan Mortgage Corp. 22,200 1,853,700
Federal National Mortgage Association 31,747 3,940,596
Golden West Financial Corp. 5,715 315,754
Great Western Financial Corp. 12,328 314,364
Household International, Inc. 12,649 747,872
Merrill Lynch & Co., Inc. 20,657 1,053,507
Morgan Stanley Group, Inc. 9,300 749,813
Salomon, Inc. 10,526 373,672
Travelers Inc. 37,452 2,354,794
------------
14,483,764
------------
Motor Vehicles -- 2.32%
Chrysler Corp. 44,214 2,448,350
Cummins Engine Co., Inc. 4,300 159,100
Dana Corp. 9,124 266,877
Eaton Corp. 8,634 462,998
Echlin, Inc. 4,769 174,069
Fleetwood Enterprises, Inc. 9,100 234,325
Ford Motor Co. 120,028 3,480,812
General Motors Corp. 85,970 4,545,664
Genuine Parts Co. 16,819 689,579
------------
12,461,774
------------
Non-Durables and Entertainment -- 2.29%
American Greetings Corp. Class A 7,080 195,585
Bally Entertainment Corp. * 15,200 212,800
CUC International, Inc. * 23,850 813,881
Handleman Co. 12,600 72,450
Harcourt General, Inc. 6,876 287,933
Hasbro, Inc. 7,758 240,498
Kimberly-Clark Corp. 32,517 2,690,782
Luby's Cafeterias, Inc. 8,600 191,350
Mattel, Inc. 23,913 735,325
McDonalds Corp. 79,782 3,600,163
FS-389
<PAGE>
Oracle Systems Corp. * 49,993 2,118,453
Premark International, Inc. 5,124 259,403
Service Corp. International 13,086 575,783
Shoneys, Inc * 17,100 175,275
Wendy's International, Inc. 7,090 150,662
------------
12,320,343
------------
Non-Ferrous Metals -- 1.02%
Alcan Aluminum Ltd. 30,807 958,868
Aluminum Co. of America 19,344 1,022,814
Asarco, Inc. 5,900 188,800
Cyprus Amax Minerals Co. 8,663 226,321
Echo Bay Mines Ltd. 17,400 180,525
Engelhard Corp. 14,386 312,896
Freeport McMoran Copper Class B 21,000 590,625
Inco, Ltd. 14,174 471,285
Newmont Mining Corp. 12,482 564,811
Phelps Dodge Corp. 9,358 582,535
Reynolds Metals Co. 7,044 398,866
------------
5,498,346
------------
Optical Photographic Equipment -- 0.53%
Eastman Kodak Co. 39,041 2,615,747
Polaroid Corp. 4,396 208,261
------------
2,824,008
------------
Paper and Forest Products -- 1.16%
Bemis, Inc. 5,800 148,625
Boise Cascade Corp. 4,800 166,200
Champion International Corp. 11,355 476,910
Federal Paper Board Co., Inc. 4,900 254,188
Georgia-Pacific Corp. 11,026 756,659
International Paper Co. 32,570 1,233,589
James River Corp. of Virginia 13,338 321,779
Louisiana Pacific Corp. 10,925 264,931
Mead Corp. 5,388 281,523
Potlatch Corp. 4,400 176,000
Temple-Inland, Inc. 5,025 221,728
Union Camp Corp. 9,171 436,769
Westvaco Corp. 8,841 245,338
Weyerhaeuser Co. 21,766 941,379
Willamette Industries, Inc. 5,700 320,625
------------
6,246,243
------------
Producer Goods -- 5.35%
Alco Standard Corp. 13,466 614,386
Allied Signal, Inc. 31,748 1,508,030
Applied Materials Co. * 21,280 837,900
Avery Dennison Corp. 5,770 289,221
Briggs & Stratton Corp. 4,000 173,500
Caterpillar, Inc. 23,480 1,379,450
Cincinnati Milacron, Inc. 5,400 141,750
Cooper Industries, Inc. 10,859 399,068
Deere & Co. 32,823 1,157,011
Dover Corp. 10,862 400,536
Emerson Electric Co. 25,042 2,047,184
FMC Corp. * 5,203 351,853
Foster Wheeler Corp. 4,400 187,000
General Electric Co. 192,042 13,827,024
Giddings & Lewis, Inc. 9,200 151,800
Grainger (W.W.), Inc. 4,812 318,795
Harnischfeger Industries, Inc. 4,600 152,950
Illinois Tool Works, Inc. 13,358 788,122
Ingersoll-Rand Co. 11,162 392,065
Millipore Corp. 5,600 230,300
Navistar International * 18,600 195,300
Parker-Hannifin Corp. 5,815 199,164
Snap-On, Inc. 4,400 199,100
Tenneco, Inc. 20,242 1,004,509
Timken Co. 3,400 130,050
Trinova Corp. 4,600 131,675
Tyco International Ltd. 20,788 740,572
Varity Corp. * 3,550 131,794
Westinghouse Electric Corp. 41,470 684,255
------------
28,764,364
------------
FS-390
<PAGE>
Railroads and Shipping -- 1.05%
Burlington Northern Santa Fe 15,925 1,242,150
Conrail, Inc. 10,666 746,620
CSX Corp. 22,140 1,010,137
Norfolk Southern Corp. 13,876 1,101,408
Union Pacific Corp. 23,667 1,562,022
------------
5,662,337
------------
Retail -- 4.50%
Albertsons, Inc. 30,169 991,806
American Stores Co. 14,264 381,562
Charming Shoppes, Inc. 125,500 360,812
Circuit City Stores, Inc. 10,964 302,881
Dayton Hudson Corp. 7,044 528,300
Dillard Department Stores Class A 11,730 334,305
Federated Department Stores, Inc. * 20,400 561,000
Gap, Inc. 14,456 607,152
Giant Food, Inc. Class A 5,800 182,700
Great Atlantic & Pacific Tea Co., Inc. 9,000 207,000
Home Depot, Inc. 53,265 2,550,062
Kmart Corp. 43,988 318,913
Kroger Co. * 13,345 500,437
Limited, Inc. 35,443 615,822
Longs Drug Stores Corp. 4,500 215,437
Lowes Companies, Inc. 20,584 689,564
May Department Stores Co. 29,670 1,253,558
Melville Corp. 11,512 353,994
Mercantile Stores, Inc. 3,900 180,375
Nordstrom, Inc. 7,793 315,617
J.C. Penney & Co., Inc. 26,988 1,285,304
Pep Boys Manny Moe & Jack 7,700 197,313
Price/Costco, Inc. * 21,613 329,598
Rite-Aid Corp. 8,156 279,343
Sears, Roebuck & Co. 44,809 1,747,551
Supervalu, Inc. 6,231 196,276
Tandy Corp. 9,138 379,227
TJX Companies, Inc. 13,100 247,263
Toys R Us * 28,967 630,032
Wal Mart Stores, Inc. 263,995 5,906,888
Walgreen Co. 25,686 767,369
Winn-Dixie Stores, Inc. 17,274 636,979
Woolworth Corp. 11,464 149,032
------------
24,203,472
------------
Soaps and Cosmetics -- 2.72%
Alberto-Culver Co. Class B 6,000 206,250
Avon Products, Inc. 7,090 534,409
Clorox Co. 4,947 354,329
Colgate-Palmolive Co. 16,027 1,125,897
Gillette Co. 50,518 2,633,251
International Flavors & Fragrances, Inc. 14,843 712,464
Procter & Gamble Co. 78,887 6,547,621
Unilever N.V. 18,014 2,535,470
------------
14,649,691
------------
Steel -- 0.28%
Armco, Inc. * 36,400 213,850
Bethlehem Steel Corp. * 8,538 119,532
Inland Steel Industries, Inc. 10,972 275,672
Nucor Corp. 9,259 528,920
USX-U.S. Steel Group 7,828 240,711
Worthington Industries, Inc. 6,785 141,213
------------
1,519,898
------------
Telephone -- 8.41%
AT&T Corp. 183,000 11,849,250
AirTouch Communications, Inc. * 54,510 1,539,908
ALLTEL Corp. 24,305 716,998
Ameritech Corp. 62,912 3,711,808
Bell Atlantic Corp. 50,790 3,396,581
Bellsouth Corp. 114,250 4,969,875
GTE Corp. 111,373 4,900,412
MCI Communications Corp. 75,559 1,973,979
NYNEX Corp. 48,110 2,597,940
Pacific Telesis Group 47,110 1,584,074
FS-391
<PAGE>
SBC Communications Inc. 70,076 4,029,370
Sprint Corp. 39,565 1,577,655
Tellabs, Inc. * 8,848 327,376
US WEST Communications Group 57,731 2,063,882
------------
45,239,108
------------
Tires and Rubber Goods -- 0.20%
Cooper Tire & Rubber Co. 6,842 168,484
Goodyear Tire & Rubber Co. 19,742 895,794
------------
1,064,278
------------
Tobacco -- 2.15%
American Brands, Inc. 20,002 892,589
Loews Corp. 13,620 1,067,468
Philip Morris Companies, Inc. 96,623 8,744,382
Schweitzer Mauduit International, Inc. * 1 21
UST, Inc. 25,615 854,90
------------
11,559,360
------------
Travel and Recreation -- 0.96%
Brunswick Corp. 9,813 235,512
Disney (Walt) Co. 60,667 3,579,353
Harrahs Entertainment, Inc. 10,050 243,712
Hilton Hotels Corp. 7,883 484,804
Marriott International, Inc. 16,137 617,240
------------
5,160,621
------------
Trucking and Freight -- 0.17%
Consolidated Freightways, Inc. 6,200 164,300
PACCAR, Inc. 4,292 180,800
Roadway Services, Inc. 3,773 184,405
Ryder System, Inc. 6,199 153,425
Yellow Corp. 17,000 210,375
------------
893,305
------------
TOTAL COMMON STOCKS 527,466,539
------------
(Cost $393,930,529)
TOTAL INVESTMENTS $537,807,471
============
(Cost $404,271,461)
<FN>
* Non-income producing security
</TABLE>
FS-392
<PAGE>
THE WOODWARD FUNDS
EQUITY INDEX FUND
NOTES TO FINANCIAL STATEMENTS
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business
trust on April 21, 1987, and registered under the Investment Company Act of
1940, as amended, as an open-end investment company. As of December 31, 1995,
Woodward consisted of seventeen separate series. The Woodward Equity Index
Fund (Equity Index Fund) commenced operations on July 10, 1992.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Equity Index Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies. Following generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Investments
The Equity Index Fund values investment securities at market value which
is determined by a pricing service based upon quoted market prices or dealer
quotes. Securities for which market prices or dealer quotes are not readily
available are valued by the investment advisor, NBD Bank (NBD) in accordance
with procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day
after trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is required to equal or
exceed 102% of the funds advanced under the repurchase agreement including
accrued interest; 2) collateral is marked to market daily by NBD to assure its
value remains at least equal to 102% of the repurchase agreement amount; and
3) funds are not disbursed by Woodward or its agent unless collateral is
presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount on debt instruments.
Dividends are recorded on the ex-dividend date.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
Net realized gains differ for financial statement and tax purposes
primarily because of the recognition of wash sale transactions and
post-October 31 capital losses. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed may differ
from the year that the income or realized gains were recorded by the Fund.
Certain book-to-tax timing differences for the funds are reflected as excess
distributions in the Statements of Changes in Net Assets. These distributions
do not constitute a tax return of capital.
Shareholder Dividends
Dividends from net investment income are declared and paid quarterly by
the Equity Index Fund. Net realized capital gains are distributed annually.
Distributions from net investment income and net realized gains are made
during each year to avoid the 4% excise tax imposed on regulated investment
companies
FS-393
<PAGE>
by the Internal Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the
five year period beginning with the commencement of operations of the Equity
Index Fund.
Expenses
Expenses are charged daily as a percentage of the Fund's net assets.
Woodward monitors the rate at which expenses are charged to ensure that a
proper amount of expense is charged to income each year. This percentage is
subject to revision if there is a change in the estimate of the future net
assets of Woodward or a change in expectations as to the level of actual
expenses.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of .005% of the Equity Index Fund's average net assets and
Essex is entitled to receive a fee at the annual rate of .10% of the aggregate
average net assets of Woodward's investment portfolios attributable to
investments by clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For its
advisory services to Woodward, NBD is entitled to a fee, computed daily and
payable monthly. Under the Advisory Agreement, NBD also provides Woodward with
certain administrative services, such as maintaining Woodward's general ledger
and assisting in the preparation of various regulatory reports. NBD receives
no additional compensation for such services.
A reorganization of Woodward and The Prairie Funds is being considered by
the Board of Trustees of both funds. In connection with the proposed
reorganization, the Board of Trustees of Woodward and the Board of Trustees of
Prairie must approve certain reorganization agreements. The transaction is
intended to be effected as a tax-free reorganization under the Internal
Revenue Code, so that none of the Fund's shareholders will recognize taxable
gains or losses as a result of the reorganization. A proxy
statement/prospectus describing the reorganization and the reasons therefore
will be sent to shareholders.
NBD, FoM, and Essex have agreed that they may waive their fees in whole
or in part; and, if in part, may specify the particular fund to which such
waiver relates as may be required to satisfy any expense limitation imposed by
state securities laws or other applicable laws. At present, no restrictive
expense limitation is imposed on Woodward. Restrictive limitations could be
imposed as a result of changes in current state laws and regulations in those
states where Woodward has qualified its shares, or by a decision of the
Trustees to qualify the shares in other states having restrictive expense
limitations.
NBD is also compensated for its services as Woodward's Custodian,
Transfer Agent and Dividend Disbursing Agent, and is reimbursed for certain
out of pocket expenses incurred on behalf of Woodward.
On March 10, 1994, Woodward adopted The Woodward Funds Deferred
Compensation Plan (the "Plan"), an unfunded, nonqualified deferred
compensation plan. The Plan allows an individual Trustee to elect to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
FS-394
<PAGE>
(4) Investment Securities Transactions
Information with respect to investment securities and security
transactions, based on the aggregate cost of investments for federal income
tax purposes, excluding short-term securities, is as follows:
<TABLE>
<S> <C>
Gross Unrealized Gains $ 142,270,373
Gross Unrealized Losses (11,735,522)
-------------
$ 130,534,851
=============
Federal Income Tax Cost $ 407,272,620
Purchases $ 114,112,109
Sales $ 43,881,654
</TABLE>
(5) Expenses
Following is a summary of total expense rates charged, advisory fee rates
payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the year ended December 31, 1995. The rates
shown are stated as a percentage of each fund's average net assets.
<TABLE>
<CAPTION>
Effective Date
--------------
<S> <C>
Expense Rates:
January 1 0.15%
NBD Advisory Fee:
January 1 0.10%
Amounts Paid:
Advisory Fee to NBD $411,792
Distribution Fee to FoM & Essex $ 21,253
Other Fees & Out of Pocket Expenses
to NBD $ 89,143
</TABLE>
FS-395
<PAGE>
THE WOODWARD FUNDS
EQUITY INDEX FUND
FINANCIAL HIGHLIGHTS
The Financial Highlights presents a per share analysis of how the Equity
Index Fund's net asset values have changed during the periods presented.
Additional quantitative measures expressed in ratio form analyze important
relationships between certain items presented in the financial statements.
These financial highlights have been derived from the financial statements of
the Equity Index Fund and other information for the periods presented.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.65 $ 11.15 $ 10.52 $ 10.00
Income from investment operations:
Net investment income 0.30 0.31 0.28 0.12
Net realized and unrealized gains (losses)
on investments 3.65 (0.20) 0.75 0.52
------------ ------------ ------------ ------------
Total from investment operations 3.95 0.11 1.03 0.64
------------ ------------ ------------ ------------
Less distributions:
From net investment income (0.31) (0.30) (0.27) (0.12)
From realized gains (0.14) (0.23) (0.13) --
In excess of realized gains (0.00) (0.08) -- --
------------ ------------ ------------ ------------
Total distributions (0.45) (0.61) (0.40) (0.12)
------------ ------------ ------------ ------------
Net asset value, end of period $ 14.15 $ 10.65 $ 11.15 $ 10.52
============ ============ ============ ============
Total Return 37.35% 1.02% 9.77% 13.61%(a)
Ratios/Supplemental Data
Net assets, end of period $528,202,913 $340,808,050 $325,328,903 $242,057,866
Ratio of expenses to average net assets 0.15% 0.17% 0.20% 0.22%(a)
Ratio of net investment income to average net
assets 2.39% 2.71% 2.59% 2.71%(a)
Portfolio turnover rate 10.66% 24.15% 16.01% 0.50%
Average commission rate $ 0.03
<FN>
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
See accompanying notes to financial statements.
</TABLE>
FS-396
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees and Shareholders of
The Woodward Equity Index Fund:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The Woodward Equity Index Fund as
of December 31, 1995, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the periods
from inception (as indicated in Note 1) through December 31, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included physical counts and
confirmation of securities owned as of December 31, 1995, by inspection and
correspondence with custodians, banks and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of The Woodward Equity Index Fund as of December 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods from inception (as indicated in Note 1)
through December 31, 1995 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
February 19, 1996.
FS-397
<PAGE>
[ INTENTIONALLY LEFT BLANK ]
FS-398
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
<S> <C>
ASSETS: BOND FUND
---------
Investment in securities:
At cost $481,852,916
============
At value (Note 2) $512,978,615
Cash --
Receivable for securities sold 225,826
Interest receivable 5,748,712
Deferred organization costs, net (Note 2) 6,439
Prepaids and other assets 4,113
------------
TOTAL ASSETS 518,963,705
------------
LIABILITIES:
Payable for securities purchased 456,491
Accrued investment advisory fee 283,332
Accrued distribution fees 5,095
Accrued custodial fee 7,282
Dividends payable 582,184
Other payables and accrued expenses 63,742
------------
TOTAL LIABILITIES 1,398,126
------------
NET ASSETS $517,565,579
============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) $ 4,952,384
Additional paid-in capital 509,179,119
Accumulated undistributed net investment income 233,362
Accumulated undistributed net realized gains (losses) (27,924,985)
Net unrealized appreciation on investments 31,125,699
------------
TOTAL NET ASSETS $517,565,579
============
Shares of capital stock outstanding 49,523,843
============
Net asset value and redemption price per share $ 10.45
============
Maximum offering price per share $ 10.97
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-399
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
December 31, 1995
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Investment in securities:
At cost $391,716,402 $159,199,919 $75,750,865 $51,219,137
============ ============ =========== ===========
At value (Note 2) $401,008,361 $161,484,092 $78,252,712 $52,778,540
Cash 231,665 -- -- 94,074
Receivable for securities sold -- -- -- --
Interest receivable 4,975,654 2,337,249 1,277,409 716,553
Deferred organization costs, net (Note 2) 3,565 25,504 6,315 6,315
Prepaids and other assets 21,456 78,198 36,597 18,137
----------- ------------ ----------- ------------
TOTAL ASSETS 406,240,701 163,925,043 79,573,033 53,613,619
----------- ------------ ----------- -----------
LIABILITIES:
Payable for securities purchased -- 31,588 2,372,029 --
Accrued investment advisory fee 222,293 89,955 41,971 29,027
Accrued distribution fees 2,543 714 1,295 1,907
Accrued custodial fee 6,109 3,255 1,459 1,318
Dividends payable 632,436 443,656 190,088 125,268
Other payables and accrued expenses 67,381 19,020 2,627 2,939
------------ ------------ ----------- -----------
TOTAL LIABILITIES 930,762 588,188 2,609,469 160,459
------------ ------------ ----------- -----------
NET ASSETS $405,309,939 $163,336,855 $76,963,564 $53,453,160
============ ============ =========== ===========
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) $ 3,909,253 $ 1,596,349 $ 720,543 $ 504,175
Additional paid-in capital 402,590,497 159,350,652 74,166,371 51,420,410
Accumulated undistributed net investment income 291,887 65,478 5,107 1,934
Accumulated undistributed net realized gains (losses (10,773,659) 40,203 (430,304) (32,762)
Net unrealized appreciation on investments 9,291,959 2,284,173 2,501,847 1,559,403
------------ ------------ ----------- -----------
TOTAL NET ASSETS $405,309,939 $163,336,855 $76,963,564 $53,453,160
============ ============ =========== ===========
Shares of capital stock outstanding 39,092,534 15,963,488 7,205,434 5,041,749
============ ============ =========== ===========
Net asset value and redemption price per share $ 10.37 $ 10.23 $ 10.68 $ 10.60
============ ============ =========== ===========
Maximum offering price per share $ 10.89 $ 10.55 $ 11.21 $ 11.13
============ ============ =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-400
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
BOND FUND
---------
<S> <C>
INTEREST INCOME (Note 2) $ 34,039,591
------------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee 3,121,267
Distribution fees 51,487
Professional fees 69,263
Custodial fee 80,898
Transfer and dividend disbursing agent fees 38,611
Amortization of deferred organization costs 15,455
Marketing expenses 43,247
Security pricing services 13,033
Registration, filing fees and other expenses 118,444
Less:
Expense reimbursement --
------------
NET EXPENSES 3,551,705
------------
NET INVESTMENT INCOME 30,487,886
------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) (1,566,826)
Net change in unrealized appreciation on
investments 72,514,668
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 70,947,842
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $101,435,728
============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-401
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF OPERATIONS (Continued)
For the Year Ended December 31, 1995
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
------------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME (Note 2) $27,227,503 $6,498,945 $ 3,692,331 $2,756,908
----------- ---------- ----------- ----------
EXPENSES (Notes 2, 3 and 5):
Investment advisory fee 2,650,418 650,298 444,288 327,020
Distribution fees 28,779 5,165 13,331 19,211
Professional fees 67,806 67,810 54,065 54,065
Custodial fee 71,081 31,613 17,836 15,729
Transfer and dividend disbursing agent fees 18,952 4,585 11,521 16,438
Amortization of deferred organization costs 8,555 6,801 3,031 3,031
Marketing expenses 39,826 32,438 34,056 33,105
Security pricing services 13,033 13,033 18,692 18,692
Registration, filing fees and other expenses 79,582 2,375 33,300 31,536
Less:
Expense reimbursement -- (65,761) (88,071) (119,481)
----------- ---------- ----------- ----------
NET EXPENSES 2,978,032 748,357 542,049 399,346
----------- ---------- ----------- ----------
NET INVESTMENT INCOME 24,249,471 5,750,588 3,150,282 2,357,562
----------- ---------- ----------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) (4,126,208) 97,446 (132,105) 95,495
Net change in unrealized appreciation on
investments 52,637,906 3,290,608 7,347,301 5,119,573
----------- ---------- ----------- ----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 48,511,698 3,388,054 7,215,196 5,215,068
----------- ---------- ----------- ----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $72,761,169 $9,138,642 $10,365,478 $7,572,630
=========== ========== =========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-402
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
BOND FUND
------------------------------
Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 30,487,886 $ 30,959,603
Net realized gains (losses) (1,566,826) (17,468,162)
Net change in unrealized appreciation
(depreciation) on investments 72,514,668 (49,072,055)
------------ ------------
Net increase (decrease) in net assets from
operations 101,435,728 (35,580,614)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income (31,071,705) (30,287,702)
From realized gains -- (1,125,200)
------------ ------------
Total distributions (31,071,705) (31,412,902)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 81,776,844 136,836,769
Net asset value of shares issued in reinvestment
of distributions to shareholders 24,963,507 26,773,071
------------ ------------
106,740,351 163,609,840
Less: payments for shares redeemed (86,707,190) (170,644,207)
------------ ------------
Net increase (decrease) in net assets from
capital share transactions 20,033,161 (7,034,367)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 90,397,184 (74,027,883)
NET ASSETS:
Beginning of period 427,168,395 501,196,278
------------ ------------
End of period $517,565,579 $427,168,395
============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold 8,355,987 13,838,356
Shares issued in reinvestment of distributions
to shareholders 2,525,870 2,798,104
------------ ------------
10,881,857 16,636,460
Less: shares redeemed (8,790,418) (17,749,867)
------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING 2,091,439 (1,113,407)
CAPITAL SHARES:
Beginning of period 47,432,404 48,545,811
------------ ------------
End of period 49,523,843 47,432,404
============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-403
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
INTERMEDIATE SHORT
BOND FUND BOND FUND
------------------------------- -------------------------------
Year Ended Year Ended Year Ended Period Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 24,249,471 $ 23,804,528 $ 5,750,588 $ 1,090,862
Net realized gains (losses) (4,126,208) (3,493,275) 97,446 (31,726)
Net change in unrealized appreciation
(depreciation) on investments 52,637,906 (47,966,003) 3,290,608 (1,006,435)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
operations 72,761,169 (27,654,750) 9,138,642 52,701
------------ ------------ ------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income (24,265,050) (23,538,862) (5,697,455) (1,078,517)
From realized gains -- (325,750) (25,517) --
------------ ------------ ------------ ------------
Total distributions (24,265,050) (23,864,612) (5,722,972) (1,078,517)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 47,268,989 108,142,125 114,313,557 74,761,056
Net asset value of shares issued in reinvestment
of distributions to shareholders 19,077,115 19,356,266 3,924,968 941,812
------------ ------------ ------------ ------------
66,346,104 127,498,391 118,238,525 75,702,868
Less: payments for shares redeemed (102,551,452) (112,749,718) (22,556,503) (10,437,889)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
capital share transactions (36,205,348) 14,748,673 95,682,022 65,264,979
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 12,290,771 (36,770,689) 99,097,692 64,239,163
NET ASSETS:
Beginning of period 393,019,168 429,789,857 64,239,163 --
------------ ------------ ------------ ------------
End of period $405,309,939 $393,019,168 $163,336,855 $ 64,239,163
============ ============ ============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold 4,818,378 10,895,776 11,284,693 7,483,171
Shares issued in reinvestment of distributions
to shareholders 1,922,824 1,990,229 388,668 95,210
------------ ------------ ------------ ------------
6,741,202 12,886,005 11,673,361 7,578,381
Less: shares redeemed (10,335,186) (11,494,626) (2,236,808) (1,051,446)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (3,593,984) 1,391,379 9,436,553 6,526,935
CAPITAL SHARES:
Beginning of period 42,686,518 41,295,139 6,526,935 --
------------ ------------ ------------ ------------
End of period 39,092,534 42,686,518 15,963,488 6,526,935
============ ============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-404
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
MICHIGAN
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
----------------------------- -----------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 3,150,282 $ 3,064,874 $ 2,357,562 $ 2,210,323
Net realized gains (losses) (132,105) (297,451) 95,495 (128,351)
Net change in unrealized appreciation
(depreciation) on investments 7,347,301 (6,604,737) 5,119,573 (4,621,088)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
operations 10,365,478 (3,837,314) 7,572,630 (2,539,116)
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (3,149,113) (3,086,808) (2,358,540) (2,226,665)
From realized gains -- -- -- --
------------ ------------ ------------ ------------
Total distributions (3,149,113) (3,086,808) (2,358,540) (2,226,665)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 25,660,467 29,816,164 12,994,627 20,635,934
Net asset value of shares issued in reinvestment
of distributions to shareholders 964,584 1,002,601 927,746 1,084,833
------------ ------------ ------------ ------------
26,625,051 30,818,765 13,922,373 21,720,767
Less: payments for shares redeemed (18,133,625) (17,342,844) (10,946,362) (13,805,722)
------------ ------------ ------------ ------------
Net increase in net assets from capital share
transactions 8,491,426 13,475,921 2,976,011 7,915,045
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS 15,707,791 6,551,799 8,190,101 3,149,264
NET ASSETS:
Beginning of year 61,255,773 54,703,974 45,263,059 42,113,795
------------ ------------ ------------ ------------
End of year $ 76,963,564 $ 61,255,773 $ 53,453,160 $ 45,263,059
============ ============ ============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold 2,502,764 2,923,798 1,290,446 2,066,281
Shares issued in reinvestment of distributions
to shareholders 93,325 100,547 90,653 109,478
------------ ------------ ------------ ------------
2,596,089 3,024,345 1,381,098 2,175,759
Less: shares redeemed (1,774,851) (1,757,269) (1,085,688) (1,401,752)
------------ ------------ ------------ ------------
NET INCREASE IN SHARES OUTSTANDING 821,238 1,267,076 295,410 774,007
CAPITAL SHARES:
Beginning of year 6,384,196 5,117,120 4,746,339 3,972,332
------------ ------------ ------------ ------------
End of year 7,205,434 6,384,196 5,041,749 4,746,339
============ ============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
FS-405
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS -- 5.47%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05 and U.S. Treasury Notes, 5.50%,
11/15/98, all held at Chemical Bank) $16,559,026 $ 16,559,026
Nikko Securities, Revolving Repurchase Agreement,
5.90%, 1/2/96 (secured by various U.S. Treasury
Bills with maturities ranging from 9/19/96
through 10/17/96, and U.S. Treasury Notes with
maturities ranging from 5/31/96 through 8/15/00,
all held at the Bank of New York) 11,500,000 11,500,000
-----------
(Cost $28,059,026) 28,059,026
-----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 82.21%
U.S. Treasury Securities -- 36.90%
Principal Strip from U.S. Treasury Securities
due:
8/15/98 1,500,000 1,309,425
2/15/99 7,450,000 6,332,128
11/15/18 61,840,000 15,020,318
8/15/20 55,640,000 12,111,715
5/15/18 3,720,000 932,976
5/15/05 3,950,000 2,324,614
Strip from U.S. Treasury Securities due:
5/15/98 1,800,000 1,592,856
11/15/98 1,700,000 1,464,992
2/15/99 3,355,000 2,851,146
2/15/11 4,525,000 1,832,172
5/15/11 9,338,000 3,716,898
2/15/12 4,555,000 1,721,061
5/15/13 10,594,000 3,684,064
2/15/14 8,950,000 2,962,897
U.S. Treasury Bonds:
12.750%, 11/15/10 9,000,000 13,708,080
10.375%, 11/15/12 8,830,000 12,207,475
U.S. Treasury Notes:
7.375%, 5/15/96 5,001,000 5,039,308
6.125%, 7/31/96 1,000,000 1,004,840
8.000%, 10/15/96 4,400,000 4,490,728
7.250%, 11/15/96 3,890,000 3,954,418
6.750%, 2/28/97 2,100,000 2,135,763
8.500%, 4/15/97 3,505,000 3,645,761
8.500%, 5/15/97 3,130,000 3,263,995
6.750%, 5/31/97 1,000,000 1,020,620
8.625%, 8/15/97 18,900,000 19,892,250
8.750%, 10/15/97 6,150,000 6,518,016
8.875%, 11/15/97 8,780,000 9,345,169
7.875%, 1/15/98 12,592,000 13,231,422
8.125%, 2/15/98 3,000,000 3,172,500
7.875%, 4/15/98 16,125,000 17,027,032
5.375%, 5/31/98 4,000,000 4,013,120
6.875%, 7/31/99 7,410,000 7,780,500
-----------
(Cost $174,104,991) 189,308,259
-----------
Agency Obligations -- 45.31%
Federal Home Loan Mortgage Corp. Participation
Ctfs.:
#170269, 12.000%, 8/1/15 1,938,783 2,173,246
#200070, 7.500%, 4/1/02 314,427 321,520
#274081, 7.500%, 7/1/16 95,532 97,744
#289711, 7.500%, 4/1/17 171,732 175,599
#555238, 12.000%, 7/1/19 887,323 994,945
FS-406
<PAGE>
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 10 Class D, 10.000%, 7/15/18 1,255,907 1,288,962
Series 11 Class D, 9.500%, 7/15/19 1,500,000 1,669,289
Series 22 Class C, 9.500%, 4/15/20 1,104,876 1,251,748
Series 23 Class E, 9.400%, 8/15/19 823,046 849,687
Series 23 Class F, 9.600%, 4/15/20 1,150,000 1,283,652
Series 32 Class B, 9.500%, 8/15/19 1,000,494 1,020,613
Series 38 Class C, 9.500%, 1/15/19 596,952 612,735
Series 41 Class I, HB, 84.000%, 5/15/20 141,037 331,436
Series 47 Class F, 10.000%, 6/15/20 500,000 559,415
Series 51 Class D, 10.000%, 5/15/19 802,603 807,105
Series 56 Class E, 9.600%, 5/15/20 2,220,582 2,215,606
Series 82 Class D, 8.900%, 10/15/20 1,000,000 1,018,119
Series 99 Class Z, 9.500%, 1/15/21 2,181,715 2,347,545
Series 129 Class E, 8.850%, 6/15/09 3,500,000 3,565,136
Series 134 Class B, IO, 9.000%, 8/15/22 1,177,894 265,026
Series 204 Class E, HB, IF, 5/15/23 21,745 478,384
Series 1022 Class G, 8.000%, 2/15/19 696,411 699,815
Series 1045 Class G, HB, 1066.2085%, 2/15/21 5,071 135,144
Series 1051 Class D, 7.000%, 11/15/19 1,429,602 1,447,085
Series 1065 Class J, 9.000%, 4/15/21 2,000,000 2,175,618
Series 1072 Class A, HB, 1008.500%, 5/15/06 35,279 697,117
Series 1079 Class S, IF, 5/15/21 1,332,679 1,501,756
Series 1084 Class F, AR, 5/15/21 2,000,000 2,039,918
Series 1084 Class S, IF, 5/15/21 1,400,000 1,820,000
Series 1089 Class C, IO, IF, 6/15/21 91,366 1,000,233
Series 1098 Class M, HB, 10.080%, 6/15/06 15,632 326,711
Series 1144 Class KB, 8.500%, 9/15/21 2,000,000 2,117,078
Series 1172 Class L, HB, 1167.776%, 11/15/21 21,071 611,045
Series 1196 Class B, HB, IF, 1/15/22 93,403 934,965
Series 1295 Class JB, 4.500%, 3/15/07 2,400,000 2,173,605
Series 1297 Class H, 7.500%, 1/15/20 1,699,404 1,741,021
Series 1298 Class L, HB, 981.8667, 6/15/07 9,000 328,500
Series 1329 Class S, IO, IF, 8/15/99 5,014,742 269,542
Series 1360 Class PK, 10.000%, 12/15/20 2,500,000 2,869,872
Series 1370 Class F, 6.750%, 3/15/19 600,000 606,329
Series 1378 Class H, 10.000%, 1/15/21 1,500,000 1,728,119
Series 1378 Class JZ, 7.500%, 11/15/21 2,280,849 2,318,934
Series 1418 Class B, 6.500%, 11/15/19 2,250,000 2,253,062
Series 1456 Class G, 6.500%, 12/15/18 6,500,000 6,506,818
Series 1465 Class SA, IO, IF, 2/15/08 29,155,288 1,439,397
Series 1483 Class E, 6.500%, 2/15/20 3,150,000 3,148,138
Series 1489 Class L, 5.500%, 4/15/08 2,087,129 2,036,306
Series 1506 Class F, AR, 5/15/08 1,632,714 1,640,877
Series 1506 Class S, IF, 5/15/08 583,112 530,632
Series 1506 Class SD, IO, IF, 5/15/08 27,449,198 1,269,525
Series 1508 Class KB, IO, IF, 5/15/23 8,872,418 571,118
Series 1531 Class K, 6.000%, 4/15/08 1,127,152 1,093,314
Series 1554 Class KA, PO, 8/15/08 927,383 736,685
Series 1583 Class NS, IF, 9/15/23 1,270,128 939,895
Series 1585 Class NB, IF, 9/15/23 2,271,596 1,839,993
Series 1586 Class A, 6.000%, 9/15/08 1,478,062 1,422,175
Series 1595 Class S, IO, IF, 10/15/11 14,871,975 604,100
Series 1604 Class SE, IF, 11/15/08 701,374 561,099
Series 1628 Class S, IF, 12/15/23 2,550,000 1,606,500
Series 1640 Class A, 5.500%, 10/15/07 1,102,202 1,073,455
Series 1655 Class F, AR, 12/15/08 1,494,755 1,483,544
Series 1655 Class SA, IF, 12/15/08 344,875 257,146
Series 1681 Class K, 7.000%, 8/15/23 1,115,049 1,090,606
Series 1686 Class SH, IF, 2/15/24 1,535,892 1,132,720
Series 1689 Class SD, IF, 10/15/23 1,725,000 1,535,250
Series 1694 Class SE, IF, 5/15/23 1,418,419 1,290,761
Series 1706 Class LA, 7.000%, 3/15/24 5,227,604 5,121,740
Series 1757-A Class A, 9.500%, 5/15/23 3,532,192 3,757,369
Series 1796-A, Class S, IF, 2/15/09 1,000,000 755,000
Series 1798-B, Class C, 6.500%, 3/15/08 2,250,000 2,200,073
GNMA Series 29 Class SD, IO, IF, 4/25/24 24,545,249 613,631
Federal Housing Administration Merrill Lynch
Project Pool 170 Pass Thru Ctfs., 7.430%,
8/1/20 1,368,496 1,413,821
Federal National Mortgage Assn. Mortgage Backed
Securities,
Stripped Trust:
23, Class 2, IO, 10.000%, 9/1/17 1,348,966 346,521
50, Class 2, IO, 10.500%, 3/25/19 180,863 46,912
FS-407
<PAGE>
Federal National Mortgage Assn. Pass Thru
Securities:
Pool #44699, 7.000%, 4/1/17 350,441 355,329
Pool #50966, 7.000%, 1/1/24 2,047,461 2,068,364
Pool #70226, AR, 1/1/19 603,874 604,629
Pool #116612, AR, 3/1/19 2,562,238 2,651,219
Pool #160330, 6.345%, 3/1/99 2,391,211 2,433,057
Pool #303306, 12.500%, 1/1/16 2,182,598 2,515,988
Federal National Mortgage Assn. Pass Thru
Securities
Gtd. Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 841,800 897,829
1988 Class 17-B, 9.400%, 10/25/17 736,900 760,273
1989 Class 27-D, 10.000%, 1/25/16 827,434 852,744
1989 Class 34-E, 9.850%, 8/25/14 1,000,000 1,066,785
1989 Class 69-G, 7.600%, 10/25/19 2,250,000 2,321,397
1989 Class 70-G, 8.000%, 10/25/19 2,000,000 2,122,378
1989 Class 73-C, PO, 10/25/19 1,299,464 1,015,206
1989 Class 78-H, 9.400%, 11/25/19 1,250,000 1,393,024
1990 Class 1-D, 8.800%, 1/25/20 3,200,000 3,400,189
1990 Class 60-K, 5.500%, 6/25/20 750,000 713,669
1990 Class 63-H, 9.500%, 6/25/20 900,000 1,003,301
1990 Class 93-G, 5.500%, 8/25/20 1,500,000 1,427,669
1990 Class 94-H, HB, 505.000%, 8/25/20 36,402 527,832
1990 Class 95-J, HB, 1118.040%, 8/25/20 20,445 654,236
1990 Class 102-J, 6.500%, 8/25/20 4,000,000 3,990,276
1990 Class 106-H, 8.500%, 1/25/19 1,135,711 1,137,731
1990 Class 134-SC, IF, 11/25/20 1,210,648 1,325,659
1990 Class 140-K, HB, 652.1454%, 12/25/20 23,237 426,391
1991 Class 4-N, HB, 758.750%, 1/25/06 11,237 162,935
1991 Class 7-K, HB, 908.500%, 2/25/21 8,010 172,206
1991 Class 33-J, HB, 1008.250%, 4/25/06 10,292 206,673
1991 Class 55-G, HB, 1148.550%, 2/25/05 3,554 14,215
1991 Class 144-PZ, 8.500%, 6/25/21 2,134,822 2,258,319
1992 Class 13-S, HB, IF, 1/25/99 35,593 263,385
1992 Class 135-LC, 7.500%, 9/25/07 1,000,000 1,035,809
1992 Class 137-BA, 3.500%, 1/25/17 2,297,663 2,212,970
1992 Class 199-S, IO, IF, 11/25/99 13,023,680 577,861
1992 Class 204-B, 6.000%, 10/25/20 4,300,000 4,160,418
1993 Class 8-SB, IO, IF, 8/25/06 16,001,583 729,992
1993 Class 12-S, IO, IF, 2/25/23 7,558,799 481,873
1993 Class 12-SB, HB, IF, 2/25/23 59,767 552,847
1993 Class 13-G, 6.000%, 6/25/20 2,000,000 1,962,738
1993 Class 15-K, 7.000%, 2/25/08 792,410 788,415
1993 Class 19-G, 5.000%, 5/25/19 3,265,000 3,096,457
1993 Class 32-K, 6.000%, 3/25/23 1,888,847 1,816,240
1993 Class 38-S, IO, IF, 11/25/22 33,215,974 913,439
1993 Class 44-S, IO, IF, 4/25/23 11,772,196 518,683
1993 Class 58-J, 5.500%, 4/25/23 2,065,801 1,930,512
1993 Class 94-K, 6.750%, 5/25/23 1,299,186 1,271,473
1993 Class 113-S, IO, IF, 7/25/23 8,861,933 509,561
1993 Class 139-SG, IF, 8/25/23 3,450,311 2,675,060
1993 Class 152-D, PO, 8/25/23 1,000,000 785,000
1993 Class 155-LA, 6.500%, 5/25/23 4,166,134 4,109,970
1993 Class 155-SB, IO, IF, 9/25/23 10,689,381 581,182
1993 Class 156-SD, IF, 10/25/19 1,250,000 900,000
1993 Class 167-S, IF, 9/25/23 1,776,420 1,314,551
1993 Class 190-SE, IF, 10/25/08 1,719,713 1,336,526
1993 Class 207-SC, IF, 11/25/23 3,435,541 2,507,945
1993 Class 209-KB, 5.659%, 8/25/08 3,632,376 3,466,773
1993 Class 214-L, 6.000%, 12/25/08 838,760 829,005
1993 Class 220-SD, IF, 11/25/13 2,087,684 1,622,506
1993 Class 223-FB, AR, 12/25/23 5,732,752 5,646,761
1993 Class 223-SB, IF, 12/25/23 2,901,860 2,321,488
1993 Class X-225C VO, IF, 12/25/22 1,600,000 1,456,000
1994 Class 8-G, PO, 11/25/23 2,249,815 1,631,116
1994 Class 19-C, 5.000%, 1/25/24 2,519,478 2,329,230
1994 Class 26-G, PO, 2/25/24 2,278,569 1,458,284
1994 Class 30-LA, 6.500%, 2/25/09 1,953,476 1,929,623
1994 Class 36-SG, IO, IF, 8/25/23 7,651,123 399,236
1994 Class 36-SE, IF, 11/25/23 2,061,342 1,649,073
1994 Class 39-F, AR, 3/25/24 1,133,152 1,125,356
1994 Class 39-S, IF, 3/25/24 435,828 387,067
1994 Class 53-CA, PO, 11/25/23 2,500,000 1,731,250
1994 Class 59-PK, 6.000%, 3/25/24 1,766,334 1,717,140
1994 Class 82-SA, IO, IF, 5/25/23 41,672,922 1,119,751
1995 Class 13-B, 6.500%, 3/25/09 3,457,934 3,381,203
1995 Class XG1C C, 8.800%, 1/25/25 1,000,000 1,096,116
1992-G Class 15-Z, 7.000%, 1/25/22 1,633,455 1,588,745
1992-G Class 27-SQ, HB, IF, 5/25/22 7,749 1,118,615
FS-408
<PAGE>
1992-G Class 42-Z, 7.000%, 7/25/22 1,644,947 1,620,098
1992-G Class 59-C, 6.000%, 12/25/21 1,300,000 1,261,831
1992-G Class 61-Z, 7.000%, 10/25/22 1,028,251 946,207
1993-G Class 19-K, 6.500%, 6/25/19 2,208,259 2,169,833
1993-G Class 27-SE, IF, 8/25/23 1,343,715 863,337
1994-G Class 13-ZB, 7.000%, 11/17/24 2,359,038 2,258,067
Government National Mortgage Assn. Pass Thru
Securities
Guaranteed Remic Trust:
1994 Class 4-SA, IO, IF, 10/16/22 7,700,000 490,875
Government National Mortgage Assn. Pass Thru
Pool:
#023594, 8.500%, 7/15/08 453,589 479,352
#190923, 9.000%, 12/15/16 445,009 474,753
#297628, 8.000%, 9/15/22 3,428,413 3,581,557
#313110, 7.500%, 11/15/22 2,076,338 2,140,142
#345288, 7.500%, 3/15/23 852,574 878,329
International Bank For Reconstruction &
Development, 2/15/15 2,000,000 576,830
------------
(Cost $217,452,161) 232,446,081
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS 421,754,340
------------
(Cost $391,557,152)
CORPORATE BONDS AND NOTES -- 9.07%
Finance -- 7.54%
American Express Co., 11.625%, 12/12/00 1,400,000 1,562,750
Associates Corp. of North America:
9.125%, 4/1/00 2,350,000 2,652,372
8.150%, 8/1/09 3,085,000 3,516,838
Chase Manhattan Grantor Trust, Series 95-B,
5.900%, 11/15/01 1,692,081 1,702,943
Collaterized Mortgage Obligation Trust CMO:
Series 10, Class Z, 8.950%, 12/1/16 3,070,227 3,121,344
Series 12, Class D, 9.500%, 2/1/17 889,933 953,517
Series 16, Class Q, 14.750%, 3/20/18 491,993 521,513
Ford Credit Grantor Trust, Series 94-A, 6.350%,
5/15/99 2,040,088 2,061,344
Ford Motor Credit Co., 9.625%, 2/27/96 2,150,000 2,161,761
General Motors Acceptance Corp. Medium Term Note,
7.550%, 1/14/97 2,500,000 2,550,125
Government National Mortgage Assn. Backed Trust I
CMO, Class A, Zero Coupon, PO, 5/20/17 354,912 278,101
Kidder Peabody Mortgage Assets Trust CMO, Series
24 Class E, 8.940%, 4/1/19 1,125,000 1,162,405
Merrill Lynch Trust Series 43 Class E CMO 6.500%,
8/27/15 4,000,000 3,979,956
Morgan Stanley Mortgage Trust CMO:
Series 35-2, HB, IF, 4/20/21 5,248 760,996
Series 37-2, HB, IF, 7/20/21 5,996 779,480
Series 39-3, PO, 12/20/21 999,131 815,851
PaineWebber CMO Trust:
Series H-4, 8.750%, 4/1/18 1,030,480 1,080,241
Series P-4, 8.500%, 8/1/19 2,479,357 2,620,405
Rural Housing Trust 1987-1 Sr. Mortgage Pass Thru
Ctf., Class 3-B, 7.330%, 4/1/26 1,199,436 1,225,594
Shearson Lehman, Inc. CMO, Mortgage Backed
Sequential Pay Bond, Series U, Sequence U-1,
8.750%, 8/27/17 322,556 325,249
Standard Credit Card Master Trust Asset Backed
Ctf., Series 1995-5, Class A, Adjustable Rate,
5/8/00 2,000,000 2,000,620
Toyota Auto Receivables Grantor Trust, Series
95-A Class A, 5.850%, 3/15/01 1,314,302 1,320,767
World Omni Automobile LSE SEC Trust, Series 95-5
Class A, 6.050%, 11/25/01 1,500,000 1,513,619
------------
(Cost $39,352,083) 38,667,791
------------
Industrial -- 1.24%
Boeing Co., 7.950%, 8/15/24 1,730,000 2,036,573
Dominos Pizza Funding Corp., Series A, Adjustable
Rate, 4/1/96 995,000 1,005,235
General Motors Corp., 8.800%, 3/1/21 2,695,000 3,321,668
------------
(Cost $5,521,130) 6,363,476
------------
FS-409
<PAGE>
Public Utility -- 0.29%
Nippon Telegraph & Telephone Corp., 9.500%,
7/27/98 1,355,000 1,479,850
------------
(Cost $1,447,437)
TOTAL CORPORATE BONDS AND NOTES 46,511,117
------------
(Cost $46,320,650)
FOREIGN -- 3.25%
African Development Bank Note, 9.300%, 7/1/00 1,572,000 1,784,786
Kingdom of Belgium Put Euro Dollar, 9.200%, 6/28/10 2,000,000 2,542,500
Metropolis of Tokyo, 8.700%, 10/05/99 2,250,000 2,483,620
National Australia Bank Ltd, 9.700%, 10/15/98 800,000 879,136
Province of Ontario, 15.750%, 3/15/12 1,415,000 1,653,031
Province of Ontario Eurobond, 7.000%, 1/27/99 4,300,000 4,461,250
Province of Quebec, 9.125%, 8/22/01 2,515,000 2,849,809
------------
(Cost $15,916,088) 16,654,13
------------
TOTAL INVESTMENTS $512,978,615
============
(Cost $481,852,916)
</TABLE>
FS-410
<PAGE>
THE WOODWARD FUNDS
BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
Notes to Portfolio of Investments
(a) The Funds invest in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture. Descriptions of certain collateralized mortgage
obligations are as follows:
Adjustable Rate (AR)
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks as
those associated with IO securities. Unlike IO's, the owner also has a
right to receive a very small portion of principal. The high interest rate
results from taking interest payments from other classes in the REMIC
Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represents the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market interest
rates. As prepayments on the underlying mortgages of these securities
increase, the yield on these securities increases.
(b) Based upon estimated future cash flows, income is currently not being
recognized on certain IO, HB, and CMO securities with an aggregate market
value of $1,496,849. The book cost of certain IO and HB securities
includes a write down in the amount of $6,056,100 taken during 1993 to
properly state the net realizable value of the securities. The write down
results in a lower cost of investments than the tax cost disclosed in Note
4 in Notes to Financial Statements.
FS-411
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS -- 3.30%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05, and U.S. Treasury Notes, 5.50%,
11/15/98, all held at Chemical Bank) $8,248,085 $ 8,248,085
Nikko Securities, Revolving Repurchase Agreement,
5.90%, 1/2/96 (secured by various U.S. Treasury
Bills with maturities ranging fom 9/19/96 through
10/17/96, and U.S. Treasury Notes with maturities
ranging from 5/31/96 through 8/15/00, all held at
the Bank of New York) 5,000,000 5,000,000
------------
(Cost $13,248,085) 13,248,085
------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 85.73%
U.S. Treasury Securities -- 47.10%
Principal Strip from U.S. Treasury Securities
due:
2/15/99 6,900,000 5,864,655
Strip from U.S. Treasury Securities due:
5/15/98 6,600,000 5,840,472
11/15/98 7,600,000 6,549,376
2/15/99 2,760,000 2,345,503
5/15/05 5,660,000 3,330,967
8/15/08 6,350,000 3,046,667
2/15/09 4,300,000 1,996,318
U.S. Treasury Bonds:
12.750%, 11/15/10 6,731,000 10,252,121
10.375%, 11/12/12 4,800,000 6,636,000
U.S. Treasury Notes:
7.375%, 5/15/96 540,000 544,136
6.125%, 7/31/96 1,000,000 1,004,840
7.250%, 11/15/96 2,000,000 2,033,120
6.750%, 2/28/97 5,000,000 5,085,150
8.500%, 4/15/97 11,640,000 12,107,462
6.875%, 4/30/97 10,000,000 10,206,200
8.500%, 5/15/97 11,470,000 11,961,031
6.750%, 5/31/97 2,000,000 2,041,240
8.625%, 8/15/97 3,000,000 3,157,500
8.750%, 10/15/97 9,950,000 10,545,408
8.875%, 11/15/97 19,985,000 21,271,434
7.875%, 1/15/98 23,710,000 24,913,994
8.125%, 2/15/98 8,300,000 8,777,250
7.875%, 4/15/98 12,425,000 13,120,055
5.125%, 4/30/98 3,320,000 3,313,260
5.375%, 5/31/98 4,500,000 4,514,760
6.875%, 7/31/99 8,000,000 8,400,000
------------
(Cost $185,580,125) 188,858,919
------------
Agency Obligations -- 38.63%
Federal Home Loan Mortgage Corp. Participation
Ctf.:
#170269, 12.000%, 8/01/15 1,533,401 1,718,840
#252600, 7.500%, 9/1/08 369,227 379,170
#252601, 8.000%, 6/1/01 389,128 400,802
#555238, 12.000%, 7/1/19 673,464 755,147
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 10 Class D, 10.000%, 7/15/18 1,998,034 2,050,621
Series 11 Class D, 9.500%, 7/15/19 500,000 556,429
Series 14 Class A, 9.000%, 12/15/19 44,298 44,434
Series 18 Class A, 9.000%, 11/15/19 80,381 80,707
Series 23 Class E, 9.400%, 8/15/19 548,697 566,458
Series 30 Class C, 9.500%, 5/15/18 731,331 747,009
Series 32 Class B, 9.500%, 8/15/19 2,718,733 2,773,404
Series 38 Class C, 9.500%, 1/15/19 397,968 408,490
Series 39 Class E, 10.000%, 10/15/19 876,507 898,953
Series 41 Class I, HB, 84.000%, 5/15/20 105,777 248,577
FS-412
<PAGE>
Series 47 Class F, 10.000%, 6/15/20 500,000 559,415
Series 51 Class D, 10.000%, 5/15/19 525,068 528,013
Series 56 Class E, 9.600%, 5/15/20 2,599,353 2,593,528
Series 63 Class F, 9.350%, 10/15/19 315,973 320,447
Series 82 Class D, 8.900%, 10/15/20 700,000 712,683
Series 99 Class Z, 9.500%, 1/15/21 2,181,715 2,347,545
Series 115 Class G, 9.000%, 3/15/18 684,605 683,762
Series 129 Class E, 8.850%, 6/15/09 2,700,000 2,750,248
Series 191 Class D, 9.000%, 9/15/21 203,506 203,398
Series 204 Class E, HB, IF, 5/15/23 7,008 154,175
Series 1022 Class G, 8.000%, 2/15/19 654,626 657,826
Series 1072 Class A, HB, 1008.500%, 5/15/06 23,438 463,139
Series 1079 Class S, IF, 5/15/21 999,510 1,126,317
Series 1084 Class F, AR, 5/15/21 500,000 509,979
Series 1084 Class S, IF, 5/15/21 350,000 455,000
Series 1098 Class M, HB, 10.080%, 6/15/06 3,474 72,602
Series 1144 Class KB, 8.500%, 9/15/21 2,000,000 2,117,078
Series 1172 Class L, HB, 1167.776%, 11/15/21 18,197 527,720
Series 1196 Class B, HB, IF, 1/15/22 61,111 611,721
Series 1295 Class JB, 4.500%, 3/15/07 1,500,000 1,358,503
Series 1298 Class L, HB, 981.86%, 6/15/07 6,000 219,000
Series 1329 Class S, IO, IF, 8/15/99 4,297,785 231,006
Series 1360 Class PK, 10.000%, 12/15/20 2,000,000 2,295,898
Series 1378 Class H, 10.000%, 1/15/21 1,500,000 1,728,119
Series 1418 Class B, 6.500%, 11/15/19 1,250,000 1,251,701
Series 1456 Class G, 6.500%, 12/15/18 3,000,000 3,003,147
Series 1465 Class SA, IO, IF, 2/15/08 26,873,569 1,326,748
Series 1489 Class L, 5.500%, 4/15/08 1,744,840 1,702,351
Series 1506 Class F, AR, 5/15/08 1,088,476 1,093,918
Series 1506 Class SD, IO, IF, 5/15/08 15,122,475 699,414
Series 1506 Class S, IF, 5/15/08 388,742 353,755
Series 1508 Class KB, IF, 5/15/23 4,613,657 296,981
Series 1531 Class K, 6.000%, 4/15/08 1,040,448 1,009,212
Series 1583 Class NS, IF, 9/15/23 982,727 727,218
Series 1585 Class NB, IF, 9/15/23 2,513,255 2,035,737
Series 1586 Class A, 6.000%, 9/15/08 1,377,285 1,325,208
Series 1595 Class S, IO, IF, 10/15/13 20,963,156 851,523
Series 1628 Class S, IF, 12/15/23 2,500,000 1,575,000
Series 1640 Class A, 5.500%, 10/15/07 1,992,442 1,940,477
Series 1655 Class F, AR, 12/15/08 970,128 962,852
Series 1655 Class SA, IF, 12/15/08 223,945 166,978
Series 1689 Class SD, IF, 10/15/23 1,500,000 1,335,000
Series 1694 Class SE, IF, 5/15/23 1,086,730 988,924
Series 1706 Class LA, 7.000%, 3/15/24 3,400,068 3,331,213
Series 1757-A Class A, 9.500%, 5/15/23 2,649,144 2,818,027
Series 1796-A, Class S, IF, 2/15/09 1,391,843 1,050,841
GNMA Series 29 Class SD, IO, IF, 4/25/24 14,249,782 356,245
Federal National Mortgage Assn. Mortgage Backed
Securities Stripped Trust:
46, Class 1, 7.000%, 12/25/03 290,697 292,877
50, Class 2, IO, 10.500%, 3/25/19 286,367 74,278
Federal National Mortgage Assn. Pass Thru
Securities
Gtd. Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 823,889 878,726
1988 Class 17-B, 9.400%, 10/25/17 128,067 132,130
1989 Class 26-D, 10.000%, 5/25/04 1,000,000 1,057,759
1989 Class 27-D, 10.000%, 1/25/16 1,510,067 1,556,259
1989 Class 34-D, 9.850%, 7/25/13 750,247 760,142
1989 Class 70-G, 8.000%, 10/25/19 2,000,000 2,122,378
1989 Class 73-C, PO, 10/25/19 275,805 215,472
1989 Class 78-H, 9.400%, 11/25/19 1,750,000 1,950,233
1990 Class 1-D, 8.800%, 1/25/20 950,000 1,009,431
1990 Class 60-K, 5.500%, 6/25/20 1,250,000 1,189,449
1990 Class 63-H, 9.500%, 6/25/20 755,000 841,658
1990 Class 93-G, 5.500%, 8/25/20 1,250,000 1,189,724
1990 Class 94-H, HB, 505.000%, 8/25/20 21,561 312,639
1990 Class 95-J, HB, 1118.040%, 8/25/20 10,222 327,119
1990 Class 102-J, 6.500%, 8/25/20 4,600,000 4,588,817
1990 Class 106-H, 8.500%, 1/25/19 879,775 881,341
1990 Class 134-SC, IF, 11/25/20 719,616 787,979
1990 Class 140-K, HB, 652.145%, 12/25/20 21,687 397,964
1991 Class 4-N, HB, 758.750%, 1/25/06 3,966 57,503
1991 Class 7-K, HB, 908.500%, 2/25/21 2,002 43,052
1991 Class 20-M, HB, 908.750%, 3/25/06 2,044 33,936
1991 Class 33-J, HB, 1008.250%, 4/25/06 4,803 96,448
1991 Class 55-G, HB, 1148.550%, 2/25/05 4,442 17,769
1991 Class 161-H, 7.500%, 2/25/21 780,627 794,256
1992 Class 13-S, HB, IF, 1/25/99 10,539 77,988
1992 Class 137-BA, 3.500%, 1/25/17 1,969,426 1,896,831
1992 Class 199-S, IO, IF, 11/25/99 9,074,832 402,650
FS-413
<PAGE>
1992 Class 204-B, 6.000%, 10/25/20 2,000,000 1,935,078
1993 Class 8-SB, IO, IF, 8/25/06 15,386,138 701,916
1993 Class 12-S, IO, IF, 2/25/23 4,781,380 304,813
1993 Class 12-SB, HB, IF, 2/25/23 52,736 487,806
1993 Class 19-G, 5.000%, 5/25/19 3,530,000 3,347,778
1993 Class 38-S, IO, IF, 11/25/22 31,190,042 857,726
1993 Class 58-J, 5.50%, 4/25/23 1,549,351 1,447,884
1993 Class 94-K, 6.750%, 5/25/23 866,124 847,649
1993 Class 110-SC, IO, IF, 7/25/23 4,235,993 177,361
1993 Class 113-S, IO, IF, 7/25/23 7,935,546 456,294
1993 Class 139-SG, IF, 8/25/23 2,597,473 2,013,847
1993 Class 152-D, PO, 8/25/23 700,000 549,500
1993 Class 155-LA, 6.500%, 5/25/23 1,735,889 1,712,488
1993 Class 155-SB, IO, IF, 9/25/23 7,696,354 418,451
1993 Class 156-SD, IF, 10/25/19 1,000,000 720,000
1993 Class 167-S, IF, 9/25/23 2,138,284 1,582,330
1993 Class 190-SE, IF, 10/25/08 1,495,403 1,162,197
1993 Class 207-SC, IF, 11/25/23 2,366,706 1,727,695
1993 Class 209-KB, 5.659%, 8/25/08 2,804,924 2,677,045
1993 Class 214-L, 6.000%, 12/25/08 1,677,520 1,658,009
1993 Class 220-SD, IF, 11/25/13 1,242,669 965,777
1993 Class 223-FB, AR, 12/25/23 721,333 710,513
1993 Class 223-SB, IF, 12/25/23 651,339 521,071
1993 Class X225-C VO, IF, 12/25/22 2,000,000 1,820,000
1994 Class 8-G, PO, 11/25/23 1,730,627 1,254,705
1994 Class 19-C, 5.000%, 1/25/24 2,082,214 1,924,984
1994 Class 26-G, PO, 2/25/24 2,199,391 1,407,610
1994 Class 30-LA, 6.500%, 2/25/09 2,123,344 2,097,416
1994 Class 36-SE, IF, 11/25/23 1,198,454 958,764
1994 Class 36-SG, IO, IF, 8/25/23 3,480,275 181,601
1994 Class 39-F, AR, 3/25/24 1,019,837 1,012,820
1994 Class 39-S, IF, 3/25/24 392,245 348,361
1994 Class 53-CA, PO, 11/25/23 3,352,442 2,321,566
1994 Class 59-PK, 6.000%, 3/25/24 2,826,135 2,747,424
1994 Class 82-SA, IO, IF, 5/25/23 20,541,515 551,951
1995 Class 13-B, 6.500%, 3/25/09 2,497,397 2,441,980
1995 Class X-G1C C, 1/25/25 1,000,000 1,096,116
1992-G Class 27-SQ, HB, IF, 5/25/22 3,907 563,973
1992-G Class 42-Z, 7.000%, 7/25/22 630,973 621,441
1993-G Class 8-PG, 6.500%, 7/25/18 1,000,000 997,249
1993-G Class 13-G, 6.000%, 6/25/20 1,000,000 981,369
1993-G Class 19-K, 6.500%, 6/25/19 1,613,728 1,585,647
1993-G Class 27-SE, IF, 8/25/23 1,535,674 986,671
1994-G Class 13-ZB, 7.000%, 11/17/24 2,359,038 2,258,069
Federal National Mortgage Assn. Pass Thru Pool:
#111366, AR, 8/01/19 517,219 534,649
#116612, AR, 3/01/19 1,643,700 1,700,782
#160330, 6.345%, 3/1/99 2,391,210 2,433,057
#303306, 12.500%, 1/1/16 1,440,515 1,660,552
Government National Mortgage Assn. Pass Thru
Pool:
#297628, 8.000%, 9/15/22 2,285,609 2,387,705
#313110, 7.500%, 11/15/22 1,922,535 1,981,613
------------
(Cost $149,905,032) 154,886,744
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS 343,745,663
------------
(Cost $335,485,157)
CORPORATE BONDS AND NOTES -- 9.24%
Finance -- 8.45%
American Express Co., 11.625%, 12/12/00 1,250,000 1,395,313
American Express Credit Corp., 8.500%, 6/15/99 300,000 325,020
Associates Corp. of North America:
9.125%, 4/1/00 1,675,000 1,890,521
8.150%, 8/1/09 3,625,000 4,132,427
Bear Stearns Secured Investments, Inc. CMO,
Series 88-7B, 9.250%, 12/1/18 576,823 574,723
Case Equipment Loan Trust Asset Backed Ctf.
1994 Series A, Class A2, 4.650%, 8/15/99 1,398,171 1,389,794
1994 Series C, Class A2, 8.100%, 6/15/01 2,000,000 2,089,818
Chase Manhattan Grantor Trust Automobile Loan
Pass Thru Ctfs. Series 1995-B, Class A,
5.900%, 11/15/01 1,450,355 1,459,665
Collaterized Mortgage Obligation Trust CMO:
Series 10, Class Z, 8.950%, 12/1/16 4,950,742 5,033,167
Series 12, Class D, 9.500%, 2/1/17 444,966 476,759
Series 16 Class Q, 14.750%, 3/20/18 277,484 294,133
Collaterized Mortgage Securities Corp. CMO:
Series 88-2 Class B, 8.800%, 4/20/19 585,723 617,454
FS-414
<PAGE>
General Motors Acceptance Corp. Medium Term Note,
7.550%, 1/14/97 4,735,000 4,829,937
Goldman Sachs Trust 7-C CMO, Series 7, Class C-2,
9.100%, 4/27/17 16,195 16,184
Merrill Lynch Trust 43-E CMO, Series 43, Class E,
6.500%, 8/27/15 1,500,000 1,492,483
Morgan Stanley Mortgage Trust, CMO:
Series 35-2, HB, IF, 4/20/21 3,999 579,806
Series 37-2, HB, IF, 7/20/21 4,065 528,466
Series 39-3, PO, 12/20/21 777,102 634,550
Rural Housing Trust 1987-1, Senior Mortgage
Pass-Thru Ctf.,
Sub Class 3-B, 7.330%, 4/1/26 536,660 548,364
Standard Credit Card Master Trust Asset Backed
Ctf.
Series 1995-5, Class A, IF, 5/8/00 200,000 200,062
Series 1995-10, Class A, 5.900%, 2/7/01 2,520,000 2,547,339
Toyota Auto Receivable Grantor Trust Asset Backed
Ctf.
Series 1995-A, Class A, 5.850%, 3/15/01 1,311,436 1,317,887
World Omni Automobile Lse Sec Trust Asset Backed
Ctf.
Series 1995-A, Class A, 6.050%, 11/25/01 1,500,000 1,513,619
------------
(Cost $33,041,515) 33,887,491
------------
Industrial -- 0.79%
Boeing Co., 8.375%, 3/1/96 3,020,000 3,034,257
Dominos Pizza Funding Corp., Series A, Adjustable
Rate, 4/1/96 145,000 146,492
------------
(Cost $3,183,157) 3,180,749
------------
TOTAL CORPORATE BONDS AND NOTES 37,068,240
------------
(Cost $36,224,672)
FOREIGN -- 1.73%
African Development Bank Note, 9.300%, 7/1/00 983,000 1,116,059
Metropolis of Tokyo, 8.700%, 10/5/99 1,500,000 1,655,746
National Australia Bank Ltd., 9.700%, 10/15/98 400,000 439,568
Province of Ontario Eurobond, 7.000%, 1/27/99 3,600,000 3,735,000
------------
(Cost $6,758,488) 6,946,373
------------
TOTAL INVESTMENTS $401,008,361
============
(Cost $391,716,402)
</TABLE>
FS-415
<PAGE>
THE WOODWARD FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
Notes to Portfolio of Investments
(a) The Funds invest in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture. Descriptions of certain collateralized mortgage
obligations are as follows:
Adjustable Rate (AR)
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks as
those associated with IO securities. Unlike IO's, the owner also has a
right to receive a very small portion of principal. The high interest rate
results from taking interest payments from other classes in the REMIC
Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represents the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market interest
rates. As prepayments on the underlying mortgages of these securities
increase, the yield on these securities increases.
(b) Based upon estimated future cash flows, income is currently not being
recognized on certain IO, HB, and CMO securities with an aggregate market
value of $1,408,358. The book cost of certain IO and HB securities
includes a write down in the amount of $2,639,653 taken during 1993 to
properly state the net realizable value of the securities. The write down
results in a lower cost of investments than the tax cost disclosed in Note
4 in Notes to Financial Statements.
FS-416
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
SHORT BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 0.16%
Salomon Brothers, Revolving Repurchase Agreement,
5.93%, 1/2/96 (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/96
through 11/15/05, and U.S. Treasury Notes,
5.500%, 11/15/98, all held at Chemical Bank) $ 262,082 $ 262,082
------------
(Cost $262,082)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 87.11%
U.S. Treasury Securities -- 71.75%
Strips from U.S. Treasury Note Principal due:
5/15/96 380,000 372,997
8/15/98 500,000 436,475
U.S. Treasury Notes:
5.875%, 5/31/96 1,430,000 1,433,575
7.625%, 5/31/96 3,200,000 3,229,984
7.875%, 7/15/96 1,500,000 1,520,160
6.125%, 7/31/96 4,000,000 4,019,360
8.000%, 10/15/96 1,000,000 1,020,620
7.500%, 1/31/97 1,945,000 1,990,883
6.625%, 3/31/97 500,000 508,280
8.500%, 4/15/97 2,750,000 2,860,440
6.500%, 5/15/97 10,500,000 10,675,560
8.500%, 5/15/97 500,000 521,405
6.750%, 5/31/97 600,000 612,372
6.125%, 5/31/97 25,490,000 25,816,552
8.500%, 7/15/97 250,000 262,070
8.750%, 10/15/97 490,000 519,322
8.875%, 11/15/97 4,000,000 4,257,480
5.750%, 10/31/97 250,000 252,422
7.875%, 1/15/98 11,265,000 11,837,037
5.625%, 1/31/98 1,450,000 1,462,006
7.875%, 4/15/98 3,200,000 3,379,008
5.125%, 4/30/98 1,000,000 997,970
9.000%, 5/15/98 4,500,000 4,874,062
5.375%, 5/31/98 1,100,000 1,103,608
5.125%, 6/30/98 4,500,000 4,490,865
5.250%, 7/31/98 3,000,000 3,000,930
5.125%, 11/30/98 5,000,000 4,983,600
5.125%, 12/31/98 500,000 498,280
5.875%, 3/31/99 1,000,000 1,017,810
7.000%, 4/15/99 1,000,000 1,051,250
6.500%, 4/30/99 3,000,000 3,109,680
6.750%, 5/31/99 2,200,000 2,298,309
6.750%, 6/30/99 990,000 1,035,164
6.375%, 7/15/99 1,700,000 1,761,353
6.875%, 8/31/99 1,000,000 1,050,940
7.125%, 9/30/99 1,000,000 1,060,000
7.500%, 10/31/99 1,500,000 1,610,385
7.750%, 11/30/99 2,250,000 2,438,078
7.750%, 12/31/99 1,000,000 1,085,936
7.750%, 1/31/00 1,300,000 1,412,937
------------
(Cost $114,151,228) 115,869,165
------------
Agency Obligations -- 15.36%
Federal Home Loan Bank Consolidated Bond:
4.265%, 3/12/96 500,000 499,050
4.410%, 7/8/96 665,000 661,350
4.410%, 8/26/96 1,000,000 994,950
4.750%, 1/13/97 1,500,000 1,492,600
4.920%, 2/24/97 1,000,000 996,180
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 2 Class Z, 9.300%, 3/15/19 1,418,594 1,515,951
Series 10 Class D, 10.000%, 7/15/18 285,434 292,946
Series 11 Class C, 9.500%, 4/15/19 266,023 277,662
Series 81 Class A, 8.125%, 11/15/20 450,236 461,492
Series 85 Class C, 8.600%, 1/15/21 1,000,000 1,056,045
Series 99 Class Z, 9.500%, 1/15/21 1,090,858 1,173,773
Series 192 Class H, 9.000%, 7/15/21 521,411 535,744
FS-417
<PAGE>
Series 1045 Class G, HB, 1066.2085%, 2/15/21 2,536 67,572
Series 1096 Class D, 7.000%, 6/15/20 1,344,241 1,350,867
Series 1238 Class E, 6.500%, 2/15/04 329,352 329,282
Series 1477 Class F, 6.650%, 5/15/18 300,000 305,973
Series 1559 Class VF, 6.250%, 2/15/20 500,000 502,214
Series 1578 Class C, 5.500%, 11/15/12 1,000,000 998,689
Series 1603 Class F, 5.750%, 4/15/21 500,000 489,739
Series 1623 Class PC, 5.000%, 11/15/07 300,000 297,525
Federal National Mortgage Assn. Medium Term Note,
4.920%, 9/28/98 220,000 215,181
Federal National Mortgage Assn. Mortgage Backed
Securities
Stripped Trust 268, Class 2, IO, 9.000%,
12/25/21 282,888 69,485
Federal National Mortgage Assn. Pass Thru
Securities:
Pool #070226, AR, 1/1/19 362,325 362,778
Pool #111366, AR, 8/1/19 417,754 431,832
Pool #116612, AR, 3/1/19 918,538 950,437
Federal National Mortgage Assn. Pass Thru
Securities
Gtd. Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 895,532 955,137
1988 Class 15-A, 9.000%, 6/25/18 188,049 198,405
1988 Class 16-B, 9.500%, 6/25/18 1,124,388 1,212,273
1988 Class 17-B, 9.400%, 10/25/17 64,034 66,065
1988 Class 19-H, 9.500%, 7/25/17 267,638 269,709
1989 Class 27-D, 10.000%, 1/25/16 206,859 213,186
1989 Class 31-D, 9.150%, 8/25/18 358,340 367,269
1989 Class 73-C, PO, 10/25/19 212,157 165,748
1990 Class 77-C, 9.000%, 7/25/19 387,757 404,463
1990 Class 94-C, 8.000%, 1/25/19 183,675 186,015
1991 Class 16-G, 8.000%, 3/25/04 1,050,000 1,066,830
1991 Class 41-O, 9.000%, 8/25/06 375,000 392,591
1992 Class 13-S, HB, IF, 1/25/99 4,479 33,146
1992 Class 137-BA, 3.500%, 1/25/17 328,238 316,139
1993 Class 35-C, 5.500%, 10/25/01 200,000 199,310
1993 Class 85-PD, 5.500%, 7/25/03 300,000 299,181
1993 Class 107-D, 6.500%, 12/25/06 400,000 409,600
1994-G Class 7-PB, 6.000%, 4/17/08 1,000,000 1,002,659
1994-G Class 8-B, 6.650%, 8/17/07 700,000 707,000
------------
(Cost $24,493,755) 24,794,043
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS 140,663,208
------------
(Cost $138,644,983)
CORPORATE BONDS AND NOTES -- 12.73%
Finance -- 10.62%
American Southwest Financial Corp. CMO, Series
67-D,
9.450%, 3/1/15 464,754 467,208
Associates Corp. of North America:
8.800%, 3/1/96 405,000 407,048
9.700%, 5/1/97 765,000 805,392
6.800%, 12/15/97 800,000 819,067
8.500%, 1/10/00 500,000 547,895
7.550%, 8/23/01 250,000 268,825
Associates Corp. of North America Medium Term
Note
Tranche #SR 00455, 7.480%, 7/27/02 300,000 322,988
Bear Stearns Secured Investments, Inc. CMO,
Series 88-7B, 9.250%, 12/1/18 288,412 287,361
Beneficial Finance Corp. Medium Term Note:
Tranche #00107, 9.250%, 10/15/96 1,150,000 1,182,456
Tranche #00490, 7.200%, 2/21/97 400,000 407,515
Tranche #00659, 7.340%, 11/26/99 200,000 210,421
CFC-7 Grantor Trust Asset Backed Ctf., 8.650%,
10/15/96 262,064 262,983
Chemical Bank Grantor Trust 1989-B Participation
Marine Contracts, Class 1, 8.900%, 12/15/96 212,785 218,927
Citicorp Mortgage Securities, Inc. Remic Pass
Thru Ctf.,
Series 89-16, Class A-1, AR, 4/1/19 336,678 336,678
Collaterized Mortgage Obligation Trust CMO:
Series 12, Class D, 9.500%, 2/1/17 222,483 238,379
Collaterized Mortgage Securities Corp. CMO:
Series 88-16, Class B, 9.100%, 2/27/18 44,941 44,948
Ford Credit Grantor Trust Asset Backed Ctf.
Series 1994-B, Class A, 7.300%, 10/15/99 242,975 248,028
FS-418
<PAGE>
Ford Motor Credit Co.:
8.625%, 4/15/96 475,000 479,028
9.500%, 4/15/00 590,000 669,731
Ford Motor Credit Co. Euro Dollar Debenture,
9.625%, 2/27/96 500,000 502,735
Ford Motor Credit Co. Medium Term Note:
9.750%, 5/6/96 1,005,000 1,019,900
9.000%, 7/26/96 500,000 509,726
Tranche #TR 00493, 6.450%, 7/21/97 300,000 304,111
Tranche #00281, 7.470%, 7/29/99 1,000,000 1,054,275
Tranche #00442, 7.590%, 4/6/00 300,000 319,328
General Electric Capital Corp., 8.750%, 11/26/96 500,000 514,477
General Electric Capital Corp. Medium Term Note
Tranche #TR 00624, 7.665%, 2/3/97 500,000 512,393
General Motors Acceptance Corp. Medium Term Note
Tranche #00162, 7.750%, 2/20/97 250,000 255,992
Goldman Sachs CMO:
Trust 4, Series C-3, 9.450%, 10/27/03 269,782 271,120
Trust 7, Class 2-C, 9.100%, 4/27/17 7,393 7,388
Lomas Mortgage Funding Corp. II, CMO, Series
88-1A,
9.000%, 9/20/15 62,912 63,463
MBNA Master Credit Card Trust Asset Backed Ctf.:
Trust 91-1, Series 1991-1A, 7.750%, 10/15/98 1,000,000 1,017,229
Trust 92-1, Series 1992-1A, 7.250%, 6/15/99 750,000 768,682
Morgan Stanley Mortgage Trust, CMO, Series 38-4,
PO, 11/20/21 71,667 56,258
Ryland Acceptance Corp. Four, CMO, Series 78,
Class 78-B, 9.550%, 3/1/16 653,661 675,166
Shearson Lehman, Inc. CMO, Mortgage Backed
Sequential Pay Bond, Series U, Sequence U-1,
8.750%, 8/27/17 30,833 31,141
Western Financial Grantor Trust Auto Receivable P/T Ctf:
1993-4, Class A1, 4.600%, 4/1/99 614,418 609,109
1994-3, Class A, 6.650%, 12/1/99 423,509 430,607
------------
(Cost $18,335,649) 18,581,444
------------
Industrial -- 2.11%
Coca-Cola Co., 7.750%, 2/15/96 290,000 290,799
Ford Holdings Inc.:
9.250%, 3/1/00 468,000 525,722
9.250%, 7/15/97 861,000 907,744
General Electric Co., 7.875%, 5/1/96 488,000 491,940
Pepsico, Inc.:
7.875%, 8/15/96 445,000 451,858
7.000%, 11/15/96 182,000 184,628
Waste Management Inc., 7.875%, 8/15/96 550,000 558,133
------------
(Cost $1,957,205) 1,977,358
------------
TOTAL CORPORATE BONDS AND NOTES 20,558,802
------------
(Cost $20,292,854)
TOTAL INVESTMENTS $161,484,092
============
(Cost $159,199,919)
</TABLE>
FS-419
<PAGE>
THE WOODWARD FUNDS
SHORT BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
Notes to Portfolio of Investments
The Funds invest in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture. Descriptions of certain collateralized mortgage
obligations are as follows:
Adjustable Rate (AR)
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks as
those associated with IO securities. Unlike IO's, the owner also has a
right to receive a very small portion of principal. The high interest rate
results from taking interest payments from other classes in the REMIC
Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represents the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market interest
rates. As prepayments on the underlying mortgages of these securities
increase, the yield on these securities increases.
FS-420
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
WOODWARD MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
MUNICIPAL BONDS -- 99.94%
Alaska -- 3.33%
Fairbanks North Star Borough Series S (MBIA
Insured), 5.45%, 3/1/06 $2,500,000 $ 2,602,825
Arizona -- 2.19%
Phoenix General Obligation Refunding Series A,
5.00%, 7/1/03 1,000,000 1,036,700
Salt River Project Agricultural Improvement Power
District Revenue, Electric System Series D,
6.00%, 1/1/08 625,000 680,319
-----------
1,717,019
-----------
California -- 1.34%
Los Angeles Waste Water System Revenue Series D
(MBIA Insured) 6.25%, 12/1/15 1,000,000 1,052,030
-----------
Florida -- 5.17%
Florida State Board of Education Capital Outlay
Public Education Series C, 5.10%, 6/1/09 1,650,000 1,656,765
Florida State Pollution Control Series Y, 6.40%,
7/1/08 1,400,000 1,527,624
Gainesville Utilities System Revenue Series B,
5.50%, 10/1/13 850,000 860,804
-----------
4,045,193
-----------
Georgia -- 0.86%
Georgia State Housing and Finance Authorit Revenue
Series B, 6.10%, 12/1/12 650,000 669,922
Illinois -- 14.15%
Chicago Metropolitan Water Capital Improvement,
5.50%, 12/1/12 1,000,000 1,046,100
Chicago School Finance Authority (FGIC Insured)
Series A, 5.20%, 6/1/06 1,000,000 1,020,120
DuPage Co. Forest Preservation District, 6.00%,
11/1/03 1,750,000 1,910,790
Evanston General Obligation Unlimited Tax, 6.10%,
12/1/09 1,000,000 1,082,480
Illinois Dedicated Tax Revenue (AMBAC Insured)
Civic Center, 6.25%, 12/15/11 250,000 280,255
Illinois Health Facilities Authority Revenue
Northwestern Memorial Hospital Series A, 5.60%,
8/15/06 1,000,000 1,056,800
Illinois Housing Development, Series A, 5.95%,
7/1/21 2,000,000 2,013,240
Illinois State Toll Highway Authority Revenue,
Series A, Variable Rate, 1/1/10 2,666,000 2,666,000
-----------
11,075,785
-----------
Indiana -- 9.53%
Ball State University Revenue (FGIC Insured)
Student Fee Series G, 6.125%, 7/1/09 400,000 427,724
Fort Wayne Sewer Works Improvement Revenue Indiana
(FGIC Insured), 5.75%, 8/1/10 1,100,000 1,131,482
Indiana State Vocational Technology Revenue Series
D, 5.90%, 7/1/06 1,000,000 1,077,090
Indiana Transportation Finance Authority, Series A
6.25%, 11/1/16 1,500,000 1,551,255
North Adams Community Schools Participation Ctfs.,
5.75%, 7/15/12 1,000,000 1,031,960
Perry Township Multi School Corporation Revenue,
5.20%, 1/15/11 1,200,000 1,176,672
St. Joseph Co. Hospital Authority Facilities
Revenue (MBIA Insured), Memorial Hospital South
Bend Project, 6.25%, 8/15/12 1,000,000 1,064,990
-----------
7,461,173
-----------
FS-420
<PAGE>
Kentucky -- 1.60%
Kentucky State Turnpike Authority Economic
Development Revenue (AMBAC Insured) Refunding,
5.50%, 7/1/06 1,175,000 1,250,223
-----------
Maryland -- 1.31%
Maryland State Community Development Administration
Dept. Housing & Community Development, First
Series, 5.80%, 4/1/07 1,000,000 1,026,520
-----------
Massachusetts -- 3.68%
Massachusetts General Obligation Series A, 5.25%,
2/1/08 500,000 503,930
Massachusetts State Finance Agency, Series F 6.00%,
1/1/15 2,265,000 2,377,781
-----------
2,881,711
-----------
Michigan -- 8.66%
Grand Rapids Water Supply System Revenue (FGIC
Insured), 6.30%, 1/1/04 250,000 272,323
Michigan State Building Authority Revenue Series I,
6.40%, 10/1/04 600,000 659,724
Michigan State Housing Development Authority
Revenue Series C, 6.375%, 12/1/11 1,450,000 1,514,293
Michigan State Trunk Line Revenue Series B-2,
5.75%, 10/1/12 500,000 510,315
Rochester Community School District School Building
& Site Unlimited Tax, 6.50%, 5/1/06 250,000 278,455
Royal Oak Hospital Finance Authority Revenue,
William Beaumont Hospital:
Series C, 7.20%, 1/1/05 250,000 276,582
Series G, 5.60%, 11/15/11 850,000 860,225
Saranac Community School District, 6.00%, 5/1/13 250,000 263,870
Wyandotte Electric Revenue, 6.25%, 10/1/17 2,000,000 2,140,200
-----------
6,775,987
-----------
Missouri -- 2.48%
Kansas City School District Building Revenue
Elementary School Project Series D, 5.10%, 2/1/07 1,905,000 1,937,995
-----------
Nevada -- 1.54%
Nevada General Obligation Series B Prison Board
Limited Tax, 6.30%, 4/1/05 1,100,000 1,201,310
-----------
Gloucester Co. Improvement Authority Gtd. Revenue,
Solid Waste Landfill Project Series AA, 6.20%,
9/1/07 400,000 428,084
Monmouth Co. General Obligation Utility Unlimited
Tax, 7.00%, 8/1/08 250,000 282,723
-----------
710,807
-----------
New York -- 2.27%
New York State Thruway Authority Highway Revenue
Series B, 5.125%, 4/1/15 1,500,000 1,482,705
Tri-Borough Bridge & Tunnel Authority Revenue
General Purpose Series X, 6.625%, 1/1/12 250,000 290,767
-----------
1,773,472
-----------
North Carolina -- 5.37%
Charlotte North Carolina General Obligation
Series A, 5.50%, 7/1/07 1,000,000 1,057,440
Mecklenberg County General Obligation Unlimited
Tax, 5.50%, 4/1/12 2,000,000 2,096,180
North Carolina Municipal Power Agency Catawba
Electric Revenue, 6.00%, 1/1/05 1,000,000 1,049,610
-----------
4,203,230
-----------
Ohio -- 6.66%
Franklin Co. Hospital Revenue, Children's Hospital
Series A, 6.50%, 5/1/07 950,000 1,035,329
Ohio State Building Authority Revenue, State
Facilities Adult Correctional Building Fund
Series A, 6.125%, 10/1/09 250,000 269,080
Ohio State Water Development Authority Revenue
(MBIA Insured), 5.75%, 12/1/05 1,000,000 1,072,750
FS-421
<PAGE>
Ohio General Obligation State of Public & Sewer
Imports Unlimited Tax, 6.00%, 8/1/07 1,000,000 1,103,350
Ohio Housing Financial Agency Mortgage Revenue
Residential GNMA Series A-1, 6.20%, 9/1/14 1,670,000 1,732,542
-----------
5,213,051
-----------
South Dakota -- 3.09%
South Dakota Housing Development Authority Revenue
Series C, 6.25%, 5/1/15 1,000,000 1,024,390
South Dakota State Building Authority Lease Revenue
(AMBAC Insured), 6.625%, 9/1/12 1,200,000 1,390,464
-----------
2,414,854
-----------
Tennessee -- 1.31%
Metropolitan Government Nashville/Davis County
Revenue, 7.00%, 1/1/14 1,000,000 1,022,250
-----------
Texas -- 6.68%
Austin Utilities System Revenue (AMBAC Insured),
6.50%, 5/15/11 250,000 273,917
El Paso General Obligation Unlimited Tax, 5.00%,
8/15/09 500,000 498,505
Harris Co. Flood Control District Refunding General
Obligation, 6.25%, 10/1/05 250,000 269,060
Houston General Obligation Series C, 6.00%, 3/1/05 400,000 427,328
Round Rock General Obligation (AMBAC Insured)
Unlimited Tax, 5.30%, 8/15/05 500,000 515,450
San Antonio Water Revenue (MBIA Insured), 6.50%,
5/15/10 250,000 275,483
Tarrant Co. Water Control & Improvement District #1
Revenue Series A, 6.10%, 3/1/05 400,000 423,912
Texas General Obligation, 7.70%, 8/1/06 1,305,000 1,444,257
Texas General Obligation Refunding Series A
Unlimited Tax 6.00%, 10/1/05 1,000,000 1,102,350
-----------
5,230,262
-----------
Virginia -- 9.29%
Norfolk Virginia General Obligation 7.00%, 10/1/07 1,500,000 1,643,494
Virginia State Housing Development Authority
Revenue, 5.60%, 11/1/10 1,500,000 1,496,880
Virginia State Housing Development Commonwealth
Series H, 6.20%, 1/1/08 1,000,000 1,035,660
Virginia State Public School Authority Revenue
Series A, 6.25%, 1/1/11 500,000 524,575
Virginia State Transportation Board Contract
Revenue #58 Corridor, 6.00%, 5/15/19 2,500,000 2,567,650
-----------
7,268,259
-----------
Washington -- 3.17%
Kent General Obligation (AMBAC Insured) Unlimited
Tax, 5.40%, 12/1/06 1,300,000 1,360,021
King Co. General Obligation Series A, 7.00%,
12/1/07 550,000 617,034
Seattle General Obligation, 4.90%, 12/1/05 500,000 506,420
-----------
2,483,475
-----------
Wisconsin -- 5.35%
Wisconsin Housing and Economic Development
Authority Revenue Series A, 6.15%, 9/1/17 1,500,000 1,525,305
Wisconsin Public Power System Revenue (AMBAC
Insured), Power Supply System Series A:
5.20%, 7/1/06 400,000 410,560
5.30%, 7/1/08 700,000 710,969
Wisconsin State Health & Educational Facilities
Authority Revenue, Lutheran Hospital Benevolent
Development Fund Series A, 5.60%, 2/15/09 450,000 462,920
Wisconsin State Transportation Revenue Series B,
5.75%, 7/1/12 1,000,000 1,077,410
-----------
4,187,164
-----------
FS-422
<PAGE>
TOTAL MUNICIPAL BONDS 78,204,517
-----------
(Cost $75,702,670)
TEMPORARY CASH INVESTMENT -- 0.06%
Woodward Tax Exempt Money Market Fund 48,195 48,195
-----------
(Cost $48,195)
TOTAL INVESTMENTS $78,252,712
===========
(Cost $75,750,865)
</TABLE>
FS-423
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
WOODWARD MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
Description Face Amount Market Value
----------- ----------- ------------
<S> <C> <C>
MUNICIPAL BONDS -- 98.62%
Michigan -- 98.62%
Allegan Public School District General Obligation
(AMBAC Insured), Unlimited Tax, 5.75%, 5/1/12 $ 200,000 $ 208,860
Ann Arbor General Obligation Resource Recovery
Improvements, Series A, 6.375%, 9/1/10 525,000 560,726
Dearborn Economic Division Oakwood Obligation
Group Series, 5.60%, 11/15/08 1,690,000 1,759,882
Detroit Sewer Disposal Revenue (FGIC Insured):
6.00%, 7/1/00 1,225,000 1,312,575
Series A, Sewer Improvement, 5.30%, 7/1/06 455,000 470,443
East China Township School District School
Building & Site, Unlimited Tax, 6.00%, 5/1/03 400,000 431,500
Eastern Michigan University General Obligation
Revenue (AMBAC Insured), 5.125%, 6/1/11 500,000 495,250
Eastern Michigan University General Sinking Fund,
6.375%, 6/1/14 1,000,000 1,070,030
Fenton Area Public Schools, 7.00%, 5/1/04 250,000 275,880
Ferndale School District, 5.50%, 5/1/11 1,000,000 1,022,880
Grand Haven Electric Revenue, 5.25%, 7/1/13 1,315,000 1,317,919
Grand Traverse Co. Hospital Finance Authority
Revenue (AMBAC Insured), Munson Healthcare
Series A, 5.90%, 7/1/04 1,000,000 1,078,450
Hartland Consolidated School District General
Obligation (AMBAC Insured), Unlimited Tax,
6.00%, 5/1/11 650,000 695,895
Holland Electric Revenue:
5.00%, 7/1/09 625,000 620,756
Kent Co. Building Authority Limited Tax, 6.45%,
12/1/02 620,000 671,981
Lansing Building Authority (AMBAC Insured),
6.00%, 6/1/05 1,000,000 1,101,210
Livingston Co. General Obligation Bldg. Authority
Limited Tax, 5.80%, 7/1/08 1,330,000 1,408,975
Marysville Public School District, 5.60%, 5/1/09 620,000 644,626
Michigan General Obligation Environmental
Protection Program:
6.25%, 11/1/08 450,000 507,928
Michigan Municipal Bond Authority Revenue:
Equipment & Real Property Financing Program G,
5.70%, 5/1/05 365,000 381,732
Local Government Loan Program Series A, 5.70%,
8/1/07 1,145,000 1,200,361
Michigan State Building Authority Revenue
Series I:
6.40%, 10/1/04 400,000 439,816
(AMBAC Insured), 5.00%, 10/1/06 950,000 960,897
Michigan State Comprehensive Transportation
Revenue Series B, 5.75%, 5/15/11 2,140,000 2,187,915
Michigan State Hospital Finance Authority
Revenue:
Detroit Medical Center -- B (AMBAC Insured),
5.00%, 8/15/06 1,000,000 1,004,040
Henry Ford Hospital, 6.00%, 9/1/11 1,250,000 1,315,425
Henry Ford Hospital, 5.75%, 9/1/17 750,000 758,092
Mercy Mt. Clemens, 6.25%, 5/15/11 500,000 525,855
Sisters of Mercy (MBIA Insured):
Series P, 5.00%, 8/15/06 460,000 458,845
Series H, 7.50%, 8/15/07 250,000 270,133
Michigan State Housing Development Authority
Revenue:
Rental, Series A, 6.20%, 4/1/03 1,000,000 1,055,990
Single Family Mortgage Series B, 6.30%, 4/1/03 1,000,000 1,002,180
Series C, 6.375%, 12/1/11 750,000 783,255
Michigan State University Revenue Series A:
6.125%, 8/15/07 500,000 533,515
6.25%, 8/15/15 2,000,000 2,112,140
Newaygo Public Schools General Obligation
Unlimited Tax, 6.00%, 5/1/12 300,000 318,339
Norway Vulcan Area Schools, 5.75%, 5/1/13 250,000 257,998
FS-424
<PAGE>
Novi Community Schools, 6.125%, 5/1/13 750,000 807,645
Novi General Obligation Series A & B Recreational
Facilities & Public Improvements, 5.00%,
10/1/11 725,000 706,433
Oak Park School District (AMBAC Insured):
6.00%, 6/1/09 250,000 266,470
Oakland County General Obligation Segment I & II
Evergreen Farmington Sewer Disposal System,
6.80%, 11/1/03 750,000 814,965
Oakland Community College Refunding & Improvement
Limited Tax:
5.15%, 5/1/09 910,000 898,707
General Obligation, 5.20%, 5/1/10 700,000 689,527
Okemos Public School District, 6.30%, 5/1/06 655,000 725,393
Ottawa Co. General Obligation Water Supply
System, 6.00%, 8/1/08 1,950,000 2,100,735
Perry Public Schools General Obligation Unlimited
Tax, 6.00%, 5/1/12 250,000 263,870
Rockford Public Schools, 5.875%, 5/1/12 500,000 522,905
Royal Oak Hospital Finance Authority Revenue,
William Beaumont Hospital -- G, 5.60%, 11/15/11 2,000,000 2,024,060
Saranac Community School District, 6.00%, 5/1/13 250,000 263,870
Traverse City Area Public School District,
Series I, 5.70%, 5/1/12 2,400,000 2,500,800
Troy City School District, School Improvements,
6.40%, 5/1/12 400,000 426,076
University of Michigan Revenue Hospital Series A:
5.75%, 12/1/12 850,000 859,409
5.50%, 12/1/21 450,000 445,077
University of Michigan Revenue Medical Service
Plan, 6.20%, 12/1/03 1,000,000 1,100,100
University of Michigan Revenue Student Fee
Series A, 5.25%, 4/1/15 1,000,000 997,510
Washtenaw Community College Unlimited Tax, 6.25%,
4/1/07 1,000,000 1,048,770
Wayne State University (AMBAC Insured):
5.50%, 11/15/07 1,000,000 1,044,180
5.65%, 11/15/15 800,000 813,904
Wayne Westland Community Schools (FGIC Insured),
Unlimited Tax, 5.75%, 5/1/11 350,000 360,951
Webberville Community School, 5.60%, 5/1/11 500,000 511,415
Western University Revenue (FGIC Insured), 6.25%,
11/15/12 250,000 270,172
Wyoming Public School, 5.875%, 5/1/13 350,000 367,010
-----------
TOTAL MUNICIPAL BONDS 52,052,248
-----------
(Cost $50,492,845)
TEMPORARY CASH INVESTMENT -- 1.38%
Woodward Michigan Tax-Exempt Money Market Fund 726,292 726,292
-----------
(Cost $726,292)
TOTAL INVESTMENTS $52,778,540
===========
(Cost $51,219,137)
</TABLE>
FS-425
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business
trust on April 21, 1987, and registered under the Investment Company Act of
1940, as amended, as an open-end investment company. As of December 31, 1995,
Woodward consisted of seventeen separate series of which there were five Bond
Funds, as described below. Woodward Bond Fund Woodward Intermediate Bond Fund
Woodward Short Bond Fund Woodward Municipal Bond Fund Woodward Michigan
Municipal Fund
The Bond and Intermediate Bond Funds commenced operations on June 1,
1991. The Municipal Bond and Michigan Municipal Bond Funds commenced
operations February 1, 1993. The Short Bond Fund commenced operations on
September 17, 1994.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Bond Funds in the preparation of the financial statements. The policies
are in conformity with generally accepted accounting principles for investment
companies. Following generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments
The Bond Funds value investment securities at market value which is
determined by a pricing service based upon quoted market prices or dealer
quotes. Securities for which market prices or dealer quotes are not readily
available are valued by the investment advisor, NBD Bank (NBD) in accordance
with procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day
after trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is required to equal or
exceed 102% of the funds advanced under the repurchase agreement including
accrued interest; 2) collateral is marked to market daily by NBD or its third
party custodian to assure its value remains at least equal to 102% of the
repurchase agreement amount; and 3) funds are not disbursed by Woodward or its
agent unless collateral is presented or acknowledged by the collateral
custodian.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount on debt instruments. Bond
premiums and discounts are amortized/accreted as required by the Internal
Revenue Code. Premiums and discounts on mortgage-backed securities are
amortized/accreted using the effective interest rate method. As prepayments on
the underlying mortgages increase or decrease the expected life, the yield is
adjusted to amortize/accrete the security to its new expected life.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
FS-426
<PAGE>
Net realized gains differ for financial statement and tax purposes
primarily because of the recognition of wash sale transactions for all Funds
and write downs for book purposes on the Bond and Intermediate Bond funds (See
notes to Portfolio of Investments). Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed may differ
from the year the income or realized gains were recorded by the Fund.
As of December 31, 1995, the Bond Funds had capital loss carryforwards
and related expiration dates as follows:
<TABLE>
<CAPTION>
Fund 2002 2003 Total
- ---- ---- ---- -----
<S> <C> <C> <C>
Bond $19,955,806 $1,041,792 $20,997,598
Intermediate Bond 3,916,956 2,190,497 6,107,453
Municipal Bond 96,878 333,098 429,976
Michigan Municipal Bond 29,400 -- 29,400
</TABLE>
Shareholder Dividends
Dividends from net investment income are declared and paid monthly by the
Bond Funds. Net realized capital gains are distributed annually. Distributions
from net investment income and net realized gains are made during each year to
avoid the 4% excise tax imposed on regulated investment companies by the
Internal Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the
five year period beginning with the commencement of operations of each series.
When Issued/To Be Announced (TBA) Securities.
The Bond Funds may purchase securities on a "when issued" basis. These
securities have been registered by a municipality or government agency, but
have not yet been issued to the public. These transactions involve a
commitment by the Funds to purchase particular securities, with payment and
delivery taking place at a future date, for which all specific information,
such as the face amount and maturity date of such investment security, is not
known at the time of the trade. These transactions are subject to market
fluctuations and the risk that the value at delivery may be more or less than
the purchase price at which the transactions were entered. The current value
of these securities is determined in the same manner as that of other
portfolio securities. Although the Bond Funds generally purchase these
securities with the intention of acquisition, such securities may be sold
before the settlement date.
Expenses
Expenses are charged daily as a percentage of the Fund's assets. Woodward
monitors the rate at which expenses are charged to ensure that a proper amount
of expense is charged to income each year. This percentage is subject to
revision if there is a change in the estimate of the future net assets of
Woodward or a change in expectations as to the level of actual expenses.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of .005% of the Bond Funds's average net assets and Essex
is entitled to receive a fee at the annual rate of .10% of the aggregate
average net assets of Woodward's investment portfolios attributable to
investments by clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For its
advisory services to Woodward, NBD is entitled to a fee, computed daily and
payable monthly. Under the Advisory Agreement, NBD also provides Woodward with
certain administrative services, such as maintaining Woodward's general ledger
and assisting in the preparation of various regulatory reports. NBD receives
no additional compensation for such services.
A reorganization of Woodward and The Prairie Funds is being considered by
the Board of Trustees of both funds. In connection with the proposed
reorganization, the Board of Trustees of Woodward and the Board of Trustees of
Prairie must approve certain reorganization agreements. The transaction is
intended to be effected as a tax-free reorganization under the Internal
Revenue Code, so that none of the Funds' shareholders will recognize taxable
gains or losses as a result of the reorganization. A proxy
statement/prospectus describing the reorganization and the reasons therefore
will be sent to shareholders.
FS-427<PAGE>
NBD, FoM, and Essex have agreed that they may waive their fees in whole
or in part; and, if in part, may specify the particular fund to which such
waiver relates as may be required to satisfy any expense limitation imposed by
state securities laws or other applicable laws. At present, no restrictive
expense limitation is imposed on Woodward. Restrictive limitations could be
imposed as a result of changes in current state laws and regulations in those
states where Woodward has qualified its shares, or by a decision of the
Trustees to qualify the shares in other states having restrictive expense
limitations. For the year ended December 31, 1995, NBD reimbursed the Short
Bond, Municipal Bond, and Michigan Municipal Bond Funds for certain expenses
in the amount of $65,761, $88,071, and $119,481 respectively.
On March 10, 1994, Woodward adopted the Woodward Funds Deferred
Compensation Plan (the "Plan"), an unfunded, nonqualified deferred
compensation plan. The Plan allows an individual Trustee to elect to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
NBD is also compensated for its services as Woodward's Custodian,
Transfer Agent and Dividend Disbursing Agent, and is reimbursed for certain
out of pocket expenses incurred on behalf of Woodward.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
(4) Investment Securities Transactions
Information with respect to investment securities and security
transactions based on the aggregate cost of investments for federal income tax
purposes, excluding short-term securities, is as follows:
<TABLE>
<CAPTION>
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
--------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Gross Unrealized
Gains $ 35,731,180 $ 13,566,717 $ 2,333,204 $ 2,346,519 $ 1,652,718
Gross Unrealized
Losses (11,032,156) (7,073,022) (49,031) (155,328) (93,315)
------------ ------------ ------------ ------------ ------------
$ 24,699,024 $ 6,493,695 $ 2,284,173 $ 2,501,847 $ 1,559,403
============ ============ ============ ============ ============
Federal Income Tax
Cost $488,279,591 $394,514,666 $159,199,919 $ 75,750,865 $ 51,219,137
Purchases $191,486,673 $141,628,950 $129,641,103 $ 24,624,824 $ 16,596,409
Sales & Maturities, at value $189,618,003 $176,498,989 $ 31,673,292 $ 13,656,636 $ 13,193,153
</TABLE>
FS-428
<PAGE>
(5) Expenses
Following is a summary of total expense rates charged, advisory fee
rates payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the year ended December 31, 1995. The rates
shown are stated as a percentage of each fund's average net assets.
<TABLE>
<CAPTION>
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
Effective Date BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
- -------------- --------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Expense Rates:
January 1 0.74% 0.73% 0.75% 0.77% 0.77%
March 21 0.74% 0.73% 0.75% 0.80% 0.80%
NBD Advisory Fee:
January 1 0.65% 0.65% 0.65% 0.65% 0.65%
Amounts Paid:
Advisory Fee to NBD $3,121,267 $2,650,418 $650,298 $444,288 $ 327,020
Distribution Fees to FoM
& Essex $ 51,487 $ 28,779 $ 5,165 $ 13,331 $ 19,211
Other Fees & Out of Pocket
Expenses to NBD $ 124,183 $ 92,054 $ 36,588 $ 33,445 $ 34,020
Expense reimbursement by NBD -- -- $(65,761) $(88,071) $(119,481)
</TABLE>
(6) Portfolio Composition
Although the Municipal Bond Fund has a diversified investment portfolio,
the Fund has investments greater than 10% of its total investments in the
state of Illinois. The Michigan Municipal Bond Fund does not have a
diversified portfolio since all of its investments are within the state of
Michigan. Such concentrations within particular states may subject the Funds
more significantly to economic changes occuring within those states.
FS-429
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the Bond
Funds' net asset values have changed during the periods presented. Additional
quantitative measures expressed in ratio form analyze important relationships
between certain items presented in the financial statements. These financial
highlights have been derived from the financial statements of the Bond Funds
and other information for the periods presented.
<TABLE>
<CAPTION>
Bond Fund
-------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Period ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.01 $ 10.32 $ 10.25 $ 10.55 $ 10.00
Income from investment operations:
Net investment income 0.63 0.61 0.76 0.83 0.51
Net realized and unrealized gains
(losses) on investments 1.45 (1.31) 0.38 (0.17) 0.57
------------ ------------- ------------ ------------ ------------
Total from investment operations 2.08 (0.70) 1.14 0.66 1.08
------------ ------------- ------------ ------------ ------------
Less distributions:
From net investment income (0.64) (0.59) (0.76) (0.83) (0.51)
From realized gains -- (0.02) (0.31) (0.13) (0.02)
------------ ------------- ------------ ------------ ------------
Total distributions (0.64) (0.61) (1.07) (0.96) (0.53)
------------ ------------- ------------ ------------ ------------
Net asset value, end of period $ 10.45 $ 9.01 $ 10.32 $ 10.25 $ 10.55
============ ============= ============ ============ ============
Total Return (b) 23.75% (6.99%) 11.39% 6.56% 18.45%(a)
Ratios/Supplemental Data
Net assets, end of period $517,565,579 $427,168,395 $501,196,278 $321,758,333 $237,673,316
Ratio of expenses to average net assets 0.74% 0.74% 0.73% 0.73% 0.75%(a)
Ratio of net investment income to
average net assets 6.39% 6.36% 7.20% 8.08% 8.44%(a)
Portfolio turnover rate 41.91% 75.67% 111.52% 90.45% 8.19%
<FN>
- ----------------
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
See accompanying notes to financial statements.
</TABLE>
FS-430
<PAGE>
<TABLE>
<CAPTION>
Intermediate Bond Fund
-----------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Period ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.21 $ 10.41 $ 10.28 $ 10.55 $ 10.00
Income from investment operations:
Net investment income 0.59 0.56 0.59 0.71 0.40
Net realized and unrealized gains (losses)
on investments 1.16 (1.20) 0.26 (0.10) 0.57
------------ ------------ ------------ ------------ ------------
Total from investment operations 1.75 (0.64) 0.85 0.61 0.97
------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income (0.59) (0.55) (0.59) (0.71) (0.40)
From realized gains -- (0.01) (0.13) (0.17) (0.02)
------------ ------------ ------------ ------------ ------------
Total distributions (0.59) (0.56) (0.72) (0.88) (0.42)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period $ 10.37 $ 9.21 $ 10.41 $ 10.28 $ 10.55
============ ============ ============ ============ ============
Total Return (b) 19.48% (6.31%) 8.41% 6.00% 16.62%(a)
Ratios/Supplemental Data
Net assets, end of period $405,309,939 $393,019,168 $429,789,857 $220,432,255 $130,367,032
Ratio of expenses to average net assets 0.73% 0.74% 0.74% 0.74% 0.75%(a)
Ratio of net investment income to average net
assets 5.98% 5.73% 5.44% 6.91% 6.59%(a)
Portfolio turnover rate 36.47% 54.60% 92.80% 56.30% 7.38%
<FN>
- ----------------
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
FS-431
<PAGE>
<TABLE>
<CAPTION>
Short Bond Fund Municipal Bond Fund
------------------------------ ---------------------------------------------
Year ended Period ended Year ended Year ended Period ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.84 $ 10.00 $ 9.59 $ 10.69 $ 10.00
Income from investment operations:
Net investment income 0.58 0.17 0.48 0.50 0.45
Net realized and unrealized gains
(losses) on investments 0.39 (0.16) 1.08 (1.11) 0.69
------------ ------------ ----------- ----------- -----------
Total from investment operations 0.97 0.01 1.56 (0.61) 1.14
------------ ------------ ----------- ----------- -----------
Less distributions:
From net investment income (0.58) (0.17) (0.47) (0.49) (0.44)
From realized gains (0.00) -- -- -- (0.01)
------------ ------------ ----------- ----------- -----------
Total distributions (0.58) (0.17) (0.47) (0.49) (0.45)
------------ ------------ ----------- ----------- -----------
Net asset value, end of period $ 10.23 $ 9.84 $ 10.68 $ 9.59 $ 10.69
============ =========== =========== =========== ===========
Total Return (b) 10.07% 0.21%(a) 16.54% (5.72%) 12.69%(a)
Ratios/Supplemental Data
Net assets, end of period $163,336,855 $64,239,163 $76,963,564 $61,255,773 $54,703,974
Ratio of expenses to average net assets 0.75% 0.75%(a) 0.79% 0.53% 0.19%(a)
Ratio of net investment income to
average net assets 5.74% 5.92%(a) 4.63% 4.94% 5.27%(a)
Ratio of expenses to average net assets
without fee waivers/ reimbursed expenses 0.81% 0.93%(a) 0.93% 0.88% 1.12%(a)
Ratio of net investment income to average
net assets without fee waivers/
reimbursed expenses 5.68% 5.74%(a) 4.49% 4.59% 4.34%(a)
Portfolio turnover rate 30.94% 10.20% 20.46% 19.11% 11.12%
<FN>
- ----------------
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
FS-432
<PAGE>
<TABLE>
<CAPTION>
Michigan Municipal Bond Fund
---------------------------------------------
Year ended Year ended Period ended
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
------------- ------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.54 $ 10.60 $ 10.00
Income from investment operations:
Net investment income 0.48 0.50 0.44
Net realized and unrealized gains (losses)
on investments 1.06 (1.06) 0.59
----------- ----------- -----------
Total from investment operations 1.54 (0.56) 1.03
----------- ----------- -----------
Less distributions:
From net investment income (0.48) (0.50) (0.43)
From realized gains -- -- --
----------- ----------- -----------
Total distributions (0.48) (0.50) (0.43)
----------- ----------- -----------
Net asset value, end of period $ 10.60 $ 9.54 $ 10.60
=========== =========== ===========
Total Return (b) 16.49% (5.42%) 11.50%(a)
Ratios/Supplemental Data
Net assets, end of period $53,453,160 $45,263,059 $42,113,795
Ratio of expenses to average net assets 0.79% 0.53% 0.19%(a)
Ratio of net investment income to average net assets 4.71% 5.01% 5.12%(a)
Ratio of expenses to average net assets without fee
waivers/ reimbursed expenses 1.04% 1.05% 1.21%(a)
Ratio of net investment income to average net assets
without fee waivers/reimbursed expenses 4.46% 4.49% 4.10%(a)
Portfolio turnover rate 26.97% 25.93% 41.70%
<FN>
- ----------------
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
FS-433
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees and Shareholders of
The Woodward Bond Funds:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Bond Funds of THE WOODWARD
FUNDS (comprising, as indicated in Note 1, the Bond, Intermediate Bond, Short
Bond, Municipal Bond and Michigan Municipal Bond Funds) as of December 31,
1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods from
inception (as indicated in Note 1) through December 31, 1995. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included physical counts and
confirmation of securities owned as of December 31, 1995, by inspection and
correspondence with custodians, banks and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective funds constituting the Bond Funds of The
Woodward Funds as of December 31, 1995, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended and the financial highlights for each of the periods
from inception (as indicated in Note 1) through December 31, 1995 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
February 19, 1996.
FS-434
<PAGE>
[ INTENTIONALLY LEFT BLANK ]
FS-435
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--25.7%
AUTOMOBILES--LEASING--0.9%
Hertz Corp., Junior Subordinate Note.... 6.63% 7/15/00 $ 500 $ 511,596
-----------
BANKING--2.4%
Citicorp, Subordinate Capital Note...... 9.75% 8/1/99 250 281,881
Citicorp, Subordinate Debenture......... 8.63% 12/1/02 350 399,187
NationsBank Corp., Subordinate
Debenture............................. 8.13% 6/15/02 350 386,750
Westpac Banking Limited, Subordinate
Debenture............................. 9.13% 8/15/01 250 285,192
-----------
1,353,010
-----------
BEVERAGES, FOOD AND TOBACCO--4.8%
Grand Metro Investment Corp., Guaranteed
Debenture, Yankee Bond................ 9.00% 8/15/11 250 309,616
Philip Morris Cos., Inc., Corporate
Note.................................. 8.63% 3/1/99 500 539,361
Philip Morris Cos., Inc., Corporate
Note.................................. 7.13% 10/1/04 250 264,357
RJR Nabisco, Inc. ...................... 8.30% 4/15/99 750 799,769
RJR Nabisco, Inc. ...................... 8.63% 12/1/02 700 727,012
-----------
2,640,115
-----------
CONSUMER GOODS AND SERVICES--1.0%
Time Warner, Inc., Corporate Note....... 7.95% 2/1/00 500 528,668
-----------
ENERGY--3.1%
Burlington Resources, Inc., Corporate
Note.................................. 8.50% 10/1/01 250 279,853
Coastal Corp., Senior Debenture......... 10.25% 10/15/04 500 623,257
Occidental Petroleum Corp., Senior Note. 11.13% 8/1/10 400 558,388
Shell Canada Limited, Corporate Note.... 7.38% 6/1/99 250 263,587
-----------
1,725,085
-----------
FINANCIAL SERVICES--9.2%
Barclay American Corp., Senior
Debenture............................. 9.13% 12/1/97 750 796,317
Chemical Banking Corp., Subordinate
Note.................................. 7.63% 1/15/03 500 542,021
Discover Credit Corp., Medium Term Note. 8.37% 4/28/99 250 268,483
General Motors Acceptance Corp.,
Corporate Note........................ 7.75% 4/15/97 250 254,756
General Motors Acceptance Corp.,
Corporate Note........................ 7.00% 3/1/00 500 520,157
</TABLE>
See Notes to Financial Statements.
FS-436
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
FINANCIAL SERVICES (CONTINUED)
General Motors Acceptance Corp.,
Medium Term Note...................... 8.65% 5/29/96 $ 400 $ 405,094
International Lease Finance,
Corporate Note........................ 8.35% 10/1/98 500 533,594
KFW International Finance, Inc.
Guaranteed Note....................... 8.85% 6/15/99 250 274,728
Progessive Corp., Ohio, Corporate Note.. 6.60% 1/15/04 500 509,013
Salomon Inc., Senior Note............... 7.50% 2/1/03 500 514,213
Wells Fargo & Co., Subordinate Note..... 8.38% 5/15/02 400 447,822
-----------
5,066,198
-----------
HEATH CARE AND HOSPITAL MANAGEMENT--0.5%
Multicare Cos., Inc.,
Subordinate Debenture*................ 7.00% 3/15/03 250 271,250
-----------
RETAIL--0.5%
May Department Stores Co.,
Medium Term Note...................... 9.45% 2/2/99 250 275,701
-----------
STEEL--0.9%
USX-Marathon Group, Corporate Note...... 6.38% 7/15/98 500 505,561
-----------
TECHNOLOGY INDUSTRIES--1.0%
Digital Equipment Corp., Debenture...... 8.63% 11/1/12 500 547,116
-----------
UTILITIES--1.4%
Commonwealth Edison Co., First Mortgage,
Series 81, Corporate Note............. 8.63% 2/1/22 250 275,250
Pacific Bell, Corporate Note............ 7.00% 7/15/04 500 525,940
-----------
801,190
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $13,587,940)..................... 14,225,490
-----------
U.S. GOVERNMENT OBLIGATIONS--3.7%
U.S. Treasury Notes..................... 8.50% 5/15/97 100 104,344
U.S. Treasury Notes..................... 8.13% 2/15/98 500 528,750
U.S. Treasury Notes..................... 6.25% 5/31/00 850 879,218
U.S. Treasury Notes..................... 8.00% 5/15/01 500 560,000
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $1,960,714)...................... 2,072,312
-----------
</TABLE>
See Notes to Financial Statements.
FS-437
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS--1.7%
Federal National
Mortgage Association.. 7.60% 1/10/97 $ 400 $ 409,250
Federal National
Mortgage Association.. 8.35% 11/10/99 500 547,694
----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(COST $900,628)........ 956,944
----------
<CAPTION>
Shares
------
<S> <C> <C> <C> <C>
PREFERRED CONVERTIBLE
STOCKS--7.0%
AUTOMOBILES--3.1%
Ford Motor Co., Series
A, $4.20.............. 9,000 852,750
General Motors Corp.,
Series C, $3.25....... 12,000 879,000
----------
1,731,750
----------
BANKING AND FINANCE--3.9%
Citicorp, Series 13,
$5.38................. 6,000 1,098,750
First USA, Inc., 6.25%.. 15,000 592,500
National City Corp.,
8.00%................. 6,000 472,500
----------
2,163,750
----------
TOTAL PREFERRED
CONVERTIBLE STOCKS
(COST $2,643,539)...... 3,895,500
----------
COMMON STOCKS--41.9%
AUTOMOBILES--1.7%
Ford Motor Co. ......... 4,000 116,000
General Motors Corp..... 14,886 787,097
----------
903,097
----------
BANKING AND FINANCE--5.1%
Bank of Boston Corp. ... 21,000 971,250
First Union Corp. ...... 11,000 611,875
NationsBank Corp. ...... 13,912 968,623
Citicorp................ 4,280 287,830
----------
2,839,578
----------
BEVERAGE, FOOD AND
TOBACCO--3.3%
Philip Morris Cos.,
Inc. ................. 20,000 1,810,000
----------
</TABLE>
See Notes to Financial Statements.
FS-438
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
ELECTRICAL AND ELECTRONIC EQUIPMENT--0.6%
Hubbell, Inc., Class B.......................... 5,000 $ 328,750
-----------
HEALTH INDUSTRIES--3.6%
National Health Investors, Inc. ................ 61,000 2,020,625
-----------
INSURANCE--3.1%
AON Corp. ...................................... 28,500 1,421,438
Exel, Ltd. ..................................... 5,200 317,200
-----------
1,738,638
-----------
OIL & GAS--3.9%
Atlantic Richfield Co. ......................... 5,000 553,750
British Petroleum PLC ADR....................... 9,000 919,125
Texaco, Inc. ................................... 9,000 706,500
-----------
2,179,375
-----------
PHARMACEUTICALS--5.8%
Bristol Myers Squibb Co. ....................... 8,000 687,000
Johnson & Johnson............................... 8,000 685,000
Pfizer, Inc. ................................... 20,000 1,260,000
Warner Lambert Co. ............................. 6,000 582,750
-----------
3,214,750
-----------
REAL ESTATE INVESTMENT TRUSTS--2.0%
Amli Residential Property Trust................. 55,000 1,100,000
-----------
TELECOMMUNICATIONS--6.0%
Brittish Telecom PLC ADR........................ 10,000 565,000
GTE Corp. ...................................... 26,000 1,144,000
Sprint Corp. ................................... 20,000 797,500
US West, Inc. .................................. 15,000 536,250
US West Media Group............................. 15,000 285,000
-----------
3,327,750
-----------
UTILITIES--6.8%
Detroit Edison Co. ............................. 20,000 690,000
Entergy Corp. .................................. 20,000 585,000
Peco Energy Co. ................................ 25,000 753,125
</TABLE>
See Notes to Financial Statements.
FS-439
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UTILITIES (CONTINUED)
Texas Utilities Co. ................... 30,000 $ 1,233,750
United Illuminating Co. ............... 14,000 523,250
-----------
3,785,125
-----------
TOTAL COMMON STOCKS
(COST $17,046,251).................... 23,247,688
-----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
SHORT TERM INVESTMENT--19.2%
U.S. TREASURY BILL--19.2%
U.S. Treasury Bill (cost $10,607,930).. 5.31%** 2/29/96 $10,700 10,617,075
-----------
TOTAL INVESTMENTS--99.2%
(COST $46,747,002)(A)................. 55,015,009
Other assets in excess of liabilities--
0.8%.................................. 450,318
-----------
NET ASSETS--100.0%...................... $55,465,327
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $55,465,327.
* Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
** Yield at purchase.
(a) Represents cost for federal income tax and financial reporting purposes
and differs from value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $8,452,650
Unrealized depreciation......................................... (184,643)
----------
Net unrealized appreciation..................................... $8,268,007
==========
</TABLE>
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-440
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--61.4%
ALUMINUM--1.1%
Aluminum Co. of America...................... 1,900 $ 100,462
----------
AUTOMOBILES--0.9%
Ford Motor Co................................ 3,000 87,000
----------
AUTOMOTIVE PARTS & EQUIPMENT--0.9%
Echlin, Inc.................................. 2,400 87,600
----------
BANKING--3.7%
BankAmerica Corp............................. 1,900 123,025
NationsBank Corp............................. 1,700 118,363
State Street Bank(b)......................... 2,600 117,000
----------
358,388
----------
BEVERAGE, FOOD & TOBACCO--4.5%
Anheuser-Busch Cos., Inc..................... 1,200 80,250
Coca-Cola Co................................. 1,600 118,800
PepsiCo, Inc................................. 2,000 111,750
Philip Morris Cos., Inc...................... 1,300 117,650
----------
428,450
----------
BROKERAGE SERVICES--0.7%
Dean Witter, Discover & Co................... 1,400 65,800
----------
BUSINESS & DATA PROCESSING EQUIPMENT--1.6%
International Business Machines.............. 1,700 155,975
----------
CHEMICALS--3.6%
E. I. du Pont de Nemours & Co................ 1,100 76,863
Monsanto Co.................................. 700 85,750
Morton Int'l................................. 2,900 104,037
Praxair, Inc................................. 2,300 77,337
----------
343,987
----------
COMPUTERS-MICRO--0.9%
Compaq Computer Corp.(b)..................... 1,700 81,600
----------
COMPUTERS-SOFTWARE & PERIPHERALS--2.1%
Computer Association Int'l., Inc. ........... 1,550 88,156
Microsoft Corp.(b)........................... 1,300 114,075
----------
202,231
----------
</TABLE>
See Notes to Financial Statements.
FS-441
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
CONGLOMERATES--3.4%
Allied Signal, Inc........................... 1,700 $ 80,750
General Electric Co.......................... 2,500 180,000
ITT Corp..................................... 900 47,700
ITT Industries, Inc.(b)...................... 900 21,600
----------
330,050
----------
CONSUMER GOODS--1.0%
Service Corp. International.................. 2,100 92,400
----------
ELECTRONIC EQUIPMENT--2.7%
Emerson Electric Co.......................... 2,000 163,500
Motorola, Inc................................ 1,700 96,900
----------
260,400
----------
FINANCE COMPANIES--1.1%
Federal Home Loan Mortgage Corp.............. 1,300 108,550
----------
FOOD PROCESSING--0.9%
CPC Int. .................................... 1,300 89,212
----------
FOOD PRODUCTS--0.8%
Hershey Foods................................ 1,200 78,000
----------
HOUSEHOLD & PERSONAL CARE PRODUCTS--1.2%
Procter & Gamble Co. ........................ 1,400 116,200
----------
INSURANCE--1.9%
American International Group, Inc. .......... 1,500 138,750
ITT Hartford Group(b)........................ 900 43,538
----------
182,288
----------
LEISURE & ENTERTAINMENT--1.1%
Walt Disney Co............................... 1,800 106,200
----------
NEWSPAPERS AND PUBLISHING--0.7%
News Corp., Ltd. ADR......................... 3,300 70,538
----------
OIL-DOMESTIC--3.9%
Chevron Corp................................. 2,300 120,750
Mobil Corp................................... 1,200 134,400
Unocal Corp.................................. 4,100 119,413
----------
374,563
----------
</TABLE>
See Notes to Financial Statements.
FS-442
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
OIL-FIELD SERVICES AND EQUIPMENT--0.9%
Schlumberger, Ltd. ........................... 1,200 $ 83,100
----------
OIL & GAS--2.0%
British Petroleum Co. ADR..................... 900 91,913
Royal Dutch Petroleum Co...................... 700 98,788
----------
190,701
----------
PHARMACEUTICALS--5.5%
Bristol Myers Squibb Co....................... 1,200 103,050
Johnson & Johnson............................. 1,500 128,437
Merck & Co., Inc.............................. 1,800 118,350
Pfizer, Inc................................... 1,600 100,800
Smithkline Beecham ADR........................ 1,300 72,150
----------
522,787
----------
POLLUTION CONTROL--0.9%
WMX Technologies.............................. 3,000 89,625
----------
RAILROADS--1.1%
CSX Corp...................................... 2,400 109,500
----------
RESTAURANTS--0.8%
McDonald's Corp............................... 1,600 72,200
----------
RETAIL--3.1%
Home Depot, Inc............................... 2,400 114,900
May Department Stores Co...................... 1,500 63,375
Wal Mart Stores, Inc.......................... 5,400 120,825
----------
299,100
----------
TELECOMMUNICATIONS--6.9%
AT&T Corp..................................... 2,100 135,974
General Instrument Corp.(b)................... 1,300 30,388
GTE Corp...................................... 3,800 167,200
MCI Communications Corp....................... 2,800 73,150
NYNEX Corp.................................... 2,100 113,400
Pacific Telesis Group......................... 1,800 60,525
Telcom Corp. New Zealand ADR.................. 1,200 83,250
----------
663,887
----------
</TABLE>
See Notes to Financial Statements.
FS-443
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UTILITIES--1.5%
FPL Group, Inc.......................... 3,200 $ 148,400
----------
TOTAL COMMON STOCKS
(COST $5,270,362)...................... 5,899,194
----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
----- -------- ---------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--26.0%
U.S. TREASURY NOTES
U.S. Treasury Note...................... 6.25% 5/31/00 $ 800 827,500
U.S. Treasury Note...................... 7.50% 11/15/01 700 771,750
U.S. Treasury Note...................... 6.38% 8/15/02 850 893,296
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $2,398,249)...................... 2,492,546
----------
SHORT TERM INVESTMENT--11.7%
U.S. TREASURY BILL
U.S. Treasury Bill (cost $1,120,308).... 5.31%* 2/29/96 1,130 1,121,243
----------
TOTAL INVESTMENTS
(COST $8,788,919)(A)--99.1% ........... 9,512,982
Other assets in excess of liabilities--
0.9%................................... 86,019
----------
NET ASSETS--100.0%....................... $9,599,001
==========
</TABLE>
- -----------
Percentages indicated are based on net assets of $9,599,001.
*Yield at purchase.
(a)Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................... $766,286
Unrealized depreciation........................................... (42,223)
--------
Net unrealized appreciation....................................... $724,063
========
</TABLE>
(b)Represents non-income producing security.
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-444
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--87.4%
AUTOMOBILES--1.4%
Ford Motor Co.............................. 140,000 $ 4,060,000
------------
AUTOMOTIVE PARTS & EQUIPMENT--1.7%
Echlin, Inc................................ 135,000 4,927,500
------------
BANKS--5.7%
Bankers Trust.............................. 115,000 7,647,500
First Union Corp. ......................... 90,000 5,006,250
NationsBank Corp........................... 55,000 3,829,375
------------
16,483,125
------------
BEVERAGES, FOOD & TOBACCO--2.8%
ConAgra, Inc............................... 81,418 3,358,492
Philip Morris Cos., Inc.................... 50,841 4,601,111
------------
7,959,603
------------
CHEMICALS--6.3%
ARCO Chemical.............................. 106,000 5,154,250
Dow Chemical............................... 93,000 6,544,875
E. I. du Pont de Nemours & Co.............. 90,000 6,288,750
------------
17,987,875
------------
COMPUTER SOFTWARE AND PERIPHERALS--1.3%
International Business Machines............ 40,000 3,670,000
------------
CONSTRUCTION--0.5%
Vulcan Materials........................... 23,000 1,325,375
------------
CONSUMER PRODUCTS--3.8%
Clorox Co. ................................ 100,000 7,162,500
Southern Co. .............................. 150,000 3,693,750
------------
10,856,250
------------
DEFENSE--1.7%
Lockheed Martin............................ 60,000 4,740,000
------------
ELECTRICAL EQUIPMENT--2.2%
Emerson Electric Co. ...................... 48,000 3,924,000
Hubbell, Inc., Class B..................... 20,000 1,315,000
Thomas & Betts Corp. ...................... 15,000 1,106,250
------------
6,345,250
------------
</TABLE>
See Notes to Financial Statements.
FS-445
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
FOREST AND PAPER PRODUCTS--1.4%
Weyerhaeuser Co............................. 95,000 $ 4,108,750
------------
INSURANCE--5.8%
AON Corp. .................................. 137,000 6,832,875
FPL Group, Inc. ............................ 75,000 3,478,125
Lincoln National Corp. ..................... 120,000 6,450,000
------------
16,761,000
------------
METALS--1.0%
Phelps Dodge Corp. ......................... 45,000 2,801,250
------------
NATURAL GAS--3.0%
National Fuel Gas Co. ...................... 25,000 840,625
Sonat, Inc.................................. 40,000 1,425,000
Tenneco, Inc. .............................. 130,000 6,451,250
------------
8,716,875
------------
OIL & GAS--19.0%
AMOCO Corp.................................. 140,000 10,062,500
Atlantic Richfield Corp..................... 55,000 6,091,250
British Petroleum Co. PLC, ADR.............. 70,000 7,148,750
Exxon Corp.................................. 15,000 1,201,875
Mobil Corp.................................. 105,000 11,760,000
Occidental Petroleum Corp. ................. 195,000 4,168,125
Texaco, Inc................................. 125,000 9,812,500
Unocal Corp................................. 153,000 4,456,125
------------
54,701,125
------------
PHARMACEUTICALS--2.9%
Warner Lambert Co. ......................... 86,000 8,352,750
------------
REAL ESTATE INVESTMENT TRUSTS--3.8%
Amli Residential Properties Trust........... 140,000 2,800,000
Equity Residential Properties Trust ........ 80,000 2,450,000
National Health Investors, Inc. ............ 174,000 5,763,750
------------
11,013,750
------------
RETAIL STORES--2.3%
May Department Stores Co. .................. 156,938 6,630,631
------------
</TABLE>
See Notes to Financial Statements.
FS-446
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
TELECOMMUNICATIONS--8.7%
British Telecom PLC ADR.................. 70,000 $ 3,955,000
GTE Corp. ............................... 210,000 9,240,000
Sprint Corp.............................. 156,938 6,257,903
U.S. West, Inc........................... 156,938 5,610,533
------------
25,063,436
------------
UTILITIES--12.1%
Cinergy Corp............................. 130,000 3,981,250
Detroit Edison Co. ...................... 196,173 6,767,969
Houston Industries....................... 260,000 6,305,000
Pacific Gas & Electric Co................ 54,928 1,558,582
Peco Energy Co. ......................... 129,769 3,909,291
Texas Utilities Co. ..................... 156,938 6,454,075
United Illuminating Co................... 156,938 5,865,558
------------
34,841,725
------------
TOTAL COMMON STOCKS
(COST $213,380,725)..................... 251,346,270
------------
CONVERTIBLE PREFERRED STOCKS--2.9%
AUTOMOBILES--2.2%
Ford Motor Company, Series A, $4.20...... 66,699 6,319,730
------------
STEEL--0.7%
WHX Corp., Series B, $3.00............... 45,694 1,941,995
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $7,461,465)....................... 8,261,725
------------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
CONVERTIBLE BOND--2.7%
BANKS--2.7%
Bank of New York, Inc.
Subordinate Convertible Debenture
(cost $4,984,156)...................... 7.50% 8/15/01 $ 3,139 7,816,110
------------
</TABLE>
See Notes to Financial Statements.
FS-447
<PAGE>
PRAIRIE FUNDS
EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--7.1%
TIME DEPOSIT--7.1%
Berlin/Frankfurt Bank
(cost $20,271,000).................... 5.81% 1/2/96 $20,271 $ 20,271,000
------------
TOTAL INVESTMENTS
(COST $246,097,346)(A)--100.1%......... 287,695,105
Liabilities in excess of other
assets--(0.1%)......................... (301,578)
------------
NET ASSETS--100.0%....................... $287,393,527
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $287,393,527.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $42,227,078
Unrealized depreciation........................................ (629,319)
-----------
Net unrealized appreciation.................................... $41,597,759
===========
</TABLE>
ADR--American Depository Receipt.
See Notes to Financial Statements.
FS-448
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--95.5%
ADVERTISING AND MARKETING SERVICES--1.3%
Interpublic Group of Companies, Inc. ........ 55,000 $ 2,385,625
Omnicon Group................................ 40,000 1,490,000
------------
3,875,625
------------
AUTOMOTIVE PARTS & EQUIPMENT--1.0%
Echlin, Inc. ................................ 80,000 2,920,000
------------
BANKING--1.5%
State Street Bank(b)......................... 100,000 4,500,000
------------
BEVERAGES, FOOD AND TOBACCO--16.0%
Coca Cola Co. ............................... 55,000 4,083,750
ConAgra, Inc. ............................... 110,000 4,537,500
General Mills, Inc. ......................... 140,000 8,085,000
Hershey Foods Corp. ......................... 60,000 3,900,000
Hudson Foods, Inc. Class A................... 90,000 1,552,500
PepsiCo, Inc. ............................... 130,000 7,263,750
Philip Morris Cos., Inc. .................... 140,000 12,670,000
Sara Lee Corp. .............................. 170,000 5,418,750
Schweitzer-Mauduit Int'l.(b)................. 8,000 185,000
------------
47,696,250
------------
CHEMICALS--5.9%
Eastman Chemical Co. ........................ 85,000 5,323,125
Morton Int'l ................................ 150,000 5,381,250
Praxair, Inc. ............................... 145,000 4,875,625
Wellman, Inc. ............................... 90,000 2,047,500
------------
17,627,500
------------
COMPUTERS--MICRO--0.7%
Compaq Computer Corp.(b)..................... 40,000 1,920,000
------------
COMPUTER SOFTWARE AND PERIPHERALS--5.2%
Automatic Data Processing, Inc. ............. 80,000 5,940,000
Computer Associates Int'l., Inc. ............ 100,000 5,687,500
Intel Corp. ................................. 70,000 3,972,500
------------
15,600,000
------------
</TABLE>
See Notes to Financial Statements.
FS-449
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
CONSUMER GOODS AND SERVICES--10.4%
American Home Products Corp. ................ 70,000 $ 6,790,000
Clorox Co. .................................. 75,000 5,371,875
Hillenbrand Industries, Inc. ................ 100,000 3,387,500
Kimberly-Clark Corp. ........................ 80,000 6,620,000
Service Corp. Int'l. ........................ 115,000 5,060,000
Stewart Enterprises, Inc. ................... 105,000 3,885,000
------------
31,114,375
------------
CONSUMER NON-DURABLES--0.6%
Alberto-Culver Co., Class A.................. 55,000 1,677,500
------------
ELECTRONICS--9.5%
AMP, Inc. ................................... 120,000 4,605,000
Emerson Electric............................. 80,000 6,540,000
General Electric Co. ........................ 180,000 12,960,000
Motorola, Inc. .............................. 75,000 4,275,000
------------
28,380,000
------------
ENTERTAINMENT AND LEISURE--1.5%
Time Warner, Inc. ........................... 120,000 4,545,000
------------
HEALTH INDUSTRIES--3.9%
Horizon HealthCare Corp.(b).................. 145,000 3,661,250
Procter & Gamble Co. ........................ 95,000 7,885,000
------------
11,546,250
------------
INSURANCE--5.4%
American International Group, Inc. .......... 75,000 6,937,500
Chubb Corp. ................................. 65,000 6,288,750
General RE Corp. ............................ 20,000 3,100,000
------------
16,326,250
------------
MANUFACTURING--1.1%
Corning, Inc. ............................... 100,000 3,200,000
------------
MEDICAL CARE & PRODUCTS--0.7%
Sofamor Danek Group(b)....................... 80,000 2,270,000
------------
OIL & GAS--3.4%
British Petroleum Co. ADR.................... 70,000 7,148,750
Unocal Corp. ................................ 100,000 2,912,500
------------
10,061,250
------------
</TABLE>
See Notes to Financial Statements.
FS-450
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
PHARMACEUTICALS--12.0%
Elan Corp. PLC ADR(b)......................... 90,000 $ 4,376,250
Forest Labs, Inc.(b).......................... 50,000 2,262,500
Ivax Corp. ................................... 100,000 2,850,000
Johnson & Johnson............................. 95,000 8,134,375
Mylan Labs.................................... 105,000 2,467,500
Pfizer, Inc. ................................. 160,000 10,080,000
Pharmacia & Upjohn(b)......................... 75,000 2,906,250
Smithkline Beecham ADR........................ 50,000 2,775,000
------------
35,851,875
------------
POLLUTION CONTROL--4.1%
Browning-Ferris............................... 185,000 5,457,500
WMX Technologies, Inc. ....................... 230,000 6,871,250
------------
12,328,750
------------
RETAIL--4.2%
Eckerd Corp.(b)............................... 110,000 4,908,750
May Department Stores Co. .................... 110,000 4,647,500
Walgreen Co.(b)............................... 100,000 2,987,500
------------
12,543,750
------------
TELECOMMUNICATIONS--6.5%
AT&T Corp. ................................... 140,000 9,065,000
Century Telephone Enterprises, Inc. .......... 50,000 1,587,500
DSC Communications Corp.(b)................... 40,000 1,475,000
MCI Communications Corp. ..................... 275,000 7,184,375
------------
19,311,875
------------
UTILITIES--0.6%
AES Corp.(b).................................. 80,000 1,910,000
------------
TOTAL COMMON STOCKS
(COST $239,473,384).......................... 285,206,250
------------
</TABLE>
See Notes to Financial Statements.
FS-451
<PAGE>
PRAIRIE FUNDS
GROWTH FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--3.6%
TIME DEPOSIT--3.6%
Berlin/Frankfort Bank
(cost $10,663,000).................... 5.81% 1/2/96 $10,663 $ 10,663,000
------------
TOTAL INVESTMENTS
(COST $250,136,384)(A)--99.1%.......... 295,869,250
Other assets in excess of liabilities--
0.9%................................... 2,672,096
------------
NET ASSETS--100.0%....................... $298,541,346
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $298,541,346.
(a) Represents cost for financial reporting purposes. Cost for federal income
tax purposes was $250,657,238 and differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $48,528,373
Unrealized depreciation........................................ (3,316,361)
-----------
Net unrealized appreciation.................................... $45,212,012
===========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-452
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--93.9%
ADVERTISING AND MARKETING SERVICES--1.3%
Interpublic Group of Companies, Inc. ......... 12,000 $ 520,500
Omnicon Group................................. 20,000 745,000
-----------
1,265,500
-----------
APPAREL--1.1%
Tommy Hilfiger Corp.(b)....................... 24,100 1,021,238
-----------
AUTOMOTIVE PARTS AND EQUIPMENT--3.0%
Borg Warner................................... 30,000 960,000
Simpson Industries............................ 70,000 630,000
Superior Industries Int'l, Inc. .............. 45,000 1,186,875
-----------
2,776,875
-----------
BANKS--13.0%
First of America.............................. 50,000 2,218,750
Firstar Corp.................................. 60,000 2,377,500
Northern Trust Corp. ......................... 50,000 2,800,000
Old Kent Financial............................ 60,000 2,467,500
Southern National............................. 60,000 1,575,000
Southtrust Corp. ............................. 30,000 768,750
-----------
12,207,500
-----------
BEVERAGES, FOOD AND TOBACCO--3.0%
Dean Foods Co. ............................... 35,000 962,500
Hudson Foods, Inc., Class A................... 110,000 1,897,500
-----------
2,860,000
-----------
BUSINESS EQUIPMENT AND SERVICES--1.1%
Proxima Corp.(b).............................. 45,000 995,625
-----------
CHEMICALS--2.0%
Airgas, Inc.(b)............................... 55,000 1,828,750
-----------
CONSUMER GOODS AND SERVICES--2.1%
Service Corp Int'l. .......................... 45,000 1,980,000
-----------
CONSUMER NON-DURABLES--1.8%
Alberto-Culver Co., Class A................... 55,000 1,677,500
-----------
</TABLE>
See Notes to Financial Statements.
FS-453
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
ELECTRONICS--1.9%
Memec Electric Materials, Inc.(b)............. 14,000 $ 456,750
Methode Electronics, Inc., Class A............ 37,500 534,375
Molex, Inc. .................................. 25,000 793,750
-----------
1,784,875
-----------
ENTERTAINMENT AND LEISURE--1.1%
Royal Caribbean Cruise Ltd. .................. 48,000 1,056,000
-----------
HEALTH CARE PRODUCTS AND SERVICES--14.4%
American Medical Response, Inc.(b)............ 55,000 1,787,500
Amerisource Health Corp., Class A(b).......... 60,000 1,980,000
Genesis Health Ventures, Inc.(b).............. 50,000 1,825,000
Healthcare & Retirement Corp.(b).............. 55,000 1,925,000
Horizon HealthCare Corp.(b)................... 95,000 2,398,750
Multicare Cos., Inc.(b)....................... 50,000 1,200,000
OEA, Inc...................................... 42,000 1,254,750
Summit Care Corp.(b).......................... 50,000 1,143,750
-----------
13,514,750
-----------
INSURANCE--13.6%
Ace Limited................................... 40,000 1,590,000
AMBAC, Inc.................................... 60,000 2,812,500
American Re Corp.............................. 50,000 2,043,750
Integon, Corp................................. 100,000 2,062,500
National Re Corp.............................. 60,000 2,280,000
Sphere Drake Holdings Ltd..................... 68,024 952,336
Western National Corp......................... 60,000 967,500
-----------
12,708,586
-----------
INVESTMENT MANAGEMENT--0.5%
Phoenix Duff & Phelps Corp.................... 62,471 429,488
-----------
MANUFACTURING--1.0%
Holophane(b).................................. 45,000 978,750
-----------
MEDICAL CARE AND PRODUCTS--4.8%
Rural/Metro(b)................................ 80,000 1,810,000
Sofamor Danek Group(b)........................ 95,000 2,695,625
-----------
4,505,625
-----------
</TABLE>
See Notes to Financial Statements.
FS-454
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
NATURAL GAS--0.4%
Swift Energy Co.(b)............................ 35,000 $ 420,000
-----------
OIL & GAS--3.5%
Noble Affiliates............................... 50,000 1,493,750
Smith Intl., Inc.(b)........................... 75,000 1,762,500
-----------
3,256,250
-----------
PHARMACEUTICALS--7.6%
A.L. Pharmaceuticals, Inc...................... 85,000 2,220,625
Elan Corp. PLC ADR(b).......................... 50,000 2,431,250
Ivax Corp. .................................... 85,000 2,422,500
-----------
7,074,375
-----------
POLLUTION CONTROL--0.7%
Waste Management PLC ADR(b).................... 65,000 698,750
-----------
RAILROAD EQUIPMENT--0.3%
Johnstown America Industries, Inc.(b).......... 60,000 300,000
-----------
REAL ESTATE DEVELOPMENT--1.8%
Stewart Enterprises, Inc., Class A ............ 45,000 1,665,000
-----------
RESTAURANTS--1.9%
IHOP Corp.(b).................................. 60,000 1,560,000
Starbucks Corp................................. 10,000 210,000
-----------
1,770,000
-----------
RETAIL AND WHOLESALE DISTRIBUTION--1.0%
Corporate Express, Inc.(b)..................... 30,000 903,750
-----------
RETAIL STORES--4.1%
Eckerd Corp.(b)................................ 55,000 2,454,375
Officemax, Inc................................. 60,193 1,346,818
-----------
3,801,193
-----------
TELECOMMUNICATIONS--2.8%
Centennial Cellular Corp., Class A(b).......... 30,000 513,750
Century Telephone Enterprises, Inc. ........... 65,000 2,063,750
-----------
2,577,500
-----------
</TABLE>
See Notes to Financial Statements.
FS-455
<PAGE>
PRAIRIE FUNDS
SPECIAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UTILITIES--4.1%
AES Corp.(b)............................ 80,000 $ 1,910,000
Public Service Co. of New Mexico(b)..... 35,000 616,875
South Industries G&E Co.(b)............. 36,800 1,278,800
-----------
3,805,675
-----------
TOTAL COMMON STOCKS
(COST $72,403,453)..................... 87,863,555
-----------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--6.3%
TIME DEPOSIT
Berlin/Frankfort Bank
(cost $5,914,000)..................... 5.81% 1/2/96 $5,914 5,914,000
-----------
TOTAL INVESTMENTS
(COST $78,317,453)(A)--100.2%.......... 93,777,555
Liabilities in excess of other assets--
(0.2%)................................. (164,612)
-----------
NET ASSETS--100.0%....................... $93,612,943
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $93,612,943.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $16,914,276
Unrealized depreciation........................................ (1,454,174)
-----------
Net unrealized appreciation.................................... $15,460,102
===========
</TABLE>
(b) Represents non-income producing security.
ADR--American Depository Receipts.
See Notes to Financial Statements.
FS-456
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
COMMON STOCKS--71.2%
AUSTRALIA--3.2%
Aberfoyle................................... 2,400 $ 5,266
Adelaide Brighton Limited................... 3,800 3,392
Amcor Limited............................... 15,300 108,121
Ampolex..................................... 6,900 15,090
Ashton Mining Limited....................... 7,000 10,154
Australian National Industries Limited...... 18,800 13,983
Boral Limited............................... 27,500 69,550
Brambles Industries Limited................. 5,500 61,369
Broken Hill Proprietary Co. ................ 47,000 664,270
Burns Philip & Co. ......................... 12,200 27,316
Caltex Limited.............................. 4,300 16,985
Coca-Coca Amatil............................ 9,600 76,623
Coles Myer Limited.......................... 26,612 82,944
CRA Limited................................. 16,017 235,192
Crusader(b)................................. 2,400 2,535
CSR Limited................................. 22,700 73,959
Dominion Mining Limited(b).................. 2,160 1,125
Email Limited............................... 6,900 16,424
Emperor Mines Limited(b).................... 1,600 2,559
FAI Insurances(b)........................... 7,600 4,127
Fosters Brewing Group....................... 48,900 80,387
General Property Trust...................... 15,200 26,910
Gold Mines of Kalgoorlie.................... 23,800 22,129
Goodman Fielder Limited..................... 29,900 30,026
Hardie (James) Industries................... 9,600 16,567
ICI Australia............................... 7,400 56,697
Lend Lease Corp. ........................... 6,000 87,032
MIM Holdings Limited........................ 39,700 54,925
National Australia Bank..................... 34,900 314,124
Newcrest Mining Limited..................... 5,800 24,419
News Corporation Limited.................... 49,700 265,443
North Limited............................... 17,100 47,700
OPSM Protector Limited...................... 3,500 5,467
Pacific Dunlop Limited...................... 28,800 67,481
Pioneer International Holdings.............. 22,100 57,045
QCT Resources............................... 15,100 16,960
RGC Limited................................. 5,000 24,920
</TABLE>
See Notes to Financial Statements.
FS-457
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
AUSTRALIA (CONTINUED)
Rothman's Holdings Limited................. 2,500 $ 10,228
Santos Limited............................. 21,000 61,389
Schroders Property Fund.................... 9,100 14,892
Smith Howard Limited....................... 4,200 19,839
Sons of Gwalia Limited..................... 1,800 9,908
Southcorp Holdings......................... 23,400 54,482
Stockland Trust Group...................... 7,400 17,064
TNT Limited(b)............................. 14,400 19,066
Tubemakers of Australia Limited............ 6,900 21,403
Westfield Trust............................ 23,700 42,662
Westpac Banking Corp....................... 45,500 201,720
WMC Limited................................ 27,600 177,385
------------
3,339,254
------------
FRANCE--3.5%
Accor...................................... 100 12,964
Air Liquide................................ 250 41,459
Alcatel Alsthom............................ 1,700 146,766
AXA........................................ 600 40,488
Banque Nationale de Paris.................. 4,500 203,266
BIC........................................ 100 10,183
Bouygues................................... 100 10,087
Carnaudmetalbox(b)......................... 3,300 151,154
Carrefour(b)............................... 150 91,128
Casino Guich-Perr.......................... 250 7,264
Chargeurs.................................. 50 9,969
Cie De St Gobain........................... 2,300 254,909
Cie De Suez................................ 2,400 99,133
Cie Geophysique(b)......................... 50 1,646
Club Mediterranee(b)....................... 50 3,998
Compagnie Bancaire......................... 1,210 135,589
Compagnie UAP.............................. 3,600 94,152
Comptoirs Modern........................... 50 16,256
CSF (Thomson).............................. 450 10,039
Docks de France............................ 50 7,607
Dollfus-Meig & Cie PV...................... 50 2,044
Eaux-Cie Generale.......................... 2,700 269,924
</TABLE>
See Notes to Financial Statements.
FS-458
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
FRANCE (CONTINUED)
ELF-Aquitane............................... 3,300 $ 243,466
Eridania Beghin-Say........................ 100 17,177
Essilor International...................... 50 9,570
Europe 1(b)................................ 25 5,061
Groupe Danone.............................. 250 41,306
GTM Entrepose.............................. 50 3,512
Imetal..................................... 50 5,981
Lafarge-Coppee............................. 330 21,290
Lagardere Groupe........................... 350 6,441
Legrand.................................... 500 77,295
L'oreal.................................... 250 67,019
LVMH Moet Hennessy......................... 1,600 333,716
Lyonnais Des Eaux-Dumez.................... 100 9,641
Michelin, Class B.......................... 2,300 91,852
Moulinex(b)................................ 100 1,374
Nord Est................................... 50 1,159
Peugeot SA................................. 1,300 171,725
Pinault-Printemps.......................... 100 19,978
Promodes................................... 50 11,768
Rhone Poulenc, Series A.................... 1,250 26,813
Sanofi..................................... 3,300 211,818
Schneider SA............................... 500 17,115
Sefimeg.................................... 50 3,323
Seita...................................... 200 7,259
Simco...................................... 50 4,754
Societe Generale........................... 2,500 309,281
Sodexho(b)................................. 50 14,723
St. Louis.................................. 50 13,291
Total, Class B............................. 4,800 324,392
Union Immobiliere de France................ 50 4,334
------------
3,696,459
------------
GERMANY--3.1%
AMB AAchener & Muench...................... 50 36,331
BASF AG.................................... 600 135,404
Bayer AG................................... 600 159,634
Bayerische Vereinsbank..................... 3,000 90,129
</TABLE>
See Notes to Financial Statements.
FS-459
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
GERMANY (CONTINUED)
Beiersdorf AG, Series ABC................... 50 $ 34,410
Bilfinger & Berger.......................... 50 19,039
Brau Und Brunnen............................ 50 7,616
Bremer Vulkan AG............................ 150 4,192
CKAG Colonial............................... 50 41,921
Commerzbank AG.............................. 500 118,950
Continental AG.............................. 1,000 14,148
Daimler Benz AG............................. 350 177,045
Degussa AG.................................. 100 33,746
Deutsche Bank AG............................ 8,000 380,639
Deutsche Lufthansa AG....................... 400 55,475
Didier-Werke AG(b).......................... 50 4,045
FAG Kugelfischer Georg(b)................... 50 6,428
Heidelberger Zement......................... 55 34,508
Hochtief AG................................. 100 42,829
Kaufhof Holding AG.......................... 300 91,597
Linde AG.................................... 100 59,388
Linotype Hell AG(b)......................... 50 5,153
MAN AG...................................... 100 27,737
Mannesmann AG............................... 450 143,526
Muenchener Ruckvers......................... 100 215,891
Preussag AG................................. 800 225,812
P.W.A. Papier Waldhof(b).................... 50 7,406
RWE AG...................................... 300 109,308
SAP AG...................................... 500 77,553
Schering AG................................. 1,000 66,584
Siemens AG(b)............................... 650 357,862
Thyssen AG(b)............................... 350 63,995
Veba AG..................................... 7,000 300,291
Volkswagon AG............................... 200 67,212
------------
3,215,804
------------
HONG KONG--1.6%
Bank of East Asia........................... 6,000 21,534
Cathay Pacific Airway....................... 23,000 35,100
Cheung Kong Holdings........................ 18,000 109,649
China Light and Power Co., Limited.......... 25,000 115,105
</TABLE>
See Notes to Financial Statements.
FS-460
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
HONG KONG (CONTINUED)
Chinese Estates Holdings................... 12,000 $ 7,837
Dickson Concepts Intl. Limited............. 5,000 4,656
Giordano International Holdings............ 4,000 3,414
Hang Lung Development Co................... 10,000 15,908
Hang Seng Bank Limited..................... 21,800 195,247
Hong Kong Aircraft......................... 1,200 3,104
Hong Kong Telecom.......................... 106,400 189,903
Hopewell Holdings.......................... 35,000 20,143
Hutchison Whampoa.......................... 46,000 280,214
Hysan Development Limited.................. 8,000 21,158
Johnson Electric Holdings.................. 3,000 5,354
Kumagai Gumi............................... 3,000 2,173
Lai Sun Garment International.............. 2,000 1,940
Miramar Hotel & Investment................. 4,000 8,432
New World Development Co................... 13,000 56,661
Oriental Press Group....................... 12,000 3,647
Peregrine Investment Holdings.............. 4,000 5,173
Playmates Toys Holdings.................... 4,000 796
Regal Hotel Holdings....................... 22,000 5,177
Shangri-La Asia............................ 8,000 9,778
Shun Tak Holdings Limited.................. 12,000 8,458
South China Morning Post................... 12,000 7,333
Sun Hung Kai Properties.................... 25,000 204,508
Swire Pacific Limited...................... 20,000 155,200
Television Broadcasts Limited.............. 3,000 10,689
Wharf Holdings Limited..................... 39,000 129,882
Wing Lung Bank............................. 1,200 6,720
Winsor Industrial Corp. Limited............ 2,000 1,693
------------
1,646,586
------------
JAPAN--41.2%
Advantest Corp. ........................... 1,000 51,380
Ajinomoto Co., Inc. ....................... 10,000 111,485
Alps Electric Co.(b)....................... 3,000 34,608
Amada Co. ................................. 28,000 276,871
Aoki Corp.(b).............................. 2,000 8,394
Aoyama Trading............................. 1,000 31,991
</TABLE>
See Notes to Financial Statements.
FS-461
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Asahi Bank Limited(c)....................... 41,000 $ 516,710
Asahi Breweries............................. 8,000 94,617
Asahi Chemical Industries................... 27,000 206,781
Asahi Glass Co. ............................ 33,000 367,903
Ashikaga Bank............................... 10,000 62,431
Bank of Tokyo............................... 36,000 631,687
Bank of Yokohama............................ 20,000 163,836
Banyu Pharmaceutical........................ 2,000 24,624
Bridgestone Corp. .......................... 16,000 254,382
Brother Industries Limited.................. 4,000 21,754
Canon, Inc. ................................ 24,000 435,086
Casio Computer Co. ......................... 1,000 9,791
Chiba Bank.................................. 13,000 117,205
Chichibu Onada Cement....................... 7,000 37,391
Chugai Pharmaceutical Co. .................. 2,000 19,176
Citizen Watch Co. Limited................... 19,000 145,513
Cosmo Oil Co. .............................. 3,000 16,403
Credit Saison............................... 2,000 47,697
Dai Nippon Co. Limited.(b).................. 26,000 441,098
Dai Nippon Ink & Chemical................... 8,000 37,304
Dai Nippon Screen........................... 2,000 17,566
Daicel Chemical Industries.................. 13,000 73,978
Daido Steel Co. Limited..................... 2,000 10,082
Daiei Inc. ................................. 9,000 109,062
Dai-Ichi Kangyo Bank(c)..................... 64,000 1,259,501
Dai-Ichi Pharmaceuticals Co. Limited........ 3,000 42,752
Daikin Industries........................... 27,000 264,368
Daikyo(b)................................... 3,000 22,394
Daimaru(b).................................. 2,000 15,511
Daishowa Paper(b)........................... 1,000 7,756
Daito Trust................................. 1,000 11,827
Daiwa Bank.................................. 20,000 161,896
Daiwa House Industries...................... 14,000 230,727
Daiwa Kosho Lease Co. Limited............... 3,000 29,956
Daiwa Securities............................ 24,000 367,613
Denid Kagaku Kogyo.......................... 3,000 10,906
Ebara Corp. ................................ 2,000 29,277
</TABLE>
See Notes to Financial Statements.
FS-462
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Eisai Co. ................................. 3,000 $ 52,641
Ezaki Glico Co. ........................... 2,000 19,350
Fanuc Co. ................................. 7,000 303,339
Fuji Bank(c)............................... 56,000 1,237,785
Fuji Photo Film Limited(c)................. 11,000 317,783
Fujita Corp. .............................. 3,000 13,553
Fujita Kanko............................... 2,000 44,207
Fujitsu Limited............................ 43,000 479,390
Furukawa Electric.......................... 3,000 14,687
Gakken Co.(b).............................. 2,000 13,184
Gunma Bank................................. 9,000 96,847
Gunze Limited(b)........................... 4,000 24,236
Hankyu Corp.(b)............................ 12,000 65,728
Hanyu Department Stores.................... 1,000 14,833
Haseko Corp.(b)............................ 2,000 8,085
Hazama Corp.(b)............................ 2,000 8,531
Higo Bank.................................. 3,000 24,139
Hitachi Limited(c)......................... 81,000 816,658
Hokkaido Bank.............................. 5,000 16,965
Hokuriku Bank.............................. 11,000 68,995
Honda Motor Co. ........................... 19,000 392,335
Honshu Paper Co. .......................... 2,000 12,254
House Foods Corp.(b)....................... 2,000 36,063
Hoya Corp. ................................ 1,000 34,415
Inax Corp. ................................ 26,000 247,013
Industrial Bank of Japan(c)................ 47,000 1,426,149
Isetan Co. ................................ 2,000 32,961
Ishihara Sangyo Kaisha(b).................. 2,000 6,495
Ito Yokado Co.(c).......................... 13,000 801,537
Itochu Corp. .............................. 26,000 175,178
Itoham Foods............................... 3,000 22,685
Iwantani International Corp.(b)............ 3,000 15,996
Jaccs...................................... 2,000 20,746
Japan Air Lines Co.(b)..................... 33,000 219,143
Japan Energy Corp. ........................ 5,000 16,771
Jeol....................................... 1,000 8,512
JGC Corp.(b)............................... 1,000 10,567
</TABLE>
See Notes to Financial Statements.
FS-463
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Joyo Bank.................................. 14,000 $ 112,650
Jusco Co.(b)............................... 4,000 104,312
Kajima Corp. .............................. 12,000 118,660
Kaken Pharmaceutical....................... 1,000 9,016
Kandenko Limited........................... 1,000 12,506
Kanebo Corp.(b)............................ 9,000 22,335
Kaneka Corp. .............................. 3,000 18,933
Kansai Electric Power(c)................... 20,100 487,146
Kansai Paint Co. Limited................... 2,000 9,307
Kao Corp. ................................. 9,000 111,680
Katokichi.................................. 1,000 20,843
Kawasaki Kisen Kaisha(b)................... 11,000 34,977
Kawasaki Steel Corp........................ 39,000 136,110
Keihin Electric............................ 6,000 36,005
Keio Teito Electric Railway................ 16,000 93,221
Kikkoman Corp.............................. 3,150 23,208
Kinden Corp................................ 2,000 34,124
Kinki Nippon Railway....................... 31,000 234,410
Kirin Brewery Co........................... 19,000 224,717
Kobe Steel(b).............................. 30,000 92,775
Komatsu Limited(c)......................... 9,000 74,162
Konica Corp................................ 1,000 7,251
Kubota Corp................................ 13,000 83,808
Kumagai Gumi Co............................ 5,000 20,116
Kurabo Industries.......................... 5,000 19,147
Kuraray Co. Limited........................ 8,000 87,638
Kureha Chemical Industries Co.(b).......... 2,000 9,404
Kyocera Corp............................... 3,000 223,070
Kyowa Hakko Kogyo.......................... 5,000 47,212
Lion Corp.................................. 2,000 11,808
Maeda Road Construction.................... 6,000 111,098
Makita Corp................................ 2,000 31,992
Marubeni Corp.............................. 28,000 151,738
Marudai Food Co............................ 2,000 14,348
Maruha Co.(b).............................. 4,000 13,533
Marui Co.(b)............................... 5,000 104,215
Matsushita Electric Industries............. 40,000 651,464
</TABLE>
See Notes to Financial Statements.
FS-464
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Meija Milk Products......................... 4,000 $ 23,964
Meiji Seika Kaisha.......................... 5,000 30,150
Misawa Homes................................ 1,000 8,803
Mitsubishi Bank............................. 12,000 282,690
Mitsubishi Chemical Corp.................... 29,000 141,131
Mitsubishi Corp............................. 29,000 357,045
Mitsubishi Electric Corp.................... 32,000 230,493
Mitsubishi Estate........................... 24,000 300,139
Mitsubishi Gas(b)........................... 3,000 13,524
Mitsubishi Heavy Industries Limited......... 68,000 542,538
Mitsubishi Materials........................ 21,000 108,917
Mitsubishi Oil Co........................... 2,000 17,780
Mitsubishi Paper............................ 34,000 204,687
Mitsubishi Steel Manufacturing(b)........... 1,000 5,235
Mitsubishi Trust and Banking Limited........ 24,000 400,186
Mitsui Engine & Shipbuilding(b)............. 1,000 2,782
Mitsui Fire & Marine Insurance.............. 13,000 92,756
Mitsui Fudosan Co. ......................... 15,000 184,679
Mitsui Mining and Smelting(b)............... 9,000 36,122
Mitsui O.S.K. Lines(b)...................... 20,000 64,176
Mitsui Toatsu Chemical...................... 6,000 24,139
Mitsui Trust and Banking Co................. 22,000 241,003
Mitsui & Co. Limited........................ 29,000 254,710
Mitsukoshi Limited(b)....................... 6,000 56,422
Mochida Pharmaceuticals..................... 1,000 13,863
Murata Manufacturing Co..................... 4,000 147,356
Nagase & Co.(b)............................. 1,000 8,609
Nagoya Railroad Co.......................... 11,000 55,452
Nankai Electric Railway..................... 6,000 40,717
NEC Corp. .................................. 30,000 366,450
New Oji Paper............................... 8,000 72,437
NGK Insulators.............................. 44,000 439,349
Nichido Fire and Marine Insurance........... 8,000 64,371
Nichii Co. Limited.......................... 22,000 292,191
Nichirei Corp............................... 5,000 32,476
Nihon Cement Co............................. 4,000 26,756
Nintendo Co................................. 2,600 197,864
</TABLE>
See Notes to Financial Statements.
FS-465
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Nippon Beet Sugar(b)........................ 2,000 $ 8,880
Nippon Communications Systems Corp.(b)...... 1,000 10,567
Nippon Denso................................ 19,000 355,496
Nippon Express Co........................... 16,000 154,179
Nippon Fire and Marine Insurance............ 11,000 74,647
Nippon Light Metal.......................... 10,000 57,391
Nippon Meat Packers......................... 16,000 232,666
Nippon Oil Co. ............................. 11,000 69,102
Nippon Paper Industries..................... 10,000 69,509
Nippon Seiko Kab Kai........................ 2,000 14,542
Nippon Shinpan Co. ......................... 5,000 37,808
Nippon Shokubai Kagaku Kogyo................ 2,000 19,583
Nippon Steel Corp. ......................... 138,000 473,588
Nippon Suisan(b)............................ 4,000 16,558
Nippon Yusen Kab Kai........................ 22,000 127,752
Nishimatsu(b)............................... 2,000 23,460
Nissan Motor Co. ........................... 46,000 353,634
Nisshinbo Industries, Inc. ................. 4,000 38,778
Nissin Food Products Co., Limited(b)........ 2,000 46,921
NKK Corp.(b)................................ 40,000 107,800
NOF Corp. .................................. 2,000 10,877
Nomura Securities........................... 36,000 785,250
NTN Corp. .................................. 1,000 6,689
Obayashi Corp. ............................. 8,000 63,595
Odakyu Electric Railway..................... 10,000 68,345
Okamoto Industries.......................... 3,000 19,486
Okumura(b).................................. 1,000 9,113
Olympus Optical Co., Limited................ 1,000 9,694
Omron Corp. ................................ 3,000 69,218
Onward Kashiyama(b)......................... 3,000 48,860
Orient Corp. ............................... 5,000 28,405
Orix Corp. ................................. 3,000 123,604
Osaka Gas Co. .............................. 117,000 404,925
Penta-Ocean(b).............................. 2,000 15,511
Pioneer Electronic.......................... 8,000 146,580
Q.P. Corp.(b)............................... 2,000 17,431
Renown, Inc. ............................... 5,000 17,402
</TABLE>
See Notes to Financial Statements.
FS-466
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Ricoh Co. .................................. 5,000 $ 54,774
Rohn Company Limited........................ 2,000 113,037
Sagami...................................... 4,000 17,334
Sakura Bank................................. 61,000 774,682
Sankyo Co. ................................. 19,000 427,331
Sankyo Aluminum............................. 2,000 10,722
Sanrio Corp.(b)............................. 1,000 11,536
Sanwo Shutter Corp. ........................ 2,000 14,522
Sanyo Electric Corp......................... 32,000 184,582
Sapporo Corporation......................... 6,000 55,840
Secom Co. .................................. 7,000 487,243
Sega Enterprises............................ 1,000 55,258
Seino Transportation........................ 10,000 167,714
Seiyu(b).................................... 2,000 24,818
Sekisui Chemical............................ 8,000 117,884
Sekisui House............................... 54,000 691,016
Settsu Corp.(b)............................. 1,000 3,151
Seven-Eleven Japan NPV...................... 8,000 564,605
Sharp Corp. ................................ 18,000 287,924
Shimizu Corp. .............................. 9,000 91,612
Shin-Etsu Chemical Co. ..................... 4,000 82,984
Shinmaywa Industries........................ 16,000 132,154
Shiongoi & Co. ............................. 3,000 25,273
Shiseido Co. ............................... 4,000 47,696
Shizuoka Bank............................... 14,000 176,438
Shochiku Co.(b)............................. 1,000 10,955
Shokusan(b)................................. 1,000 3,665
Showa Denko KK(b)........................... 10,000 31,410
Skylark Co. ................................ 2,000 36,839
Snow Brand Milk(b).......................... 5,000 31,992
Sony Corp. ................................. 6,200 372,054
Sumitomo Bank............................... 63,000 1,337,540
Sumitomo Chemical........................... 20,000 99,852
Sumitomo Corp. ............................. 20,000 203,582
Sumitomo Electric Industries................ 22,000 264,464
Sumitomo Forestry........................... 2,000 30,634
Sumitomo Marine and Fire Insurance.......... 12,000 98,651
</TABLE>
See Notes to Financial Statements.
FS-467
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Sumitomo Metal Industries(b)................ 36,000 $ 109,235
Sumitomo Metal Mining....................... 10,000 89,964
Sumitomo Osaka Cement....................... 5,000 23,267
Taisei Corp. ............................... 11,000 73,473
Taisho Pharmaceutical Co. .................. 4,000 79,107
Taiyo Yuden................................. 2,000 21,522
Takara(b)................................... 2,000 22,879
Takara Shuzo(b)............................. 4,000 38,274
Takashimaya Co.(b).......................... 2,000 31,992
Takeda Chemical Industries.................. 32,000 527,376
Tanabe...................................... 2,000 14,406
TDK Corp. .................................. 8,000 408,718
Teijin Limited.............................. 11,000 56,305
TOA Corp.(b)................................ 1,000 7,368
Tobu Railway Co. ........................... 12,000 75,151
Tohoku Electric Power....................... 8,080 195,045
Tokai Bank.................................. 36,000 502,560
Tokio Marine and Fire Insurance............. 29,000 379,538
Tokyo Broadcasting.......................... 3,000 49,442
Tokyo Dome Corp. ........................... 3,000 51,477
Tokyo Electric Power........................ 27,200 727,782
Tokyo Electronics........................... 3,000 116,333
Tokyo Gas Co. .............................. 43,000 151,734
Tokyo Steel Manufacturing Co. Limited....... 20,000 368,388
Tokyo Style Co.(b).......................... 2,000 34,318
Tokyo Tatemono(b)........................... 4,000 19,001
Tokyoto Keiba Co. .......................... 5,000 20,843
Tokyu Corp. ................................ 16,000 113,075
Tonen Corp. ................................ 20,000 292,772
Toppan Printing Co. ........................ 14,000 184,582
Toray Industries Inc. ...................... 90,000 593,298
Toshiba Corp.(c)............................ 88,000 690,166
Tosoh Corp.(b).............................. 5,000 24,091
Tostem Corp. ............................... 3,000 99,756
Toto Limited................................ 4,000 55,840
Toyo Engineering............................ 1,000 6,301
Toyo Kanetsu KK............................. 3,000 15,385
</TABLE>
See Notes to Financial Statements.
FS-468
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
JAPAN (CONTINUED)
Toyo Seikan Kaisha.......................... 2,000 $ 59,912
Toyobo Co.(b)............................... 13,000 46,756
Toyoda Automatic Loom Works Limited......... 2,000 35,869
Toyota Motor Corp.(c)....................... 77,000 1,634,772
UBE Industries(b)........................... 2,000 7,562
Unitika Limited(b).......................... 3,000 9,132
Yamaguchi Bank.............................. 3,000 51,187
Yamaichi Securities Co. .................... 22,000 171,261
Yamanouchi Pharmaceutical................... 4,000 86,087
Yamato Transport............................ 4,000 47,696
Yamazaki Baking Co. ........................ 3,000 55,840
Yasuda Trust and Bank....................... 20,000 118,466
Yokogawa Bridge Works Corp. ................ 7,000 105,863
Yokogawa Electric........................... 4,000 37,847
77 Bank..................................... 6,000 55,084
------------
43,005,659
------------
SINGAPORE--5.1%
Amcol Holdings.............................. 20,000 55,144
Chaun Hup Holdings.......................... 13,000 11,764
City Developments........................... 52,000 378,654
Cycle and Carriage.......................... 16,000 159,494
DBS Land Limited............................ 61,000 206,137
Development Bank Singapore.................. 45,000 559,926
First Capital Corp. ........................ 16,000 44,341
Fraser and Neave Limited.................... 16,000 203,610
Hai Sun Hup Group........................... 29,000 19,476
Haw Par Brothers International.............. 12,000 25,620
Hotel Properties Limited.................... 27,000 41,801
Inchcape Berhad............................. 11,000 35,306
Jurong Shipyard............................. 7,000 53,942
Keppel Corp. ............................... 34,000 302,869
Low Keng Huat Limited....................... 4,000 2,234
Lum Chang Holdings Limited.................. 22,000 18,352
Metro Holdings.............................. 7,000 27,218
Natsteel Limited............................ 22,000 45,104
Neptune Orient Lines........................ 46,000 51,704
Overseas Chinese Banking Corp. ............. 61,000 763,324
</TABLE>
See Notes to Financial Statements.
FS-469
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
SINGAPORE (CONTINUED)
Overseas Union Enterprises................. 8,000 $ 40,439
Parkway Holdings Limited................... 19,000 51,581
Prima Limited.............................. 3,000 11,453
Robinson and Company....................... 4,000 16,684
Shangri-La Hotel........................... 10,000 38,883
Sia Limited Foreign........................ 86,000 802,561
Singapore Press Holdings................... 22,800 402,979
Straits Steamship.......................... 40,000 135,172
Straits Trading Co. ....................... 20,000 46,942
United Industrial Corp. ................... 90,000 88,443
United Overseas Bank....................... 60,600 582,663
United Overseas Land....................... 33,000 62,756
------------
5,286,576
------------
UNITED KINGDOM--13.5%
Abbey National PLC(b)...................... 21,900 216,252
Anglian Water PLC.......................... 3,000 28,180
Argos PLC.................................. 2,900 26,835
Argyll Group............................... 11,000 58,067
Arjo Wiggins............................... 11,100 28,435
Associated British FDS..................... 2,400 13,750
Barclays PLC(b)............................ 26,900 308,643
Bass(b).................................... 27,900 311,450
Bat Industries............................. 35,500 312,791
BBA Group.................................. 3,200 14,383
Bet Pub Limited............................ 48,400 95,435
BICC PLC................................... 2,800 11,998
Blue Circle Industries..................... 9,900 52,644
BOC Group.................................. 6,500 90,928
Boots Co. PLC.............................. 9,300 84,613
BPB Industries............................. 6,800 31,884
British Aerospace.......................... 2,200 27,223
British Airways............................ 13,000 94,056
British Gas................................ 116,800 460,612
British Land Co.(b)........................ 5,000 29,577
British Petroleum.......................... 61,800 517,173
British Steel.............................. 27,500 69,487
</TABLE>
See Notes to Financial Statements.
FS-470
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
British Telecom............................ 131,700 $ 723,850
BTR PLC.................................... 61,600 314,653
Cable & Wireless........................... 18,900 134,982
Cadbury Schweppes PLC...................... 16,400 135,461
Carlton Communities PLC(b)................. 2,300 34,496
Chubb Security(b).......................... 2,800 13,846
Coats Viyella.............................. 15,600 42,385
Commercial Union........................... 11,100 108,228
Courtaulds PLC............................. 5,500 34,755
De La Rue PLC(b)........................... 2,200 22,236
Delta PLC.................................. 1,200 7,434
Electrocomponent PLC....................... 5,800 32,418
English China Clays........................ 4,200 20,671
Forte PLC.................................. 15,800 81,075
General Accident........................... 3,400 34,365
General Electric........................... 46,000 253,538
GKN PLC.................................... 4,700 56,845
Glaxo Holdings PLC......................... 46,900 666,271
Grand Metropolitan......................... 39,300 283,117
Great Universe Stores PLC.................. 9,800 104,226
Guardian Royal Exchange PLC................ 6,600 28,282
Guinness................................... 43,200 317,922
Hammerson PLC.............................. 3,900 21,344
Hanson..................................... 75,200 224,750
Harrison & Crossfield PLC.................. 9,600 23,847
Hepworth Ceramic........................... 3,300 16,344
HSBC Holdings.............................. 43,800 684,117
IMI PLC.................................... 4,400 22,441
Imperial Chemical Industries............... 9,900 117,278
Kingfisher PLC............................. 6,500 54,698
Ladbroke Group PLC(b)...................... 19,400 44,125
Land Securities PLC........................ 6,900 66,099
Lasmo PLC.................................. 74,200 201,601
Legal and General.......................... 9,700 100,903
Lloyds TSB Group........................... 180,086 926,867
London Electricity PLC..................... 3,300 29,409
Lonrho PLC(b).............................. 9,000 24,593
</TABLE>
See Notes to Financial Statements.
FS-471
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Lucas Industries PLC....................... 28,300 $ 79,529
Marks & Spencer PLC........................ 46,700 326,279
Metal Box-Caradon(b)....................... 8,200 24,889
MEPC....................................... 5,500 33,730
National Grid Group(b)..................... 2,910 9,013
National Power............................. 13,000 90,726
Next PLC................................... 3,700 26,195
Northwest Water Group(b)................... 3,800 36,343
P & O Stream Nav(b)........................ 10,100 74,642
Pearson PLC................................ 6,500 62,973
Pilkington Ord PLC......................... 10,800 33,871
Prudential Corp. .......................... 31,700 204,249
Rank Organisation PLC...................... 11,300 81,757
Reckitt and Coleman........................ 22,600 250,182
Redland PLC................................ 7,100 42,881
Reed International......................... 9,400 143,317
Reuters Holdings PLC(b).................... 27,800 254,656
Rexam PLC.................................. 6,800 37,374
RMC Group.................................. 2,700 41,543
Rolls Royce................................ 39,300 115,322
Royal Bank of Scotland PLC................. 13,300 121,006
Royal Insurance PLC........................ 24,200 143,528
RTZ Corp................................... 17,800 258,675
Rugby...................................... 8,700 14,858
Sainsbury (J) PLC.......................... 17,600 107,390
Schroders PLC.............................. 3,200 67,966
Scottish & New Castle PLC(b)............... 1,000 9,517
Scottish Power PLC(b)...................... 13,600 78,127
Sears...................................... 88,800 143,385
Sedgwick Group............................. 24,700 46,401
Seeboard PLC(b)............................ 200 1,633
Slough Estate PLC.......................... 5,300 18,021
Smith Industries........................... 4,100 40,485
Smithkline Beecham, Class A................ 12,900 142,202
Smithkline Beecham......................... 50,400 549,320
Southern Electric PLC(b)................... 200 2,807
Southern Water PLC......................... 1,700 18,159
</TABLE>
See Notes to Financial Statements.
FS-472
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
T & N PLC.................................. 4,200 $ 10,564
Tarmac PLC................................. 12,600 20,148
Tate & Lyle PLC............................ 1,000 7,328
Taylor Woodrow PLC......................... 5,200 9,486
Tesco...................................... 77,700 358,290
Thames Water PLC........................... 22,800 198,944
Thorn EMI PLC(b)........................... 7,100 167,226
TI Group PLC(b)............................ 5,500 39,195
Trafalgar House PLC(b)..................... 12,600 5,428
Unigate Limited............................ 600 3,829
Unilever PLC............................... 13,500 277,301
United Biscuits PLC........................ 1,400 5,564
Vodafone Group............................. 26,200 93,762
Williams Holdings.......................... 7,900 40,231
Willis Corroon PLC......................... 3,200 7,005
Wimpey George PLC.......................... 4,900 10,955
Wolseley................................... 7,500 52,517
Zeneca Group............................... 8,900 172,172
------------
14,106,784
------------
TOTAL COMMON STOCKS
(COST $68,762,442)........................ 74,297,122
------------
PREFERRED STOCKS--0.6%
AUSTRALIA--0.1%
News Corp., Limited Voting Preferred Voting
Shares................................... 24,100 112,761
------------
FRANCE--0.0%
Casino Guich-Perr, Preferred Shares........ 50 1,135
------------
GERMANY--0.5%
Allianz AG, Preferred Shares Nonvoting..... 200 393,495
Kloeckner AG, Preferred Shares Nonvoting... 500 3,022
Lufthansa AG, Preferred Shares Nonvoting... 50 6,550
Man AG, Preferred Shares Nonvoting......... 50 10,753
RWE AG, Preferred Shares Nonvoting......... 150 41,921
</TABLE>
See Notes to Financial Statements.
FS-473
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 2(a))
----------- ------ -----------
<S> <C> <C>
GERMANY (CONTINUED)
SAP AG, Preferred Nonvoting........... 500 $ 76,085
Volkswagon AG, Preferred Shares
Nonvoting........................... 50 12,150
------------
543,976
------------
TOTAL PREFERRED STOCKS
(COST $580,168)...................... 657,872
------------
<CAPTION>
Principal
Maturity Amount
Rate Date (000)
---- -------- ---------
<S> <C> <C> <C> <C>
FOREIGN CORPORATE OBLIGATION--12.6%
GERMANY--12.6%
Bundeslaender Versicher
(cost $12,896,203).................. 8.63% 2/20/96 18,700** 13,143,650
------------
SHORT-TERM INVESTMENTS--13.4%
U.S. TREASURY BILLS--13.4%
U.S. Treasury Bill.................... 5.61%* 2/8/96 1,000 994,320
U.S. Treasury Bill.................... 5.48%* 2/15/96 2,000 1,986,675
U.S. Treasury Bill.................... 5.54%* 3/7/96 2,500 2,478,150
U.S. Treasury Bill.................... 5.07%* 3/28/96 1,600 1,581,232
U.S. Treasury Bill(c)................. 5.35%* 5/2/96 3,500 3,441,883
U.S. Treasury Bill.................... 5.65%* 7/25/96 1,500 1,457,802
U.S. Treasury Bill.................... 5.61%* 8/22/96 1,150 1,113,305
U.S. Treasury Bill(c)................. 5.61%* 9/19/96 1,000 964,475
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $14,002,418)................... 14,017,842
------------
TOTAL INVESTMENTS
(COST $96,241,231)(A)--97.8%......... 102,116,486
Other assets in excess of liabilities--
2.2%................................. 2,272,891
------------
NET ASSETS--100.0%..................... $104,389,377
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $104,389,377.
* Yield at purchase.
** Denominated in local currency.
See Notes to Financial Statements.
FS-474
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $ 7,077,639
Unrealized depreciation........................................ (1,202,384)
-----------
Net unrealized appreciation.................................... $ 5,875,255
===========
</TABLE>
(b) Represents non-income producing security.
(c) Securities partially or fully pledged as collateral to cover open futures
positions.
<TABLE>
<CAPTION>
Contract Contract Unrealized
Price Value (Depreciation)
-------- -------- --------------
<S> <C> <C> <C>
FOREIGN CURRENCY INVESTMENTS
CURRENCY PURCHASED:
German Deutsche Mark......................... $0.698600 $328,907 $ (3,032)
Japanese Yen(d).............................. $0.960000 504,385 (69,326)
U.K. Pound Sterling.......................... $1.552600 115,183 (1,442)
-------- --------
TOTAL FOREIGN CURRENCY INVESTMENTS
(COST $1,022,275)........................... $948,475 $(73,800)
======== ========
</TABLE>
(d) Pledged to cover margin requirements for open futures positions.
<TABLE>
<S> <C> <C> <C> <C>
FINANCIAL FUTURES
<CAPTION>
UNREALIZED
MARKET VALUE APPRECIATION
NUMBER OF COVERED (DEPRECIATION)
CONTRACTS BY CONTRACTS EXPIRATION AT 12/31/95
--------- ------------ ---------- --------------
<S> <C> <C> <C> <C>
Financial Futures Purchased
Long:
British Pound--FTSE(1)...... 57 $ 8,134,087 March 1996 $ 54,862
German Deutsche Marks--
DAX(1).................... 3 447,415 March 1996 12,404
Japanese Yen--TOPIX(1)...... 120 18,426,486 March 1996 851,509
Financial Futures Sold Short:
German Deutsche Marks(2).... 130 $11,340,875 March 1996 (71,500)
Japanese Yen(2) 69 8,491,312 March 1996 101,775
--------
$949,050
========
</TABLE>
(1) Exchange traded local currency denominated futures contracts.
(2) U.S. Dollar denominated futures contracts.
See Notes to Financial Statements.
FS-475
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--33.6%
ASSET-BACKED SECURITIES--7.0%
Advanta Mortgage Loan Trust,
Series 1994-3, Class A2............... 7.60% 7/25/10 $ 3,915 $ 4,045,170
First Federal Savings & Loan
Association, Chicago, Mortgage Backed
Certificates, Series A, Passthrough
Notes(b).............................. 8.75% 6/1/06 7 7,113
Green Tree Home Improvement Loan Trust,
Series 1994-B1, Class A1.............. 7.15% 7/15/14 1,045 1,071,326
MBNA Master Credit Card Trust,
Series 1994-C, Class A................ 6.25% 3/15/04 1,655 1,661,206
Midlantic Auto Grantor Trust,
Series 1992-1, Class A................ 4.30% 9/15/97 125 124,509
Olympic Automobiles Receivables Trust,
Series 1995-D......................... 6.15% 7/15/01 2,300 2,333,781
People's Bank Credit Card Master Trust,
Series 1993-1, Class A................ 4.80% 12/15/99 2,480 2,476,352
Security Pacific Acceptance Corp.,
Series 1995-1......................... 7.25% 4/10/20 2,000 2,119,118
------------
13,838,575
------------
BANKING--11.3%
AAB, Global Bond, Bank Guaranteed....... 7.25% 5/31/05 2,800 2,998,192
Chase Manhattan Corp., Subordinate Note. 9.75% 11/1/01 2,500 2,949,827
Chevy Chase Auto Receivables Trust
Class A............................... 5.80% 6/15/02 3,000 3,015,687
First Union Corp., Subordinate Note..... 6.88% 9/15/05 3,000 3,129,951
Mellon Financial Co., Senior Notes...... 7.63% 11/15/99 2,310 2,449,360
Midland Bank PLC, Subordinate Notes..... 8.63% 12/15/04 2,230 2,568,289
Norwest Corp., Medium Term Note......... 7.75% 3/1/02 1,500 1,639,203
Saloman, Inc. Senior Notes.............. 6.70% 12/1/98 3,700 3,724,901
------------
22,475,410
------------
ENTERTAINMENT--3.2%
News America Holdings................... 8.50% 2/15/05 2,500 2,821,893
Time Warner Entertainment............... 9.63% 5/1/02 3,000 3,476,898
------------
6,298,791
------------
FINANCE--2.2%
Associates Corp., North America,
Corporate Notes....................... 6.63% 6/15/05 1,700 1,757,470
Chemical Master Credit Card Trust,
Series 1995-3, Class A................ 6.23% 4/15/02 2,500 2,556,748
------------
4,314,218
------------
</TABLE>
See Notes to Financial Statements.
FS-476
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
HEALTH CARE & HOSPITAL MANAGEMENT--2.2%
Columbia HCA/Health, Medium Term Note... 6.87% 9/15/03 $ 4,250 $ 4,421,896
------------
HOTELS AND GAMING--1.4%
Marriot International, Inc., Senior
Note.................................. 7.88% 4/15/05 2,500 2,718,953
------------
INDUSTRIAL--3.9%
ITT Corp., Debentures................... 7.38% 11/15/15 5,000 5,132,450
TCI Communications, Senior Notes........ 8.00% 8/1/05 2,500 2,672,875
------------
7,805,325
------------
RETAIL STORES--1.3%
Dayton Hudson Credit Card Master Trust,
Series 1995-1, Class A................ 6.10% 2/25/02 2,500 2,543,247
------------
SUPRANATIONALS--0.6%
European Investment Bank................ 8.88% 3/1/01 1,000 1,143,335
------------
UTILITIES--0.5%
West Texas Utilities.................... 6.38% 10/1/05 1,000 1,017,028
------------
TOTAL CORPORATE OBLIGATIONS
(COST $64,213,422)..................... 66,576,778
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--7.5%
Federal Farm Credit Bank,
Medium Term Note...................... 7.00% 4/18/97 6,000 6,032,004
Federal Home Loan Mortgage Corporation,
Debenture............................. 7.35% 3/22/05 8,000 8,807,624
Federal Home Loan Mortgage Corporation,
Pool #555124 ......................... 9.50% 12/1/18 1 1,010
Government National Mortgage
Association, Pool #304382............. 8.50% 3/15/23 64 67,206
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $14,201,890)..................... 14,907,844
------------
U.S. GOVERNMENT OBLIGATIONS--47.5%
U.S. TREASURY BOND--0.6%
U.S. Treasury Bond...................... 8.13% 8/15/19 1,000 1,257,812
------------
U.S. TREASURY NOTES--46.9%
U.S. Treasury Note...................... 5.88% 5/31/96 2,650 2,657,449
U.S. Treasury Note...................... 7.88% 1/15/98 2,900 3,048,625
U.S. Treasury Note...................... 5.38% 5/31/98 375 376,288
U.S. Treasury Note...................... 5.13% 6/30/98 400 399,125
U.S. Treasury Note...................... 4.75% 10/31/98 19,000 18,750,625
U.S. Treasury Note...................... 5.00% 1/31/99 550 546,046
U.S. Treasury Note...................... 6.88% 8/31/99 1,785 1,875,921
U.S. Treasury Note...................... 7.13% 9/30/99 165 174,900
U.S. Treasury Note...................... 7.88% 11/15/99 990 1,076,625
</TABLE>
See Notes to Financial Statements.
FS-477
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES (CONTINUED)
U.S. Treasury Note...................... 7.75% 11/30/99 $ 2,440 $ 2,644,350
U.S. Treasury Note...................... 7.75% 1/31/00 12,100 13,151,187
U.S. Treasury Note...................... 8.50% 2/15/00 830 925,708
U.S. Treasury Note...................... 6.88% 3/31/00 800 846,250
U.S. Treasury Note...................... 6.13% 7/31/00 5,000 5,150,000
U.S. Treasury Note...................... 8.75% 8/15/00 1,870 2,125,369
U.S. Treasury Note...................... 7.50% 11/15/01 18,050 19,900,125
U.S. Treasury Note...................... 7.50% 5/15/02 150 166,500
U.S. Treasury Note...................... 7.25% 5/15/04 1,500 1,669,217
U.S. Treasury Note...................... 7.25% 8/15/04 2,365 2,631,063
U.S. Treasury Note...................... 7.88% 11/15/04 9,700 11,236,829
U.S. Treasury Note...................... 7.63% 2/15/25 3,000 3,666,558
------------
93,018,760
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $90,128,484)..................... 94,276,572
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $168,543,796).................... 175,761,194
------------
SHORT-TERM INVESTMENT--10.5%
REPURCHASE AGREEMENT--10.5%
Repurchase Agreement with National
Westminster Bank dated 12/29/95, with
a maturity value of $20,870,094 (See
Footnote A)........................... 5.65% 1/2/96 20,857 20,857,000
------------
TOTAL SHORT-TERM INVESTMENT (COST
$20,857,000)........................... 20,857,000
------------
TOTAL INVESTMENTS--99.1%
(COST $189,400,796)(A)................. 196,618,194
Other assets in excess of liabilities--
0.9%................................... 1,665,477
------------
NET ASSETS--100.0%....................... $198,283,671
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $198,283,671.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $7,224,889
Unrealized depreciation......................................... (7,491)
----------
Net unrealized appreciation..................................... $7,217,398
==========
</TABLE>
(b) Illiquid security.
Footnote A: Collateralized by $22,100,000 U.S. Treasury Bill due 9/19/96, with
a value of $21,293,129.
See Notes to Financial Statements.
FS-478
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--50.2%
ASSET-BACKED SECURITIES--7.7%
Advanta Mortgage Loan Trust,
Series 1994-3, Class A2............... 7.60% 7/25/10 $ 1,625 $ 1,679,030
First U.S.A. Credit Card Master Trust,
Series 1992-1, Class A................ 5.20% 6/15/98 833 832,116
Green Tree Financial Corporation,
Manufactured Housing Senior
Subordinate Passthrough,
Series 1995-4, Class A6............... 7.30% 7/15/25 3,000 3,169,227
Security Pacific Acceptance Corp.
Manufactured Housing Contract
Senior Subordinate, Series 1995-1,
Class A3.............................. 7.25% 4/10/20 2,000 2,119,118
Standard Credit Card Master Trust I,
Participation Certificates,
Series 1994-2, Class A................ 7.25% 4/7/06 1,800 1,945,636
------------
9,745,127
------------
BANKING--15.8%
ABN-AMRO Bank N.V., Chicago Subordinate
Note.................................. 7.25% 5/31/05 2,000 2,141,566
Chase Manhattan Corp.,
Subordinate Note...................... 9.75% 11/1/01 2,000 2,359,862
Chemical Master Credit Card Trust I,
Series 1995-3, Asset-Backed CTF, Class
A..................................... 6.23% 4/15/05 1,000 1,022,699
Chevy Chase Auto Receivables Trust,
Series 1995-2 Class A................. 5.80% 6/15/02 2,000 2,010,458
First Union Corp., Subordinate Note..... 6.88% 9/15/05 2,000 2,086,634
Interamerican Development Bank,
Debentures............................ 8.50% 3/15/11 1,800 2,152,114
Interamerican Development Bank,
Debentures............................ 7.00% 6/15/25 2,200 2,347,633
International Bank for Reconstruction
and Development Debentures............ 9.64% 4/30/99 1,500 1,685,392
Midland Bank PLC, Subordinate Note...... 8.63% 12/15/04 1,500 1,727,549
Solomon, Inc., Senior Notes............. 6.70% 12/1/98 2,500 2,516,825
------------
20,050,732
------------
</TABLE>
See Notes to Financial Statements.
FS-479
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
BEVERAGE, FOOD AND TOBACCO--0.7%
Grand Metro Investment Corp.,
Guaranteed Note....................... 7.13% 9/15/04 $ 800 $ 854,929
------------
CABLE TV SYSTEMS--3.0%
Cablevision Industries Corp., Senior
Debentures............................ 9.25% 4/1/08 3,500 3,797,500
------------
CHEMICALS--1.4%
Monsanto Co., Debenture................. 8.20% 4/15/25 1,500 1,725,809
------------
ENTERTAINMENT--2.2%
News America Holdings, Senior Note...... 8.50% 2/15/05 2,500 2,821,893
------------
FINANCE--2.0%
American Express Co., Debentures........ 8.63% 5/15/22 800 911,707
Sears Credit Master Trust II,
Series 1995-3, Class A................ 7.00% 10/15/04 1,600 1,679,742
------------
2,591,449
------------
FOREST AND PAPER PRODUCTS--0.7%
Weyerhaeuser Co., Debentures............ 8.38% 2/15/07 800 943,652
------------
HEALTH CARE & HOSPITAL MANAGEMENT--3.8%
Coastal Corp. .......................... 7.75% 10/15/35 2,000 2,136,354
Columbia/HCA Healthcare Corp. .......... 7.58% 9/15/25 2,500 2,723,243
------------
4,859,597
------------
HOTELS AND GAMING--1.7%
Marriott International, Inc., Senior
Note, Series B........................ 7.88% 4/15/05 2,000 2,175,162
------------
RETAIL STORES--5.8%
Dayton Hudson Credit Card Master Trust
Series 95-1, Class A.................. 6.10% 2/25/02 1,500 1,525,948
Dayton Hudson Corp., Debenture.......... 7.88% 6/15/23 1,800 1,867,500
Federated Department Stores, Senior
Notes................................. 8.13% 10/15/02 4,000 4,040,000
------------
7,433,448
------------
TELECOMMUNICATIONS--4.6%
ITT Corp................................ 7.75% 11/15/25 2,000 2,052,980
TCI Communications, Inc. ............... 8.75% 8/1/15 3,500 3,862,891
------------
5,915,871
------------
</TABLE>
See Notes to Financial Statements.
FS-480
<PAGE>
PRAIRIE FUNDS
BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
UTILITIES--0.8%
West Texas Utilities First Mortgage,
Series U............................. 6.38% 10/1/05 $ 1,000 $ 1,017,028
------------
TOTAL CORPORATE OBLIGATIONS
(COST $60,247,885).................... 63,932,197
------------
U.S. GOVERNMENT OBLIGATIONS--40.1%
U.S. TREASURY BONDS--8.0%
U.S. Treasury Bond..................... 10.75% 5/15/03 1,000 1,314,686
U.S. Treasury Bond..................... 11.13% 8/15/03 3,500 4,702,026
U.S. Treasury Bond..................... 12.00% 8/15/13 1,760 2,717,000
U.S. Treasury Bond..................... 9.88% 11/15/15 1,000 1,448,125
------------
10,181,837
------------
U.S. TREASURY NOTES--32.1%
U.S. Treasury Note..................... 5.88% 5/31/96 3,850 3,860,822
U.S. Treasury Note..................... 4.75% 2/15/97 3,500 3,483,588
U.S. Treasury Note..................... 7.88% 1/15/98 700 735,875
U.S. Treasury Note..................... 5.00% 1/31/99 6,450 6,403,631
U.S. Treasury Note..................... 7.75% 11/30/99 1,500 1,625,625
U.S. Treasury Note..................... 6.75% 4/30/00 6,200 6,527,428
U.S. Treasury Note..................... 7.75% 2/15/01 2,000 2,210,000
U.S. Treasury Note..................... 7.50% 11/15/01 6,000 6,615,000
U.S. Treasury Note..................... 7.25% 5/15/04 8,500 9,458,894
------------
40,920,863
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $48,518,853).................... 51,102,700
------------
U.S. GOVERNMENT AGENCY
OBLIGATION--0.1%
Government National Mortgage
Association, Pool #201299 (cost
$77,388).............................. 8.50% 2/15/17 77 81,023
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $108,844,126)................... $115,115,920
------------
</TABLE>
See Notes to Financial Statements.
FS-481
<PAGE>
PRAIRIE FUNDS
BOND FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000) (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENT--8.8%
REPURCHASE AGREEMENT--8.8%
Repurchase agreement with National
Westminster Bank dated 12/29/95, with a
maturity value of $11,174,010 (see
Footnote A)............................ 5.65% 1/2/96 $11,167 $ 11,167,000
------------
TOTAL SHORT-TERM INVESTMENT
(COST $11,167,000)...................... 11,167,000
------------
TOTAL INVESTMENTS
(COST $120,011,126)(A)--99.2%........... 126,282,920
Other assets in excess of liabilities--
0.8%.................................... 1,025,749
------------
NET ASSETS--100.0%........................ $127,308,669
============
</TABLE>
- -----------
Percentages are based on net assets of $127,308,669.
(a) Represents cost for federal income tax and financial reporting purposes
and differs from value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $6,271,794
Unrealized depreciation......................................... --
----------
Net unrealized appreciation..................................... $6,271,794
==========
</TABLE>
Footnote A: Collateralized by $11,300,000 U.S. Treasury Note, 5.63%, due
10/31/97; with a value of $11,480,710.
See Notes to Financial Statements.
FS-482
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000)* (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS--5.3%
BRITISH POUNDS STERLING--1.3%
Barclays Bank........................... 10.25% 12/10/97 120 $ 197,956
-----------
FRENCH FRANCS--1.9%
Unilever NV............................. 9.88% 9/4/97 1,300 284,768
-----------
JAPANESE YEN--2.1%
Export-Import Bank of Japan............. 4.38% 10/1/03 30,000 319,530
-----------
TOTAL CORPORATE OBLIGATIONS
(COST $456,789)........................ 802,254
-----------
FOREIGN GOVERNMENT
OBLIGATIONS--50.0%
BELGIUM FRANCS--3.6%
Belgium Government, Series 19........... 6.50% 3/31/05 16,000 536,496
-----------
BRITISH POUNDS STERLING--3.0%
United Kingdom Exchequer................ 12.25% 3/26/99 250 451,346
-----------
CANADIAN DOLLARS--3.7%
Canadian Government..................... 9.75% 10/1/97 200 156,206
Canadian Government..................... 10.75% 3/15/98 500 402,832
-----------
559,038
-----------
DANISH KRONE--2.6%
Kingdom of Denmark...................... 9.00% 11/15/98 2,000 393,120
-----------
FINLAND--2.3%
Republic of Finland..................... 6.00% 1/29/02 30,000 346,800
-----------
FRENCH FRANCS--5.4%
France O.A.T............................ 8.50% 6/25/97 2,800 599,348
France O.A.T............................ 5.50% 4/25/04 1,100 210,265
-----------
809,613
-----------
GERMAN DEUTSCHEMARKS--9.2%
Austria Republic........................ 6.00% 4/1/98 600 435,555
Bundesrepublic.......................... 9.00% 10/20/00 600 488,375
Deutsche Bundespost..................... 7.50% 8/2/04 600 453,497
-----------
1,377,427
-----------
</TABLE>
See Notes to Financial Statements.
FS-483
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Maturity Amount Value
Description Rate Date (000)* (Note 2(a))
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C>
ITALIAN LIRA--6.1%
Italy Government.............. 8.50% 1/1/99 15,000,000 $ 910,500
-----------
JAPANESE YEN--5.6%
Japan Development Bank........ 6.50% 9/20/01 35,000 414,155
Japan Government Bank, Series
175......................... 4.50% 12/20/04 40,000 430,240
-----------
844,395
-----------
NETHERLAND GUILDERS--5.0%
Netherland Government......... 5.75% 1/15/04 1,200 744,109
-----------
SPANISH PESETAS--3.5%
Spanish Government............ 8.00% 5/30/04 70,000 523,040
-----------
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS
(COST $7,387,364)............ 7,495,884
-----------
SUPRANATIONAL OBLIGATIONS--13.4%
GERMAN DEUTSCHEMARKS--3.1%
European Investment Bank...... 7.50% 11/4/02 600 457,982
-----------
JAPANESE YEN--10.3%
Asian Development Bank........ 5.00% 2/5/03 40,000 441,080
Council of Europe............. 6.88% 3/5/01 30,000 356,250
IBRD.......................... 5.25% 3/20/02 30,000 337,890
Interamerican Development
Bank........................ 7.25% 5/15/00 35,000 415,625
-----------
1,550,845
-----------
TOTAL SUPRANATIONAL OBLIGATIONS
(COST $2,035,096)............ 2,008,827
-----------
SHORT-TERM INVESTMENT--32.1%
U.S. TREASURY BILL--32.1%
U.S. Treasury Bill............ 5.18%** 1/4/96 4,815(b) 4,812,922
-----------
TOTAL SHORT-TERM INVESTMENT
(COST $4,812,922)............ 4,812,922
-----------
TOTAL INVESTMENTS
(COST $14,692,171)(A)--
100.8%....................... 15,119,887
Liabilities in excess of
assets--(0.8%)............... (124,599)
-----------
TOTAL NET ASSETS--100.0%....... $14,995,288
===========
</TABLE>
See Notes to Financial Statements.
FS-484
<PAGE>
PRAIRIE FUNDS
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
- -----------
Percentages indicated are based on net assets of $14,995,288.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................... $427,716
Unrealized depreciation........................................... --
--------
Net unrealized appreciation....................................... $427,716
========
</TABLE>
(b) Denominated in U.S. dollars.
<TABLE>
<CAPTION>
FORWARD FOREIGN CURRENCY CONTRACT
Principal Market
Amount in Value
Local in U.S. Unrealized
Currency Proceeds Dollars Appreciation
--------- -------- ------- ------------
<S> <C> <C> <C> <C>
Japanese Yen, expiring 2/10/96 300,000,000 $3,036,130 $2,928,038 $108,092
========
</TABLE>
* Numbers are presented in local currency unless otherwise indicated.
** Yield at purchase.
See Notes to Financial Statements.
FS-485
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS--98.9%
ALASKA--0.7%
Alaska Student Loan Corp.,
Student Loan Revenue,
State Assisted, Series A
(A.M.T.)................. A/A 5.50% 7/1/04 $ 1,000 $ 1,007,940
North Slope Boro Refunding,
Series G (FSA Insured)... Aaa/AAA 8.35% 6/30/98 1,500 1,650,360
------------
2,658,300
------------
ARIZONA--1.3%
Maricopa County University
School District No. 41,
Series C, Collateralized
by U.S. Government
Securities (Pre-refunded
at 100 on 7/1/04)(FGIC
Insured)................. Aaa/AAA 6.10% 7/1/14 2,000 2,219,600
Pima County Refunding,
Series A................. Aa/A+ 5.00% 7/1/02 3,000 3,103,440
------------
5,323,040
------------
CALIFORNIA--12.5%
California Health
Facilities Financing
Authority Revenue
Refunding, Catholic
Health Facilities
Insured, Series B (AMBAC
Insured)................. Aaa/AAA 4.50% 7/1/02 2,500 2,506,275
California Health
Facilities Financing, St.
Joseph's Health Systems,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
7/1/99).................. NR/AA- 6.90% 7/1/14 6,750 7,490,137
</TABLE>
See Notes to Financial Statements.
FS-486
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Central Valley Financing
Authority,
Califcogeneration Project
Revenue, Carson Ice
Generation Project....... NR/BBB- 5.50% 7/1/01 $ 975 $ 993,515
Central Valley Financing
Authority,
Califcogeneration Project
Revenue, Carson Ice
Generation Project....... NR/BBB- 5.40% 7/1/00 2,550 2,598,909
Fresno Health Facilities
Revenue, Holy Cross
Health Systems Corp.
(MBIA Insured)........... A1/AA- 5.10% 12/1/03 1,570 1,626,834
Fresno Health Facilities
Revenue, Holy Cross
Health Systems Corp.
(MBIA Insured)........... A1/AA- 5.10% 12/1/03 635 657,987
Fresno Health Facilities
Revenue, Holy Cross
Health Systems Corp.
(MBIA Insured)........... A1/AA- 5.00% 12/1/02 1,500 1,548,900
Los Angeles Wastewater
Systems Revenue, Series A
(MBIA Insured)........... Aaa/AAA 8.50% 6/1/00 1,360 1,592,519
MSR Public Power Agency
California, San Juan
Project
Revenue Refunding, Series F
(AMBAC Insured).......... Aaa/AAA 5.55% 7/1/02 1,615 1,721,429
Northern California Power
Agency, Public Power
Refunding, Geothermal
Project #3, Series A..... Aaa/AAA 5.85% 7/1/10 4,625 4,983,946
Northern California Power
Agency, Public Power
Refunding, Series B-1,
Collateralized by U.S.
Government Securities
(Pre-refunded at 100 on
7/1/98).................. NR/AAA 8.00% 7/1/24 3,000 3,291,660
</TABLE>
See Notes to Financial Statements.
FS-487
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble Project. NR/BBB- 5.90% 7/1/02 $ 1,000 $ 1,027,670
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble Project. NR/BBB- 5.80% 7/1/01 1,300 1,333,800
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble Project. NR/BBB- 5.60% 7/1/99 3,300 3,373,557
South Coast Air Quality
Management District
Building Corp.,
California Revenue
Institutional Sale,
Series B, (Pre-refunded
at 102 on 8/1/99)........ Aaa/AAA 7.13% 8/1/14 3,650 4,092,270
University of California
Revenue Refunding,
Multiple Purpose Projects
(MBIA Insured)........... Aaa/AAA 6.20% 9/1/01 6,675 7,312,129
University of California
Revenue Refunding,
Multiple Purpose
Projects, Series B (MBIA
Insured)................. Aaa/AAA 4.90% 9/1/08 3,140 3,064,514
------------
49,216,051
------------
COLORADO--8.3%
Adams County Single Family
Mortgage Revenue, Series
A, Collateralized by U.S.
Government Securities.... Aaa/AAA 8.88% 8/1/03 1,230 1,579,037
Denver City and County
Airport, Series A
(A.M.T.)................. Baa/BB 7.40% 11/15/04 200 224,006
Denver City and County
Airport, Series A........ Aaa/AAA 8.50% 11/15/07 2,000 2,344,740
Denver City and County
Airport, Series A........ B/BB 8.00% 11/15/17 4,215 4,505,624
Denver City and County
Airport, Series A........ NR/NR 8.00% 11/15/25 1,360 1,542,158
</TABLE>
See Notes to Financial Statements.
FS-488
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
COLORADO (CONTINUED)
Denver City and County
Airport, Series B
(A.M.T.)................. NR/NR 7.25% 11/15/05 $ 2,000 $ 2,195,120
Denver City and County
Airport, Series C........ B/BB 6.55% 11/15/03 1,145 1,219,425
Denver City and County
Airport, Series D........ B/BB 7.30% 11/15/00 2,900 3,171,556
Denver City & County Water
Refunding................ Aa/AA 7.00% 10/1/99 8,665 9,548,137
Denver Metropolitan Major
League Baseball Stadium,
Colorado Revenue
Refunding, Sales Tax,
Baseball Stadium Project
(FGIC Insured)........... Aaa/AAA 4.60% 10/1/05 2,000 1,982,040
Poudre Valley Hospital
District Revenue,
Collateralized by U.S.
Government Securities,
(Pre-refunded at 101 on
12/1/01) (AMBAC Insured). Aaa/AAA 6.63% 12/1/01 3,750 4,243,163
------------
32,555,006
------------
DISTRICT OF COLUMBIA--4.9%
District of Columbia,
Series A, Collateralized
by U.S. Government
Securities (Pre-refunded
at 102 on 6/1/00)........ Aaa/AAA 7.25% 6/1/05 1,125 1,283,299
District of Columbia
Hospital Revenue,
Washington Hospital
Center Corp. Issue,
Series A, Collateralized
by U.S. Government
Securities (Pre-refunded
at 102 on 1/1/01)........ NR/BBB 8.75% 1/1/15 2,750 3,330,608
</TABLE>
See Notes to Financial Statements.
FS-489
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
DISTRICT OF COLUMBIA (CONTINUED)
District of Columbia Refunding,
Series A-1 (MBIA Insured).... Aaa/AAA 4.75% 6/1/03 $ 2,960 $ 2,950,735
District of Columbia Refunding,
Series A-1 (MBIA Insured).... Aaa/AAA 4.65% 6/1/02 1,500 1,494,180
District of Columbia Refunding,
Series B-1 (AMBAC Insured)... Aaa/AAA 5.10% 6/1/03 3,000 3,055,530
District of Columbia Refunding,
Series B-1 (AMBAC Insured)... Aaa/AAA 5.40% 6/1/06 4,850 4,966,303
District of Columbia Refunding,
Series B-3 (MBIA Insured).... Aaa/AAA 5.20% 6/1/04 2,000 2,040,920
------------
19,121,575
------------
FLORIDA--3.6%
Florida State Board of
Education Capital Outlay
Refunding, Series A,
Collateralized by U.S.
Government Securities (Pre-
refunded at 102 on 6/1/00)... Aaa/AAA 7.25% 6/1/23 4,620 5,282,185
Orlando Utilities Commission
Water & Electric Revenue,
Series A..................... Aa/AA 5.25% 10/1/23 7,500 7,343,775
Orlando Utilities Commission
Water & Electric Revenue,
Series D..................... Aa/AA- 5.00% 10/1/23 1,500 1,431,705
------------
14,057,665
------------
GEORGIA--6.0%
Georgia State,
General Obligation........... Aaa/AA+ 7.25% 9/1/04 9,440 11,310,253
</TABLE>
See Notes to Financial Statements.
FS-490
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
GEORGIA (CONTINUED)
Georgia State,
General Obligation....... Aaa/AA+ 7.25% 9/1/05 $ 10,130 $ 12,235,014
------------
23,545,267
------------
HAWAII--2.5%
Hawaii State Department of
Budget & Finance Special
Purpose Mortgage Revenue,
Kapiolani Healthcare
System................... A/A 5.60% 7/1/02 2,065 2,130,770
Hawaii State Refunding,
Series C................. Aa/AA 4.25% 7/1/99 7,500 7,549,800
------------
9,680,570
------------
ILLINOIS--12.2%
Chicago Metropolitan Water
Reclamation District..... Aa/AA 5.00% 12/1/02 4,500 4,671,720
Chicago Public Community
Building Revenue, Series
A (MBIA Insured)......... Aaa/AAA 4.90% 12/1/01 3,000 3,087,600
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 5.20% 10/1/03 750 753,743
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 5.10% 10/1/02 1,180 1,185,263
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 5.00% 10/1/01 1,120 1,124,357
Illinois Health Facilities
Authority Revenue
Refunding, Illinois
Masonic Medical Center... A/A- 4.90% 10/1/00 825 827,714
</TABLE>
See Notes to Financial Statements.
FS-491
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Illinois Health
Facilities Authority
Revenue Refunding &
Improvement, Swedish
Covenant,
Series A.............. Baa1/A- 6.10% 8/1/08 $ 1,000 $ 1,033,280
Illinois State Sales Tax
Revenue, Series S..... A1/AAA 4.85% 6/15/06 11,300 11,276,722
Illinios State Toll
Highway Authority,
Toll Highway Priority
Revenue, Series A..... A1/A 3.50% 1/1/05 4,000 3,630,240
Illinois Health
Facilities Authority
Revenue Refunding,
Illinois Memorial
Hospital.............. VMIG1/NR 5.60% 1/1/16 1,930 1,930,000
Metropolitan Pier &
Exposition Authority,
Illinois Dedicated
State Tax Revenue..... A/A+ 6.40% 6/1/03 10,495 11,636,226
Metropolitan Pier &
Exposition Authority,
Illinois Dedicated
State Tax Revenue..... A/A+ 6.50% 6/1/05 2,960 3,336,482
Regional Transportation
Authority, Series A
(AMBAC Insured)....... Aaa/AAA 8.00% 6/1/03 2,785 3,357,067
------------
47,850,414
------------
IOWA--0.8%
Iowa Student Loan
Liquidity Corp.
Student Loan Revenue,
Series A.............. Aa1/NR 6.00% 3/1/98 3,000 3,104,850
------------
INDIANA--3.1%
Indiana Bond Bank,
Special Program,
Series A-2............ A/NR 4.75% 11/1/02 375 374,760
Indiana Bond Bank,
Special Program,
Series A-2............ A/NR 4.65% 11/1/01 375 374,599
Indiana Bond Bank
Revenue Guarantee,
State Revolving Fund
Program, Series A..... NR/A 5.80% 2/1/02 500 527,185
</TABLE>
See Notes to Financial Statements.
FS-492
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
INDIANA (CONTINUED)
Indiana Bond Bank Revenue
Guarantee, State Revolving
Fund Program, Series A.... NR/A 5.60% 2/1/05 $ 700 $ 727,230
Indiana Health Facility,
Funding Authority Revenue,
Capital Access Designated
Pool...................... VMIG1/NR 5.60% 12/1/10 1,000 1,000,000
Indiana State Office
Community Building Capital
Complex Revenue Refunding,
State Office Building II
Facilities, Series D...... A1/A+ 6.50% 7/1/99 3,000 3,187,590
Indianapolis Economic
Development Water
Facilities Revenue
Refunding, Indianapolis
Water Co. Project......... A1/A+ 5.20% 5/1/01 5,810 5,948,162
------------
12,139,526
------------
MASSACHUSETTS--3.9%
Massachusetts Bay
Transportation Authority,
General Transportation
Systems, Series A,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
3/1/01)................... Aaa/A+ 7.00% 3/1/22 3,500 4,000,500
Massachusetts Municipal
Wholesale Electric Company
Supply System Revenue,
Series B.................. Aaa/AAA 4.50% 7/1/04 4,215 4,163,703
Massachusetts State General
Obligation, Series B...... A/A+ 9.25% 7/1/00 2,000 2,400,240
Massachusetts State
Refunding, Series A....... A1/A+ 6.25% 7/1/02 4,500 4,949,190
------------
15,513,633
------------
</TABLE>
See Notes to Financial Statements.
FS-493
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEVADA--3.4 %
Clark County General
Obligation................ A1/A+ 7.00% 9/1/00 $ 6,705 $ 7,482,914
Las Vegas Refunding......... A1/A 6.40% 10/1/03 2,250 2,488,680
Nevada State Municipal Bond
Bank Project No. R-5,
Series A.................. Aa/AA 6.00% 5/1/02 1,000 1,083,500
Nevada State Municipal Bond
Bank Project No. R-5,
Series A.................. Aa/AA 4.50% 11/1/02 1,020 1,026,212
Nevada State Refunding,
Series C.................. Aa/AA 5.90% 4/1/01 1,000 1,074,230
------------
13,155,536
------------
NEW YORK--8.9%
New York City, General
Obligation, Series F...... Aaa/AAA 3.00% 11/15/00 3,000 2,857,260
New York City Municipal
Water Financing Authority
Water & Sewer Systems
Revenue, Series C,
Collateralized by U.S.
Government Securities
(Pre-refunded at 101.5 on
6/15/01) (FGIC Insured)... Aaa/AAA 7.00% 6/15/16 3,805 4,369,548
New York State Local
Assistance Corp., Series
A, Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
4/1/01)................... Aaa/AAA 7.25% 4/1/18 2,000 2,319,020
New York State Local
Assistance Corp., Series
B, Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
4/1/01)................... Aaa/AAA 7.50% 4/1/20 4,255 4,983,456
</TABLE>
See Notes to Financial Statements.
FS-494
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York State Local
Assistance Corp., Series
C, Collateralized by U.S.
Government Securities
(Pre-refunded at 102 on
4/1/01)................... Aaa/AAA 7.00% 4/1/21 $ 825 $ 946,960
New York State Throughway
Authority, Highway &
Bridge Traffic Fund,
Series A.................. A/A- 6.00% 4/1/99 17,025 17,736,645
Triborough Bridge & Tunnel
Authority, New York
Revenue, Series R,
Collateralized by U.S.
Government Securities
(Pre-refunded at 100 on
1/1/00)................... Aaa/AAA 6.00% 1/1/20 1,500 1,604,865
------------
34,817,754
------------
NORTH CAROLINA--0.8%
North Carolina Municipal
Power Agency No. 1,
Catawba Electric Revenue,
(MBIA Insured)............ Aaa/AAA 7.25% 1/1/07 2,500 2,989,300
------------
PENNSYLVANIA--10.7%
Geisinger Authority Health
Systems, Series A......... NR/NR 5.50% 7/1/03 2,895 3,063,489
Pennsylvania
Intergovernmental
Cooperative Authority,
Special Tax Revenue, City
of Philadelphia Funding
Program Collateralized by
U.S. Government Securities
(Pre-refunded at 100 on
6/15/02).................. Aaa/AAA 6.80% 6/15/22 9,375 10,662,094
Pennsylvania
Intergovernmental
Cooperative Authority,
Special Tax Revenue, City
of Philadelphia Funding
Program (FGIC Insured).... Aaa/AAA 6.00% 6/15/00 7,000 7,497,280
</TABLE>
See Notes to Financial Statements.
FS-495
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Philadelphia Gas Works
Revenue, Fourteenth
Series.................... Aaa/AAA 7.00% 7/1/02 $12,090 $ 13,759,992
Philadelphia Gas Works
Revenue, Fifteenth Series
(FSA Insured)............. Aaa/AAA 4.90% 8/1/02 1,350 1,378,903
Pittsburgh Water & Sewer
Authority, Water & Sewer
System Revenue, Series A,
(Pre-refunded at 102 on
9/1/01)................... Aaa/AAA 6.50% 9/1/14 5,000 5,642,850
------------
42,004,608
------------
SOUTH CAROLINA--1.3%
South Carolina State Public
SVC Authority Revenue,
Series A.................. A1/A+ 5.00% 7/1/01 5,000 5,137,900
------------
TENNESSEE--1.3%
Chattanooga-Hamilton County,
Hospital Authority
Hospital Revenue, Enlanger
Medical Center............ Aaa/AAA 5.63% 10/1/09 5,000 5,274,550
------------
TEXAS--1.2%
Dallas Independent School
District, Collateralized
by U.S. Government
Securities................ Aa/AAA 8.70% 8/1/00 1,000 1,188,280
Humble Independent School
District Refunding
(PSFG Insured)............ Aaa/AAA 6.00% 2/15/04 2,035 2,203,132
Texas State Public Financing
Authority, Series A....... Aa/AA 8.00% 10/1/99 1,000 1,134,560
------------
4,525,972
------------
VIRGINIA--1.7%
Fairfax County Refunding,
Series A.................. Aaa/AAA 5.80% 6/1/02 5,250 5,373,060
Virginia Beach Public
Improvement, Series A..... Aa/AA 6.85% 5/1/99 1,100 1,187,384
------------
6,560,444
------------
</TABLE>
See Notes to Financial Statements.
FS-496
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
WASHINGTON--2.3%
King County General
Obligation, Series A. Aa1/AA+ 9.00% 12/1/99 $ 1,200 $ 1,407,888
Snohomish County Public
Utilities District
No. 001, Electric
Revenue Generation
System,
Series B (A.M.T.).... A1/A+ 5.15% 1/1/03 1,280 1,299,533
Washington State Health
Care Facility
Authority Revenue,
Fred Hutchinson
Cancer............... VMIG1/NR 6.00% 1/1/18 450 450,000
Washington State Health
Care Facility
Authority Revenue,
Fred Hutchinson
Cancer............... VMIG1/NR 6.00% 1/1/18 1,335 1,335,000
Washington State Public
Power Supply Systems,
Nuclear Project No. 1
Revenue, Series A,
Collateralized by
U.S. Government
Securities (Pre-
refunded at 102 on
7/1/99) (MBIA
Insured)............. Aaa/AAA 7.50% 7/1/15 1,420 1,603,279
Washington State Public
Power Supply Systems,
Nuclear Project No. 2
Revenue, Series B
(MBIA Insured)....... Aaa/AAA 5.10% 7/1/04 2,800 2,844,408
------------
8,940,108
------------
WEST VIRGINIA--1.7%
Pleasants County
Pollution Control
Revenue Refunding,
Monongahela Power
Co., Series B........ A1/NR 6.88% 4/1/98 6,105 6,502,558
------------
</TABLE>
See Notes to Financial Statements.
FS-497
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
WISCONSIN--5.8%
Wisconsin Health
Facility Authority
Revenue, Franciscan
Health Care.......... VMIG1/A-1+ 5.50% 1/1/16 $ 235 $ 235,000
Wisconsin State General
Obligation, Series B. Aa/AA 7.00% 5/1/01 3,950 4,454,652
Wisconsin State General
Obligation, Series B. Aa/AA 7.00% 5/1/02 4,155 4,750,328
Wisconsin State General
Obligation, Series B. Aa/AA 7.00% 5/1/03 4,625 5,345,205
Wisconsin State General
Obligation, Series 2. Aa/AA 5.13% 11/1/08 3,000 3,039,270
Wisconsin State
Refunding, Series 3.. Aa/AA 4.25% 11/1/99 4,895 4,924,908
------------
22,749,363
------------
TOTAL INVESTMENTS
(COST
$370,618,759)(A)--
98.9%................. 387,423,990
Other assets in excess
of liabilities--1.1%.. 4,446,727
------------
NET ASSETS--100.0%...... $391,870,717
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $391,870,717.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from the value by net unrealized appreciation of securities as
follows:
<TABLE>
<S> <C>
Unrealized appreciation........................................ $16,805,231
Unrealized depreciation........................................ --
-----------
Net unrealized appreciation.................................... $16,805,231
===========
</TABLE>
AMBAC--American Municipal Bond Assurance Corporation.
A.M.T.--Subject to Alternative Minimum Tax.
FGIC--Financial Guaranty Insurance Company.
FSA--Financial Security Assurance.
MBIA--Municipal Bond Insurance Association.
NR--No rating available.
PSFG--Permanent School Fund Guaranty.
See Notes to Financial Statements.
FS-498
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS--98.9%
ALASKA--0.3%
Alaska Student Loan
Corp., Student Loan
Revenue State
Assisted, Series A
(AMBAC Insured),
(A.M.T.).............. Aaa/AAA 6.13% 7/1/05 $ 800 $ 832,792
------------
ARIZONA--1.1%
Maricopa County School
District No. 028,
Kyrene Elementary,
Series B
(FGIC Insured)........ Aaa/AAA 6.00% 7/1/14 2,500 2,631,675
------------
CALIFORNIA--15.9%
Central Valley Financing
Authority,
Califogeneration
Project Revenue,
Carson Ice Generation
Project............... Bbb-/BBB- 6.00% 7/1/09 5,600 5,699,344
Cupertino Certificates
of Participation, Open
Space Acquisition
Project,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102
on 4/1/01)............ NR/NR 7.13% 4/1/16 2,675 3,064,186
Fresno Health Facilities
Revenue, Holy Cross
Health System Corp.
(MBIA Insured)........ A1/AA 5.25% 12/1/05 1,850 1,922,446
Los Angeles Wastewater
Systems Revenue,
Series D,
Collateralized by U.S.
Government Securities
(Pre-refunded at 102
on 12/1/00) (MBIA
Insured).............. Aaa/AAA 6.70% 12/1/21 10,000 11,316,500
Northern California
Power Agency, Public
Power Revenue
Refunding, Geothermal
Project No. 3, Series
A..................... Aaa/AAA 5.60% 7/1/06 3,500 3,728,620
</TABLE>
See Notes to Financial Statements.
FS-499
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
Northern California
Power Agency, Public
Power Revenue
Refunding, Geothermal
Project No. 3, Series
A.................... Aaa/AAA 5.65% 7/1/07 $ 4,800 $ 5,115,936
Northern California
Power Agency, Public
Power Revenue
Refunding, Geothermal
Project No. 3, Series
A.................... NR/NR 5.80% 7/1/09 4,000 4,309,440
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble
Project.............. NR/BBB- 7.00% 7/1/05 1,500 1,666,005
Sacramento Cogeneration
Authority Revenue,
Procter & Gamble
Project.............. NR/BBB- 6.20% 7/1/06 2,500 2,567,950
------------
39,390,427
------------
COLORADO--12.2%
Denver City and County
Airport Revenue,
Series A (A.M.T.).... Baa/BB 8.50% 11/15/23 2,500 2,865,025
Denver City and County
Airport Revenue,
Series A (A.M.T.).... Baa/BB 8.00% 11/15/25 2,295 2,576,229
Denver City and County
Airport Revenue,
Series B (A.M.T.).... Baa/BB 7.25% 11/15/05 3,000 3,292,680
Denver City and County
Airport Revenue,
Series C (A.M.T.).... Baa/BB 6.50% 11/15/06 2,000 2,100,160
Denver City and County
Airport Revenue,
Series C (A.M.T.).... Baa/BB 6.13% 11/15/25 9,355 9,373,242
Denver City and County
Airport Revenue,
Series D (A.M.T.).... Baa/BB 7.75% 11/15/13 6,925 8,332,160
</TABLE>
See Notes to Financial Statements.
FS-500
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
COLORADO (CONTINUED)
Denver Metropolitan
Major League Baseball
Stadium District
Revenue Refunding,
Sales Tax, Baseball
Stadium Project
(FGIC Insured)........ Aaa/AAA 4.50% 10/1/04 $ 1,600 $ 1,593,600
------------
30,133,096
------------
FLORIDA--3.7%
Broward County
Educational Facilities
Authority Revenue,
Nova Southeastern
University Project
(Connie Lee Insured).. NR/AAA 5.70% 4/1/05 1,440 1,523,678
Florida State Board,
Education Capacity
Outlay, General
Obligation, Series D.. Aa/AA 5.13% 6/1/18 5,800 5,663,758
Orlando Florida
Utilities Commision
Water & Electric
Revenue, Series D..... Aa/AA- 5.00% 10/1/23 2,000 1,908,940
------------
9,096,376
------------
GEORGIA--12.7%
Fulton County School
District, General
Obligation............ Aa/AA 6.38% 5/1/10 5,000 5,716,650
Georgia State General
Obligation............ Aaa/AA+ 7.10% 9/1/09 8,500 10,358,185
Georgia State General
Obligation............ Aaa/AA+ 6.75% 9/1/11 10,000 11,956,500
Georgia State General
Obligation, Series F.. Aaa/AA+ 6.50% 12/1/05 3,060 3,530,750
------------
31,562,085
------------
ILLINOIS--11.0%
Chicago Airport Revenue
Refunding, 2nd Lien,
O'Hare International
Airport, Series C
(MBIA Insured)........ Aaa/AAA 5.75% 1/1/09 2,490 2,665,769
</TABLE>
See Notes to Financial Statements.
FS-501
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
Cook County Community
College, District No.
508 Lease, Series C
(MBIA Insured)........ Aaa/NR 7.70% 12/1/04 $ 5,000 $ 6,090,800
Cook County, General
Obligation, Series B.. Aaa/AAA 5.50% 11/15/22 2,535 2,511,982
Illinois Health
Facilities Authority
Revenue Refunding, Bro
Menn Healthcare (SPA--
Bankers Trust
Co.)(FGIC Insured).... Aaa/AAA 6.00% 8/15/05 1,000 1,087,560
Illinois Health
Facilities Authority
Revenue Refunding &
Improvement, Swedish
Covenant,
Series A.............. Baa1/A- 6.10% 8/1/08 2,600 2,686,528
Illinois Health
Facilities Authority
Revenue Refunding &
Improvement, Swedish
Covenant,
Series A.............. Baa1/A- 6.30% 8/1/13 2,375 2,446,298
Illinois State Sales Tax
Revenue Refunding,
Series Q.............. A1/AAA 5.75% 6/15/06 5,000 5,376,300
Winnebago & Boone
Counties School
District No. 205 (CGIC
Insured).............. Aaa/AAA 7.35% 2/1/04 3,600 4,280,976
------------
27,146,213
------------
INDIANA--3.5%
Indiana State Office
Building Commission,
Correctional
Facilities Revenue,
Series A.............. Aaa/AAA 5.50% 7/1/20 5,000 5,002,100
Indiana Transmission
Financing Authority
Highway Revenue,
Series A.............. A1/A+ 6.80% 12/1/16 1,200 1,411,512
</TABLE>
See Notes to Financial Statements.
FS-502
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
INDIANA (CONTINUED)
Indiana University
Revenue, Series K..... Aa/AA- 6.50% 8/1/05 $ 1,935 $ 2,197,289
------------
8,610,901
------------
MASSACHUSETTS--12.4%
Massachusetts Municipal
Electric Co., Power
Supply Systems
Revenue, Series B..... A/BBB+ 6.63% 7/1/03 4,535 5,060,516
Massachusetts State
Refunding, Series A... A1/A+ 6.25% 7/1/02 12,000 13,197,840
Massachusetts State
Refunding, Series B... A1/A+ 5.30% 11/1/05 2,300 2,395,611
Massachusetts State
Refunding, Series B... A1/A+ 5.40% 11/1/06 1,730 1,813,075
New England Educational
Loan Marketing Corp.,
Massachusetts Student
Loan Revenue
Refunding,
Series G.............. A1/A- 5.20% 8/1/02 8,000 8,160,480
------------
30,627,522
------------
MISSOURI--1.6%
Sikeston Electric
Revenue Refunding
(MBIA Insured)........ Aaa/AAA 6.00% 6/1/05 3,710 4,069,165
------------
NEVADA--1.9%
Clark County Industrial
Development Revenue
Refunding, Nevada
Power Co. Project,
Series C (AMBAC
Insured).............. Aaa/AAA 7.20% 10/1/22 4,115 4,711,387
------------
NEW YORK--0.8%
New York City General
Obligation, Sub Series
A-9................... A1/A+ 5.10% 8/1/18 2,000 2,000,000
------------
OHIO--2.0%
Columbus School
District, 144A*....... NR/NR 9.39% 5/1/97 688 702,076
</TABLE>
See Notes to Financial Statements.
FS-503
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
OHIO (CONTINUED)
Ohio State Highway,
Series T............. Aa/AAA 4.80% 5/15/02 $ 1,600 $ 1,644,592
Ohio State Public
Facilities
Commission, Higher
Education Capital
Facilities, Series II
A
(AMBAC Insured)...... Aaa/AAA 4.30% 12/1/08 2,890 2,676,920
------------
5,023,588
------------
OKLAHOMA--1.5%
Oklahoma State
Industrial Authority
Revenue Refunding,
Health Facilities,
Sisters of Mercy,
Series A............. Aa/AA 5.20% 6/1/05 3,600 3,719,016
------------
PENNSYLVANIA--0.5%
Philadelphia Gas Works
Revenue, Fifteenth
Series, (FSA
Insured)............. Aaa/AAA 5.13% 8/1/05 1,220 1,248,255
------------
RHODE ISLAND--2.1%
Rhode Island Depositors
Economic Protection
Corp., Series A (FSA
and MBIA Insured).... Aaa/AAA 6.30% 8/1/05 4,640 5,182,880
------------
TENNESSEE--5.0%
Knox County Health,
Educational & Housing
Facilities Board,
Hospital Facilities
Revenue Refunding,
Fort Sanders Alliance
(MBIA Insured)....... Aaa/AAA 7.25% 1/1/08 8,900 10,731,709
Knox County Health,
Educational & Housing
Facilities Board,
Hospital Facilities
Revenue Refunding,
Fort Sanders Alliance
(MBIA Insured)....... Aaa/AAA 7.25% 1/1/09 1,360 1,649,299
------------
12,381,008
------------
</TABLE>
See Notes to Financial Statements.
FS-504
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal
S&P Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ----- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
TEXAS--5.9%
Texas City Industrial
Development Corp.,
Marine Terminal
Revenue Refunding,
Arco Pipe Line Co.
Project.............. A1/A 7.38% 10/1/20 $ 4,650 $ 5,791,436
Texas State College
Student Loan
(A.M.T.)............. Aa/AA 6.50% 8/1/07 4,000 4,362,360
Texas State Public
Finance Authority,
Series A............. Aa/AA 8.00% 10/1/99 3,930 4,458,821
------------
14,612,617
------------
WASHINGTON--2.8%
Chelan County Public
Utilities District
No. 001, Revenue,
Series E............. A1/A+ 5.70% 7/1/08 2,150 2,199,257
Washington State Public
Power Supply System
Nuclear Project No. 2
Revenue, Series C.... NR/AAA 7.63% 7/1/10 4,000 4,673,720
------------
6,872,977
------------
WISCONSIN--1.7%
Wisconsin State General
Obligation, Series B. Aa/AA 5.50% 5/1/09 4,160 4,290,083
------------
WYOMING--0.3%
Wyoming Community
Development
Authority, Single
Family, Series D
(FHA/VA Mortgage
Insured)............. Aa/AA 7.60% 6/1/17 800 856,440
------------
TOTAL INVESTMENTS
(COST
$231,324,230)(A)--
98.9%................. 244,998,503
Other assets in excess
of liabilities--1.1%.. 2,824,647
------------
NET ASSETS--100.0%...... $247,823,150
============
</TABLE>
See Notes to Financial Statements.
FS-505
<PAGE>
PRAIRIE FUNDS
MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
- -----------
Percentages indicated are based on net assets of $247,823,150.
* Securities exempt from registration under Rule 144A of the Securities Act
of 1993. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(a) Represents cost for federal income tax and financial reporting purposes
and differs from the value by net unrealized appreciation of the
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $13,674,273
Unrealized depreciation......................................... --
-----------
Net unrealized appreciation..................................... $13,674,273
===========
</TABLE>
AMBAC--American Municipal Bond Assurance Corporation.
A.M.T.--Subject to Alternative Minimum Tax.
CGIC--Capital Guaranty Insurance Corporation.
FGIC--Financial Guaranty Insurance Company.
FHA/VA--Federal Housing Association/Veterans Administration.
FSA--Financial Security Assurance.
MBIA--Municipal Bond Insurance Association.
NR--No rating available.
SPA--Standby Purchase Agreement.
See Notes to Financial Statements.
FS-506
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized
Maturity Amount Cost
Description Rate Date (000) (Note 2(a))
----------- ------ -------- --------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--82.5%
U.S. TREASURY BILLS--82.5%
U.S. Treasury Bill..................... 5.35%* 1/11/96 $10,000 $ 9,985,194
U.S. Treasury Bill..................... 5.32%* 1/18/96 5,000 4,987,451
U.S. Treasury Bill..................... 5.34%* 1/25/96 10,000 9,964,400
U.S. Treasury Bill..................... 5.32%* 2/15/96 7,500 7,450,125
U.S. Treasury Bill..................... 5.30%* 3/7/96 7,500 7,427,194
U.S. Treasury Bill..................... 4.82%* 3/14/96 7,500 7,426,696
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $47,241,060).................... 47,241,060
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $47,241,060).................... 47,241,060
-----------
REPURCHASE AGREEMENTS--17.8%
Repurchase agreement with National
Westminster, dated 12/29/95, with a
maturity value of $10,206,403 (see
Footnote A).......................... 5.65% 1/2/96 10,200 10,200,000
-----------
TOTAL INVESTMENTS
(COST $57,441,060)(A)--100.3%......... 57,441,060
Liabilities in excess of other assets--
(0.3%)................................ (177,000)
-----------
NET ASSETS--100.0%...................... $57,264,060
===========
</TABLE>
- -----------
Percentages indicated are based on net assets of $57,264,060.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Yield at purchase.
Footnote A: Collateralized by $10,100,000 U.S. Treasury Note, due 03/31/97;
with a value of $10,474,323.
See Notes to Financial Statements.
FS-507
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
BANKERS ACCEPTANCES--4.9%
Bank of Tokyo............... P-1/A-1 5.81% 1/8/96 $ 5,000 $ 4,994,351
Dai-Ichi Kangyo............. P-1/A-1 5.81% 2/15/96 5,000 4,963,688
------------
TOTAL BANKERS ACCEPTANCES
(COST $9,958,039).......... 9,958,039
------------
CERTIFICATES OF DEPOSIT--39.7%
U.S. BRANCHES OF FOREIGN
BANKS--39.7%
ABN Amro.................... P-1/A-1+ 5.78% 2/1/96 7,000 7,000,494
Bank of Montreal............ P-1/A-1+ 5.78% 1/17/96 5,000 5,000,060
Banque Nationale de Paris... P-1/A-1 5.75% 2/5/96 7,000 7,000,251
Canadian Imperial Bank of
Commerce.................. P-1/A-1+ 5.60% 3/12/96 7,000 7,000,000
Commerz Bank AG............. P-1/A-1+ 5.77% 1/17/96 5,000 5,000,044
Fuji Bank, Ltd. ............ P-1/A-1 6.09% 1/18/96 7,000 7,000,099
Industrial Bank of Japan.... P-1/A-1 5.82% 1/17/96 5,000 4,999,747
Mitsubishi Bank, Ltd. ...... P-1/A-1+ 5.86% 3/6/96 7,000 7,000,849
National Westminster Bank... P-1/A-1+ 5.78% 1/16/96 5,000 5,000,054
Rabobank.................... P-1/A-1+ 5.75% 1/22/96 5,000 5,000,029
Sanwa Bank, Ltd. ........... P-1/A-1+ 6.03% 1/17/96 7,000 6,999,953
Societe Generale............ P-1/A-1 5.77% 2/2/96 7,000 7,000,392
Sumitomo Bank............... P-1/A-1 6.06% 1/18/96 7,000 7,000,066
------------
TOTAL CERTIFICATES OF DEPOSIT
(COST $81,002,038)......... 81,002,038
------------
COMMERCIAL PAPER--43.7%
DOMESTIC--34.4%
AT&T........................ P-1/A-1+ 5.54% 3/19/96 7,000 6,915,977
Barclays Funding............ P-1/A-1+ 5.67% 1/19/96 7,500 7,478,737
Ciesco L.P. ................ P-1/A-1+ 5.70% 1/19/96 7,500 7,478,625
Corporate Asset
Funding Co., Inc. ........ P-1/A-1+ 5.65% 2/9/96 7,000 6,957,154
Exxon Imperial.............. P-1/A-1+ 5.62% 1/16/96 6,000 5,985,950
Ford Motor Credit........... P-1/A-1 5.63% 2/13/96 7,500 7,449,565
Goldman Sachs............... P-1/A-1+ 5.55% 4/2/96 7,000 6,900,717
Morgan Stanley & Co. ....... P-1/A-1+ 6.00% 1/3/96 7,000 6,997,667
Nestle Capital.............. P-1/A-1+ 5.73% 1/12/96 7,000 6,987,744
Philip Morris............... P-1/A-1 5.72% 1/19/96 7,000 6,979,980
------------
70,132,116
------------
</TABLE>
See Notes to Financial Statements.
FS-508
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
FOREIGN--9.3%
Bayerische Vereinsbank..... P-1/A-1+ 5.73% 1/8/96 $ 7,000 $ 6,992,201
Dresdner Finance........... P-1/A-1+ 5.69% 1/3/96 5,000 4,998,419
Deutsche Bank.............. P-1/A-1+ 5.74% 1/12/96 7,000 6,987,723
------------
18,978,343
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST
$89,110,459).............. 89,110,459
------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS--0.0%
Small Business
Administration,
Pool #500870V*............ NR/NR 7.63% 4/25/96 6 5,887
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(AMORTIZED COST $5,887)... 5,887
------------
TOTAL INVESTMENTS IN
SECURITIES (AMORTIZED COST
$180,076,423)............. 180,076,423
------------
REPURCHASE AGREEMENTS--12.3%
Repurchase agreement with
Daiwa Securities, dated
12/29/95, with a maturity
value of $15,009,166 (see
Footnote A).............. NR/NR 5.50% 1/2/96 15,000 15,000,000
Repurchase agreement with
National Westminster
Bank, dated 12/29/95,
with a maturity value of
$10,106,431 (see
Footnote B).............. NR/NR 5.65% 1/2/96 10,100 10,100,000
------------
TOTAL REPURCHASE AGREEMENTS
(AMORTIZED COST
$25,100,000).............. 25,100,000
------------
TOTAL INVESTMENTS
(AMORTIZED COST
$205,176,423)(A)--100.6%.. 205,176,423
Liabilities in excess of
other assets--(0.6%)...... (1,117,205)
------------
NET ASSETS--100.0%.......... $204,059,218
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $204,059,218.
(a) Cost for federal income tax and financial reporting purposes are the same.
NR--No rating available.
* Variable rate security. Interest rate stated is as of December 31, 1995.
Maturity date reflects the later of the next rate change or the next put
date.
Footnote A: Collateralized by $14,800,000 U.S. Treasury Note, 5.88%, due
07/31/97; with a value of $15,313,017.
Footnote B: Collateralized by $10,000,000 U.S. Treasury Note, 6.63%, due
03/31/97; with a value of $10,287,625.
See Notes to Financial Statements.
FS-509
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
ALASKA--3.3%
City of Valdez, Marine
Terminal Revenue, CP,
Refunding, ARCO
Transportation
Project, Series A..... VMIG1/A-1 3.50% 2/5/96 $ 3,500 $ 3,500,000
City of Valdez, Marine
Terminal Revenue, CP,
Refunding, ARCO
Transportation
Project, Series A,
1994 A................ VMIG1/A-1 3.55% 1/5/96 4,000 4,000,000
------------
7,500,000
------------
ALABAMA--2.6%
Phenix City Alabama
(A.M.T.)(LC
ABN Amro)............. P-1/NR 3.55% 2/7/96 6,000 6,000,000
------------
CALIFORNIA--4.2%
Southeast Resource
Recovery Facility,
Authority of
California Lease
Revision, VRDN, Series
A, (LC Industrial Bank
of Japan Ltd)......... VMIG1/A-1 5.15%* 12/1/18 9,500 9,500,000
------------
COLORADO--4.4%
Burke County
(LC Credit Swisse).... VMIG1/A-1+ 3.40% 3/7/96 5,000 5,000,000
Colorado Student
Obligation Bond
Authority, VRDN,
Student Loan Revenue,
Series 1990A (A.M.T.)
(LC Student Loan
Marketing
Association).......... VMIG1/NR 5.20%* 9/1/24 5,000 5,000,000
------------
10,000,000
------------
FLORIDA--8.4%
Florida Municipal Power
(LC First Union)...... P-1/A-1 3.50% 2/8/96 7,500 7,500,000
West Orange Hospital
(LC Rabobank)......... VMIG1/NR 3.75% 1/3/96 5,600 5,600,000
West Orange Hospital
(LC Rabobank)......... VMIG1/NR 3.80% 1/11/96 6,000 6,000,000
------------
19,100,000
------------
</TABLE>
See Notes to Financial Statements.
FS-510
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
GEORGIA--3.2%
Georgia Municipal Gas
(LC Wachovia Bank).... A1+/NR 3.80% 2/5/96 $ 5,000 $ 5,000,000
Thomaston--Upson County,
Industrial Development
Authority, Yamaha
Music Manufacturing,
(A.M.T.) (LC Bank of
Tokyo Ltd.)........... NR/A-1 5.80%* 8/1/18 2,300 2,300,000
------------
7,300,000
------------
IOWA--2.6%
Iowa School Corps.,
Warrant Certificates,
Iowa School Cash
Anticipation Program,
Series A
(CGIC Insured)........ VMIG1/SP-1+ 4.75% 6/28/96 6,000 6,025,412
------------
ILLINOIS--2.7%
Southwestern Illinois
Development Authority,
Environmental Impact
Revenue, Shell Oil Co.
Wood River Project,
(A.M.T.).............. VMIG1/AAA 6.15% 10/1/25 6,175 6,175,000
------------
INDIANA--1.6%
Seymour Economic
Development Authority
Revenue, Kobelco Metal
Powder Project
(A.M.T.) (LC
Industrial Bank of
Japan, Limited)....... NR/A-1 5.80% 12/1/97 3,700 3,700,000
------------
KENTUCKY--4.8%
Bowling Green,
Industrial Building
Revenue, VRDN, Bando
Manufacturing America
Project (A.M.T.) (LC
Industrial Bank of
Japan, New York)...... NR/A-1 5.80%* 12/1/07 2,655 2,655,000
</TABLE>
See Notes to Financial Statements.
FS-511
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
KENTUCKY (CONTINUED)
Bowling Green,
Industrial Building
Revenue, VRDN, Twin
Faste Inc. Project
(A.M.T.) (LC
Industrial Bank of
Japan)................ NR/A-1 5.80%* 3/1/08 $ 2,400 $ 2,400,000
Henderson County, Solid
Waste Disposal
Revenue, VRDN, Hudson
Foods Inc. Project
(A.M.T.)
(LC Rabobank
Netherland)........... VMIG1/NR 5.10%* 3/1/15 2,000 2,000,000
Kentucky Higher
Education Student Loan
Corp., Insured Student
Loan, Series E,
(A.M.T.) (LC Sumitomo
Bank, Chicago)........ VMIG1/A-1 5.60% 12/1/11 4,000 4,000,000
------------
11,055,000
------------
LOUISIANA--5.3%
New Orleans Exhibition
Hall Authority, Series
B, (A.M.T.) (LC Sanwa
Bank Ltd.)............ VMIG1/A-1 5.50% 7/1/18 5,000 5,000,000
State of Louisiana
(LC Credit Locale).... VMIG1/A-1+ 3.80% 1/3/96 7,000 7,000,000
------------
12,000,000
------------
MISSOURI--3.4%
Missouri Higher
Education Loan
Authority, VRDN,
Series A (A.M.T.) (LC
National Westminster
Place)................ VMIG1/NR 5.25%* 6/1/17 3,000 3,000,000
Burlington G&E VRDN..... P-1/A-1+ 3.65%* 3/11/96 4,800 4,800,000
------------
7,800,000
------------
</TABLE>
See Notes to Financial Statements.
FS-512
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEW HAMPSHIRE--4.4%
New Hampshire Business
Finance Authority,
Pollution Control
Revenue Refunding,
Public Service Co. of
New Hampshire Project,
VRDN, Series 1992D,
(A.M.T.) (LC Barclays
Bank PLC)............. VMIG1/A-1+ 5.15%* 5/1/21 $ 10,000 $ 10,000,000
------------
NEVADA--4.8%
Clark County Industrial
Development Revenue,
Nevada Power Co.
Project, Series A,
(A.M.T.) (LC Bank
Barcia Place)......... NR/A-1+ 5.35% 10/1/30 8,000 8,000,000
Washoe County Nevada (LC
Union Bank of
Switzerland).......... P-1/A-1+ 4.00% 1/22/96 3,000 3,000,000
------------
11,000,000
------------
NEW YORK--11.4%
New York City General
Obligation, Series F-6
(LC Noeinchukin)...... VMIG1/A-1+ 5.50% 2/15/18 4,200 4,200,000
New York City Housing
Development Corp.
Mortgage Revenue,
Multifamily 400 West
59th-A-2 (A.M.T.)
(LC Bayerische
Hypotheken)........... NR/A-1 5.00% 9/1/30 9,000 9,000,000
New York State Energy
Research & Development
Authority, Pollution
Control Revenue, New
York Electric & Gas--D
(LC Union Bank of
Switzerland).......... VMIG1/A-1+ 5.30% 10/1/29 6,000 6,000,000
</TABLE>
See Notes to Financial Statements.
FS-513
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
New York State Energy
Research & Development
Authority, Pollution
Control Revenue,
Niagara Power Corp.
Project--B, (A.M.T.)
(LC Morgan Guaranty
New York)............. NR/A-1+ 5.60% 7/1/27 $ 2,000 $ 2,000,000
St. Lawrence County
Industrial Development
Agency, Environmental
Impact Revenue
Reynolds Metals Co.
Project, (A.M.T.) (LC
Royal Bank of Canada). VMIG1/A-1+ 5.00% 5/1/25 4,900 4,900,000
------------
26,100,000
------------
OREGON--1.8%
State of Oregon General
Obligation, VRDN,
Veterans' Welfare
Bond, Series 1973F,
(LC Mitsubishi Bank
Ltd.)................. VMIG1/A-1 5.15%* 12/1/17 4,000 4,000,000
------------
PENNSYLVANIA--6.4%
Allegheny County
Pennsylvania (LC
Norinchukin).......... P-1/A-1+ 3.70% 2/2/96 3,700 3,700,000
Carbon County
Pennsylvania (A.M.T.)
(LC NatWest).......... P-1/A-1+ 3.45% 3/6/96 7,000 7,000,000
Montgomery County (LC
Deutsche Bank)........ P-1/A-1+ 3.80% 2/7/96 3,800 3,800,000
------------
14,500,000
------------
RHODE ISLAND--1.3%
Providence Off Street
Public Parking
Facility Revenue,
VRDN, Wash Street
Garage Corp. Project,
(A.M.T.) (LC Morgan
Guaranty Trust)....... NR/A-1+ 5.10%* 12/1/22 3,000 3,000,000
------------
</TABLE>
See Notes to Financial Statements.
FS-514
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
SOUTH CAROLINA--3.0%
South Carolina Jobs,
Economic Development
Authority, VRDN,
Hospital Facilities
Revenue, Baptist
Healthcare System (LC
Credit Local de
France)............... VMIG1/A-1+ 5.05%* 8/1/17 $ 7,000 $ 7,000,000
------------
TENNESSEE--2.8%
Memphis Shelby County
(A.M.T.) (LC Canadian
Imperial Bank of
Commerce)............. P-1/A-1+ 3.70% 2/22/96 6,405 6,405,000
------------
TEXAS--9.9%
Brazos Higher Education
Authority, Student
Loan Revenue, VRDN,
Series B-1 (A.M.T.)
(LC
Student Loan Marketing
Assoc.) .............. VMIG1/NR 5.20%* 6/1/23 6,000 6,000,000
Brazos River Texas
(A.M.T.) (LC Canadian
Imperial Bank of
Commerce)............. VMIG1/A-1+ 3.95% 1/18/96 3,000 3,000,000
Gulf Coast Industrial
Development Authority,
Texas Solid Waste
Disposal Revenue,
Citgo Petroleum Corp.
Project (A.M.T.)
(LC NationsBank of
Texas)................ VMIG1/NR 6.15% 5/1/25 2,700 2,700,000
Milam County Industrial
Development Corp.,
Pollution Control
Revenue Refunding,
Aluminum Co. of
America Project (LC
Credit Suisse)........ VMIG1/NR 4.60% 3/1/01 5,000 5,000,000
</TABLE>
See Notes to Financial Statements.
FS-515
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings
Moody's/ Principal Amortized
S&P Maturity Amount Cost
Description (Unaudited) Rate Date (000) (Note 2(a))
----------- ----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
TEXAS (CONTINUED)
Panhandle Plains Higher
Education Authority
Revenue, VRDN,
Student Loan Revenue,
Series A, (A.M.T.)
(LC Student Loan
Marketing
Association)......... VMIG1/NR 5.20%* 6/1/21 $ 6,000 $ 6,000,000
------------
22,700,000
------------
UTAH--2.4%
Emery County (LC Credit
Suisse).............. P-1/A-1+ 3.90% 1/10/96 5,500 5,500,000
------------
WEST VIRGINIA--2.6%
West Virginia Public
Energy (A.M.T.) (LC
Swiss Bank).......... P-1/A-1+ 3.70% 2/22/96 6,000 6,000,000
------------
WYOMING--2.4%
Sweetwater City,
Wyoming (A.M.T.) (LC
West Deutsche
LandesBank).......... VMIG1/A-1+ 3.70% 2/1/96 5,400 5,400,000
------------
TOTAL INVESTMENTS--99.7%
(COST
$227,760,412)(A)...... 227,760,412
Other assets in excess
of liabilities--0.3%.. 750,866
------------
NET ASSETS--100.0%...... $228,511,278
============
</TABLE>
- -----------
Percentages indicated are based on net assets of $228,511,278.
(a) Cost for federal income tax and financial reporting purposes are the same.
A.M.T.--Subject to Alternative Minimum Tax.
CGIC--Capital Guaranty Insurance Corporation.
CP--Commercial Paper.
LC--Letter of Credit.
NR--No rating available.
VRDN--Variable Rate Demand Note.
* Variable rate security. Interest rate stated is as of December 31, 1995.
Maturity date reflects the later of the next rate change or the next put
date.
See Notes to Financial Statements.
FS-516
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
FS-517
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund Assets Fund Income Fund
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $46,747,002, $8,788,919,
$246,097,346, $250,136,384,
$78,317,453, $96,241,231 and
$168,543,796, respectively).......... $55,015,009 $9,512,982 $287,695,105
Repurchase Agreements (cost $0, $0, $0,
$0, $0, $0 and $20,857,000,
respectively)........................ -- -- --
Cash................................... 23,959 27,271 --
Cash denominated in foreign currencies. -- -- --
Receivable for investment securities
sold................................. -- -- --
Receivable for Fund shares sold........ 42,814 16,051 59,398
Receivable from Adviser................ -- -- --
Dividends receivable................... 130,722 10,670 1,011,718
Interest receivable.................... 341,392 31,618 98,743
Foreign tax reclaim receivable......... -- -- --
Deferred organization expenses......... 76,450 61,278 60,637
Prepaid expenses and other assets...... 20,666 5,397 7,051
----------- ---------- ------------
Total Assets.......................... 55,651,012 9,665,267 288,932,652
----------- ---------- ------------
LIABILITIES:
Advisory fees payable.................. 32,187 1,596 80,927
Administration fees payable............ 9,160 534 33,314
Shareholder Services fees payable
(Class A Shares)..................... 30,702 4,618 1,548
Shareholder Services fees payable
(Class B Shares)..................... 1,269 486 302
12b-1 fees payable (Class B Shares).... 4,502 1,419 892
Bank overdrafts........................ -- -- 438,819
Dividends payable...................... 19,103 2,812 847,092
Payable for Fund shares redeemed....... 59,709 -- --
Payable for investment securities
purchased............................ -- 23,593 --
Payable for variation margin........... -- -- --
Other accrued expenses................. 29,053 31,208 136,231
----------- ---------- ------------
Total Liabilities..................... 185,685 66,266 1,539,125
----------- ---------- ------------
NET ASSETS.............................. $55,465,327 $9,599,001 $287,393,527
=========== ========== ============
</TABLE>
See Notes to Financial Statements.
FS-518
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Growth Opportunities Equity Intermediate
Fund Fund Fund Bond Fund
------ ------------- ------------- ------------
<S> <C> <C> <C>
$295,869,250 $93,777,555 $102,116,486 $175,761,194
-- -- -- 20,857,000
-- 7,474 89,437 1,010
-- -- 948,475 --
5,224,933 -- -- --
103,710 13,900 447,060 56,077
-- -- -- 192,506
634,710 33,175 129,246 --
5,165 2,865 960,435 2,452,092
-- -- 55,468 --
59,746 60,194 60,697 38,759
7,172 3,042 3,482 13,068
- ------------ ----------- ------------ ------------
301,904,686 93,898,205 104,810,786 199,371,706
- ------------ ----------- ------------ ------------
139,215 39,946 31,952 53,803
42,597 11,526 10,626 25,102
2,545 359 1,592 3,312
148 10 90 136
437 28 256 451
262,146 -- -- --
844,773 180,457 203,585 929,545
326,751 -- 634 --
1,593,065 -- -- --
-- -- 72,514 --
151,663 52,936 100,160 75,686
- ------------ ----------- ------------ ------------
3,363,340 285,262 421,409 1,088,035
- ------------ ----------- ------------ ------------
$298,541,346 $93,612,943 $104,389,377 $198,283,671
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
FS-519
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund Assets Fund Income Fund
------------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
CLASS A SHARES:
Net Assets........................... $51,996,986 $8,355,636 $ 2,872,994
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 3,576,517 726,432 235,161
----------- ---------- ------------
Net Asset Value per Share............ 14.54 11.50 12.22
Maximum Sales Charge................. 0.68* 0.54* 0.58*
----------- ---------- ------------
Maximum Offering Price............... $ 15.22 $ 12.04 $ 12.80
=========== ========== ============
CLASS B SHARES:
Net Assets........................... $ 2,174,744 $ 832,603 $ 593,200
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 149,364 72,716 48,550
----------- ---------- ------------
Net Asset Value per Share............ $ 14.56 $ 11.45 $ 12.22
=========== ========== ============
CLASS I SHARES:
Net Assets........................... $ 1,293,597 $ 410,762 $283,927,333
Shares of beneficial interest issued
and outstanding, $0.001 par value,
unlimited number of shares
authorized......................... 88,785 35,843 23,259,373
----------- ---------- ------------
Net Asset Value per Share............ $ 14.57 $ 11.46 $ 12.21
=========== ========== ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at
par................................ $ 3,815 $ 835 $ 23,544
Additional paid-in-capital........... 47,372,999 8,874,025 240,515,461
Accumulated net realized gains
(losses) from investment
transactions....................... (179,714) 5 5,265,350
Undistributed net investment income
(loss)............................. 220 73 (8,587)
Net unrealized appreciation on
investments........................ 8,268,007 724,063 41,597,759
Net unrealized appreciation of assets
and liabilities denominated in
foreign currencies and financial
futures............................ -- -- --
----------- ---------- ------------
NET ASSETS, DECEMBER 31, 1995.......... $55,465,327 $9,599,001 $287,393,527
=========== ========== ============
</TABLE>
- -----------
* Sales charge is 4.50% of Maximum Offering Price.
** Sales charge is 3.00% of Maximum Offering Price.
See Notes to Financial Statements.
FS-520
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Opportunities Equity Intermediate
Growth Fund Fund Fund Bond Fund
----------- ------------- ------------- ------------
<S> <C> <C> <C>
$ 4,329,204 $ 671,776 $ 2,749,124 $ 6,094,679
361,669 55,070 246,447 744,997
------------ ----------- ------------ ------------
11.97 12.20 11.16 8.18
0.56* 0.57* 0.53* 0.25**
------------ ----------- ------------ ------------
$ 12.53 $ 12.77 $ 11.69 $ 8.43
============ =========== ============ ============
$ 268,039 $ 15,387 $ 192,707 $ 259,384
22,438 1,269 17,292 31,701
------------ ----------- ------------ ------------
$ 11.95 $ 12.12 $ 11.14 $ 8.18
============ =========== ============ ============
$293,944,103 $92,925,780 $101,447,546 $191,929,608
24,559,453 7,623,036 9,079,890 23,455,341
------------ ----------- ------------ ------------
$ 11.97 $ 12.19 $ 11.17 $ 8.18
============ =========== ============ ============
$ 24,944 $ 7,679 $ 9,344 $ 24,232
247,530,554 78,254,290 95,968,721 188,432,293
5,249,304 (113,066) 1,502,766 2,609,748
3,678 3,938 134,091 --
45,732,866 15,460,102 5,875,255 7,217,398
-- -- 899,200 --
------------ ----------- ------------ ------------
$298,541,346 $93,612,943 $104,389,377 $198,283,671
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
FS-521
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate
International Municipal
Bond Fund Bond Fund Bond Fund
--------- ------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $108,844,126, $14,692,171,
$370,618,759, $231,324,230,
$47,241,060, $180,076,423 and
$227,760,412, respectively)......... $115,115,920 $15,119,887 $387,423,990
Repurchase agreements (amortized cost
$11,167,000, $0, $0, $0,
$10,200,000, $25,100,000 and $0,
respectively)....................... 11,167,000 -- --
Cash.................................. -- 20,834 --
Receivable for investment securities
sold................................ -- -- --
Receivable for Fund shares sold....... 58,546 5,713 2,889
Receivable from Adviser............... -- -- 142,179
Interest receivable................... 1,667,756 380,503 6,122,544
Unrealized appreciation on forward
foreign currency contracts.......... -- 108,092 --
Deferred organization expenses........ 57,260 56,533 45,319
Prepaid expenses and other assets..... 5,854 6,525 29,721
------------ ----------- ------------
Total Assets......................... 128,072,336 15,698,087 393,766,642
------------ ----------- ------------
LIABILITIES:
Advisory fees payable................. 46,708 4,784 65,306
Administration fees payable........... 17,390 1,942 50,362
Shareholder Services fees payable
(Class A Shares).................... 1,007 283 59,716
Shareholder Services fees payable
(Class B Shares).................... 33 4 160
12b-1 fees payable (Class B Shares)... 94 8 568
Bank overdrafts....................... 175 -- 92
Dividends payable..................... 631,870 665,559 1,447,504
Payable for Fund shares redeemed...... 2,797 -- 170,000
Other accrued expenses................ 63,593 30,219 102,217
------------ ----------- ------------
Total Liabilities.................... 763,667 702,799 1,895,925
------------ ----------- ------------
NET ASSETS............................. $127,308,669 $14,995,288 $391,870,717
============ =========== ============
</TABLE>
See Notes to Financial Statements.
FS-522
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Money Market Money Market Money Market
Bond Fund Fund Fund Fund
--------- --------------- ------------ ------------
<S> <C> <C> <C>
$244,998,503 $47,241,060 $180,076,423 $227,760,412
-- 10,200,000 25,100,000 --
-- -- -- 234,790
-- -- 1,938 --
39,250 -- --
108,845 -- -- --
4,307,370 3,973 496,734 1,016,229
-- -- -- --
4,453 57,957 61,354 83,300
21,770 60,156 110,035 122,258
- ------------ ----------- ------------ ------------
249,480,191 57,563,146 205,846,484 229,216,989
- ------------ ----------- ------------ ------------
51,660 13,690 41,802 30,811
31,720 19,610 31,447 45,718
22,133 117,924 227,761 283,674
123 -- 36 --
462 -- -- --
198,527 111,239 1,334,167 --
991,881 20,092 58,489 304,350
306,469 -- -- --
54,066 16,531 93,564 41,158
- ------------ ----------- ------------ ------------
1,657,041 299,086 1,787,266 705,711
- ------------ ----------- ------------ ------------
$247,823,150 $57,264,060 $204,059,218 $228,511,278
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
FS-523
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate
Bond International Municipal
Fund Bond Fund Bond Fund
---- ------------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE:
CLASS A SHARES:
Net Assets........................ $ 1,846,532 $ 486,840 $ 17,776,872
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 170,875 45,289 1,451,741
------------ ----------- ------------
Net Asset Value per Share......... 10.81 10.75 12.25
Maximum Sales Charge.............. 0.51* 0.51* 0.38**
------------ ----------- ------------
Maximum Offering Price............ $ 11.32 $ 11.26 $ 12.63
============ =========== ============
CLASS B SHARES:
Net Assets........................ $ 61,260 $ 4,478 $ 340,913
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 5,669 414 27,834
------------ ----------- ------------
Net Asset Value per Share......... $ 10.81 $ 10.81 $ 12.25
============ =========== ============
CLASS I SHARES:
Net Assets $125,400,877 $14,503,970 $373,752,932
Shares of beneficial interest
issued and outstanding, $0.001
par value, unlimited number of
shares authorized(1)............ 11,598,064 1,342,032 30,509,460
------------ ----------- ------------
Net Asset Value per Share......... $ 10.81 $ 10.81 $ 12.25
============ =========== ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at
par............................. $ 11,774 $ 1,387 $ 31,989
Additional paid-in-capital........ 118,554,093 14,473,243 375,105,416
Accumulated net realized gains
(losses) on investment
transactions.................... 2,471,008 (37,381) (71,919)
Accumulated net investment loss... -- (13,857) --
Net unrealized appreciation on
investments..................... 6,271,794 427,716 16,805,231
Net unrealized appreciation of
assets and liabilities
denominated in foreign
currencies...................... -- 144,180 --
------------ ----------- ------------
NET ASSETS, DECEMBER 31, 1995....... $127,308,669 $14,995,288 $391,870,717
============ =========== ============
</TABLE>
- -----------
*Sales charge is 4.50% of Maximum Offering Price.
**Sales charge is 3.00% of Maximum Offering Price.
(1) The Municipal Bond Fund has authorized 2.5 billion shares for Class A and
Class B and has authorized 5.0 billion shares for Class I.
See Notes to Financial Statements.
FS-524
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Money Market Money Market Money Market
Bond Fund Fund Fund Fund
--------- --------------- ------------ ------------
<S> <C> <C> <C>
$ 7,425,897 $57,264,060 $203,994,341 $228,511,278
587,619 57,280,045 203,962,497 228,564,929
- ------------ ----------- ------------ ------------
12.64 1.00 1.00 1.00
0.60* -- -- --
- ------------ ----------- ------------ ------------
$ 13.24 $ 1.00 $ 1.00 $ 1.00
============ =========== ============ ============
$ 237,697 $ 64,877
18,797 64,867
- ------------ ------------
$ 12.65 $ 1.00
============ ============
$240,159,556
19,011,083
- ------------
$ 12.63
============
$ 19,618 $ 57,280 $ 204,027 $ 228,565
233,921,388 57,222,765 203,823,336 228,322,787
207,871 (15,985) 31,855 (40,074)
-- -- -- --
13,674,273 -- -- --
-- -- -- --
- ------------ ----------- ------------ ------------
$247,823,150 $57,264,060 $204,059,218 $228,511,278
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
FS-525
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed
Assets Income Managed Equity
Fund(6) Assets Fund(1) Income Fund(2)
------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $134,218,
for International Equity Fund).. $ 1,219,984 $ 52,630 $ 8,875,334
Interest income................... 1,726,718 91,756 1,593,621
----------- -------- -----------
2,946,702 144,386 10,468,955
----------- -------- -----------
EXPENSES:
Advisory fees..................... 331,535 25,209 1,106,473
Administration fees............... 70,850 5,818 331,942
Shareholder Services fees (Class A
Shares and Class B Shares)...... 120,334 9,051 2,981
12b-1 fees (Class B Shares)....... 5,831 3,325 1,283
Custodian fees and expenses....... 56,320 37,950 81,104
Registration fees................. 13,918 -- 74,275
Legal and audit fees.............. 31,696 22,325 45,392
Amortization of organization
expenses........................ 10,067 10,494 17,155
Transfer agent fees and expenses.. 80,641 10,246 17,960
Reports to shareholders........... 14,504 12,129 20,660
Trustees' fees.................... 1,760 2,265 5,848
Miscellaneous expenses............ 13,157 2,182 17,505
----------- -------- -----------
Total Expenses.................... 750,613 140,994 1,722,578
Less: Expense reimbursements...... (179,574) (89,978) (277,704)
----------- -------- -----------
Net Expenses..................... 571,039 51,016 1,444,874
----------- -------- -----------
NET INVESTMENT INCOME............ 2,375,663 93,370 9,024,081
----------- -------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gains (losses) on
investment transactions......... (324,052) 5 12,993,377
Net realized losses on foreign
currency transactions........... -- -- --
Net realized gains on futures
transactions.................... -- -- --
Net change in unrealized
appreciation (depreciation) on
investments..................... 9,391,499 724,063 41,597,759
Net unrealized appreciation of
assets and liabilities
denominated in foreign
currencies and financial
futures......................... -- -- --
----------- -------- -----------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS.. 9,067,447 724,068 54,591,136
----------- -------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS. $11,443,110 $817,438 $63,615,217
=========== ======== ===========
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 1, 1995 through December 31, 1995.
(5) For the year ended January 31, 1995.
(6) For the year ended December 31, 1995.
See Notes to Financial Statements.
FS-526
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International
Growth Opportunities Equity Intermediate Intermediate
Fund(2) Fund(2) Fund(3) Bond Fund(4) Bond Fund(5)
------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
$ 4,772,025 $ 611,057 $ 973,285
1,172,933 394,772 746,158 $10,539,377 $ 348,758
- ----------- ----------- ----------- ----------- ---------
5,944,958 1,005,829 1,719,443 10,539,377 348,758
- ----------- ----------- ----------- ----------- ---------
1,714,125 487,460 506,105 612,312 30,810
395,568 104,456 94,372 229,617 252
4,884 778 3,253 5,767 170
670 56 379 563 8
74,792 62,572 159,181 60,572 3,383
104,974 16,430 28,299 31,550 3,428
57,332 28,516 28,042 37,450 53,810
17,201 17,259 15,262 148 8,592
16,912 16,800 16,161 23,464 8,893
23,464 15,120 12,673 26,193 17,714
4,088 4,032 5,593 1,670 5,602
18,617 8,410 11,638 7,006 7,099
- ----------- ----------- ----------- ----------- ---------
2,432,627 761,889 880,958 1,036,312 139,761
(314,740) (168,733) (213,519) (185,219) (137,928)
- ----------- ----------- ----------- ----------- ---------
2,117,887 593,156 667,439 851,093 1,833
- ----------- ----------- ----------- ----------- ---------
3,827,071 412,673 1,052,004 9,688,284 346,925
- ----------- ----------- ----------- ----------- ---------
26,140,162 1,749,697 505,347 7,844,775 (63,605)
-- -- (236,752) -- --
-- -- 3,503,125 -- --
45,732,866 15,460,102 5,875,255 7,312,968 (304,664)
-- -- 899,200 -- --
- ----------- ----------- ----------- ----------- ---------
71,873,028 17,209,799 10,546,175 15,157,743 (368,269)
- ----------- ----------- ----------- ----------- ---------
$75,700,099 $17,622,472 $11,598,179 $24,846,027 $ (21,344)
=========== =========== =========== =========== =========
</TABLE>
See Notes to Financial Statements.
FS-527
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Intermediate
International Municipal Municipal
Bond Fund(1) Bond Fund(2) Bond Fund(3) Bond Fund(4)
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income (net of
foreign withholding
taxes of $13,850 for
International Bond
Fund).................. $ 7,432,982 $ 717,469 $16,586,298 $2,141,819
----------- ---------- ----------- ----------
7,432,982 717,469 16,586,298 2,141,819
----------- ---------- ----------- ----------
EXPENSES:
Advisory fees............ 571,379 79,128 1,294,971 213,509
Administration fees...... 155,831 16,957 488,746 27,546
Shareholder Services fees
(Class A Shares and
Class B Shares)........ 2,161 684 38,461 60,314
12b-1 fees (Class B
Shares)................ 116 30 824 175
Custodian fees and
expenses............... 55,999 34,025 76,502 5,329
Registration fees........ 31,690 5,776 142,121 33,720
Legal and audit fees..... 29,720 24,652 41,560 59,478
Amortization of
organization expenses.. 16,042 16,769 12,943 --
Transfer agent fees and
expenses............... 15,614 16,432 22,560 17,386
Reports to shareholders.. 13,762 12,840 28,882 18,415
Trustees' fees........... 5,642 2,352 1,586 5,076
Miscellaneous expenses... 10,618 6,748 13,408 11,946
----------- ---------- ----------- ----------
Total Expenses........... 908,574 216,393 2,162,564 452,894
Less: Expense
reimbursements......... (178,732) (110,736) (403,299) (296,239)
----------- ---------- ----------- ----------
Net Expenses............ 729,842 105,657 1,759,265 156,655
----------- ---------- ----------- ----------
NET INVESTMENT INCOME... 6,703,140 611,812 14,827,033 1,985,164
----------- ---------- ----------- ----------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON
INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gains
(losses) on investment
transactions........... 6,908,795 1,020,021 3,839,621 (757,908)
Net realized gains on
foreign currency
transactions........... -- 30,644 -- --
Net change in unrealized
appreciation on
investments............ 6,271,794 427,716 13,694,976 2,898,764
Translation of assets and
liabilities denominated
in foreign currencies.. -- 144,180 -- --
----------- ---------- ----------- ----------
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS AND
FOREIGN CURRENCY
TRANSACTIONS.......... 13,180,589 1,622,561 17,534,597 2,140,856
----------- ---------- ----------- ----------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $19,883,729 $2,234,373 $32,361,630 $4,126,020
=========== ========== =========== ==========
</TABLE>
- -----------
(1) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 1, 1995 through December 31, 1995.
(4) For the year ended February 28, 1995.
(5) For the year ended December 31, 1995.
See Notes to Financial Statements.
FS-528
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Municipal
Municipal Municipal Money Market Money Market Money Market
Bond Fund(3) Bond Fund(4) Fund(5) Fund(5) Fund(5)
------------ ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
$ 11,366,541 $ 984,395 $3,925,073 $8,980,167 $7,967,822
--------------- ---------- ---------- ---------- ----------
11,366,541 984,395 3,925,073 8,980,167 7,967,822
--------------- ---------- ---------- ---------- ----------
829,219 84,738 297,377 631,448 860,103
310,957 15,548 94,631 220,431 292,778
15,010 20,089 170,762 380,585 508,602
600 183 -- 154 --
43,173 5,356 47,037 58,917 67,687
95,405 30,271 7,824 26,695 19,626
56,450 25,959 22,236 57,347 54,617
148 -- 8,303 7,228 9,259
22,392 15,883 37,804 185,048 56,756
26,190 13,517 14,357 25,741 14,373
2,650 1,718 2,138 5,185 8,633
11,000 8,105 29,658 32,213 35,509
--------------- ---------- ---------- ---------- ----------
1,413,194 221,367 732,127 1,630,992 1,927,943
(278,552) (167,016) (198,986) (431,210) (489,926)
--------------- ---------- ---------- ---------- ----------
1,134,642 54,351 533,141 1,199,782 1,438,017
--------------- ---------- ---------- ---------- ----------
10,231,899 930,044 3,391,932 7,780,385 6,529,805
--------------- ---------- ---------- ---------- ----------
5,020,578 (260,986) 32,485 179,219 (44)
-- -- -- -- --
11,041,965 2,624,847 -- -- --
-- -- -- -- --
--------------- ---------- ---------- ---------- ----------
16,062,543 2,363,861 32,485 179,219 (44)
--------------- ---------- ---------- ---------- ----------
$ 26,294,442 $3,293,905 $3,424,417 $7,959,604 $6,529,761
=============== ========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
FS-529
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
--------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income............................... $ 2,375,663 $ 2,808,997
Net realized gains (losses) on investment
transactions...................................... (324,052) 210,291
Net change in unrealized appreciation (depreciation)
on investments.................................... 9,391,499 (4,108,668)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. 11,443,110 (1,089,380)
----------- ------------
Net equalization credits............................ -- 2,562
----------- ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares..................................... (2,441,590) (2,753,670)
Class B Shares..................................... (31,089) (34,937)
Class I Shares..................................... (36,073) --
----------- ------------
TOTAL DIVIDENDS TO SHAREHOLDERS.................... (2,508,752) (2,788,607)
----------- ------------
Net realized gains on investments:
Class A Shares..................................... (108,059) (19,340)
Class B Shares..................................... (4,560) (323)
Class I Shares..................................... (2,720) --
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS................ (115,339) (19,663)
----------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold....................... 9,561,625 6,725,337
Dividends reinvested................................ 2,415,006 2,336,101
Cost of shares redeemed............................. (9,697,497) (12,384,919)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS............................... 2,279,134 (3,323,481)
----------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 11,098,153 (7,218,569)
NET ASSETS:
Beginning of year................................... 44,367,174 51,585,743
----------- ------------
End of year (includes undistributed net investment
income of $220 in 1995 and $133,309 in 1994)...... $55,465,327 $ 44,367,174
=========== ============
</TABLE>
See Notes to Financial Statements.
FS-530
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
FS-531
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- ------- -------
<S> <C> <C> <C>
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income.............. $ 93,370 $ 9,024,081 $ 3,827,071
Net realized gains on investment
transactions..................... 5 12,993,377 26,140,162
Net realized gains (losses) on
foreign currency transactions.... -- -- --
Net realized gains on futures
transactions..................... -- -- --
Net change in unrealized
appreciation on investments...... 724,063 41,597,759 45,732,866
Net unrealized appreciation of
assets and liabilities
denominated in foreign currencies
and financial futures............ -- -- --
---------- ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... 817,438 63,615,217 75,700,099
---------- ------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares.................... (77,991) (36,341) (20,056)
Class B Shares.................... (7,493) (4,665) (128)
Class I Shares.................... (7,813) (8,991,662)(5) (3,803,209)
---------- ------------ ------------
TOTAL DIVIDENDS TO SHAREHOLDERS... (93,297) (9,032,668) (3,823,393)
---------- ------------ ------------
Net realized gains on investments:
Class A Shares.................... -- (76,484) (297,846)
Class B Shares.................... -- (15,958) (18,522)
Class I Shares.................... -- (7,635,585) (20,574,490)
---------- ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS.................... -- (7,728,027) (20,890,858)
---------- ------------ ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold...... 9,391,817 258,157,716 300,831,887
Dividends reinvested............... 85,512 6,638,209 15,027,099
Cost of shares redeemed............ (602,469) (24,256,920) (68,303,488)
---------- ------------ ------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS......... 8,874,860 240,539,005 247,555,498
---------- ------------ ------------
TOTAL INCREASE IN NET ASSETS..... 9,599,001 287,393,527 298,541,346
NET ASSETS:
Beginning of period................ -- -- --
---------- ------------ ------------
End of period(6)................... $9,599,001 $287,393,527 $298,541,346
========== ============ ============
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
(5) Includes distributions in excess of net investment income of $8,587.
(6) Includes undistributed net investment income of $73, $0, $3,678, $3,938,
$134,091, $0 and $0, respectively.
See Notes to Financial Statements.
FS-532
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
------------- ------------- ------- -------------
<S> <C> <C> <C>
$ 412,673 $ 1,052,004 $ 6,703,140 $ 611,812
1,749,697 505,347 6,908,795 1,020,021
-- (236,752) -- 30,644
-- 3,503,125 -- --
15,460,102 5,875,255 6,271,794 427,716
-- 899,200 -- 144,180
--------------- ------------ ------------ -----------
17,622,472 11,598,179 19,883,729 2,234,373
--------------- ------------ ------------ -----------
(807) (12,465) (50,085) (13,458)
-- (174) (755) (173)
(407,928) (905,274) (6,652,300) (612,038)
--------------- ------------ ------------ -----------
(408,735) (917,913) (6,703,140) (625,669)
--------------- ------------ ------------ -----------
(13,273) (60,752) (63,549) (33,914)
(308) (4,283) (2,117) (311)
(1,849,182) (2,203,921) (4,372,121) (1,053,821)
--------------- ------------ ------------ -----------
(1,862,763) (2,268,956) (4,437,787) (1,088,046)
--------------- ------------ ------------ -----------
89,942,654 100,265,824 129,396,150 15,584,504
1,194,408 1,535,547 2,974,473 380,496
(12,875,093) (5,823,304) (13,804,756) (1,490,370)
--------------- ------------ ------------ -----------
78,261,969 95,978,067 118,565,867 14,474,630
--------------- ------------ ------------ -----------
93,612,943 104,389,377 127,308,669 14,995,288
-- -- -- --
--------------- ------------ ------------ -----------
$ 93,612,943 $104,389,377 $127,308,669 $14,995,288
=============== ============ ============ ===========
</TABLE>
See Notes to Financial Statements.
FS-533
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended For the Year Ended For the Period Ended
December 31, January 31, January 31,
1995(1) 1995 1994(2)
-------------------- ------------------ --------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 9,688,284 $ 346,925 $ 269,055
Net realized gains
(losses) on
investment
transactions......... 7,844,775 (63,605) 13,430
Net change in
unrealized
appreciation
(depreciation) on
investments.......... 7,312,968 (304,664) (60,015)
------------ ----------- ----------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS..... 24,846,027 (21,344) 222,470
------------ ----------- ----------
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income:
Class A Shares........ (137,077) (4,217) (1,326)
Class B Shares........ (3,518) (99) --
Class I Shares........ (9,547,689) (342,609) (267,729)
------------ ----------- ----------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (9,688,284) (346,925) (269,055)
------------ ----------- ----------
Net realized gains on
investments:
Class A Shares........ (157,731) (16) (152)
Class B Shares........ (6,773) (1) --
Class I Shares........ (5,006,911) (1,196) (12,072)
------------ ----------- ----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........ (5,171,415) (1,213) (12,224)
------------ ----------- ----------
CAPITAL STOCK
TRANSACTIONS:
Net proceeds from
shares sold.......... 200,868,057 7,682,912 5,298,453
Dividends reinvested... 4,026,532 9,789 6,783
Cost of shares
redeemed............. (23,767,145) (5,345,718) (154,029)
------------ ----------- ----------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS.. 181,127,444 2,346,983 5,151,207
------------ ----------- ----------
TOTAL INCREASE IN NET
ASSETS............. 191,113,772 1,977,501 5,092,398
NET ASSETS:
Beginning of period.... 7,169,899 5,192,398 100,000
------------ ----------- ----------
End of period.......... $198,283,671 $ 7,169,899 $5,192,398
============ =========== ==========
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995.
(2) For the period March 5, 1993 (commencement of operations) through January
31, 1994.
See Notes to Financial Statements.
FS-534
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended For the Year Ended For the Year Ended
December 31, February 28, February 28,
1995(1) 1995 1994(2)
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 14,827,033 $ 1,985,164 $ 1,394,851
Net realized gains
(losses) on
investment
transactions......... 3,839,621 (757,908) 1,275,347
Net change in
unrealized
appreciation on
investments.......... 13,694,976 2,898,764 (1,243,092)
------------ ------------ -----------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 32,361,630 4,126,020 1,427,106
------------ ------------ -----------
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income:
Class A Shares........ (619,417) (1,214,913) (1,394,847)
Class B Shares........ (3,609) (17) (4)
Class I Shares........ (14,204,008) (770,234) --
------------ ------------ -----------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (14,827,034) (1,985,164) (1,394,851)
------------ ------------ -----------
Net realized gains on
investments:
Class A Shares........ (143,000) (62,814) (1,471,722)
Class B Shares........ (2,501) (284) --
Class I Shares........ (3,007,029) -- --
------------ ------------ -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........ (3,152,530) (63,098) (1,471,722)
------------ ------------ -----------
CAPITAL STOCK
TRANSACTIONS:
Net proceeds from
shares sold.......... 48,746,625 367,446,983 6,646,160
Dividends reinvested... 2,914,315 851,803 1,972,931
Cost of shares
redeemed............. (57,221,370) (16,165,822) (6,226,132)
------------ ------------ -----------
NET INCREASE
(DECREASE) IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS.. (5,560,430) 352,132,964 2,392,959
------------ ------------ -----------
TOTAL INCREASE IN NET
ASSETS............. 8,821,636 354,210,722 953,492
NET ASSETS:
Beginning of period.... 383,049,081 28,838,359 27,884,867
------------ ------------ -----------
End of period.......... $391,870,717 $383,049,081 $28,838,359
============ ============ ===========
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995.
(2) Includes Class B Shares for the period February 8, 1994 (initial offering
date of Class B Shares) through February 28, 1994.
See Notes to Financial Statements.
FS-535
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended For the Year Ended For the Year Ended
December 31, February 28, February 28,
1995(1) 1995 1994(2)
-------------------- ------------------ ------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment income.. $ 10,231,899 $ 930,044 $ 497,241
Net realized gains
(losses) on
investment
transactions......... 5,020,578 (260,986) 607,250
Net change in
unrealized
appreciation on
investments.......... 11,041,965 2,624,847 (728,931)
------------ ------------ -----------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS..... 26,294,442 3,293,905 375,560
------------ ------------ -----------
DIVIDENDS TO
SHAREHOLDERS FROM:
Net investment income:
Class A Shares........ (268,916) (409,080) (497,237)
Class B Shares........ (2,833) (67) (4)
Class I Shares........ (9,960,150) (520,897) --
------------ ------------ -----------
TOTAL DIVIDENDS TO
SHAREHOLDERS........ (10,231,899) (930,044) (497,241)
------------ ------------ -----------
Net realized gains on
investments:
Class A Shares........ (135,418) -- (717,815)
Class B Shares........ (4,334) -- --
Class I Shares........ (4,405,351) -- --
------------ ------------ -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS........ (4,545,103) -- (717,815)
------------ ------------ -----------
In excess of net
realized gains on
investments:
Class A Shares........ -- -- (6,618)
------------ ------------ -----------
CAPITAL STOCK
TRANSACTIONS:
Net proceeds from
shares sold.......... 34,482,785 222,400,536 3,588,206
Dividends reinvested... 3,928,330 323,826 956,597
Cost of shares
redeemed............. (29,087,608) (7,342,155) (5,752,746)
------------ ------------ -----------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS.. 9,323,507 215,382,207 (1,207,943)
------------ ------------ -----------
TOTAL INCREASE IN NET
ASSETS............. 20,840,947 217,746,068 (2,054,057)
NET ASSETS:
Beginning of period.... 226,982,203 9,236,135 11,290,192
------------ ------------ -----------
End of period.......... $247,823,150 $226,982,203 $ 9,236,135
============ ============ ===========
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995.
(2) Includes Class B Shares for the period February 8,1994 (initial offering
date of Class B Shares) through February 28, 1994.
See Notes to Financial Statements.
FS-536
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
---------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income........................... $ 3,391,932 $ 4,694,844
Net realized gains (losses) on investment
transactions.................................. 32,485 (961,178)
------------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... 3,424,417 3,733,666
------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Class A Shares.................................. (3,391,932) (4,694,844)
------------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold................... 250,085,862 677,021,399
Dividends reinvested............................ 2,488,380 1,310,332
Cost of shares redeemed......................... (311,695,323) (716,564,214)
------------- ------------
NET DECREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS................................. (59,121,081) (38,232,483)
------------- ------------
Increase due to capital contribution from
affiliate of investment adviser (Note 3(d)).... -- 933,054
------------- ------------
TOTAL DECREASE IN NET ASSETS................... (59,088,596) (38,260,607)
NET ASSETS:
Beginning of year............................... 116,352,656 154,613,263
------------- ------------
End of year..................................... $ 57,264,060 $116,352,656
============= ============
</TABLE>
See Notes to Financial Statements.
FS-537
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
-----------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
Net investment income.......................... $ 7,780,385 $ 5,491,950
Net realized gains (losses) on investment
transactions................................. 179,219 (1,309,831)
------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. 7,959,604 4,182,119
------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares................................ (7,779,495) (5,491,950)
Class B Shares................................ (890) --
------------- --------------
TOTAL DIVIDENDS TO SHAREHOLDERS............... (7,780,385) (5,491,950)
------------- --------------
Net realized gains on investments:
Class A Shares................................ (123,505) (23,361)
Class B Shares................................ (35) --
------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS........... (123,540) (23,361)
------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS................................ (7,903,925) (5,515,311)
------------- --------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold.................. 803,027,143 1,724,346,455
Dividends reinvested........................... 6,873,012 2,559,069
Cost of shares redeemed........................ (725,296,634) (1,770,081,791)
------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS..................... 84,603,521 (43,176,267)
------------- --------------
Increase due to capital contribution from
affiliate of investment adviser (Note 3(d))... -- 1,286,000
------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS...... 84,659,200 (43,223,459)
NET ASSETS:
Beginning of year.............................. 119,400,018 162,623,477
------------- --------------
End of year.................................... $ 204,059,218 $ 119,400,018
============= ==============
</TABLE>
See Notes to Financial Statements.
FS-538
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
---------------------------
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income............................. $ 6,529,805 $ 4,523,891
Net realized losses on investment transactions.... (44) (36,537)
------------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... 6,529,761 4,487,354
------------- ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
Class A Shares................................... (6,529,805) (4,523,891)
------------- ------------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from shares sold..................... 534,326,783 428,067,086
Dividends reinvested.............................. 3,305,612 2,261,400
Cost of shares redeemed........................... (482,251,105) (434,859,851)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM FUND
SHARE TRANSACTIONS............................. 55,381,290 (4,531,365)
------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......... 55,381,246 (4,567,902)
NET ASSETS:
Beginning of year................................. 173,130,032 177,697,934
------------- ------------
End of year....................................... $ 228,511,278 $173,130,032
============= ============
</TABLE>
See Notes to Financial Statements.
FS-539
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--GENERAL
Prairie Funds (the "Trust") is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"). At
December 31, 1995, the Trust consisted of twelve separate investment
portfolios. The accompanying financial statements include the results of
operations for the following portfolios of the Trust: Managed Assets Income
Fund, Managed Assets Fund, Equity Income Fund, Growth Fund, Special
Opportunities Fund, International Equity Fund, Bond Fund, International Bond
Fund, Intermediate Municipal Bond Fund, U.S. Government Money Market Fund,
Money Market Fund, and Municipal Money Market Fund. Additionally, the
accompanying financial statements include the results of operations for the
Prairie Municipal Bond Fund, Inc. and the Prairie Intermediate Bond Fund, two
open-end management investment companies registered under the Act (together
with the Trust's portfolios, the "Funds").
First Chicago Investment Management Company ("FCIMCO"), a wholly-owned
subsidiary of The First National Bank of Chicago ("FNBC"), serves as each
Fund's investment adviser and administrator. FCIMCO has engaged ANB Investment
Management and Trust Company ("ANB") to serve as sub-investment adviser for the
International Equity Fund. Additionally, FCIMCO has engaged Concord Holding
Corporation ("Concord"), a wholly-owned subsidiary of The BISYS Group, Inc., to
assist it in providing certain administrative services for the Funds. Concord
Financial Group, Inc., a wholly-owned subsidiary of Concord, serves as the
principal underwriter and distributor of each Fund's shares.
The Funds (except for the U.S. Government Money Market Fund and Municipal
Money Market Fund, which offer Class A shares only, and the Money Market Fund
which offers Class A shares and Class B shares) each offer Class A shares,
Class B shares and Class I shares. Class A shares, Class B shares and Class I
shares are substantially the same except that Class A shares are subject to a
sales charge imposed at the time of purchase and are subject to fees charged
pursuant to a Shareholder Services Plan. Class B shares are subject to a
contingent deferred sales charge imposed at the time of redemption and are
subject to fees charged pursuant to a Distribution Plan adopted pursuant to
Rule 12b-1 under the Act and fees charged pursuant to the Shareholder Services
Plan. Class I shares are not subject to any sales charge, shareholder services
fees or distribution fees.
During the period January 27, 1995 through March 3, 1995, various common
trust funds and collective trust funds managed by FNBC transferred cash and
securities to certain Funds in exchange for Class I shares of the corresponding
Fund. The following table sets forth the date on which such transfers occurred,
the transferring entity, the corresponding Fund, the market value of the
securities and cash transferred and the amount of Class I shares issued in
connection with such transfer:
FS-540
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class I
Shares
Date of Transfer Transferring Entity Fund Market Value Issued
---------------- ------------------- ---- ------------ -------
<S> <C> <C> <C> <C>
January 27, 1995........ First Chicago Personal Equity Income $198,087,162 19,808,716
Trust Equity Fund Fund
January 27, 1995........ First Chicago Personal Growth Fund 245,392,975 24,539,297
Trust Endowment Equity
Fund and First Chicago
Personal Trust Growth
Equity Fund
January 27, 1995........ First Chicago Personal Special 51,316,357 5,131,636
Trust Special Equity Opportunities
Fund Fund
January 27, 1995........ First Chicago Personal International 8,955,517 895,552
Trust International Bond Bond Fund
Fund
February 10, 1995....... First Chicago Personal Bond Fund 98,997,057 9,899,706
Trust Taxable Bond Fund
And First Chicago
Personal Trust
Endowment Bond Fund
February 10, 1995....... First Chicago Personal Intermediate 129,394,694 16,848,267
Trust Intermediate Bond Fund
Taxable Bond Fund and
Lake Shore Common
Trust Taxable Fixed
Income Fund
February 10, 1995....... First Chicago Personal Municipal Bond 213,488,376 17,910,099
Trust Tax-Exempt Bond Fund
Fund
February 10, 1995....... First Chicago Personal Intermediate 349,656,211 29,885,146
Trust Intermediate Tax- Municipal Bond
Exempt Bond Fund and Fund
Lake Shore Common
Trust Municipal Bond
Fund
March 3, 1995........... First Chicago Personal International 48,338,875 4,833,888
Trust International Equity Equity Fund
Fund
</TABLE>
At meetings of the shareholders of the First Prairie Diversified Assets Fund,
First Prairie Municipal Bond Fund--Intermediate Series, First Prairie Money
Market Fund--Money Market Series and Government Series, and First Prairie
Municipal Money Market Fund (collectively, the "First Prairie Funds") held on
January 17, 1995, shareholders of each such Fund approved an Agreement and Plan
of Exchange (the "Plan") which called for the transfer of the assets, subject
to the liabilities, of each First Prairie Fund to the Prairie Managed Assets
Income Fund,
FS-541
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
Prairie Intermediate Municipal Bond Fund, Prairie Money Market Fund, Prairie
U.S. Government Money Market Fund, and Prairie Municipal Money Market Fund,
respectively. The Plan also called for the issuance of shares by the respective
Prairie Funds to the shareholders of the corresponding First Prairie Fund, such
shares being equal in value to the net assets so transferred.
The following table sets forth the date on which this transfer took place
along with the net assets transferred and the number of shares issued:
<TABLE>
<CAPTION>
Net Assets
Fund Date of Transfer Transferred Shares Issued
---- ---------------- ----------- -------------
<S> <C> <C> <C>
Managed Assets Income Fund...... March 3, 1995 $ 43,698,653 3,518,593
Intermediate Municipal Bond
Fund........................... January 27, 1995 22,331,512 1,930,122
Money Market Fund............... May 20, 1995 127,355,807 127,197,352
U.S. Government Money Market
Fund........................... May 20, 1995 52,257,087 52,273,072
Municipal Money Market Fund..... May 20, 1995 178,386,094 178,439,745
</TABLE>
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. These principles
require management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses for the period. Actual results
could differ from those estimates.
(A) Portfolio Valuation: Bonds, debentures, notes, mortgage-related
securities, asset-backed securities, municipal obligations and convertible debt
obligations ("Fixed Income Securities") are valued daily using available market
quotations or at fair value as determined by one or more independent pricing
services (the "Service") approved by the Board of Trustees (or the "Board").
Fixed Income Securities for which quoted bid prices are readily available and
are representative of the bid side of the market, in the judgment of the
Service, are valued at the mean between the quoted bid prices (as obtained by
the Service from dealers in such securities) and asked prices (as calculated by
the Service based upon its evaluation of the market for such securities). Other
Fixed Income Securities are carried at fair value as determined by the Service,
based upon methods which include consideration of yields or prices of
securities of comparable quality, coupon rate, maturity and type, indications
as to values from dealers, and general market conditions. Fixed Income
Securities with maturities less than 60 days are carried at amortized cost,
which approximates market value.
Common stocks, preferred stocks and convertible securities, as well as
warrants to purchase such securities ("Equity Securities"), and call options
written by a Fund are valued at the last sale price on the securities exchange
or national securities market on which such securities are primarily traded.
Equity securities not
FS-542
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
listed on an exchange or national securities market, or securities for which
there were no transactions, are valued at the most recent bid prices. Any
securities or other assets for which recent market quotations are not readily
available are valued at fair value as determined in good faith by the Board.
Restricted securities, illiquid securities and securities for which market
quotations are not readily available, if any, are valued at fair value using
methods approved by the Board.
Investments of the U.S. Government Money Market Fund, Money Market Fund and
Municipal Money Market Fund (the "money market funds") are valued at amortized
cost, which approximates market value. Under the amortized cost method,
discount or premium is amortized on a constant basis to the maturity of the
security. In addition, the money market funds may not (a) purchase any
instruments with a remaining maturity greater that thirteen months unless such
instrument is subject to a demand feature, or (b) maintain a dollar-weighted
average maturity which exceeds 90 days.
(B) Foreign currency translations: The books and records of the International
Bond Fund and the International Equity Fund are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars on
the following basis: (i) investment securities, other assets and liabilities
initially expressed in foreign currencies are converted each business day into
U.S. dollars at the midpoint of the New York interbank market spot exchange
rate as quoted on the day of such translation by the Federal Reserve Bank of
New York or at such other quoted market exchange rate as may be determined to
be appropriate by the investment adviser; (ii) purchases and sales of foreign
securities, income and expenses are converted into U.S. dollars based upon
currency exchange rates prevailing on the respective dates of such
transactions. The Funds generally do not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized and unrealized gains and losses on foreign currency
represent: (i) foreign exchange gains and losses from the sale and holding of
foreign currencies, forward contracts and foreign currency denominated debt
obligations; (ii) gains and losses between trade date and settlement date on
investment securities transactions and forward exchange contracts; and (iii)
gains and losses from the difference between amounts of dividends and interest
recorded and the amounts actually received.
(C) Futures contracts: The International Equity Fund may engage in futures
contracts for the purpose of hedging against changes in the value of its
portfolio securities and in the value of securities it intends to purchase.
Upon entering into a futures contract, the Fund is required to deposit with the
broker an amount of cash or cash equivalents equal to a certain percentage of
the contract amount. This is known as the "initial margin". Subsequent payments
("variation margin") are made
FS-543
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the value of the contract are
recorded as unrealized gains or losses. The Fund recognizes, when the contract
is closed, a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the time it was closed. Futures
contracts open at December 31, 1995 and their related unrealized market
appreciation (depreciation) are set forth in the notes to the Portfolio of
Investments of the International Equity Fund.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments or indices, which may not
correlate with the change in value of the hedged investments. In addition,
there is the risk that the Fund may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) Forward foreign currency contracts--The International Bond Fund may enter
into forward foreign currency contracts in order to hedge its exposure to
changes in foreign currency exchange rates on its foreign portfolio holdings.
When executing forward foreign currency contracts, the Fund is obligated to buy
or sell a foreign currency at a specified rate on a certain date in the future.
With respect to sales of forward foreign currency contracts, the Fund would
incur a loss if the value of the contract increases between the date the
forward contract is opened and the date the forward contract is closed. The
Fund realizes a gain if the value of the contract decreases between those
dates. With respect to purchases of forward foreign currency contracts, the
Fund would incur a loss if the value of the contract decreases between the date
the forward contract is opened and the date the forward contract is closed. The
Fund realizes a gain if the value of the contract increases between those
dates. The Fund is also exposed to credit risk associated with counter party
nonperformance on these forward foreign currency contracts which is typically
limited to the unrealized gains on such contracts that are recognized in the
Statement of Assets and Liabilities.
(E) Securities transactions and investment income: Securities transactions
are recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, adjusted for
amortization of premiums and, when appropriate, discounts on investments, is
earned from settlement date and recognized on the accrual basis. Securities
purchased or sold on a when-issued or delayed-delivery basis may be settled a
month or more after the trade date.
Each Fund may enter into repurchase agreements with financial institutions
deemed to be creditworthy by FCIMCO, subject to the seller's agreement to
repurchase and the Fund's agreement to resell such securities at a mutually
agreed upon price. Securities purchased subject to repurchase agreements are
deposited with the Fund's custodian and, pursuant to the terms of the
repurchase agreement, must have an aggregate market value greater than or equal
to the repurchase price
FS-544
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
plus accrued interest at all times. If the value of the underlying securities
falls below the value of the repurchase price plus accrued interest, the Fund
will require the seller to deposit additional collateral by the next business
day. If the request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller.
(F) Expenses: Expenses directly attributable to a Fund are charged to that
Fund's operations; expenses which are applicable to all Funds are allocated
among them on the basis of relative net assets. Fund expenses directly
attributable to a class of shares are charged to that class; expenses which are
applicable to all classes are allocated among them.
(G) Dividends to shareholders: It is the policy of Managed Assets Income Fund
and Equity Income Fund to declare and pay dividends from net investment income
monthly while the Managed Assets Fund, Growth Fund, Special Opportunities Fund
and International Equity Fund declare and pay dividends quarterly. The Bond
Fund, Intermediate Bond Fund, International Bond Fund, Municipal Bond Fund,
Intermediate Municipal Bond Fund, U.S. Government Money Market Fund, Money
Market Fund and Municipal Money Market Fund declare dividends daily from net
investment income, payable monthly. Distributions from net realized capital
gains, if any, are normally declared and paid annually, but each Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code (the "Code"). However, to the extent
that net realized capital gains of a Fund can be reduced by capital loss
carryovers, if any, such gains will not be distributed.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles. To
the extent these differences are permanent in nature, such amounts are
reclassified within the composition of net assets based on their federal tax-
basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as distributions in excess of net investment income or
net realized capital gains. To the extent they exceed net investment income and
net realized gains for tax purposes, they are reported as distributions of
capital.
(H) Federal income taxes: It is the policy of each Fund to qualify as a
regulated investment company by complying with the provisions available to
certain investment companies, as defined in applicable sections of the Code,
and to make distributions of income and net realized capital gains sufficient
to relieve it from all, or substantially all, Federal income and excise taxes.
Capital losses incurred after October 31 ("Post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Municipal Money Market Fund and the Special Opportunities
Fund
FS-545
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- -------------------------------------------------------------------------------
incurred and may elect to defer net capital losses of approximately $50 and
$113,000, respectively.
At December 31, 1995, the Managed Asset Income Fund had unused capital loss
carryovers of approximately $317,000, which are available for Federal income
tax purposes to be applied against future net capital gains, if any, realized
subsequent to December 31, 1995. If not applied, the carryover expires in
2003.
At December 31, 1995, the U.S. Government Money Market Fund had unused
capital loss carryovers of approximately $16,000, which are available for
Federal income tax purposes to be applied against future net capital gains, if
any, realized subsequent to December 31, 1995. If not applied, the carryover
expires in 2002.
At December 31, 1995, the Municipal Money Market Fund had unused capital
loss carryovers of approximately $40,000, which are available for Federal
income tax purposes to be applied against future net capital gains, if any,
realized subsequent to December 31, 1995. If not applied, $1,000 of the
carryover expires in 1999, $2,000 expires in 2001, $1,000 expires in 2002 and
$36,000 expires in 2003.
At December 31, 1995, with the exception of the Growth Fund, the cost of the
Funds' investments for Federal income tax purposes was substantially the same
as the cost for financial reporting purposes (see Portfolios of Investments).
(I) Other: Organization expenses incurred by the Funds are being amortized
to operations over the period during which it is expected that a benefit will
be realized, not to exceed five years.
(J) Concentration of risk: Investing in securities of foreign issuers and
foreign currency transactions may involve certain considerations and risks not
typically associated with investments in the United States. These risks
include revaluation of currencies, adverse fluctuations in foreign currency
values and possible adverse political, social and economic developments,
including those particular to a specific industry, country or region, which
could cause the securities and their markets to be less liquid and prices more
volatile than those of comparable U.S. securities. These risks are greater
with respect to securities of issuers located in emerging market countries in
which certain Funds are authorized to invest. The ability of the issuers of
debt securities held by the Funds to meet their obligations may be affected by
economic and political developments particular to a specific industry, country
or region.
FS-546
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 3--INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH
AFFILIATES
(A) The Trust has an Investment Advisory Agreement with FCIMCO pursuant to
which FCIMCO has agreed to provide day-to-day management of each Fund's
investments at the following annual rates:
<TABLE>
<S> <C>
Managed Assets Income Fund............................................. 0.65%
Managed Assets Fund.................................................... 0.65%
Equity Income Fund..................................................... 0.50%
Growth Fund............................................................ 0.65%
Special Opportunities Fund............................................. 0.70%
International Equity Fund.............................................. 0.80%
Intermediate Bond Fund................................................. 0.40%
Bond Fund.............................................................. 0.55%
International Bond Fund................................................ 0.70%
Intermediate Municipal Bond Fund....................................... 0.40%
Municipal Bond Fund.................................................... 0.40%
U.S. Government Money Market Fund...................................... 0.40%
Money Market Fund...................................................... 0.40%
Municipal Money Market Fund............................................ 0.40%
</TABLE>
The Trust has an Administration Agreement with FCIMCO pursuant to which
FCIMCO has agreed to assist in all aspects of the Funds' operations at an
annual rate of 0.15% of each Fund's average daily net assets. FCIMCO has
engaged Concord to provide certain administrative services to the Funds
pursuant to a Master Sub-Administration Agreement between FCIMCO and Concord.
FCIMCO has agreed to pay Concord a fee for the services stipulated in the
Master Sub-Administration Agreement.
For the period ended December 31, 1995, FCIMCO voluntarily agreed to
reimburse a portion of the operating expenses of the Funds to the extent that
the Funds' expenses exceeded the following amounts, excluding shareholder
servicing fees and 12b-1 fees (as a percentage of each Fund's average net
assets):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS I
------- ------- -------
<S> <C> <C> <C>
Managed Assets Income Fund.............................. 1.31% 2.06% 0.80%
Managed Assets Fund..................................... 1.33% 2.08% 0.80%
Equity Income Fund...................................... 1.18% 1.93% 0.65%
Growth Fund............................................. 1.33% 2.08% 0.80%
Special Opportunities Fund.............................. 1.38% 2.13% 0.85%
International Equity Fund............................... 1.58% 2.33% 1.05%
Intermediate Bond Fund.................................. 1.15% 1.90% 0.55%
Bond Fund............................................... 1.23% 1.98% 0.70%
International Bond Fund................................. 1.48% 2.23% 0.95%
Intermediate Municipal Bond Fund........................ 0.90% 1.83% 0.55%
</TABLE>
FS-547
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Class I
------- ------- -------
<S> <C> <C> <C>
Municipal Bond Fund..................................... 1.08% 1.83% 0.55%
U.S. Government Money Market............................ 0.80% NA NA
Money Market Fund....................................... 0.80% 1.55% NA
Municipal Money Market Fund............................. 0.70% NA NA
</TABLE>
As such, FCIMCO reimbursed expenses during the period ending December 31,
1995 in the following amounts:
<TABLE>
<CAPTION>
Expense
Reimbursement
-------------
<S> <C>
Managed Assets Income Fund..................................... $179,574
Managed Assets Fund............................................ 89,978
Equity Income Fund............................................. 277,704
Growth Fund.................................................... 314,740
Special Opportunities Fund..................................... 168,733
International Equity Fund...................................... 213,519
Intermediate Bond Fund......................................... 185,219
Bond Fund...................................................... 178,732
International Bond Fund........................................ 110,736
Intermediate Municipal Bond Fund............................... 403,299
Municipal Bond Fund............................................ 278,552
U.S. Government Money Market Fund.............................. 198,986
Money Market Fund.............................................. 431,210
Municipal Money Market Fund.................................... 489,926
</TABLE>
The Distributor is not entitled to any fees pursuant to the Distribution
Agreement; however, the Distributor may receive payments of sales charges or
contingent deferred sales charges.
(B) The Funds' Class A shares and Class B shares have a Shareholder Services
Plan (the "Plan") pursuant to which the Funds pay the Distributor a fee, at an
annual rate of 0.25% of the average daily net assets of the outstanding Class A
shares and Class B shares. Pursuant to the terms of the Plan, the Distributor
has agreed to provide certain shareholder services to the holders of these
shares. Additionally, under the terms of the Plan, the Distributor may make
payments to other shareholder service agents who may include FCIMCO, FNBC and
their affiliates. For the period ended December 31, 1995, the Funds paid the
following amounts under the Plan:
<TABLE>
<CAPTION>
Amounts paid to
FCIMCO, FNBC Amounts paid to Amounts
and other service retained by
its affiliates organizations Distributor
--------------- --------------- -----------
<S> <C> <C> <C>
Managed Assets Income Fund...... $7,185 $111,163 $809
Managed Assets Fund............. 7,036 1,892 124
Equity Income Fund.............. 417 2,510 54
Growth Fund..................... 1,788 2,959 137
Special Opportunities Fund...... 304 454 19
</TABLE>
FS-548
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amounts paid to
FCIMCO, FNBC Amounts paid to Amounts
and other service retained by
its affiliates organizations Distributor
--------------- --------------- -----------
<S> <C> <C> <C>
International Equity Fund....... $ 1,363 $ 1,791 $ 98
Intermediate Bond Fund.......... 3,487 2,209 72
Bond Fund....................... 1,230 898 33
International Bond Fund......... 415 240 29
Intermediate Municipal Bond
Fund........................... 23,617 13,617 1,227
Municipal Bond Fund............. 7,593 7,151 266
U.S. Government Money Market
Fund........................... 168,470 2,292 --
Money Market Fund............... 378,833 1,372 380
Municipal Money Market Fund..... 508,558 28 17
</TABLE>
(C) The Funds' Class B shares have a Distribution Plan adopted pursuant to
Rule 12b-1 under the Act (the "12b-1 Plan") pursuant to which the Funds have
agreed to pay the Distributor for advertising, marketing and distributing Class
B Shares of the Funds at an annual rate of .75% of the average daily net assets
of the Funds' outstanding Class B shares. Under the terms of the 12b-1 Plan,
the Distributor may make payments to FCIMCO, FNBC and their affiliates in
respect of these services. For the period ended December 31, 1995, the Funds
made the following payments under the 12b-1 Plan, all of which was retained by
the Distributor:
<TABLE>
<S> <C>
Managed Assets Income Fund........................................... $5,831
Managed Assets Fund.................................................. 3,325
Equity Income Fund................................................... 1,283
Growth Fund.......................................................... 670
Special Opportunities Fund........................................... 56
International Equity Fund............................................ 379
Intermediate Bond Fund............................................... 563
Bond Fund............................................................ 116
International Bond Fund.............................................. 30
Intermediate Municipal Bond Fund..................................... 824
Municipal Bond Fund.................................................. 600
Money Market Fund.................................................... 154
</TABLE>
(D) During the fiscal year ended December 31, 1994, an affiliate of FCIMCO
purchased securities from the Money Market Fund and the U.S. Government Money
Market Fund at an amount in excess of the securities' fair market value. These
Funds recorded a realized loss on these sales in the amount of $1,286,000 and
$933,054, respectively, and an offsetting capital contribution from the
affiliate. As a result of varying treatments for book and tax purposes, the
capital contributions were reclassified from additional paid-in-capital to
accumulated net realized losses in the Statement of Assets and Liabilities.
FS-549
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 4--SECURITIES TRANSACTIONS
The following summarizes the securities transactions entered into by the
Funds, excluding short-term investments, for the period ended December 31,
1995:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Managed Assets Income Fund........................ $ 3,357,559 $ 7,795,562
Managed Assets Fund............................... 7,772,725 99,502
Equity Income Fund................................ 317,060,048 94,711,633
Growth Fund....................................... 488,008,493 274,675,271
Special Opportunities Fund........................ 96,866,413 26,212,656
International Equity Fund......................... 72,831,246 3,326,924
Intermediate Bond Fund............................ 410,895,956 256,675,480
Bond Fund......................................... 265,646,537 167,721,527
International Bond Fund........................... 14,226,845 4,749,719
Intermediate Municipal Bond Fund.................. 167,757,833 164,745,501
Municipal Bond Fund............................... 174,644,032 162,078,544
</TABLE>
At December 31, 1995, accumulated net unrealized appreciation (depreciation)
on investments was as follows:
<TABLE>
<CAPTION>
Unrealized Unrealized Net Unrealized
Appreciation Depreciation Appreciation
------------ ------------ --------------
<S> <C> <C> <C>
Managed Assets Income Fund.......... $ 8,452,650 $ (184,643) $ 8,268,007
Managed Assets Fund................. 766,286 (42,223) 724,063
Equity Income Fund.................. 42,227,078 (629,319) 41,597,759
Growth Fund......................... 48,630,652 (2,897,786) 45,732,866
Special Opportunities Fund.......... 16,914,276 (1,454,174) 15,460,102
International Equity Fund........... 7,077,639 (1,202,384) 5,875,255
Intermediate Bond Fund.............. 7,224,889 (7,491) 7,217,398
Bond Fund........................... 6,271,794 -- 6,271,794
International Bond Fund............. 427,716 -- 427,716
Intermediate Municipal Bond Fund.... 16,805,231 -- 16,805,231
Municipal Bond Fund................. 13,674,273 -- 13,674,273
</TABLE>
FS-550
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 5--CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds are summarized below:
<TABLE>
<CAPTION>
MANAGED ASSETS
INCOME FUND
---------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
--------------------- ---------------------- -------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares:
Shares Issued........... $ 6,191,735 463,615 $ 5,577,372 441,901
Dividends reinvested.... 2,369,623 177,490 2,307,933 185,739
Shares redeemed......... (9,494,631) (723,267) (11,257,088) (903,518)
----------- -------- ------------ --------
Net Increase (decrease). $ (933,273) (82,162) $ (3,371,783) (275,878)
=========== ======== ============ ========
Class B Shares:
Shares Issued........... $ 2,007,221 146,972 $ 1,147,965 90,904
Dividends reinvested.... 33,593 2,392 28,168 2,281
Shares redeemed......... -- -- (1,127,831) (93,185)(d)
----------- -------- ------------ --------
Net Increase............ $ 2,040,814 149,364 $ 48,302 --
=========== ======== ============ ========
Class I Shares:
Shares Issued........... $ 1,362,669 103,183 -- --
Dividends reinvested.... 11,790 865 -- --
Shares redeemed......... (202,866) (15,263) -- --
----------- -------- ------------ --------
Net Increase............ $ 1,171,593 88,785 $ -- --
=========== ======== ============ ========
Net Increase (decrease)
in Fund................ $ 2,279,134 320,311 $ (3,323,481) (275,878)
=========== ======== ============ ========
</TABLE>
FS-551
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED ASSETS EQUITY INCOME
FUND FUND
-----------------------------------------------
FOR THE PERIOD FOR THE PERIOD
APRIL 3, 1995 JANUARY 27, 1995
THROUGH THROUGH
DECEMBER 31, 1995(A) DECEMBER 31, 1995(A)
-----------------------------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued........... $8,265,007 774,054 $ 3,147,813 274,126
Dividends reinvested.... 77,996 6,993 96,740 8,056
Shares redeemed......... (582,928) (54,615) (548,876) (47,021)
----------- -------- ------------ ----------
Net Increase............ $7,760,075 726,432 $ 2,695,677 235,161
=========== ======== ============ ==========
Class B Shares:
Shares Issued........... $ 763,106 73,866 $ 549,799 47,321
Dividends reinvested.... 7,435 679 20,644 1,708
Shares redeemed......... (19,541) (1,829) (5,669) (479)
----------- -------- ------------ ----------
Net Increase............ $ 751,000 72,716 $ 564,774 48,550
=========== ======== ============ ==========
Class I Shares:
Shares Issued........... $ 363,704 35,836 $254,460,104 24,853,530
Dividends reinvested.... 81 7 6,520,825 538,073
Shares redeemed......... -- -- (23,702,375) (2,132,230)
----------- -------- ------------ ----------
Net Increase............ $ 363,785 35,843 $237,278,554 23,259,373
=========== ======== ============ ==========
Net Increase in Fund.... $ 8,874,860 834,991 $240,539,005 23,543,084
=========== ======== ============ ==========
</TABLE>
FS-552
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL
GROWTH OPPORTUNITIES
FUND FUND
------------------------ ------------------------
FOR THE PERIOD FOR THE PERIOD
JANUARY 27, 1995 JANUARY 27, 1995
THROUGH THROUGH
DECEMBER 31, 1995(A) DECEMBER 31, 1995(A)
------------------------ ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued............... $ 4,175,044 365,857 $ 621,648 57,254
Dividends reinvested........ 284,304 24,056 13,920 1,177
Shares redeemed............. (339,951) (28,244) (38,190) (3,361)
------------ ---------- ------------ ----------
Net Increase................ $ 4,119,397 361,669 $ 597,378 55,070
============ ========== ============ ==========
Class B Shares:
Shares Issued............... $ 246,223 21,032 $ 13,756 1,248
Dividends reinvested........ 18,650 1,584 308 26
Shares redeemed............. (2,126) (178) (52) (5)
------------ ---------- ------------ ----------
Net Increase................ $ 262,747 22,438 $ 14,012 1,269
============ ========== ============ ==========
Class I Shares:
Shares Issued............... $296,410,620 29,238,077 $89,307,250 8,700,086
Dividends reinvested........ 14,724,145 1,243,736 1,180,180 99,691
Shares redeemed............. (67,961,411) (5,922,360) (12,836,851) (1,176,741)
------------ ---------- ------------ ----------
Net Increase................ $243,173,354 24,559,453 $77,650,579 7,623,036
============ ========== ============ ==========
Net Increase in Fund........ $247,555,498 24,943,560 $78,261,969 7,679,375
============ ========== ============ ==========
</TABLE>
FS-553
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY INTERMEDIATE BOND
FUND FUND
---------------------- ------------------------
FOR THE PERIOD FOR THE PERIOD
MARCH 3, 1995 FEBRUARY 1, 1995
THROUGH THROUGH
DECEMBER 31, 1995(A) DECEMBER 31, 1995(B)
---------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued................. $ 2,704,994 256,160 $ 7,282,071 895,627
Dividends reinvested.......... 72,968 6,664 288,362 35,401
Shares redeemed............... (171,519) (16,377) (1,588,172) (194,954)
----------- --------- ------------ ----------
Net Increase.................. $ 2,606,443 246,447 $ 5,982,261 736,074
=========== ========= ============ ==========
Class B Shares:
Shares Issued................. $ 177,315 16,903 $ 303,451 37,048
Dividends reinvested.......... 4,093 407 7,835 961
Shares redeemed............... (193) (18) (50,817) (6,308)
----------- --------- ------------ ----------
Net Increase.................. $ 181,215 17,292 $ 260,469 31,701
=========== ========= ============ ==========
Class I Shares:
Shares Issued................. $97,383,515 9,484,283 $193,282,535 24,813,641
Dividends reinvested.......... 1,458,486 131,833 3,730,335 459,341
Shares redeemed............... (5,651,592) (536,226) (22,128,156) (2,742,147)
----------- --------- ------------ ----------
Net Increase.................. $93,190,409 9,079,890 $174,884,714 22,530,835
=========== ========= ============ ==========
Net Increase in Fund.......... $95,978,067 9,343,629 $181,127,444 23,298,610
=========== ========= ============ ==========
</TABLE>
FS-554
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE BOND
FUND
---------------------------------------------
FOR THE PERIOD
FOR THE YEAR MARCH 5, 1993
ENDED THROUGH
JANUARY 31, 1995 JANUARY 31, 1994(A)
--------------------- ----------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares Issued..................... $ 19,449 2,527 $ 51,267 6,185
Dividends reinvested.............. 4,153 533 1,484 180
Shares redeemed................... (15,285) (1,997) -- --
---------- --------- ----------- --------
Net Increase...................... $ 8,317 1,063 $ 52,751 6,365
========== ========= =========== ========
Class B Shares:
Shares Issued..................... $ 2,000 245 $ -- --
Dividends reinvested.............. 99 13 -- --
Shares redeemed................... (2,099) (258) -- --
---------- --------- ----------- --------
Net Increase...................... $ -- -- $ -- --
========== ========= =========== ========
Class I Shares:
Shares Issued..................... $7,661,463 1,001,211 $5,247,186 628,922
Dividends reinvested.............. 5,537 710 5,299 639
Shares redeemed................... (5,328,334) (698,958) (154,029) (18,488)
---------- --------- ----------- --------
Net Increase...................... $2,338,666 302,963 $5,098,456 611,073
========== ========= =========== ========
Net Increase in Fund.............. $2,346,983 304,026 $5,151,207 617,438
========== ========= =========== ========
</TABLE>
FS-555
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
BOND
BOND FUND FUND
------------------------ ----------------------
FOR THE FOR THE PERIOD
PERIOD JANUARY 27, 1995
FEBRUARY 10, 1995 THROUGH
THROUGH DECEMBER 31,
DECEMBER 31, 1995(A) 1995(A)
------------------------ ----------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... $ 1,854,556 174,316 $ 480,966 42,767
Dividends reinvested.... 110,618 10,293 47,097 4,274
Shares redeemed......... (148,560) (13,734) (19,999) (1,752)
------------ ---------- ----------- ---------
Net increase............ $ 1,816,614 170,875 $ 508,064 45,289
============ ========== =========== =========
Class B Shares:
Shares issued........... $ 58,404 5,401 $ 3,704 370
Dividends reinvested.... 2,873 268 484 44
Shares redeemed......... -- -- -- --
------------ ---------- ----------- ---------
Net increase............ $ 61,277 5,669 $ 4,188 414
============ ========== =========== =========
Class I Shares:
Shares issued........... $127,483,190 12,620,870 $15,099,834 1,442,838
Dividends reinvested.... 2,860,982 267,174 332,915 29,708
Shares redeemed......... (13,656,196) (1,289,980) (1,470,371) (130,514)
------------ ---------- ----------- ---------
Net increase............ $116,687,976 11,598,064 $13,962,378 1,342,032
============ ========== =========== =========
Net increase in Fund.... $118,565,867 11,774,608 $14,474,630 1,387,735
============ ========== =========== =========
</TABLE>
FS-556
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE MUNICIPAL
BOND FUND
--------------------------------------------------
FOR THE PERIOD
MARCH 1, 1995 FOR THE
THROUGH YEAR ENDED
DECEMBER 31, FEBRUARY 28,
1995(C) 1995
------------------------ ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... $ 2,036,319 167,138 $ 920,191 78,527
Dividends reinvested.... 579,220 47,958 829,334 70,747
Shares redeemed......... (2,724,405) (225,316) (12,219,977) (1,053,197)
------------ ---------- ------------ ----------
Net decrease............ $ (108,866) (10,220) $(10,470,452) (903,923)
============ ========== ============ ==========
Class B Shares:
Shares issued........... $ 348,000 28,626 $ 115,550 9,750
Dividends reinvested.... 4,876 399 1,971 169
Shares redeemed......... (20,212) (1,672) (123,958) (10,419)
------------ ---------- ------------ ----------
Net increase (decrease). $ 332,664 27,353 $ (6,437) (500)
============ ========== ============ ==========
Class I Shares:
Shares issued........... $ 46,362,306 3,850,432 $366,411,242 31,318,358
Dividends reinvested.... 2,330,219 191,337 20,498 1,737
Shares redeemed......... (54,476,753) (4,527,302) (3,821,887) (325,102)
------------ ---------- ------------ ----------
Net increase (decrease). $ (5,784,228) (485,533) $362,609,853 30,994,993
============ ========== ============ ==========
Net increase (decrease)
in Fund................ $ (5,560,430) (468,400) $352,132,964 30,090,570
============ ========== ============ ==========
</TABLE>
FS-557
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE
MUNICIPAL MUNICIPAL BOND
BOND FUND FUND
--------------------- ------------------------
FOR THE FOR THE PERIOD
YEAR ENDED MARCH 1, 1995
FEBRUARY 28, THROUGH
1994 DECEMBER 31, 1995(C)
--------------------- ------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued.................. $ 6,634,160 523,996 $ 1,295,558 103,426
Dividends reinvested........... 1,972,927 158,309 346,338 27,700
Shares redeemed................ (6,226,132) (496,647) (1,377,127) (110,562)
----------- -------- ------------ ----------
Net increase................... $ 2,380,955 185,658 $ 264,769 20,564
=========== ======== ============ ==========
Class B Shares:
Shares issued.................. $ 12,000 980 $ 228,602 18,257
Dividends reinvested........... 4 1 6,838 543
Shares redeemed................ -- -- (39) (3)
----------- -------- ------------ ----------
Net increase................... $ 12,004 981 $ 235,401 18,797
=========== ======== ============ ==========
Class I Shares:
Shares issued.................. $ -- -- $ 32,958,625 2,685,708
Dividends reinvested........... -- -- 3,575,154 285,358
Shares redeemed................ -- -- (27,710,442) (2,219,888)
----------- -------- ------------ ----------
Net increase................... $ -- -- $ 8,823,337 751,178
=========== ======== ============ ==========
Net increase in Fund........... $ 2,392,959 186,639 $ 9,323,507 790,539
=========== ======== ============ ==========
</TABLE>
FS-558
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BOND
FUND
-----------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
FEBRUARY 28, 1995 DECEMBER 31, 1994
------------------------ -----------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued................. $ 301,216 25,507 $ 3,586,206 275,363
Dividends reinvested.......... 319,837 27,236 956,593 75,829
Shares redeemed............... (2,895,171) (246,815) (5,752,746) (441,865)
------------ ---------- ----------- --------
Net decrease.................. $ (2,274,118) (194,072) $(1,209,947) (90,673)
============ ========== =========== ========
Class B Shares:
Shares issued................. $ -- -- $ 2,000 161
Dividends reinvested.......... 66 6 4 1
Shares redeemed............... (2,071) (168) -- --
------------ ---------- ----------- --------
Net increase (decrease)....... $ (2,005) (162) $ 2,004 162
============ ========== =========== ========
Class I Shares:
Shares issued................. $222,099,320 18,631,505 $ -- --
Dividends reinvested.......... 3,923 325 -- --
Shares redeemed............... (4,444,913) (371,925) -- --
------------ ---------- ----------- --------
Net increase.................. $217,658,330 18,259,905 $ -- --
============ ========== =========== ========
Net increase (decrease) in
Fund......................... $215,382,207 18,065,671 $(1,207,943) (90,511)
============ ========== =========== ========
</TABLE>
FS-559
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
-------------------------- ----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Class A Shares:
Shares issued........... 250,085,862 677,021,399 802,777,063 1,724,346,455
Dividends reinvested.... 2,488,380 1,310,332 6,872,109 2,559,069
Shares redeemed......... (311,695,323) (716,564,214) (725,110,518) (1,770,081,791)
------------ ------------ ------------ --------------
Net increase (decrease). (59,121,081) (38,232,483) 84,538,654 (43,176,267)
============ ============ ============ ==============
Class B Shares:
Shares issued........... -- -- 250,080 --
Dividends reinvested.... -- -- 903 --
Shares redeemed......... -- -- (186,116) --
------------ ------------ ------------ --------------
Net increase............ -- -- 64,867 --
============ ============ ============ ==============
Net increase (decrease)
in Fund................ (59,121,081) (38,232,483) 84,603,521 (43,176,267)
============ ============ ============ ==============
</TABLE>
FS-560
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL
MONEY MARKET
FUND
------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ------------------
SHARES SHARES
------ ------
<S> <C> <C>
Class A Shares:
Shares issued.............................. 534,326,783 428,067,086
Dividends reinvested....................... 3,305,612 2,261,400
Shares redeemed............................ (482,251,105) (434,859,851)
------------ ------------
Net increase (decrease) in Fund............ 55,381,290 (4,531,365)
============ ============
</TABLE>
- -----------
(a) Period from commencement of operations.
(b) Effective February 1, 1995, the Fund changed its fiscal year end from
January 31 to December 31.
(c) Effective March 1, 1995, the Fund changed its fiscal year end from February
28 to December 31.
(d) Includes 91,228 shares converted to Class A Shares on December 2, 1994.
NOTE 6--MERGER AND SUBSEQUENT EVENT
On December 1, 1995, FCIMCO's ultimate parent company, First Chicago
Corporation, merged with NBD Bancorp., Inc., with the combined company renamed
First Chicago NBD Corporation (FCNBD). FCNBD has now begun the process of
reorganizing their proprietary mutual funds: Prairie Funds, Prairie
Institutional Funds and the Woodward Funds (whose investment adviser is NBD
Bank, a wholly owned subsidiary of FCNBD).
On February 20, 1996, the Board of Trustees of The Woodward Funds and the
Board of Trustees/Directors of the Prairie Funds, Prairie Municipal Bond Fund,
Inc. and Prairie Intermediate Bond Fund approved Reorganization Agreements,
which are subject to shareholder approval. The expenses incurred in connection
with entering into and carrying out provisions of the Reorganization
Agreements, whether or not the transactions contemplated thereby are
consummated, will be paid by FCNBD. The reorganization is intended to be
effected on a tax-free basis, so that none of the Fund's shareholders will
recognize taxable gains or losses as a result of the reorganization.
A proxy statement/prospectus describing the reorganization and the reasons
therefore will be sent to shareholders.
FS-561
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 7--ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Trust designates the following eligible distributions for the dividends
received deduction for corporations for the year ended December 31, 1995:
<TABLE>
<CAPTION>
MANAGED
ASSETS MANAGED EQUITY
INCOME ASSETS INCOME
FUND FUND FUND
------- ------- ------
<S> <C> <C> <C>
Dividend Income................................... $1,219,984 $52,630 $8,875,334
Dividend Income Per Share--Class A Shares......... 0.28 0.05 0.32
Dividend Income Per Share--Class B Shares......... 0.22 0.05 0.26
Dividend Income Per Share--Class I Shares......... 0.28 0.08 0.36
</TABLE>
<TABLE>
<CAPTION>
GROWTH SPECIAL INTERNATIONAL
FUND OPPORTUNITIES FUND EQUITY FUND
------ ------------------ -------------
<S> <C> <C> <C>
Dividend Income.................... $4,772,025 $611,057 $973,285
Dividend Income Per Share--Class A
Shares............................ 0.10 0.01 0.05
Dividend Income Per Share--Class B
Shares............................ 0.05 0.00 0.03
Dividend Income Per Share--Class I
Shares............................ 0.12 0.04 0.07
</TABLE>
FS-562
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of
Year.......................... $ 12.13 $ 13.11 $ 12.68 $ 12.56 $ 10.79
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERA-
TIONS:
Net investment income (loss)... 0.64 0.73 0.72 0.79 0.83
Net realized and unrealized
gains (losses) on invest-
ments........................ 2.48 (0.98) 0.61 0.26 1.77
------- ------- ------- ------- -------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS....... 3.12 (0.25) 1.33 1.05 2.60
------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBU-
TIONS:
From net investment income..... (0.68) (0.72) (0.72) (0.77) (0.83)
From net realized gains on in-
vestments.................... (0.03) (0.01) (0.18) (0.16) --
------- ------- ------- ------- -------
TOTAL DIVIDENDS AND DISTRIBU-
TIONS....................... (0.71) (0.73) (0.90) (0.93) (0.83)
------- ------- ------- ------- -------
Net change in net asset value... 2.41 (0.98) 0.43 0.12 1.77
------- ------- ------- ------- -------
Net Asset Value, End of Year.... $ 14.54 $ 12.13 $ 13.11 $ 12.68 $ 12.56
======= ======= ======= ======= =======
- ---------------------------------
TOTAL RETURN (EXCLUDES SALES
CHARGE) 26.40% (1.92)% 10.70% 8.68% 24.87%
- ---------------------------------
- ---------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------
Ratio of expenses to average net
assets........................ 1.17% 0.63% 0.39% 0.02% --
Ratio of net investment income
to average net assets......... 4.88% 5.77% 5.54% 6.24% 7.04%
Ratio of expenses to average net
assets*....................... 1.54% 1.67% 1.65% 1.88% 2.16%
Ratio of net investment income
to average net assets*........ 4.51% 4.73% 4.28% 4.38% 4.88%
Portfolio turnover.............. 8.23% 28.69% 16.40% 22.14% 26.02%
Net assets, end of period (000's
omitted)...................... $51,997 $44,367 $51,586 $34,262 $14,038
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratios would have been as indicated.
See Notes to Financial Statements.
FS-563
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Period Ended Period Ended
December 31, December 2,
1995(2) 1994(1)
------------ ------------
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............... $12.42 $13.05
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.45 0.51
Net realized and unrealized gains (losses) on
investments..................................... 2.17 (0.91)
------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS... 2.62 (0.40)
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.45) (0.54)
From net realized gains on investments............ (0.03) (0.01)
------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.48) (0.55)
------ ------
Net change in net asset value...................... 2.14 (0.95)
------ ------
Conversion to Class A Shares(3).................... NA 12.10
------ ------
Net Asset Value, End of Period..................... $14.56 $ --
====== ======
- ----------------------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 21.42%++ (3.13)%++
- ----------------------------------------------------
- ----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------------------
Ratio of expenses to average net assets............ 1.92%+ 1.21%+
Ratio of net investment income to average net as-
sets............................................. 3.89%+ 4.10%+
Ratio of expenses to average net assets*........... 2.12%+ 2.17%+
Ratio of net investment income to average net as-
sets*............................................ 3.70%+ 3.14%+
Portfolio turnover................................. 8.23%++ 28.69%++
Net assets, end of period (000's omitted).......... $2,175 $ --
</TABLE>
- -----------
(1) For the period February 8, 1994 (initial offering date of Class B Shares)
through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of Class B Shares under the then-current sales load schedule and
such shares converted to Class A Shares.
(2) For the period March 3, 1995 (re-offering date of Class B Shares) through
December 31, 1995.
(3) On December 2, 1994, the Fund terminated its offering of Class B shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-564
<PAGE>
PRAIRIE FUNDS
MANAGED ASSETS INCOME FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Period Ended
December 31,
1995(1)
------------
<S> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period............................. $12.42
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................................... 0.57
Net realized and unrealized gains on investments................ 2.18
------
TOTAL INCOME FROM INVESTMENT OPERATIONS........................ 2.75
------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income...................................... (0.57)
From net realized gains on investments.......................... (0.03)
------
TOTAL DIVIDENDS AND DISTRIBUTIONS.............................. (0.60)
------
Net change in net asset value.................................... 2.15
------
Net Asset Value, End of Period................................... $14.57
======
- ------------------------------------------------------------------
TOTAL RETURN 22.55%++
- ------------------------------------------------------------------
- ------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------------------------------------------------
Ratio of expenses to average net assets.......................... 0.77%+
Ratio of net investment income to average net assets............. 5.12%+
Ratio of expenses to average net assets*......................... 1.22%+
Ratio of net investment income to average net assets*............ 4.66%+
Portfolio turnover............................................... 8.23%++
Net assets, end of period (000's omitted)........................ $1,294
</TABLE>
- -----------
(1) For the period March 3, 1995, (initial offering date of Class I Shares)
through December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-565
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- ------- -------
<S> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period........ $10.00 $10.00 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.14 0.36 0.11
Net realized and unrealized gains on in-
vestments................................ 1.50 2.57 2.86
------ ------ ------
TOTAL INCOME FROM INVESTMENT OPERATIONS... 1.64 2.93 2.97
------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................. (0.14) (0.36) (0.11)
In excess of net investment income......... -- (0.01) --
From net realized gains on investments and
foreign currency transactions............ -- (0.34) (0.89)
------ ------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS......... (0.14) (0.71) (1.00)
------ ------ ------
Net change in net asset value............... 1.50 2.22 1.97
------ ------ ------
Net Asset Value, End of Period.............. $11.50 $12.22 $11.97
====== ====== ======
- ----------------------------------------------
TOTAL RETURN (EXCLUDES SALES CHARGE) 16.48%++ 29.78%++ 29.98%++
- ----------------------------------------------
- ----------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------------
Ratio of expenses to average net assets..... 1.26%+ 1.11%+ 1.21%+
Ratio of net investment income to average
net assets................................ 2.45%+ 3.33%+ 0.86%+
Ratio of expenses to average net assets*.... 3.15%+ 1.44%+ 1.39%+
Ratio of net investment income (loss) to av-
erage net assets*......................... 0.56%+ 2.99%+ 0.68%+
Portfolio turnover.......................... 2.25%++ 44.07%++ 106.02%++
Net assets, end of period (000's omitted)... $8,356 $2,873 $4,329
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-566
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
------------- ------------- ------- -------------
<S> <C> <C> <C>
$10.00 $10.00 $10.00 $10.00
-------- ------ ------ ------
0.02 0.10 0.57 0.98
2.45 1.40 1.20 1.10
-------- ------ ------ ------
2.47 1.50 1.77 2.08
-------- ------ ------ ------
(0.02) (0.09) (0.57) (0.98)
-- -- -- (0.01)
(0.25) (0.25) (0.39) (0.34)
-------- ------ ------ ------
(0.27) (0.34) (0.96) (1.33)
-------- ------ ------ ------
2.20 1.16 0.81 0.75
-------- ------ ------ ------
$12.20 $11.16 $10.81 $10.75
======== ====== ====== ======
24.80%++ 15.16%++ 18.22%++ 21.10%++
1.25%+ 1.50%+ 1.02%+ 1.33%+
0.19%+ 1.19%+ 5.94%+ 4.91%+
2.56%+ 1.96%+ 1.57%+ 3.65%+
(1.12)%+ 0.72%+ 5.39%+ 2.59%+
38.89%++ 5.65%++ 156.11%++ 48.03%++
$ 672 $2,749 $1,847 $ 487
</TABLE>
See Notes to Financial Statements.
FS-567
<PAGE>
PRAIRIE FUNDS
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
For the Period Ended December 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- ------- -------
<S> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period....... $10.00 $10.00 $ 10.00
------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).............. 0.13 0.29 0.06
Net realized and unrealized gains on in-
vestments............................... 1.45 2.56 2.84
------ ------ -------
TOTAL INCOME FROM INVESTMENT OPERATIONS.. 1.58 2.85 2.90
------ ------ -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................ (0.13) (0.29) (0.06)
In excess of net investment income........ -- -- --
From net realized gains on investments and
foreign currency transactions........... -- (0.34) (0.89)
------ ------ -------
TOTAL DIVIDENDS AND DISTRIBUTIONS........ (0.13) (0.63) (0.95)
------ ------ -------
Net change in net asset value.............. 1.45 2.22 1.95
------ ------ -------
Net Asset Value, End of Period............. $11.45 $12.22 $ 11.95
====== ====== =======
- ---------------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 15.83%++ 28.97%++ 29.15%++
- ---------------------------------------------
- ---------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------
Ratio of expenses to average net assets.... 2.00%+ 1.90%+ 2.04%+
Ratio of net investment income (loss) to
average net assets....................... 1.69%+ 2.65%+ 0.02%+
Ratio of expenses to average net assets*... 6.84%+ 2.65%+ 2.60%+
Ratio of net investment income (loss) to
average net assets*...................... (3.15)%+ 1.90%+ (0.54)%+
Portfolio turnover......................... 2.25%++ 44.07%++ 106.02%++
Net assets, end of period (000's omitted).. $ 833 $ 593 $ 268
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. if such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-568
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
------------- ------------- ------- -------------
<S> <C> <C> <C>
$10.00 $10.00 $10.00 $10.00
-------- ------ ------ ------
(0.03) 0.05 0.50 0.91
2.40 1.39 1.20 1.16
-------- ------ ------ ------
2.37 1.44 1.70 2.07
-------- ------ ------ ------
-- (0.05) (0.50) (0.91)
-- -- -- (0.01)
(0.25) (0.25) (0.39) (0.34)
-------- ------ ------ ------
(0.25) (0.30) (0.89) (1.26)
-------- ------ ------ ------
2.12 1.14 0.81 0.81
-------- ------ ------ ------
$12.12 $11.14 $10.81 $10.81
======== ====== ====== ======
23.76%++ 14.52%++ 17.41%++ 20.90%++
2.00%+ 2.28%+ 1.87%+ 2.03%+
(0.51)%+ 0.40%+ 5.22%+ 4.39%+
9.52%+ 3.83%+ 3.91%+ 8.69%+
(8.04)%+ (1.15)%+ 3.19%+ (2.28)%+
38.89%++ 5.65%++ 156.11%++ 48.03%++
$ 15 $ 193 $ 61 $ 4
</TABLE>
See Notes to Financial Statements.
FS-569
<PAGE>
PRAIRIE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
For the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Equity
Assets Income Growth
Fund(1) Fund(2) Fund(2)
------- -------- --------
<S> <C> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period........ $10.00 $ 10.00 $ 10.00
------ -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.22 0.42 0.15
Net realized and unrealized gains on in-
vestments................................ 1.46 2.55 2.86
------ -------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS... 1.68 2.97 3.01
------ -------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................. (0.22) (0.42) (0.15)
In excess of net investment income......... -- -- --
From net realized gains on investments and
foreign currency transactions............ -- (0.34) (0.89)
------ -------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS......... (0.22) (0.76) (1.04)
------ -------- --------
Net change in net asset value............... 1.46 2.21 1.97
------ -------- --------
Net Asset Value, End of Period.............. $11.46 $ 12.21 $ 11.97
====== ======== ========
- ---------------------------------------------
TOTAL RETURN 16.90%++ 30.27%++ 30.38%++
- ---------------------------------------------
- ---------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------
Ratio of expenses to average net assets..... 0.80%+ 0.65%+ 0.80%+
Ratio of net investment income to average
net assets................................ 3.06%+ 4.08%+ 1.46%+
Ratio of expenses to average net assets*.... 4.12%+ 0.77%+ 0.92%+
Ratio of net investment income (loss) to av-
erage net assets*......................... (0.26)%+ 3.96%+ 1.34%+
Portfolio turnover.......................... 2.25%++ 44.07%++ 106.02%++
Net assets, end of period (000's omitted)... $ 411 $283,927 $293,944
</TABLE>
- -----------
(1) For the period April 3, 1995 (commencement of operations) through December
31, 1995.
(2) For the period January 27, 1995 (commencement of operations) through
December 31, 1995.
(3) For the period March 3, 1995 (commencement of operations) through December
31, 1995.
(4) For the period February 10, 1995 (commencement of operations) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-570
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Special International International
Opportunities Equity Bond Bond
Fund(2) Fund(3) Fund(4) Fund(2)
- ------------- ------------- ------- -------------
<S> <C> <C> <C>
$ 10.00 $ 10.00 $ 10.00 $ 10.00
-------- -------- -------- -------
0.06 0.14 0.61 1.02
2.44 1.40 1.20 1.16
-------- -------- -------- -------
2.50 1.54 1.81 2.18
-------- -------- -------- -------
(0.06) (0.12) (0.61) (1.02)
-- -- -- (0.01)
(0.25) (0.25) (0.39) (0.34)
-------- -------- -------- -------
(0.31) (0.37) (1.00) (1.37)
-------- -------- -------- -------
2.19 1.17 0.81 0.81
-------- -------- -------- -------
$ 12.19 $ 11.17 $ 10.81 $ 10.81
======== ======== ======== =======
25.08%++ 15.62%++ 18.57%++ 22.13%++
0.85%+ 1.05%+ 0.70%+ 0.95%+
0.59%+ 1.70%+ 6.48%+ 5.71%+
1.09%+ 1.38%+ 0.87%+ 1.93%+
0.36%+ 1.36%+ 6.31%+ 4.73%+
38.89%++ 5.65%++ 156.11%++ 48.03%++
$92,926 $101,448 $125,401 $14,504
</TABLE>
See Notes to Financial Statements.
FS-571
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Period Ended Year Ended Period Ended
December 31, January 31, January 31,
1995(1) 1995 1994(2)
------------ ----------- ------------
<S> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning of Period.... $ 7.68 $ 8.25 $ 8.36
------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERA-
TIONS:
Net investment income.................. 0.44 0.52 0.47
Net realized and unrealized gains
(losses) on investments.............. 0.72 (0.57) (0.09)
------ ------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS.......................... 1.16 (0.05) 0.38
------ ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income............. (0.44) (0.52) (0.47)
From net realized gains on investments. (0.22) -- (0.02)
------ ------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS..... (0.66) (0.52) (0.49)
------ ------ ------
Net change in net asset value........... 0.50 (0.57) (0.11)
------ ------ ------
Net Asset Value, End of Period.......... $ 8.18 $ 7.68 $ 8.25
====== ====== ======
- -----------------------------------------
TOTAL RETURN (EXCLUDES SALES CHARGE) 15.55%++ (0.45)% 5.16%+
- -----------------------------------------
- -----------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------
Ratio of expenses to average net assets. 0.94%+ 0.04% --
Ratio of net investment income to
average net assets.................... 5.72%+ 6.70% 5.96%+
Ratio of expenses to average net as-
sets*................................. 1.15%+ 2.78% 3.67%+
Ratio of net investment income to
average net assets*................... 5.51%+ 3.96% 2.29%+
Portfolio turnover...................... 173.26%++ 71.65% 26.54%++
Net assets, end of period (000's omit-
ted).................................. $6,095 $ 69 $ 65
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995. Effective
February 1, 1995, the Fund changed its fiscal year end from January 31 to
December 31.
(2) For the period March 5, 1993 (commencement of operations) through January
31, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-572
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Period Ended Period Ended
December 31, December 2,
1995(1) 1994(2)
------------ ------------
<S> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period............... $ 8.13 $ 8.16
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income............................. 0.24 0.40
Net realized and unrealized gains (losses) on
investments..................................... 0.27 (0.55)
------ ------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS... 0.51 (0.15)
------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income........................ (0.24) (0.40)
From net realized gains on invesments............. (0.22) --
------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (0.46) (0.40)
------ ------
Net change in net asset value...................... 0.05 (0.55)
------ ------
Conversion to Class A Shares(3).................... NA 7.61
------ ------
Net Asset Value, End of Period..................... $ 8.18 $ --
====== ======
- ----------------------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION CHARGE) 6.41%++ (1.82)%++
- ----------------------------------------------------
- ----------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------------------
Ratio of expenses to average net assets............ 1.60%+ --
Ratio of net investment income to average net as-
sets............................................. 5.00%+ 6.48%+
Ratio of expenses to average net assets*........... 1.78%+ 2.58%+
Ratio of net investment income to average net as-
sets*............................................ 4.83%+ 3.90%+
Portfolio turnover................................. 173.26%++ 71.65%++
Net assets, end of period (000's omitted).......... $ 259 $ --
</TABLE>
- -----------
(1) For the period May 31, 1995 (re-offering date of Class B Shares) through
December 31, 1995. Effective February 1, 1995, the Fund changed its fiscal
year end from January 31 to December 31.
(2) For the period February 8, 1994 (initial offering date of Class B Shares)
through December 2, 1994. On December 2, 1994, the Fund terminated its
offering of Class B Shares and such shares converted to Class A Shares.
(3) On December 2, 1994, the Fund terminated the offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-573
<PAGE>
PRAIRIE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the For the
Period Ended Year Ended Period Ended
December 31, January 31, January 31,
1995(1) 1995 1994(2)
------------ ----------- ------------
<S> <C> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period... $ 7.68 $ 8.25 $ 8.36
-------- ------ ------
INCOME (LOSS) FROM INVESTMENT OPERA-
TIONS:
Net investment income................. 0.47 0.52 0.47
Net realized and unrealized gains
(losses) on investments............. 0.72 (0.57) (0.09)
-------- ------ ------
TOTAL INCOME FROM INVESTMENT
OPERATIONS......................... 1.19 (0.05) 0.38
-------- ------ ------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income............ (0.47) (0.52) (0.47)
From net realized gains on invesments. (0.22) -- (0.02)
-------- ------ ------
TOTAL DIVIDENDS AND DISTRIBUTIONS.... (0.69) (0.52) (0.49)
-------- ------ ------
Net change in net asset value.......... 0.50 (0.57) (0.11)
-------- ------ ------
Net Asset Value, End of Period......... $ 8.18 $ 7.68 $ 8.25
======== ====== ======
- ----------------------------------------
TOTAL RETURN 15.90%++ (0.48)% 5.16%++
- ----------------------------------------
- ----------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------------------
Ratio of expenses to average net as-
sets................................. 0.55%+ 0.04% --
Ratio of net investment income to
average net assets................... 6.34%+ 6.70% 6.21%+
Ratio of expenses to average net as-
sets*................................ 0.67%+ 2.78% 2.64%+
Ratio of net investment income to
average net assets*.................. 6.22%+ 3.96% 3.57%+
Portfolio turnover..................... 173.26%++ 71.65% 26.54%++
Net assets, end of period (000's omit-
ted)................................. $191,930 $7,101 $5,128
</TABLE>
- -----------
(1) For the period February 1, 1995 through December 31, 1995. Effective
February 1, 1995, the Fund changed its fiscal year end from January 31 to
December 31.
(2) For the period March 5, 1993 (commencement of operations) through January
31, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-574
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Year Ended
Period Ended ---------------------------------------------------
December 31, February 28, February 28, February 28, February 29,
1995(1) 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Begin-
ning of Period....... $ 11.79 $ 12.18 $ 12.79 $ 12.25 $ 11.95
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income. 0.44 0.55 0.61 0.64 0.76
Net realized and
unrealized gains
(losses) on invest-
ments............... 0.56 (0.36) 0.01 0.68 0.37
------- ------- ------- ------- -------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS......... 1.00 0.19 0.62 1.32 1.13
------- ------- ------- ------- -------
LESS DIVIDENDS AND DIS-
TRIBUTIONS:
From net investment
income.............. (0.44) (0.55) (0.61) (0.64) (0.76)
From net realized
gains on invest-
ments............... (0.10) (0.03) (0.62) (0.14) (0.07)
------- ------- ------- ------- -------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.54) (0.58) (1.23) (0.78) (0.83)
------- ------- ------- ------- -------
Net change in net asset
value................ 0.46 (0.39) (0.61) 0.54 0.30
------- ------- ------- ------- -------
Net Asset Value, End of
Period............... $ 12.25 $ 11.79 $ 12.18 $ 12.79 $ 12.25
======= ======= ======= ======= =======
- ------------------------
TOTAL RETURN (EXCLUDES
SALES CHARGE) 8.58%++ 1.64% 4.94% 11.26% 9.78%
- ------------------------
- ------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------
Ratio of expenses to
average net assets... 0.83%+ 0.29% 0.06% -- --
Ratio of net investment
income to average net
assets............... 4.30%+ 4.73% 4.78% 5.16% 6.15%
Ratio of expenses to
average net assets*.. 0.97%+ 1.38% 1.27% 1.31% 1.72%
Ratio of net investment
income to average net
assets*.............. 4.16%+ 3.64% 3.57% 3.85% 4.43%
Portfolio turnover..... 44.75%++ 128.02% 167.95% 63.67% 86.91%
Net assets, end of
period
(000's omitted)...... $17,777 $17,243 $28,826 $27,885 $18,310
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-575
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended
----------------------------------------------------
December 31, February 28, December 2, February 28,
1995(1) 1995(2) 1994(3) 1994(4)
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Begin-
ning of Period........ $11.80 $ 11.57 $ 12.18 $ 12.32
------ ------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.37 0.04 0.37 0.03
Net realized and
unrealized gains
(losses) on
investments.......... 0.55 0.23 (0.72) (0.14)
------ ------- ------- --------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS.......... 0.92 0.27 (0.35) (0.11)
------ ------- ------- --------
LESS DIVIDENDS AND DIS-
TRIBUTIONS:
From net investment in-
come................. (0.37) (0.04) (0.37) (0.03)
From net realized gains
on investments....... (0.10) -- (0.03) --
------ ------- ------- --------
TOTAL DIVIDENDS AND
DISTRIBUTIONS....... (0.47) (0.04) (0.40) (0.03)
------ ------- ------- --------
Net change in net asset
value................. 0.45 0.23 (0.75) (0.14)
------ ------- ------- --------
Conversion to Class A
shares(3)............. NA NA 11.43 NA
------ ------- ------- --------
Net Asset Value, End of
Period................ $12.25 $ 11.80 $ -- $ 12.18
====== ======= ======= ========
- -------------------------
TOTAL RETURN (EXCLUDES
REDEMPTION CHARGE) 7.75%++ 2.30%++ (2.98)++ (0.93)%++
- -------------------------
- -------------------------
RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Ratio of expenses to av-
erage net assets...... 1.71%+ 1.36%+ 0.76%+ 0.75%+
Ratio of net investment
income to average net
assets................ 3.36%+ 3.72%+ 4.03%+ 1.68%+
Ratio of expenses to
average net assets*... 2.01%+ 1.64%+ 2.00%+ 3.00%+
Ratio of net investment
income (loss) to
average net assets*... 3.06%+ 3.44%+ 2.79%+ (0.57)%+
Portfolio turnover...... 44.75%++ 128.02%++ 128.02%++ 167.95%++
Net assets, end of pe-
riod (000's omitted).. $ 341 $ 6 $ -- $ 12
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period January 30, 1995 (re-offering date of Class B Shares)
through February 28, 1995.
(3) For the period March 1, 1994 through December 2, 1994. On December 2,
1994, the Fund terminated its offering of Class B Shares and such shares
converted to Class A Shares.
(4) For the period February 8, 1994 (initial offering date of Class B Shares)
through February 28, 1994.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-576
<PAGE>
PRAIRIE FUNDS
INTERMEDIATE MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Period Ended Year Ended
December 31, February 28,
1995(1) 1995(2)
------------ ------------
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period.............. $ 11.80 $ 11.57
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.47 0.04
Net realized and unrealized gains on investments. 0.55 0.23
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS......... 1.02 0.27
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income....................... (0.47) (0.04)
From net realized gains on investments........... (0.10) --
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS............... (0.57) (0.04)
-------- --------
Net change in net asset value..................... 0.45 0.23
-------- --------
Net Asset Value, End of Period.................... $ 12.25 $ 11.80
======== ========
- ---------------------------------------------------
TOTAL RETURN 8.76%++ 2.37%++
- ---------------------------------------------------
- ---------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- ---------------------------------------------------
Ratio of expenses to average net assets........... 0.55%+ 0.50%+
Ratio of net investment income to average net as-
sets............................................ 4.78%+ 4.79%+
Ratio of expenses to average net assets*.......... 0.68%+ 0.60%+
Ratio of net investment income to average net as-
sets*........................................... 4.65%+ 4.69%+
Portfolio turnover................................ 44.75%++ 128.02%++
Net assets, end of period (000's omitted)......... $373,753 $365,801
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period February 1, 1995 (initial offering date of Class I Shares)
through February 28, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-577
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the Year Ended
Period Ended ---------------------------------------------------
December 31, February 28, February 28, February 28, February 29,
1995(1) 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value,
Beginning of Period.. $12.06 $12.13 $13.25 $ 12.49 $12.10
------ ------ ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income. 0.48 0.60 0.63 0.70 0.76
Net realized and
unrealized gains
(losses) on
investments......... 0.82 (0.07) (0.15) 1.01 0.47
------ ------ ------ ------- ------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS......... 1.30 0.53 0.48 1.71 1.23
------ ------ ------ ------- ------
LESS DIVIDENDS AND
DISTRIBUTIONS:
From net investment
income.............. (0.48) (0.60) (0.63) (0.70) (0.76)
From net realized
gains on
investments......... (0.24) -- (0.96) (0.25) (0.08)
In excess of net
realized gains on
investments......... -- -- (0.01) -- --
------ ------ ------ ------- ------
TOTAL DIVIDENDS AND
DISTRIBUTIONS...... (0.72) (0.60) (1.60) (0.95) (0.84)
------ ------ ------ ------- ------
Net change in net asset
value................ 0.58 (0.07) (1.12) 0.76 0.39
------ ------ ------ ------- ------
Net Asset Value, End of
Period............... $12.64 $12.06 $12.13 $ 13.25 $12.49
====== ====== ====== ======= ======
- ------------------------
TOTAL RETURN (EXCLUDES
SALES CHARGE) 10.95%++ 4.45% 3.70% 14.37% 10.50%
- ------------------------
- ------------------------
RATIOS/SUPPLEMENTAL DATA:
- ------------------------
Ratio of expenses to
average net assets... 0.89%+ 1.98% -- -- --
Ratio of net investment
income to average net
assets............... 4.57%+ 5.09% 4.85% 5.49% 5.99%
Ratio of expenses to
average net assets*.. 1.04%+ 3.89% 1.44% 1.59% 2.75%
Ratio of net investment
income to average net
assets*.............. 4.43%+ 3.18% 3.41% 3.90% 3.24%
Portfolio turnover..... 69.31%++ 60.78% 175.06% 88.53% 66.28%
Net assets, end of
period
(000's omitted)...... $7,426 $6,840 $9,234 $11,290 $6,591
</TABLE>
- -----------
(1) For the period March 1, 1995 through December 31, 1995. Effective March 1,
1995, the Fund changed its fiscal year end from February 28 to December
31.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-578
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended
----------------------------------------
December 31, December 2, February 28,
1995(1) 1994(2) 1994(3)
------------ ----------- ------------
<S> <C> <C> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period. $ 12.17 $12.14 $ 12.37
------- ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............... 0.34 0.41 0.03
Net realized and unrealized gains
(losses) on investments........... 0.72 (0.70) (0.23)
------- ------ -------
TOTAL INCOME FROM INVESTMENT
OPERATIONS....................... 1.06 (0.29) (0.20)
------- ------ -------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income.......... (0.34) (0.41) (0.03)
From net realized gains on invest-
ments............................. (0.24)
------- ------ -------
TOTAL DIVIDENDS AND DISTRIBUTIONS.. (0.58) (0.41) (0.03)
------- ------ -------
Net change in net asset value........ 0.48 (0.70) (0.23)
------- ------ -------
Conversion to Class A Shares(4)...... NA 11.44 NA
------- ------ -------
Net Asset Value, End of Period....... $ 12.65 $ NA $ 12.14
======= ====== =======
- --------------------------------------
TOTAL RETURN (EXCLUDES REDEMPTION
CHARGE) 8.81%++ (4.30)%++ (1.64)%++
- --------------------------------------
- --------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------
Ratio of expenses to average net
assets............................. 1.66%+ 3.18%+ 0.50%+
Ratio of net investment income to
average net assets................. 3.61%+ 4.51%+ 4.10%+
Ratio of expenses to average net
assets*............................ 2.04%+ 5.85%+ 2.91%+
Ratio of net investment income to
average net assets*................ 3.23%+ 1.84%+ 1.69%+
Portfolio turnover................... 69.31%++ 60.78%++ 175.06%++
Net assets, end of period (000's
omitted)........................... $ 238 $ -- $ 2
</TABLE>
- -----------
(1) For the period April 4, 1995 (re-offering date of Class B Shares) through
December 31, 1995. Effective March 1, 1995, the Fund changed its fiscal
year end from February 28 to December 31.
(2) For the period March 1, 1994 through December 2, 1994. On December 2,
1994, the Fund terminated its offering of Class B Shares and such shares
converted to Class A Shares.
(3) For the period February 8, 1994 (initial offering date of Class B Shares)
through February 28, 1994.
(4) On December 2, 1994, the Fund terminated its offering of Class B Shares
under the then-current sales load schedule and such shares converted to
Class A Shares.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
NA Not applicable.
See Notes to Financial Statements.
FS-579
<PAGE>
PRAIRIE MUNICIPAL BOND FUND, INC.
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period Ended
-------------------------------
December 31, February 28,
1995(1) 1995(2)
------------ ------------
<S> <C> <C>
CLASS I SHARES:
Net Asset Value, Beginning of Period.......... $ 12.06 $ 12.06
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.52 0.05
Net realized and unrealized gains on invest-
ments...................................... 0.81 --
-------- --------
TOTAL INCOME FROM INVESTMENT OPERATIONS..... 1.33 0.05
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income................... (0.52) (0.05)
From net realized gains on investments....... (0.24) --
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS........... (0.76) (0.05)
-------- --------
Net change in net asset value................. 0.57 --
-------- --------
Net Asset Value, End of Period................ $ 12.63 $ 12.06
======== ========
- -----------------------------------------------
TOTAL RETURN 11.20%++ 0.39%++
- -----------------------------------------------
- -----------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------
Ratio of expenses to average net assets....... 0.54%+ 0.65%+
Ratio of net investment income to average net
assets...................................... 4.95%+ 5.45%+
Ratio of expenses to average net assets*...... 0.67%+ 0.79%+
Ratio of net investment income to average net
assets*..................................... 4.81%+ 5.31%+
Portfolio turnover............................ 69.31%++ 60.78%++
Net assets, end of period (000's omitted)..... $240,160 $220,143
</TABLE>
- -----------
(1) For the period March 1, 1995, through December 31, 1995. Effective March
1, 1995, the Fund changed its fiscal year end from February 28 to December
31.
(2) For the period February 1, 1995 (initial offering date of Class I Shares)
to February 28, 1995.
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-580
<PAGE>
PRAIRIE FUNDS
U.S. GOVERNMENT MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------
1995 1994 1993 1992 1991
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning
of Year................... $0.9996 $ 0.9999 $ 1.0000 $ 1.0000 $ 1.0000
------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPER-
ATIONS:
Net investment income...... 0.0498 0.0379 0.0249 0.0283 0.0498
Net realized and unrealized
gains (losses) on
investments.............. 0.0001 (0.0083) (0.0001) -- --
------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT OPERATIONS... 0.0499 0.0296 0.0248 0.0283 0.0498
------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBU-
TIONS:
From net investment income. (0.0498) (0.0379) (0.0249) (0.0283) (0.0498)
------- -------- -------- -------- --------
Increase due to voluntary
capital contribution from
an affiliate of the In-
vestment Adviser (Note
3(d))..................... -- 0.0080 -- -- --
------- -------- -------- -------- --------
Net change in net asset val-
ue........................ 0.0001 (0.0003) (0.0001) -- --
------- -------- -------- -------- --------
Net Asset Value, End of
Year...................... $0.9997 $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000
======= ======== ======== ======== ========
- -----------------------------
TOTAL RETURN 5.09% 3.86%* 2.52% 2.87% 5.10%
- -----------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------
Ratio of expenses to average
net assets................ 0.78% 0.86% 0.74% 0.91% 0.90%
Ratio of net investment
income to average net
assets.................... 4.97% 3.73% 2.48% 2.87% 4.97%
Ratio of expenses to average
net assets**.............. 1.07% 0.88% 0.88% 0.91% 0.90%
Ratio of net investment
income to average net
assets**.................. 4.67% 3.71% 2.34% 2.87% 4.97%
Net assets, end of period
(000's omitted)........... $57,264 $116,353 $154,613 $548,733 $990,897
</TABLE>
- -----------
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
2.83%.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
See Notes to Financial Statements.
FS-581
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning
of Year.................. $ 0.9998 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OP-
ERATIONS:
Net investment income..... 0.0514 0.0355 0.0274 0.0313 0.0543
Net realized and
unrealized gains (loss-
es) on investments...... 0.0100 (0.0109) 0.0001 -- --
-------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT OPERATIONS.. 0.0524 0.0246 0.0275 0.0313 0.0543
-------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRI-
BUTIONS:
From net investment in-
come.................... (0.0514) (0.0355) (0.0274) (0.0313) (0.0543)
From net realized gains on
investments............. (0.0006) (0.0002) -- -- --
-------- -------- -------- -------- --------
TOTAL DIVIDENDS AND
DISTRIBUTIONS......... (0.0520) (0.0357) (0.0274) (0.0313) (0.0543)
-------- -------- -------- -------- --------
Increase due to voluntary
capital contribution from
an affiliate of the
Investment Adviser (Note
3(d)).................... -- 0.0108 -- -- --
-------- -------- -------- -------- --------
Net change in net asset
value.................... 0.0004 (0.0003) 0.0001 -- --
-------- -------- -------- -------- --------
Net Asset Value, End of
Year..................... $ 1.0002 $ 0.9998 $ 1.0001 $ 1.0000 $ 1.0000
======== ======== ======== ======== ========
- ----------------------------
TOTAL RETURN 5.33% 3.63%* 2.77% 3.18% 5.57%
- ----------------------------
- ----------------------------
RATIOS/SUPPLEMENTAL DATA:
- ----------------------------
Ratio of expenses to
average net assets....... 0.79% 1.02% 0.94% 0.98% 0.97%
Ratio of net investment
income to average net
assets................... 5.12% 3.51% 2.76% 3.17% 5.42%
Ratio of expenses to
average net assets**..... 1.07% 1.02% 0.99% 0.98% 0.97%
Ratio of net investment
income to average net
assets**................. 4.83% 3.51% 2.71% 3.17% 5.42%
Net assets, end of period
(000's omitted).......... $203,994 $119,400 $162,623 $260,865 $456,791
</TABLE>
- -----------
* Had the Portfolio not had a capital contribution by an affiliate of the
Investment Adviser during the period, the total return would have been
2.61%.
** During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
See Notes to Financial Statements.
FS-582
<PAGE>
PRAIRIE FUNDS
MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS-- (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
Ended
December 31,
1995(1)
--------------
<S> <C>
CLASS B SHARES:
Net Asset Value, Beginning of Period........................... $1.0000
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income......................................... 0.0162
Net realized and unrealized gains on investments.............. 0.0008
-------
TOTAL INCOME FROM INVESTMENT OPERATIONS...................... 0.0170
-------
LESS DIVIDENDS AND DISTRIBUTIONS:
From net investment income.................................... (0.0162)
From net realized gains on investments........................ (0.0006)
-------
TOTAL DIVIDENDS AND DISTRIBUTIONS........................... (0.0168)
-------
Net change in net asset value.................................. 0.0002
-------
Net Asset Value, End of Period................................. $1.0002
=======
- -----------------------------------------------------------------
TOTAL RETURN 1.69%++
- -----------------------------------------------------------------
- -----------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------------------------------------------
Ratio of expenses to average net assets........................ 1.51%+
Ratio of net investment income to average net assets........... 4.33%+
Ratio of expenses to average net assets*....................... 2.02%+
Ratio of net investment income to average net assets*.......... 3.82%+
Net assets, end of period (000's omitted)...................... $ 65
</TABLE>
- -----------
(1) For the period May 20, 1995 (initial offering of Class B Shares) through
December 31, 1995.
* During the period, certain fees were voluntarily reimbursed. If such
voluntary fee reimbursements had not occurred, the ratios would have been
as indicated.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
FS-583
<PAGE>
PRAIRIE FUNDS
MUNICIPAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Net Asset Value, Beginning
of Year................... $ 0.9997 $ 0.9999 $ 0.9999 $ 0.9999 $ 0.9999
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPER-
ATIONS:
Net investment income...... 0.0322 0.0234 0.0174 0.0236 0.0413
Net realized and unrealized
gains (losses) on
investments.............. 0.0001 (0.0002) -- -- --
-------- -------- -------- -------- --------
TOTAL INCOME FROM
INVESTMENT OPERATIONS... 0.0323 0.0232 0.0174 0.0236 0.0413
-------- -------- -------- -------- --------
LESS DIVIDENDS AND DISTRIBU-
TIONS:
From net investment income. (0.0322) (0.0234) (0.0174) (0.0236) (0.0413)
-------- -------- -------- -------- --------
Net change in net asset val-
ue........................ 0.0001 (0.0002) -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of
Year...................... $ 0.9998 $ 0.9997 $ 0.9999 $ 0.9999 $ 0.9999
======== ======== ======== ======== ========
- -----------------------------
TOTAL RETURN 3.26% 2.36% 1.75% 2.38% 4.21%
- -----------------------------
- -----------------------------
RATIOS/SUPPLEMENTAL DATA:
- -----------------------------
Ratio of expenses to average
net assets................ 0.70% 0.68% 0.79% 0.95% 0.98%
Ratio of net investment
income to average net
assets.................... 3.21% 2.33% 1.74% 2.38% 4.11%
Ratio of expenses to average
net assets*............... 0.94% 0.93% 0.95% 0.96% 0.98%
Ratio of net investment
income to average net
assets*................... 2.97% 2.08% 1.58% 2.37% 4.11%
Net assets, end of period
(000's omitted)........... $228,511 $173,130 $177,698 $210,000 $233,675
</TABLE>
- -----------
* During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
See Notes to Financial Statements.
FS-584
<PAGE>
- -------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
- -------------------------------------------------------------------------------
Prairie Funds
Prairie Municipal Bond Fund, Inc.
Prairie Intermediate Bond Fund
The Members of the Boards and Shareholders
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Prairie Funds (comprising,
respectively, the Managed Assets Income, Managed Assets, Equity Income,
Growth, Special Opportunities, International Equity, Bond, International Bond,
Intermediate Municipal Bond, U.S. Government Money Market, Money Market and
Municipal Money Market Funds), Prairie Municipal Bond Fund, Inc. and Prairie
Intermediate Bond Fund (collectively, the "Funds") as of December 31, 1995 and
the related statements of operations for the periods then ended, and the
statements of changes in net assets and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of December 31, 1995 by correspondence with the custodians and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting the Prairie Funds, Prairie Municipal Bond
Fund, Inc. and Prairie Intermediate Bond Fund at December 31, 1995, the
results of their operations for the periods then ended, and the changes in
their net assets and the financial highlights for each of the indicated
periods, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
February 23, 1996
FS-585
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A of the Registration Statement are the
following:
(i) Audited Financial Highlights for the fiscal years
ended December 31, 1995, 1994, 1993, 1992 and
1991 and Unaudited Financial Highlights for the
six month period ended June 30, 1996 with
respect to the Managed Assets Conservative Fund;
(ii) Audited Financial Highlights for the fiscal years
ended December 31, 1995 and 1994 and Unaudited
Financial Highlights for the six month period
ended June 30, 1996 with respect to the Managed
Assets Balanced Fund;
(iii) Audited Financial Highlights for the fiscal years
ended December 31, 1995, 1994, 1993, 1992 and the
fiscal period ended December 31, 1991 and
Unaudited Financial Highlights for the six month
period ended June 30, 1996 with respect to each
of the Mid-Cap Opportunity and Growth and Value;
(iv) Audited Financial Highlights for the fiscal years
ended December 31, 1995, 1994, 1993, 1992 and
fiscal period ended December 31, 1991 and
Unaudited Financial Highlights for the six month
period ended June 30, 1996 with respect to the
Bond;
(v) Audited Financial Highlights for the fiscal years
ended December 31, 1995, 1994, 1993, 1992, 1991,
1990, 1989 and fiscal period ended December 31,
1988 and Unaudited Financial Highlights for the
six month period ended June 30, 1996 with respect
to the Money Market Fund; and
C-1
<PAGE>
(2) Included in Part B of the Registration Statement are
the following audited financial statements:
(i) With respect to Managed Assets Conservative,
Managed Assets Balanced, Equity Income, Growth,
Mid-Cap Opportunity, Small-Cap Opportunity,
Intrinsic Value, Growth and Value, Equity Index,
International Equity, Intermediate Bond, Bond,
Short Bond, Income, International Bond, Municipal
Bond, Intermediate Municipal Bond and Michigan
Municipal Bond Funds:
Statements of Assets and Liabilities --
June 30, 1996 (unaudited) and December 31,
1995
Statements of Operations for the six month
period ended June 30, 1996 (unaudited) and
for the year ended December 31, 1995;
Statements of Changes in Net Assets for the
six month period ended June 30, 1996
(unaudited) and for the years ended
December 31, 1995 and 1994;
Portfolio of Investments -- June 30, 1996
(unaudited) and December 31, 1995; and
Notes to Financial Statements.
(ii) With respect to the Growth and Value, Mid-Cap
Opportunity and Intrinsic Value Funds:
Financial Highlights for six month period
ended June 30, 1996 (unaudited) and for the
fiscal years ended December 31, 1995, 1994,
1993, 1992 and fiscal period ended December
31, 1991;
(iii) With respect to the Equity Index Fund:
Financial Highlights for the six month
period ended June 30, 1996 (unaudited) and
for the fiscal years ended December 31,
1995, 1994, 1993 and fiscal period ended
December 31, 1992;
C-2
<PAGE>
(iv) With respect to the Managed Assets Balanced Fund:
Financial Highlights for the six month
period ended June 30, 1996 (unaudited) and
for the fiscal years ended December 31, 1995
and 1994;
(v) With respect to the International Equity Fund:
Financial Highlights for the six month
period ended June 30, 1996 (unaudited) and
for fiscal years ended December 31, 1995
and fiscal period ended December 31, 1994;
(vi) With respect to the Bond and
Intermediate Bond Funds:
Financial Highlights for the six month
period ended June 30, 1996 (unaudited) and
for the fiscal years ended December 31,
1995, 1994, 1993, 1992 and fiscal period
ended December 31, 1991;
(vii) With respect to the Short Bond Fund:
Financial Highlights for the six month
period ended June 30, 1996 (unaudited) and
for the fiscal years ended December 31, 1995
and fiscal period ended December 31, 1994;
and
(viii) With respect to the Michigan Municipal Bond Fund:
Financial Highlights for the six month
period ended June 30, 1996 (unaudited) and
for the fiscal years ended December 31,
1995, 1994 and fiscal period ended
December 31, 1993.
(ix) With respect to the Managed Assets Conservative,
Equity Income, Growth, Small-Cap Opportunity,
Income, International Bond, Intermediate
Municipal Bond and Municipal Bond Funds:
Portfolio of Investments -- June 30, 1996
(unaudited) and December 31, 1995;
Statements of Assets and Liabilities --
June 30, 1996 (unaudited) and December 31,
1995;
Statements of Operations for the six month
period ended June 30, 1996 (unaudited) and
for the year ended December 31, 1995;
C-3
<PAGE>
Statements of Changes in Net Assets for the
six month period ended June 30,1996 and for
the years ended December 31, 1995 and 1994;
Notes to Financial Statements.
(3) Included in Part B of the Registration Statement are the
following unaudited financial statements:
(i) With respect to the Managed Assets Conservative,
Managed Assets Balanced, Equity Income, Growth,
Mid-Cap Opportunity, Small-Cap Opportunity,
Intrinsic Value, Growth and Value, Equity Index,
International Equity, Intermediate Bond, Bond,
Short Bond, Income, International Bond, Municipal
Bond, Intermediate Municipal Bond and Michigan
Municipal Bond Funds:
Statement of Assets and Liabilities --
June 30, 1996 (unaudited);
Statements of Operations for the six month
period ended June 30, 1996 (unaudited);
Statements of Changes in Net Assets for the
six month period ended June 30, 1996
(unaudited) and the year ended December 31,
1995;
Portfolio of Investments -- June 30, 1996
(unaudited);
Notes to Financial Statements.
(ii) With respect to the Growth and Value, Mid-Cap
Opportunity and Intrinsic Value Funds:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995, 1994, 1993,
1992 and fiscal period ended December 31,
1991.
(iii) With respect to the Equity Index Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995, 1994, 1993
and 1992.
(iv) With respect to the Managed Assets Balanced Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995 and 1994;
(v) With respect to the International Equity Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995 and fiscal
period ended December 31, 1994;
(vi) With respect to the Bond and
Intermediate Bond Funds:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995, 1994, 1993,
1992 and fiscal period ended December 31,
1991;
(vii) With respect to the Short Bond Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995 and fiscal
period ended December 31, 1994;
C-4
<PAGE>
(viii) With respect to the Michigan Municipal Bond Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995, 1994 and
fiscal period ended December 31, 1993;
and
(ix) With respect to the Prairie Funds Managed Assets
Income, Managed Assets, Equity Income, Growth,
Special Opportunities, International Equity,
Intermediate Bond, Bond, International Bond,
Intermediate Municipal Bond, Municipal Bond, U.S.
Government Money Market, Money Market and
Municipal Money Market Funds:
Portfolio of Investments -- June 30, 1996
(unaudited);
Statements of Changes in Net Assets for the
six month period ended June 30, 1996
(unaudited) and for the year ended December
31, 1995;
Notes to Financial Statements (Unaudited);
(x) With respect to the Prairie Managed Assets
Income Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
years ended December 31, 1995, 1994, 1993
and 1992.
(xi) With respect to the Prairie Managed Assets Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
year ended December 31, 1995.
(xii) With respect to the Prairie Equity Income Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
period ended December 31, 1995.
(xiii) With respect to the Prairie Growth, International
Equity, Special Opportunities, Bond and
International Bond Funds:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
period ended December 31, 1995.
(xiv) With respect to the Prairie Intermediate Bond
Fund:
Financial Highlights for the six month
period ended June 30, 1996 and the fiscal
period ended December 31, 1995, for the
fiscal year ended January 31, 1995 and for
the fiscal period ended January 31, 1994.
(xv) With respect to the Prairie Intermediate
Municipal Bond Fund and Municipal Bond Fund,
Inc.:
Financial Highlights for the six month
period ended June 30, 1996 and for the
fiscal period ended December 31, 1995, and
for the fiscal years ended February 28,
1995, 1994, 1993 and 1992.
(xvi) With respect to the Prairie U.S. Government Money
Market, Money Market and Municipal Money Market
Funds;
Financial Highlights for the six month
period ended June 30, 1996 and for the
fiscal years ended December 31, 1995, 1994,
1993 and 1992.
C-5
(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.
(b) Amendmend No. 1 to the Amended and Restated
Declaration of Trust dated as of September 12,
1996 is filed herein.
(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) Co-Advisory Agreement among Registrant, NBD Bank
("NBD") and First Chicago Investment Management
Company ("FCIMCO") dated as of April 12, 1996 is
filed herein.
(b) Advisory Agreement between Registrant and NBD
dated November 28, 1995 is incorporated herein by
reference to exhibit (5)(b) of Post-Effective
Amendment No. 28 to the Registrant's Registration
Statement on Form N-1A filed with the Commission
on April 5, 1996.
C-6
<PAGE>
(6) (a) Distribution Agreement between Registrant and
BISYS Fund Services ("BISYS") dated as of June 11,
1996 is filed herein.
(7) Deferred Compensation Plan is incorporated
herein by reference to exhibit (7) of Post-
Effective Amendment No. 30 to the
Registrant's Registration Statement on Form
N-1A filed with the Commission on April 15,
1996.
(8) (a) Amended and Restated Custodian Agreement
dated May 16, 1989 between Registrant and
National Bank of Detroit for Series A, B, C,
H, I, J, K and L of the Registrant is
incorporated herein by reference to exhibit
(8)(b) of Post-Effective Amendment No. 3 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
April 30, 1990.
(b) Addendum No. 1 dated January 23, 1991 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Michigan Tax-Exempt Money Market
Fund (Series M) is incorporated herein by
reference to exhibit (8)(c) of Post-Effective
Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on February 28, 1991.
C-7
<PAGE>
(c) Addendum No. 2 dated April 28, 1992 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Equity Index Fund (Series N) is
incorporated herein by reference to exhibit
(8)(d) of Post-Effective Amendment No. 10 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
September 8, 1992.
(d) Addendum No. 3 dated January 1, 1993 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward Treasury Money Market Fund (Series
O) is incorporated herein by reference to
exhibit (8)(e) of Post-Effective Amendment
No. 14 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on April 29, 1993.
(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.
C-8
<PAGE>
(h) Addendum No. 7 dated November 30, 1994 to the
Amended and Restated Custodian Agreement
between Registrant and NBD relating to the
Woodward International Equity Fund (Series T)
is incorporated herein by reference to
exhibit (8)(i) of Post-Effective Amendment
No. 25 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 28, 1995.
(i) Addendum No. 8 to the Amended and
Restated Custodian Agreement between
Registrant and NBD relating to the Woodward
Cash Management, U.S. Government Securities
Cash Management, Treasury Prime Cash
Management, Equity Income, Small Cap
Opportunity, Intermediate Municipal Bond,
Income, International Bond, Managed Assets
Conservative and Managed Assets Growth
Funds is incorporated herein by reference
to exhibit (8)(i) of Post-Effective
Amendment No. 28 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on April 5, 1996.
(j) Form of Addendum No. 9 to the Amended and
Restated Custodian Agreement between
Registrant and NBD relating to the Woodward
U.S. Government Income Fund (Series V) is
incorporated herein by reference to exhibit
(8)(k) of Post-Effective Amendment No. 17 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
November 1, 1993.
(k) Global Custody Agreement dated November 21,
1994 between Barclays Bank, PLC and NBD
relating to Series A, B, C, M, N, O, P, Q, R,
S, T, U and V is incorporated herein by
reference to exhibit (8)(k) of Post-Effective
Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A filed
with the Commission on July 28, 1995.
(9) (a) Co-Administration Agreement among the Registrant,
NBD, FCIMCO and BISYS dated as of June 11,
1996 is filed herein.
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<PAGE>
(b) Transfer Agency and Services Agreement between the
Registrant and First Data Investor Services
Group, Inc. ("FDISG") dated August 5, 1996 is
filed herein.
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<PAGE>
[ INTENTIONALLY LEFT BLANK ]
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<PAGE>
(c) 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.
(d) Shareholder Services Plan including form of
Service Agreement with respect to Class A Shares
is incorporated herein by reference to exhibit
(9)(p) of Post-Effective Amendment No. 30 to the
Registrant's Registration Statement on Form N-1A
filed with the Commission on April 15, 1996.
(e) Shareholder Administrative Services Plan
including form of Service Agreement is
incorporated herein by reference to exhibit
(9)(q) of Post-Effective Amendment No. 30 to the
Registrant's Registration Statement on Form N-1A
filed with the Commission on April 15, 1996.
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<PAGE>
*(10) Opinion of Drinker Biddle & Reath, counsel for
the Registrant.
(11) (a) Consent of Arthur Andersen LLP.
(b) Consent of Ernst & Young LLP.
(c) Consent of Drinker Biddle & Reath.
(12) None.
(13) None.
(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.
(b) Distribution Plan for Class B Shares is
incorporated herein by reference to exhibit
(15)(b) of Post-Effective Amendment No. 30 of
the Registrant's Registration Statement on
Form N-1A filed with the Commission on April
15, 1996.
(c) Distribution and Services Plan including
form of Agreement (relating to the Cash
Management Funds) is incorporated herein
by reference to exhibit (15)(c) of Post-
Effective Amendment No. 34 to the
Registrant's Registration Statement on Form
N-1A filed with the Commission on July 24,
1996.
(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
- --------
* Registrant's Rule 24f-2 Notice and related Opinion of Counsel relating
to Series A, B, C, H, I, J, K, L, M, N, O, P, Q, R, S, T and U was
filed with the SEC on February 27, 1996.
C-13
<PAGE>
N-1A filed with the Commission on February 28,
1991.
(b) Schedules of Performance Computations with
respect to the Woodward Michigan Tax-Exempt
Money Market Fund, Growth/Value Fund,
Opportunity Fund, Intrinsic Value Fund,
Intermediate Bond Fund and Bond Fund are
incorporated herein by reference to Exhibit
(16)(b) of Post-Effective Amendment No. 7 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on
December 3, 1991.
(c) Schedules of Performance Computations with
respect to the Woodward Equity Index Fund and
the Woodward Treasury Money Market Fund are
incorporated herein by reference to Exhibit
16(c) of Post-Effective Amendment No. 14 to
the Registrant's Registration Statement on
Form N-1A filed with the Commission on April
29, 1993.
(d) Schedules of Performance Computations with
respect to the Woodward Municipal Bond Fund
and Woodward Michigan Municipal Bond Fund are
incorporated herein by reference to Exhibit
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
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<PAGE>
exhibit (16)(g) of Post-Effective Amendment
No. 25 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 28, 1995.
(h) Schedules of Performance Computations with
respect to the Pegasus Cash Management,
Treasury Prime Cash Management and U.S.
Government Securities Cash Management Funds
are incorporated herein by reference to
exhibit (16)(h) of Post-Effective Amendment
No. 34 to the Registrant's Registration
Statement on Form N-1A filed with the
Commission on July 24, 1996.
(17) None.
(18) (a) Rule 18f-3 Plan is incorporated herein by
reference to exhibit (18)(a) of Post-Effective
Amendment No. 30 to the Registrant's Registration
Statement on Form N-1A filed with the Commission
on April 15,
1996.
(b) Amended Rule 18f-3 Plan is incorporated
herein by reference to exhibit (18)(b) of
Post-Effective Amendment No. 30 to the
Registrant's Registration Statement on Form
N-1A filed with the Commission on April 15,
1996.
(c) Amended Rule 18f-3 Plan is incorporated herein
by reference to exhibit (18)(b) of Post-Effective
Amendment No. 34 to the Registrant's Registration
Statement on Form N-1A filed with the Commission
on July 24, 1996.
(27) Financial Data Schedules.
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 October 31, 1996:
Number
of
Record
Title of Class Holders
-------------- -------
Growth and Value Fund -- Class A 4,660
Growth and Value Fund -- Class B 4
Growth and Value Fund -- Class I 7
Small-Cap Opportunity Fund -- Class A 348
Small-Cap Opportunity Fund -- Class B 12
Small-Cap Opportunity Fund -- Class I 11
Mid-Cap Opportunity Fund -- Class A 7,839
Mid-Cap Opportunity Fund -- Class B 2
Mid-Cap Opportunity Fund -- Class I 10
Intrinsic Value Fund -- Class A 2,004
Intrinsic Value Fund -- Class B 10
Intrinsic Value Fund -- Class I 7
Equity Index Fund -- Class A 520
Equity Index Fund -- Class B 4
Equity Index Fund -- Class I 9
C-15
Equity Income Fund -- Class A 406
Equity Income Fund -- Class B 122
Equity Income Fund -- Class I 12
Growth Fund -- Class A 1,185
Growth Fund -- Class B 47
Growth Fund -- Class I 13
International Equity Fund -- Class A 749
International Equity Fund -- Class B 116
International Equity Fund -- Class I 15
Managed Assets Conservative Fund -- Class A 2,369
Managed Assets Conservative Fund -- Class B 247
Managed Assets Conservative Fund -- Class I 6
Managed Assets Balanced Fund -- Class A 1,001
Managed Assets Balanced Fund -- Class B 85
Managed Assets Balanced Fund -- Class I 5
Bond Fund -- Class A 2,066
Bond Fund -- Class B 16
Bond Fund -- Class I 10
Intermediate Bond Fund -- Class A 833
Intermediate Bond Fund -- Class B 4
Intermediate Bond Fund -- Class I 4
Income Fund -- Class A 206
Income Fund -- Class B 30
Income Fund -- Class I 10
Short Bond Fund -- Class A 36
Short Bond Fund -- Class B 3
Short Bond Fund -- Class I 4
Municipal Bond Fund -- Class A 597
Municipal Bond Fund -- Class B 22
Municipal Bond Fund -- Class I 8
Michigan Municipal Bond Fund -- Class A 613
Michigan Municipal Bond Fund -- Class B 1
Michigan Municipal Bond Fund -- Class I 3
Intermediate Municipal Bond Fund -- Class A 357
Intermediate Municipal Bond Fund -- Class B 22
Intermediate Municipal Bond Fund -- Class I 7
International Bond Fund -- Class A 272
International Bond Fund -- Class B 4
International Bond Fund -- Class I 9
Money Market Fund -- Class A 31,289
Money Market Fund -- Class B 3
Money Market Fund -- Class I 188
ITEM 27. INDEMNIFICATION
Indemnification of Registrant's current principal underwriter
against certain losses is provided for in Section 11 of the Distribution
Agreement Filed herein by reference as Exhibit (6)(a). Indemnification of
Registrant's Custodian is provided for in Article XII of the Amended and
Restated Custodian Agreement incorporated herein by reference as Exhibit
(8)(a). Indemnification of Registrant's Transfer Agent and Dividend Disbursing
Agent is provided for in Article X of the Transfer Agency and Services
Agreement incorporated herein by reference as Exhibit (9)(b). Registrant has
obtained from a major insurance carrier a trustees' and officers' liability
policy covering certain types of errors and omissions. In addition, Section
5.4 of the Registrant's Amended and Restated Declaration of Trust incorporated
herein by reference as Exhibit (1)(a), provides as follows:
5.4 Mandatory Indemnification.
(a) Subject only to the provisions hereof, every person
who is or has been a Trustee, officer, employee or agent of the Trust
and every person who serves at the Trust's request as director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall be indemnified by the Trust
to the fullest extent permitted by law against all liabilities and
against all expenses reasonably incurred or paid by him in connection
with any debt, claim, action, demand, suit, proceeding, judgment,
decree, liability or obligation of any kind in which he becomes
involved as a party or otherwise or is threatened by virtue of his
being or having been a Trustee, officer, employee or agent of the
Trust or of another corporation, partnership, joint venture, trust or
other enterprise at the request of the Trust and against amounts paid
or incurred by him in the compromise or settlement thereof.
(b) The words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, administrative, legislative, investigative or other,
including appeals), actual or threatened, and the words "liabilities"
and "expenses" shall
C-16
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:
(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
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<PAGE>
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 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
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<PAGE>
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
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<PAGE>
[ INTENTIONALLY LEFT BLANK ]
<PAGE>
The Registrant's investment adviser, First Chicago NBD
Investment Management Company ("FCNIMCO"), is a registered investment
adviser and wholly-owned subsidiary of The First National Bank of Chicago
("FNBC"), which in turn is a wholly-owned subsidiary of First Chicago NBD
Corporation, a registered bank holding company.
Registrant is fulfilling the requirement of this Item 28 to
provide a list of the officers and directors of FCNIMCO, together with
information as to any other business, profession, vocation or employment of
a substantial nature engaged in by FCNIMCO or those of its officers and
directors during the past two years, by incorporating by reference the
information contained in the Form ADV filed with the SEC pursuant to the
Investment Advisers Act of 1940 by FCNIMCO (SEC File No. 801-47947).
C-20
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITER
(a) BISYS Fund Services Inc. acts as distributor and as an
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:
Name and
Principal Positions and Positions and
Business Offices with Offices with
Address BISYS Fund Services Registrant
- -------- ------------------- -------------
BISYS Fund Services, Inc. Sole General Partner None
150 Clove Road
Little Falls, NJ 07424
WC Subsidiary Corporation Limited Partner None
150 Clove Road
Little Falls, NJ 07424
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
(a) NBD Bank, 611 Woodward Avenue, Detroit, Michigan 48226 and 900
Tower Drive, Troy, Michigan 48098 (records relating to
functions as advisor, co-administrator, custodian, and
transfer and dividend disbursing agent).
(b) First of Chicago NBD Investment Management Company, Three First
National Plaza, 70 West Madison, Chicago, Illinois 60670
(records relating to its function as co-advisor and
co-administrator).
C-21
<PAGE>
(c) BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219
(records relating to its functions as distributor and
co-administrator).
(d) Drinker Biddle & Reath, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107-3496 (Registrant's
Declaration of Trust, By-Laws and Minute Books).
ITEM 31. MANAGEMENT SERVICES
Inapplicable.
ITEM 32. UNDERTAKINGS
Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees if
requested to do so by the holders of at least 10% of Registrant's outstanding
shares. Registrant will stand ready to assist shareholder communications in
connection with any meeting of shareholders as prescribed in Section 16(c) of
the Investment Company Act of 1940.
Registrant undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's most recent annual report
to shareholders, upon request without charge.
C-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Post-Effective Amendment No. 39
to its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment No. 39 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
30th day of December, 1996.
PEGASUS FUNDS
Registrant
*/s/ Donald G. Sutherland
----------------------
Donald G. Sutherland
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/ Will M. Caldwell
- -------------------------
Will M. Caldwell Trustee December 30, 1996
*/s/ Julius L. Pallone
- -------------------------
Julius L. Pallone Trustee December 30, 1996
*/s/ Nicholas J. De Grazia
- -------------------------
Nicholas J. De Grazia Trustee December 30, 1996
*/s/ Donald G. Sutherland
- ------------------------- President and
Donald G. Sutherland Trustee December 30, 1996
*/s/ Donald L. Tuttle
- ------------------------- Chairman and
Donald L. Tuttle Trustee December 30, 1996
*/s/ John P. Gould
- ------------------------- Chairman and
John P. Gould Trustee December 30, 1996
*/s/ Marilyn McCoy
- -------------------------
Marilyn McCoy Trustee December 30, 1996
* By:/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
----------- -------
(1)(b) Amendment No. 1 to Amended and
Restated Declaration of Trust
Dated September 12, 1996.
(5)(a) Co-Advisory Agreement Dated April 12, 1996.
(6)(a) Distribution Agreement Dated June 11, 1996.
(9)(a) Co-Administration Agreeement Dated June 11, 1996.
(9)(b) Transfer Agency and Services Agreement Dated
(11)(a) Consent of Arthur Andersen LLP
(11)(b) Consent of Ernst & Young LLP
(11)(c) Consent of Drinker Biddle & Reath
Ex.(1)(b)
THE WOODWARD FUNDS
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
DECLARATION OF TRUST
I, W. Bruce McConnel, III, do hereby certify as follows:
1. That I am duly elected Secretary of The Woodward Funds,
a Massachusetts business trust (hereinafter called the "Trust");
2. That in such capacity, I have examined records of
actions taken by the Board of Trustees of the Trust;
3. That the current Trustees of the Trust duly adopted the
following resolutions on May 21, 1996:
Change of Name of the Trust
WHEREAS, Article I, Section 1.1 of the Trust's Amended and
Restated Declaration of Trust dated as of May 1, 1992 (the
"Declaration of Trust") provides that the Trust's name may be changed
by a majority of the then Trustees;
RESOLVED, that pursuant to the authorization described above,
the Declaration of Trust shall be amended in the following respect:
Article I, Section 1.1 of the Declaration of Trust shall be
amended to change the name of the Trust from "The Woodward
Funds" to "Pegasus Funds", and all other appropriate references
in the Declaration of Trust are amended to reflect the fact
that the name of the Trust is "Pegasus Funds";
Filings
FURTHER RESOLVED, that any Trustee or officer of the Trust be,
and each of them hereby is, authorized and empowered to execute, seal
and deliver any and all documents, instruments, certificates, papers
and writings, including but not limited to, any instrument to be filed
with the Secretary of the Commonwealth of Massachusetts or the Boston
City Clerk, and to do any and all other acts, including but not
limited to, changing the foregoing resolutions upon advice of Trust
counsel prior to filing any and all said documents, instruments,
papers, and writings, in the name of the Trust and on its behalf, as
may be necessary or desirable in connection with or in furtherance of
the foregoing resolutions, such determination to be conclusively
evidenced by said officers taking any such actions;
<PAGE>
Effectiveness of Name Change:
FURTHER RESOLVED, that the foregoing amendment to the
Declaration shall be effective upon the filing of an instrument
containing the same with the Secretary of the Commonwealth of
Massachusetts and the Boston City Clerk or upon such other date
as specified in such instrument.
4. That the foregoing resolutions remain in full force and
effect as of the date hereof;
5. That this Amendment No. 1 to the Declaration of Trust
shall be effective on September 23, 1996.
Dated: September 12, 1996
/s/W. Bruce McConnel, III
-------------------------
W. Bruce McConnel, III
Subscribed to and Sworn to Before
me this 12th day of September, 1996
/s/Georganna Griffith
- ---------------------
Notary Public
-2-
Ex. (5)(a)
CO-ADVISORY AGREEMENT
This Agreement, dated as of the 12th day of April, 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.
<PAGE>
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
-2-
<PAGE>
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
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<PAGE>
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
-4-
<PAGE>
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 (x) upon the date first above written with respect to
the Cash Management Fund, the Treasury Prime Cash Management Fund
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<PAGE>
and the U.S. Government Securities Cash Management Fund, (y) as to each other
Fund which has not commenced operations on the date of this Agreement, upon
the first effective date of a registration statement registering shares issued
by such Fund, and (z) as to each Fund not covered by clause (x) or clause (y),
upon the consummation of the first reorganization in which such Fund is a
participant. Unless sooner terminated as provided herein, this Agreement shall
continue with respect to each Fund until June 30, 1997. 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.
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<PAGE>
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: /s/Illegible
-------------
NBD BANK
Attest:
_______________________ By: /s/Illegible
-------------
(Corporate Seal)
FIRST CHICAGO INVESTMENT
MANAGEMENT COMPANY
Attest:
_______________________ By: /s/Illegible
------------
(Corporate Seal)
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<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
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<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:
Fund Fee Rate
---- --------
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
of the Fund
Managed Assets Balanced Fund .65% of the average net assets
Managed Assets Conservative of the Fund
Fund
Managed Assets Growth Fund
Bond Fund .40% of the average net assets
Municipal Bond Fund of the Fund
Income Fund
Intermediate Municipal Bond
Fund
Intermediate Bond Fund
Michigan Municipal Bond
Short Bond Fund .35% of the average net assets
of the Fund
Cash Management Fund .20% of the average net assets
U.S. Government of the 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 Fund
Growth Fund .60% of the average net assets
Mid-Cap Opportunity Fund of the Fund
Growth and Value Fund
Intrinsic Value Fund
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<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).
-10-
Ex. (6)(a)
DISTRIBUTION AGREEMENT
This Agreement is made as of this 11th day of June, 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
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<PAGE>
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
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<PAGE>
(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
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<PAGE>
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
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<PAGE>
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;
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<PAGE>
(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.
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<PAGE>
(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
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<PAGE>
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 Regis-
-8-
<PAGE>
tration 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
-9-
<PAGE>
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.
-10-
<PAGE>
Section 12. Duration and Termination of this Agreement.
This Agreement became effective with respect to the Cash
Management Fund, the Treasury Prime Money Market Fund and the U.S. Government
Securities Cash Management Fund as of April 12, 1996. This Agreement shall
become effective (y) as to each other Series which has not commenced
operations on the date of this Agreement, upon the first effective date of a
registration statement registering shares issued by such Series, and (z) as to
each Series not covered by the preceding sentence or by clause (y) of this
sentence, upon the consummation of the first reorganization in which such
Series is a participant. Unless sooner terminated as provided herein, this
Agreement shall remain in force with respect to any particular Series until
December 31, 1997, and thereafter until June 30, 1998, and thereafter until
June 30 of each succeeding year, so long as the continuance until June 30,
1998 and each subsequent annual continuance is specifically approved 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.
-11-
<PAGE>
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/s/Earl I. Heenan, Jr.
----------------------
Its President
----------
BISYS Fund Services Limited Partnership
By: BISYS Fund Services, Inc.,
its general partner
By:/s/Illegible
------------
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<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
INTERNATIONAL MAJOR MARKETS FUND
-13-
Ex. (9) (a)
CO-ADMINISTRATION AGREEMENT
AGREEMENT dated as of June 11, 1996 by and among THE
WOODWARD FUNDS, a Massachusetts business trust (the "Trust"), NBD BANK
("NBD"), a national banking association, FIRST CHICAGO INVESTMENT MANAGEMENT
COMPANY ("FCIMCO"), a registered investment adviser, and BISYS LIMITED
PARTNERSHIP, d/b/a BISYS FUND SERVICES ("BISYS") (each of NBD, FCIMCO and
BISYS, 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");
<PAGE>
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 Agency and Services 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
-2-
<PAGE>
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;
(6) monitoring 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 Trusts 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 Boards 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;
(7) Providing information and
distributing written communications concerning the Funds to their
shareholders of record; handling shareholder problems and calls,
including without limitation, calls relating to shareholder purchases
and redemptions and shareholder inquiries, and maintaining a primary
facility for such telephone services;
(8) performing all administrative
functions for the Trust and the Funds not otherwise assigned to
another person by contract or otherwise and generally assist in the
operations of the Trust and the Funds.
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.
-3-
<PAGE>
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 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 their 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 and shall pay all expenses on proper authorization from each Fund.
i. The Administrators shall monitor each Fund's
compliance with Subchapter M of the Internal Revenue Code of 1986, as amended
from time to time and its status as a regulated investment company thereunder.
-4-
<PAGE>
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.
-5-
<PAGE>
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.
6. Compensation.
In consideration of services rendered pursuant to
this Agreement, the Trust will pay to NBD and FCIMCO, as agents 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
-6-
<PAGE>
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 the part of any Administrator 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.
-7-
<PAGE>
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 became effective
with respect to the Cash Management Fund, the Treasury Prime Money Market Fund
and the U.S. Government Securities Cash Management Fund as of April 12, 1996.
This Agreement shall become effective (y) as to each other Fund which has not
commenced operations on the date of this Agreement, upon the first effective
date of a registration statement registering shares issued by such Fund, and
(z) as to each Fund not covered by the preceding sentence or by clause (y) of
this sentence, upon the consummation of the first reorganization in which such
Fund is a participant. Unless sooner terminated as provided herein, this
Agreement shall continue until December 31, 1997 ("Initial Term"). Thereafter,
if not terminated, this Agreement shall continue automatically as to the Funds
until June 30, 1998 and thereafter until June 30 of each succeeding year (each
a "Renewal Term"), provided that the continuance until June 30, 1998 and each
subsequent annual continuance is specifically approved (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
-8-
<PAGE>
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
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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.
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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:/s/Earl I. Heenan, Jr.
-----------------------
NBD BANK
By:/s/Illegible
------------
FIRST CHICAGO INVESTMENT MANAGEMENT COMPANY
By:/s/Illegible
-------------
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., general partner
By:/s/Illegible
-------------
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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
INTERNATIONAL MAJOR MARKETS FUND
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TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 5th day of August, 1996 between The
Woodward Fund (the "Fund"), a Massachusetts business trust having its
principal place of business at First Chicago/NBD Investment Management
Company, 900 Tower Drive, 8th Floor, Troy, Michigan 48098 and FIRST DATA
INVESTOR SERVICES GROUP, INC. ("FDISG"), a Massachusetts corporation with
principal offices at 4400 Computer Drive, Westboro, Massachusetts 01581.
WITNESSETH
WHEREAS, the Fund is authorized to issue Shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund initially intends to offer shares in those
Portfolios identified in the attached Schedule of Portfolios, each such
Portfolio, together with all other Portfolios subsequently established by the
Fund shall be subject to this Agreement in accordance with Article 14;
WHEREAS, the Fund, on behalf of the Portfolios, desires to appoint
FDISG as its transfer agent, dividend disbursing agent and agent in connection
with certain other activities and FDISG desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and FDISG agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not
such person is an officer or employee of the Fund, duly authorized to
give Oral Instructions or Written Instructions on behalf of the Fund
as indicated in writing to FDISG from time to time.
(c) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
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(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(g) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by FDISG from a person
reasonably believed by FDISG to be an Authorized Person.
(i) "Portfolio" shall mean each separate series of shares
offered by the Fund representing interest in a separate portfolio of
securities and other assets.
(j) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(k) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Fund as may be issued from time to
time.
(l) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.
(m) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by FDISG to be an Authorized
Person and actually received by FDISG. Written Instructions shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original
or other process.
Article 2 Appointment of FDISG.
The Fund, on behalf of the Portfolios, hereby appoints and constitutes
FDISG as transfer agent and dividend disbursing agent for Shares of each
respective Portfolio of the Fund and as shareholder servicing agent for the
Fund and FDISG hereby accepts such appointments and agrees to perform the
duties hereinafter set forth.
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<PAGE>
Article 3 Duties of FDISG.
3.1 FDISG shall be responsible for:
(a) Administering and/or performing the customary services of a
transfer agent; acting as service agent in connection with dividend
and distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares of each Portfolio, as more fully described in the
written schedule of Duties of FDISG annexed hereto as Schedule A and
incorporated herein, and in accordance with the terms of the
Prospectus of the Fund on behalf of the applicable Portfolio,
applicable law and the procedures established from time to time
between FDISG and the Fund.
(b) Recording the issuance of Shares and maintaining pursuant
to Rule 17Ad-10(e) of the 1934 Act a record of the total number of
Shares of each Portfolio which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. FDISG shall
provide the Fund on a regular basis with the total number of Shares of
each Portfolio which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which functions shall be
the sole responsibility of the Fund.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, FDISG shall be under no duty or obligation to inquire into,
and shall not be liable for: (i) the legality of the issuance or sale
of any Shares or the sufficiency of the amount to be received
therefor; (ii) the legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor; (iii) the legality of the
declaration of any dividend by the Board of Directors, or the legality
of the issuance of any Shares in payment of any dividend; or (iv) the
legality of any recapitalization or readjustment of the Shares.
3.2 In addition, the Fund shall (i) identify to FDISG in writing those
transactions and assets to be treated as exempt from blue sky reporting for
each State and (ii) verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of FDISG for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
3.3 FDISG shall provide those print/mail services more fully described
in Schedule B for the fees also set forth in Schedule B.
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<PAGE>
3.4 In addition to the duties set forth herein, FDISG shall perform
such other duties and functions, and shall be paid such amounts therefor, as
may from time to time be agreed upon in writing between the Fund and FDISG.
3.5 FDISG agrees to provide the services described herein in
accordance with the Performance Standards annexed hereto as Exhibit 1 of
Schedule A and incorporated herein. Such Performance Standards may be amended
from time to time upon written agreement by the parties.
Article 4 Recordkeeping and Other Information.
4.1 FDISG shall create and maintain all records required of it
pursuant to its duties hereunder and as set forth in Schedule A in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the 1940 Act. Where applicable, such records shall be
maintained by FDISG for the periods and in the places required by Rule 31a-2
under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, FDISG agrees
that all such records prepared or maintained by FDISG relating to the services
to be performed by FDISG hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such section, and
will be surrendered promptly to the Fund on and in accordance with the Fund's
request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, FDISG will endeavor to notify the Fund of
such request and secure Written Instructions as to the handling of such
request. FDISG reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to comply with such request.
Article 5 Fund Instructions.
5.1 Subject to FDISG meeting its standard of care herein, FDISG will
have no liability when acting upon Written or Oral Instructions believed to
have been executed or orally communicated by an Authorized Person and will not
be held to have any notice of any change of authority of any person until
receipt of a Written Instruction thereof from the Fund.
5.2 At any time, FDISG may request Written Instructions from the Fund
and may seek advice from legal counsel for the Fund, or its own legal counsel,
with respect to any matter arising in connection with this Agreement, and
subject to FDISG meeting its standard of care herein, it shall not be liable
for any action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or in accordance with the opinion of
counsel for the Fund or for FDISG. Written Instructions requested by FDISG
will be provided by the Fund within a reasonable period of time.
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<PAGE>
5.3 FDISG, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing
or acting on behalf of the Fund only if said representative is an Authorized
Person. The Fund agrees that all Oral Instructions shall be followed within
one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect FDISG's right to rely on
Oral Instructions.
Article 6 Compensation.
6.1 The Fund on behalf of each of the Portfolios will compensate FDISG
for the performance of its obligations hereunder in accordance with the fees
set forth in the written Fee Schedule annexed hereto as Schedule B and
incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the Fund
on behalf of each of the Portfolios agrees to pay, and will be billed
separately for, out-of-pocket expenses incurred by FDISG in the performance of
its duties hereunder. Out-of-pocket expenses shall include, but shall not be
limited to, the items specified in the written schedule of out-of-pocket
charges annexed hereto as Schedule C and incorporated herein. Schedule C may
be modified by written agreement between the parties. Unspecified
out-of-pocket expenses shall be limited to those out-of-pocket expenses
reasonably incurred by FDISG in the performance of its obligations hereunder.
In the event that the cost of unspecified out-of-pocket expenses exceed
one-thousand dollars ($1,000) in any given monthly period, FDISG shall receive
prior approval from the Fund before incurring such expenses.
6.3 The Fund on behalf of each of the Portfolios agrees to pay all
fees and out-of-pocket expenses within thirty (30) days following the receipt
of the respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule B, a revised Fee Schedule executed and dated by
the parties hereto.
6.5 The Fund acknowledges that the fees that FDISG charges the Fund
under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 9.3 and the limitations on
liability and exclusion of remedies in Article 12. Modifying the allocation of
risk from what is stated here would affect the fees that FDISG charges, and in
consideration of those fees, the Fund agrees to the stated allocation of risk.
Article 7 Documents.
In connection with the appointment of FDISG, the Fund shall, on or
before the date this Agreement goes into effect, but in any case within a
reasonable period of time for FDISG to prepare to perform its duties
hereunder, deliver or cause to be delivered to FDISG the documents set forth
in the written schedule of Fund Documents annexed hereto as Schedule D.
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<PAGE>
Article 8 Transfer Agent System.
8.1 FDISG shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by FDISG in connection with
the services provided by FDISG to the Fund herein (the "FDISG System").
8.2 FDISG hereby grants to the Fund a limited license to the FDISG
System for the sole and limited purpose of having FDISG provide the services
contemplated hereunder and nothing contained in this Agreement shall be
construed or interpreted otherwise and such license shall immediately
terminate with the termination of this Agreement.
Article 9 Representations and Warranties.
9.1 FDISG represents and warrants to the Fund that:
(a) it is a corporation duly organized, existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in effect
for the duration of this Agreement; and
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to FDISG that:
(a) it is duly organized, existing and in good
standing under the laws of the jurisdiction in which it is
organized;
(b) it is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into this
Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to
authorize it to enter into this Agreement;
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<PAGE>
(d) a registration statement under the Securities Act of 1933,
as amended, and the 1940 Act on behalf of each of the Portfolios is
currently effective and will remain effective, and all appropriate
state securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for sale;
and
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with
the terms of the Fund's Articles of Incorporation and its Prospectus
with respect to each Portfolio, such Shares shall be validly issued,
fully paid and non-assessable.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON.
Article 10 Indemnification.
10.1 FDISG shall not be responsible for and the Fund on behalf of each
Portfolio shall indemnify and hold FDISG harmless from and against any and all
claims, costs, expenses (including reasonable attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind which may be
asserted against FDISG or for which FDISG may be held to be liable (a "Claim")
arising out of or attributable to any of the following, unless such Claim
resulted from a negligent act or omission to act or bad faith by FDISG in the
performance of its duties hereunder:
(a) any actions of FDISG required to be taken pursuant to this
Agreement;
(b) FDISG's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by FDISG from the Fund, or any authorized third party acting
on behalf of the Fund, including but not limited to the prior transfer
agent for the Fund, in the performance of FDISG's duties and
obligations hereunder;
(c) the reliance on, or the implementation of, any Written or
Oral Instructions or any other instructions or requests of the Fund on
behalf of the applicable Portfolio;
(d) the offer or sales of Shares in violation of any
requirement under the securities laws or regulations of any state that
such Shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect to
the offer or sale of such Shares in such state; and
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<PAGE>
(e) the Fund's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the Fund's negligence
or misconduct or the breach of any representation or warranty of the
Fund made herein.
10.2 In any case in which the Fund may be asked to indemnify or hold
FDISG harmless, FDISG will notify the Fund promptly after identifying any
situation which it believes presents or appears likely to present a claim for
indemnification against the Fund although the failure to do so shall not
prevent recovery by FDISG and shall keep the Fund advised with respect to all
developments concerning such situation. The Fund shall have the option to
defend FDISG against any Claim which may be the subject of this
indemnification, and, in the event that the Fund so elects, such defense shall
be conducted by counsel chosen by the Fund and reasonably satisfactory to
FDISG, and thereupon the Fund shall take over complete defense of the Claim
and FDISG shall sustain no further legal or other expenses in respect of such
Claim. FDISG will not confess any Claim or make any compromise in any case in
which the Fund will be asked to provide indemnification, except with the
Fund's prior written consent. The obligations of the parties hereto under this
Article 10 shall survive the termination of this Agreement.
10.3 Any claim for indemnification under this Agreement must be made
prior to the earlier of:
(a) one year after the Fund becomes aware of the event
for which indemnification is claimed; or
(b) one year after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.4 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
FDISG's sole and exclusive remedy for claims or other actions or proceedings
to which the Fund's indemnification obligations pursuant to this Article 10
may apply.
Article 11 Standard of Care.
11.1 FDISG shall at all times act in good faith and agrees to use its
best efforts within commercially reasonable limits to ensure the accuracy of
all services performed under this Agreement, but assumes no responsibility for
loss or damage to the Fund unless said errors are caused by FDISG's own
negligence, bad faith or willful misconduct or that of its employees, agents
or representatives.
11.2 Each party shall have the duty to use commercially reasonable
efforts to mitigate damages for which the other party may become responsible.
Article 12 Consequential Damages.
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NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written above
and shall continue for a period of three (3) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of three (3) years ("Renewal Terms")
each, unless the Fund or FDISG provides written notice to the other of its
intent not to renew. Such notice must be received not less than ninety (90)
days prior to the expiration of the Initial Term or the then current Renewal
Term.
13.3 In the event that any of the Performance Standards listed in
Exhibit 1 of Schedule A are not met by FDISG for two consecutive months the
Fund may provide FDISG with written notice of its intent to terminate this
Agreement. Such termination shall become effective unless FDISG corrects such
failure to meet the identified standards within thirty (30) days of receipt of
such notice. Unless the Fund provides FDISG with written notice of the Fund's
intent to exercise this option under this Section 13.3 within 30 days after
the Fund becomes aware of the occurrence, the Fund shall have waived its
option to terminate under this provision. Notwithstanding the foregoing, the
Fund's right to terminate the Agreement under this Section 13.3 shall not be
effective until after the expiration of two months from the time FDISG begins
providing services hereunder.
13.4 The Fund may terminate this Agreement in the event that the
negligent action or negligent omission to act on the part of FDISG causes
damages to the Fund in excess of one-hundred thousand dollars ($100,000).
"Damages to the Fund" are defined as damages caused by a single event, or
cumulative series of events related to the same matter which generates a
monetary loss. The Fund's right to terminate under this Section 13.4 shall
remain effective in the event FDISG has made the Fund whole with respect to
the damages caused. Unless the Fund provides FDISG with written notice of the
Fund's intent to exercise this option under this Section 13.4 within 30 days
after the Fund becomes aware of the occurrence, the Fund shall have waived its
option to terminate under this provision.
13.5 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting
Party, and if such material breach shall not have been remedied within thirty
(30) days after such written notice is given, then the Non-Defaulting Party
may terminate this Agreement by giving thirty (30) days written notice of such
termination to the
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<PAGE>
Defaulting Party. If FDISG is the Non-Defaulting Party, its termination of
this Agreement shall not constitute a waiver of any other rights or remedies
of FDISG with respect to services performed prior to such termination or
rights of FDISG to be reimbursed for out-of-pocket expenses. In all cases,
termination by the Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this Agreement or
otherwise against the Defaulting Party.
13.6 In the event this Agreement is terminated by the Fund pursuant to
Section 13.3, 13.4 or 13.5, all reasonable expenses associated with the
movement of records and materials to a successor transfer agent will be borne
by FDISG and the Fund shall not be responsible for the Unamortized Costs as
defined in Section 13.7 or FDISG's costs associated with such termination. In
the event of a termination pursuant to any other sections, all expenses
associated with conversion will be borne by the Fund.
13.7 The Fund shall have the right to terminate this Agreement at any
time if the Fund reorganizes into another entity, liquidates or otherwise
ceases to exist. In the event the Fund terminates the Agreement pursuant to
this Section 13.7, the Fund shall reimburse FDISG (a) for all unamortized
costs incurred by FDISG associated with the conversion of the Fund to FDISG as
transfer agent (the "Unamortized Costs") and (b) all reasonable costs
associated with such termination. In order to facilitate the calculation of
the payment described in Section 13.7(a), FDISG shall document the total cost
of the Fund's conversion to FDISG (the "Conversion Cost") within sixty (60)
days of conversion. The "Unamortized Costs" shall be defined as the Conversion
Cost minus any reimbursements made by the Fund, or any other entity, to FDISG
to off-set such Conversion Costs. Such amortization shall be straight-line
over three years.
13.8 In the event that the Fund's Co-advisors, First Chicago
Investment Management Company and NBD Bank, or any affiliate of either of
them, acquire a mutual fund complex which includes an in-house-transfer agent,
the Fund shall have the option of terminating this Agreement upon the
following conditions:
(a) such option may only be exercised after expiration of the
first twelve months of this Agreement; and
(b) the Fund must provide FDISG with one-hundred twenty (120)
days prior written notice of its intent to terminate this Agreement
under this Section 13.8; and
(c) prior to such termination, the Fund shall pay to FDISG an
amount equal to twenty-five percent (25%) of FDISG's anticipated "lost
revenue" on the remainder of this Agreement resulting from such
termination. "Lost Revenue" shall mean the total FDISG fee run-rate
(excluding out-of-pocket expenses) representing the average of the
last three months prior to termination times the number of months then
remaining in the Initial Term or the then current Renewal Term; and
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(d) prior to such termination, the Fund shall pay to FDISG the
payment described in Section 13.7 of this Agreement.
Article 14 Additional Portfolios.
In the event that the Fund establishes one or more Portfolios in
addition to those identified in Exhibit 1, with respect to which the Fund
desires to have FDISG render services as transfer agent under the terms
hereof, the Fund shall so notify FDISG in writing. Upon such notification the
parties shall amend Exhibit 1 to include such additional Portfolios and FDISG
shall provide the services to such Portfolios under the same terms as set
forth herein.
Article 15 Confidentiality.
15.1 The parties agree that the Proprietary Information (defined
below) and the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their respective
licensors. The Fund and FDISG shall exercise at least the same degree of care,
but not less than reasonable care, to safeguard the confidentiality of the
Confidential Information of the other as it would exercise to protect its own
confidential information of a similar nature. The Fund and FDISG may use the
Confidential Information only to exercise its rights under this Agreement.
Except as required by law and except as disclosed in the Fund's registration
statement or filed as an exhibit thereto, the Fund and FDISG shall not
duplicate, sell or disclose to others the Confidential Information of the
other, in whole or in part, without the prior written permission of the other
party. The Fund and FDISG may, however, disclose Confidential Information to
its employees who have a need to know the Confidential Information to perform
work for the other, provided that each shall use reasonable efforts to ensure
that the Confidential Information is not duplicated or disclosed by its
employees in breach of this Agreement. The Fund and FDISG may also disclose
the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
FDISG disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating
to the past, present or future business activities of the Fund or
FDISG, their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them;
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(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or FDISG
a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes
and models, and any other tangible manifestation of the foregoing of either
party which now exist or come into the control or possession of the other.
Article 16 Force Majeure.
16.1 No party shall be liable for any default or delay in the
performance of its obligations under this Agreement if and to the extent such
default or delay is caused, directly or indirectly, by (i) fire, flood,
elements of nature or other acts of God; (ii) any outbreak or escalation of
hostilities, war, riots or civil disorders in any country, (iii) any act or
omission of the other party or any governmental authority; (iv) any labor
disputes (whether or not the employees' demands are reasonable or within the
party's power to satisfy); or (v) nonperformance by a third party or any
similar cause beyond the reasonable control of such party, including without
limitation, failures or fluctuations in telecommunications or other equipment.
In any such event, the non-performing party shall be excused from any further
performance and observance of the obligations so affected only for as long as
such circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
16.2 During the term of this Agreement, at no additional cost to the
Fund, FDISG shall provide a facility capable of being utilized by FDISG to
provide the services covered by this Agreement in case of damage to the
primary facility providing those services (the "Back-Up Facility").
Utilization of the Back-Up Facility by FDISG, including without limitation,
transferring of transfer agency and dividend records of the Fund, shall
commence as soon as practically possible after damage to the primary facility
results in an inability to provide the services described in this Agreement.
Any additional costs in connection with utilizing the Back-Up Facility shall
be at FDISG's expense. After the primary facility has recovered, FDISG shall
again utilize it to provide the services discussed in this Agreement to the
Fund at no additional cost to the Fund.
16.3 In the case of damage to the Fund's primary facility providing
telephone service for the Fund's Shareholders, the Fund, at its own expense,
shall re-route Shareholder telephone calls
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<PAGE>
to FDISG and FDISG agrees to handle such calls on behalf of the Fund. FDISG
shall provide this service for a period of three (3) days at no charge to the
Fund, however, the Fund shall assume responsibility for and pay FDISG for any
direct expenses incurred by FDISG. In the event that the Fund desires to
continue such service for a period in excess thereof, the Fund and FDISG shall
mutually agree on the fees to be paid by the Fund to FDISG for such service.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that
FDISG may assign all its right, title and interest in this Agreement to an
affiliate, parent or subsidiary, provided that in the reasonable judgment of
the Board of Directors of the Fund, acting in its sole discretion, (i) the
financial capacity of such assignee is not materially less than FDISG's; (ii)
the nature and quality of the services to be provided hereunder, including the
Performance Standards set forth in Exhibit 1 of Schedule A, are not materially
adversely affected by such assignment; and (iii) the quality and capabilities
of the personnel and facilities of the assignee are not materially less than
FDISG's. FDISG may, in its sole discretion, engage subcontractors to perform
any non-material or non-substantive obligations contained in this Agreement
that it is otherwise required to perform hereunder, provided however, that
FDISG shall remain responsible for the acts and omissions of such
subcontractors to the same extent as it is hereunder.
Article 18 Notice.
Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or FDISG shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
c/o NBD Bank
900 Tower Drive
P.O. Box 7058
Troy, Michigan 48007-7058
(800) 688-3350
ATTN: President
With a copy to:
Mr. Marco Hanig
Managing Director
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<PAGE>
First Chicago Investment Management Company
Three First National Plaza, Mail Stop 0334
Chicago, IL 60670
and to
W. Bruce McConnel, III
Drinker Biddle & Reath
1345 Chestnut Street
Suite 1100
Philadelphia, PA 19107-3496
To FDISG:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to FDISG's General Counsel
Article 19 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement
of this Agreement. All actions arising from or related to this Agreement shall
be brought in the state and federal courts sitting in the City of Boston, and
FDISG and Client hereby submit themselves to the exclusive jurisdiction of
those courts.
Article 20 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall,
together, constitute only one instrument.
Article 21 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 22 Publicity.
Neither FDISG nor the Fund shall release or publish news releases,
public announcements, advertising or other publicity relating to this
Agreement or to the transactions
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<PAGE>
contemplated by it without the prior review and written approval of the other
party; provided, however, that either party may make such disclosures as are
required by legal, accounting or regulatory requirements after making
reasonable efforts in the circumstances to consult in advance with the other
party.
Article 23 Relationship of Parties/Non-Solicitation.
The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 24 Entire Agreement; Severability.
24.1 This Agreement, including Schedules, Addenda, and Exhibits
hereto, constitutes the entire Agreement between the parties with respect to
the subject matter hereof and supersedes all prior and contemporaneous
proposals, agreements, contracts, representations, and understandings, whether
written or oral, between the parties with respect to the subject matter
hereof. No change, termination, modification, or waiver of any term or
condition of the Agreement shall be valid unless in writing signed by each
party. No such writing shall be effective as against FDISG unless said writing
is executed by an Executive Vice President or President of FDISG. A party's
waiver of a breach of any term or condition in the Agreement shall not be
deemed a waiver of any subsequent breach of the same or another term or
condition.
24.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such
case, the parties shall in good faith modify or substitute such provision
consistent with the original intent of the parties. Without limiting the
generality of this paragraph, if a court determines that any remedy stated in
this Agreement has failed of its essential purpose, then all other provisions
of this Agreement, including the limitations on liability and exclusion of
damages, shall remain fully effective.
24.3 The names "The Woodward Funds" and "Trustees of Woodward" 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 May 1, 1992, which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of Woodward. 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 Fund personally, but bind only the trust property, and
all persons dealing with any portfolio of the Fund must look solely to the
trust property belonging to such portfolio for the enforcement of any claims
against the Fund.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, as of the day and year first
above written.
THE WOODWARD FUNDS
By: /s/ Earl J. Heenan, Jr.
-----------------------
Title: Its Chairman
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Jerry Kukun
---------------
Title: Executive VP
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<PAGE>
SCHEDULE OF PORTFOLIOS
The Woodward Funds
Transfer Agency and Services Agreement
Growth Fund (Capital Growth Fund*)
International Equity Fund
Equity Index Fund
Growth and Value Fund (Growth/Value Fund*)
Intrinsic Value Fund
Mid-Cap Opportunity Fund (Opportunity Fund*)
Equity Income Fund
Small-Cap Opportunity Fund
Bond Fund
Short Bond Fund
Intermediate Bond Fund
Municipal Bond Fund
Michigan Municipal Bond Fund
Intermediate Municipal Bond Fund
Income Fund
International Bond Fund
Money Market Fund
Treasury Money Market Fund
Municipal Money Market Fund (Tax-Exempt Money Market Fund*)
Michigan Municipal Money Market Fund (Michigan Tax-Exempt Money Market Fund*)
Cash Management Fund
U.S. Government Securities Cash Management Fund
Treasury Prime Cash Management Fund
Managed Assets Balanced Fund (Balanced Fund*)
Managed Assets Conservative Fund
Managed Assets Growth Fund
- -------
* This is the pre-organization name of the Fund.
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<PAGE>
Schedule A
DUTIES OF FDISG
1. Shareholder Information. FDISG shall maintain a record of the
number of Shares held by each Shareholder of record which shall include name,
address, taxpayer identification and which shall indicate whether such Shares
are held in certificates or uncertificated form and shall include historical
information regarding the account of each Shareholder, including dividends and
distributions paid and the date and price for all transactions on a
Shareholder's account; any stop or restraining order placed against a
Shareholder's account; information with respect to withholdings; any
information required in order for FDISG to perform any calculations
contemplated or required by the Agreement to which this is a Schedule (the
"Agreement"); FDISG shall keep a record of all redemption checks and dividend
checks returned by the postal authorities, and shall maintain such records as
are required by the Fund.
2. Shareholder Services. FDISG shall respond as appropriate to all
inquiries and communications from Shareholders relating to Shareholder
accounts with respect to its duties hereunder and as may be from time to time
mutually agreed upon between FDISG and the Fund. Shareholder communication
services shall include a voice response unit ("VRU") capability providing
inquiry based on options. Effective on or before January 1, 1997, the VRU
capabilities shall be enhanced to allow for selected transaction processing.
3. Mailing Communications to Shareholders. At the expense of the Fund,
as set forth in Schedule C, FDISG will address and mail to Shareholders of the
Fund all reports to Shareholders, dividend and distribution notices.
4. Sales of Shares
(a) FDISG shall not be required to issue any Shares of the Fund where
it has received a Written Instruction from the Fund or official notice from
any appropriate authority that the sale of the Shares of the Fund has been
suspended or discontinued. The existence of such Written Instructions or such
official notice shall be conclusive evidence of the right of FDISG to rely on
such Written Instructions or official notice.
(b) In the event that any check or other order for the payment of
money is returned unpaid for any reason, FDISG will endeavor to: (i) give
prompt notice of such return to the Fund or its designee; (ii) place a stop
transfer order against all Shares issued as a result of such check or order;
and (iii) take such actions as FDISG may from time to time deem appropriate.
5. Transfer and Repurchase.
(a) FDISG shall process all requests to transfer or redeem Shares in
accordance with the transfer or repurchase procedures set forth in the Fund's
Prospectus.
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<PAGE>
(b) FDISG will transfer or repurchase Shares upon receipt of Oral or
Written Instructions or otherwise pursuant to the Prospectus and Share
certificates, if any, properly endorsed for transfer or redemption,
accompanied by such documents as FDISG reasonably may deem necessary.
(c) FDISG reserves the right to refuse to transfer or repurchase
Shares until it is satisfied that the endorsement on the instructions is valid
and genuine. FDISG also reserves the right to refuse to transfer or repurchase
Shares until it is satisfied that the requested transfer or repurchase is
legally authorized, and it shall incur no liability for the refusal, in good
faith, to make transfers or repurchases which FDISG, in its good judgement,
deems improper or unauthorized, or until it is reasonably satisfied that there
is no basis to any claims adverse to such transfer or repurchase.
(d) When Shares are redeemed, FDISG shall, upon receipt of the
instructions and documents in proper form, deliver to the Custodian and the
Fund or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate
accounts maintained by FDISG reflecting outstanding Shares of the Fund and
Shares attributed to individual accounts.
(e) FDISG, upon receipt of the monies paid to it by the Custodian for
the repurchase of Shares, pay such monies as are received from the Custodian,
all in accordance with the procedures described in the written instruction
received by FDISG from the Fund.
(f) FDISG shall not process or effect any repurchase with respect to
Shares of the Fund after receipt by FDISG or its agent of notification of the
suspension of the determination of the net asset value of the Fund.
6. Dividends.
(a) Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund with respect to Shares of
the Fund, the Fund shall furnish or cause to be furnished to FDISG Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record
date as of which Shareholders entitled to payment shall be determined, the
amount payable per Share to the Shareholders of record as of that date, the
total amount payable on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution of the
Board of Directors, the Fund will pay to the disbursement account sufficient
cash to make payment to the Shareholders of record as of such payment date.
(c) If the disbursement account does not receive sufficient cash from
the Fund to make total dividend and/or distribution payments to all
Shareholders of the Fund as of the payable
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<PAGE>
date, FDISG will notify the Fund. The Fund hereby instructs FDISG to process
dividend and/or distribution payments to all Shareholders of record as of the
payable date regardless of whether sufficient cash is available in the
disbursement accounts. Subject to FDISG meeting its standard of care herein,
the Fund shall be responsible for and shall indemnify and hold FDISG harmless
from all costs asserted by others with respect to the actions of FDISG in
complying with the instruction of the Fund under the foregoing sentence.
7. Reports.
(a) FDISG shall furnish daily reports of transactions in Shares;
furnish monthly reports of transactions in Shares by type (custodial, trust,
Keogh, IRA, other) including number of accounts; furnish sales data for blue
sky reporting to the Fund via daily transmission; calculate sales load or
compensation payment, if applicable, and provide such information to the Fund;
calculate dealer commissions for the Fund; mail duplicate confirmations to
dealers of their clients' activity, whether executed through the dealer or
directly with FDISG; provide detail for underwriter or broker confirmations
and other participating dealer shareholder accounting, in accordance with such
procedures as may be agreed upon between the Fund and FDISG; provide
Shareholder lists and statistical information concerning accounts to the Fund;
provide to the Fund or the custodian with timely notification of Fund activity
and such other information as may be agreed upon from time to time between
FDISG and custodian; and at the expense of the Fund in accordance with
Schedule C, provide toll free lines for direct shareholder use, plus customer
liaison staff with on-line inquiry capacity.
(b) In connection with FDISG's obligation to provide detail for
underwriter or broker confirmations and other participating dealer shareholder
accounting, FDISG shall modify and enhance the FDISG System to allow for the
timely transmission of such detail to the Pershing Division of Donaldson,
Lufkin & Jenrette Securities Corporation ("Pershing"). Such transmission
capability shall be available on or before September 13, 1996, subject to
successful testing with Pershing.
8. Independent Public Accountants. FDISG shall cooperate with the
Fund's independent public accountants and shall take all reasonable action in
the performance of its obligations under the 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 Fund from time to time.
9. In addition to and neither in lieu nor in contravention of the
services set forth above, FDISG shall: (i) perform all the customary services
of a transfer agent, registrar, dividend disbursing agent and agent of the
dividend reinvestment and cash purchase plan as described herein consistent
with those requirements in effect as at the date of this Agreement. The
detailed definition, frequency, limitations and associated costs (if any) set
out in the attached fee schedule, include but are not limited to: maintaining
all Shareholder accounts, preparing
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<PAGE>
Shareholder meeting lists, mailing proxies, tabulating proxies, mailing
Shareholder reports to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts where applicable, preparing and
filing U.S. Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by federal authorities
for all Shareholders.
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<PAGE>
Exhibit 1 of Schedule A
PERFORMANCE STANDARDS
FDISG will use a statistical sampling defined below as a percentage of
transactions processed through the Transaction Processing and Quality Control
units of FDISG providing services to the Fund and will track and report to the
Fund on the accuracy of the transactions processed. Examining the sample
against predetermined FDISG criteria for accuracy, FDISG will provide an
accuracy rate as represented by a "percent", measured to the last Friday of
each month from the last Friday of the previous month. The Fund reserves the
right to inspect, or have a third party inspect, the Quality Assurance
Procedures and documentation and all documents reviewed and considered in
determining the accuracy of processing.
Turnaround QC% QA% Accuracy
R=receipt date Standard
I. Transaction Processing
New Accounts
Purchases R 100% 15% 98%
Exchanges R 100% 15% 98%
Transfers R+3 100% 15% 98%
Purchases
Directs R 100% 10% 98%
Wire Orders R 100% 10% 98%
Redemptions
Directs R 100% 10% 98%
Wire Orders R 100% 10% 98%
Exchanges R 100% 10% 98%
Transfers R+3 100% 10% 98%
Adjustments
Priority R+1 100% 10% 98%
Non-Priority R+4 100% 10% 98%
OCF Cancel/Rebill R+1 100% 15% 98%
II. Shareholder Services
Research
Priority R+1 100% 95%
Non-Priority R+4 100% 95%
Transcripts R+9 100% 95%
Correspondence
Priority (Financial) R+3 100% 10% 98%
Non-Priority (Other) R+5 100% 10% 98%
III. Control Deadlines
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<PAGE>
[CAPTION]
Fund Accounting Times
Variable Funds Supersheets 10:00am daily
Tax Exempt Money Market Funds Supersheets 12:30pm daily
Taxable Money Market Funds Supersheets 3:30pm daily
Custody Settlements
Net Settlement for Variable Funds 11:00am daily
Net Settlement for Money Market Funds 4:00pm daily
Outgoing Wires 4:30pm daily
Commissions
12B-1 Data to Bisys R+1
Funding to FDISG TBD (to be discussed with Bisys)
Checks Mailed TBD+3
Front End Load Checks R+3
IV. Administration
Duplicate Confirmation R+2 2% 98%
Mailed
Daily Checks Mailed R+1 2% 98%
Periodic Checks Mailed R+2 2% 98%
Daily Confirmations R+2 2% 98%
Mailed
Periodic Statements
Mailed Pre-sort
50% minimum R+3 2% 98%
Remaining R+4 2% 98%
V. Systems
Availability
Monday - Friday 8:00am to 9:00pm* EST 98%
Saturday 11:00am to 10:00pm EST 98%
Sunday 8:00am to 5:00pm EST 98%
* At month-end and periodically for predetermined business reasons,
FSR will come down at 8:00pm.
Transmissions
ACH for NBD Bank DDA cycle - 11:00pm EST 98%
List out remaining transmissions and
determine client standards 98%
FDISG will use a statistical sampling defined categorically in Section I-III
of transactions processed through the Transaction Processing and Quality
Control units of FDISG providing services to the Fund and will track and
report to the Fund on the accuracy of the transaction processed. Examining the
sampling against predetermined FDISG criteria for accuracy, FDISG
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<PAGE>
will provide a 98% accuracy rate, measured monthly by their independent
Quality Assurance Department and reported to the Fund by the 20th of the
following month.
This document will be modified by the business areas if conditions are such
that changes are deemed necessary by the Fund and by FDISG.
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<PAGE>
Schedule B
Fee Schedule
I. TRANSFER AGENT FEES:
Open Account Sliding Fee Scale
Accounts Annual Fee
-------- ----------
0-80,000 $18.00 per account
80,001-100,000 $16.00 per account
100,001-150,000 $14.00 per account
150,001+ $13.00 per account
Closed Account Fee: $2.00 per account per annum
IMPRESS Software Fees: $3,200 per workstation per annum
Note: IMPRESS Software Fees will be included in
IMPRESS License Software Agreement
Variable Annuity Fees: A flat fee of $1,000 per month will be
charged to support up to 5 variable
annuity funds. The monthly fee will
increase by $500 for each additional
fund.
IRA Maintenance Fees: Retirement account shareholders will be
assessed an annual fee of $10.00 per
fund/account position with a cap of $25
per account number.
New Portfolio Fees: $25,000 per annum minimum for all new
portfolios introduced over the 3 year
contract period.
(Initial 6 have no minimums.)
II. VALUE ADDED SERVICES
Remote Trade Entry: $10,000 per annum for up to 10 workstations
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<PAGE>
III. SET UP CHARGES
Voice Response Unit, Cost Basis Accounting, and Remote Trade Entry
$50,000 set up charge
IV. CONVERSION EXPENSE
First Data and First Chicago/NBD Bank have agreed to split the conversion cost
with First Chicago/NBD paying a maximum of $250,000.
V. PRINT/MAIL CHARGES
1. Daily Output
(a) Shareholder Statements:
Base stock, laser printing, folding, inserting and
mailing (excluding postage and envelopes)
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
Set up Fee: $15.00 per work order
(b) Combined Statements (Householding multiple statements in one
envelope):
Base stock, laser printing, folding, inserting and
mailing (excluding postage and envelopes)
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
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<PAGE>
Set up Fee: $15.00 per work order
(c) Combined Exchange Statements (To and from exchange on one
confirm):
Base stock, laser printing, folding, inserting and
mailing (excluding postage and envelopes)
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
2. Dividend Output
(a) Shareholder Statements:
Base stock, laser printing, folding, inserting and
mailing (excluding postage and envelopes)
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
(b) Dividend Checks:
Base stock, laser printing, folding, inserting and
mailing (excluding postage and envelopes)
Number of Items Per Fund Price
1-3,500 $.179 per image
3,501-10,000 $.169 per image
10,001-and above $.16 per image
Minimum Charge $25.00 per work order
3. Consolidated Statements
Shareholder & Dealer Statements:
Base stock, laser printing, folding, inserting and mailing
(excluding postage and envelopes)
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<PAGE>
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
Selective Inserting $ .03 per envelope
Charges (minimum $250)
4. On-Request 'Super Select* Statements
Shareholder Statements:
Base stock, laser printing, folding, inserting and mailing
(excluding postage and envelopes)
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
Set up Fee: $15.00 per work order
5. New Account Letters
Base stock, laser printing, folding, inserting and mailing
(excluding postage and envelopes)
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
Set up Fee: $15.00 per work order
6. T.I.N. Solicitations
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<PAGE>
Daily Statements, Educational TIN, B-Notice, Second B-notice:
Base stock, laser printing, folding, inserting and
mailing
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
(excluding postage and envelopes) $15.00 per work order
7. Wire Order Invoice Statements
Base stock, laser printing, folding, inserting and mailing
Number of Items Per Fund Price
1-3,500 $.135 per image
3,501-10,000 $.125 per image
10,001-and above $.12 per image
Minimum Charge $25.00 per work order
(excluding postage and envelopes) $15.00 per work order
8. Label List Mailings
Cheshire labeling and mail first class $29.00/thousand
Labeling, inserting and mailing $50.00 set up charge
(excludes postage and envelopes)
9. Miscellaneous Services
Charge Per Unit
1 Additional Insert $20 1,000
2 Additional Inserts $40 1,000
3 Additional Inserts $60 1,000
4 Additional Inserts $80 1,000
5 Additional Inserts $100 1,000
6 Additional Inserts $120 1,000
7 Additional Inserts $140 1,000
8 Additional Inserts $160 1,000
Folding $20 1,000
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<PAGE>
Manual Processing $25 Per Hour
NOTE: Costs of all materials used are in addition to all prices.
Postage is in addition (50-50 split of postal savings).
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Schedule C
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for the following applicable
out-of-pocket expenses:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including envelopes, checks and stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all
lease, maintenance and line costs
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end forms and mailings
- Terminals, communication lines, printers and other
equipment and any expenses incurred in connection with
such terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention as required by the Fund, retrieval and
destruction costs, including, but not limited to exit fees
charged by third party record keeping vendors
- All Systems enhancements after the conversion at the rate
of $100.00 per hour
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with FDISG. In addition, the Fund will
promptly reimburse FDISG for any other unscheduled expenses incurred by FDISG
whenever the Fund and FDISG mutually agree that such expenses are not
otherwise properly borne by FDISG as part of its duties and obligations under
the Agreement.
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Schedule D
Fund Documents
- Certified copy of the Articles of Incorporation of the
Fund, as amended
- Certified copy of the By-laws of the Fund, as amended
- Copy of the resolution of the Board of Directors
authorizing the execution and delivery of this
Agreement
- All account application forms and other documents
relating to Shareholder accounts or to any plan,
program or service offered by the Fund
- Certified list of Shareholders of the Fund with the
name, address and taxpayer identification number of each
Shareholder, and the number of Shares of the Fund held
by each, certificate numbers and denominations (if any
certificates have been issued), lists of any accounts
against which stop transfer orders have been placed,
together with the reasons therefore, and the number of
Shares redeemed by the Fund
- All notices issued by the Fund with respect to the
Shares in accordance with and pursuant to the
Articles of Incorporation or By-laws of the Fund
or as required by law and shall perform such other
specific duties as are set forth in the Articles
of Incorporation including the giving of notice of
any special or annual meetings of shareholders and
any other notices required thereby.
-32-
EXHIBIT (11)(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports dated February 19, 1996 included in Pegasus Funds' Annual Reports
to Shareholders for the year ended December 31, 1995 (and to all references
to our Firm) included in or made a part of this registration statement on
Form N-1A (Post-Effective Amendment No. 39 to Pegasus Funds' Registration
Statement under the Securities Act of 1966).
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Detroit, Michigan,
December 27, 1996
EXHIBIT (11)(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" in the Prospectus and "Independent Public Accountants" in the
Statement of Additional Information and to the use of our report on the
financial statements of The Prairie Funds, Prairie Municipal Bond Fund, Inc.
and Prairie Intermediate Bond Fund dated February 23, 1996 in this
Registration Statement (Form N-1A 33-13990) of The Pegasus Funds.
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
New York, New York
December 27, 1996
EXHIBIT (11)(c)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference
to our Firm under the caption "Counsel" in the Statement of Additional
Information that is included in Post-Effective Amendment No. 39 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
December 30, 1996
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000814067
<NAME> WOODWARD FUNDS
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<NUMBER> 18
<NAME> WOODWARD BALANCED FUND
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000814067
<NAME> WOODWARD FUNDS
<SERIES>
<NUMBER> 19
<NAME> CAPITAL GROWTH FUND
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 000814067
<NAME> WOODWARD FUNDS
<SERIES>
<NUMBER> 20
<NAME> WOODWARD SHORT BOND FUND
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<CURRENCY> U.S. DOLLARS
<PERIOD-TYPE> 6-MOS
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000814067
<NAME> WOODWARD FUNDS
<SERIES>
<NUMBER> 21
<NAME> WOODWARD INTERNATIONAL EQUITY
FUND
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</TABLE>
